Answer 15- 15. During Bloom Co.\'s first year of operations, the office supplies
ID: 2537175 • Letter: A
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Answer 15- 15. During Bloom Co.'s first year of operations, the office supplies account was debited for $1,480 for office supplies purchased during the year. At year-end, office supplies on hand were $540. The appropriate adjusting entry would A. Increase expenses by $940. B. Have no effect on net income. C. Decrease expenses by $540. D. Decrease assets by $540. 6. During the month, Rude, Inc. received S212.500 in cash and paid out $183,750 in cash. If the ending cash balance is $36,300, what was the beginning cash balance? A. $ 7.550 B. S 28,750 C. $65,050 D. $248,800 17. What effect does receiving payment from customers whom were already billed for services provided to them have on the accounting equation? A. Assets increase and assets decrease. B. Assets increase and owners' equity increases. C. Liabilities increase and owners' equity decreases. D. Liabilities decrease and assets decrease. 18. What effect does providing services for customers "on account", have on the accounting equation? A. Assets increase and assets decrease. B. Assets increase and owners' equity increases. C. Liabilities increase and owners' equity decreases. D. Liabilities decrease and assets decrease. 19. Which of the following would not be recorded as a cash sale? A. Customer who pays with a check. B. Customer who pays with a debit card. C. Customer who pays with a credit card. D. Customer who buys on accountExplanation / Answer
Answer to Question 15:
Option A i.e. Increase Expenses by $940.
The Adjusting Entry would record the difference between the Supplies available for use and Supplies available at the end of the year. The Difference is due to usage of Supplies.
Ending Supplies = Beginning Supplies + Supplies Purchased – Supplies Used
$540 = $0 + $1,480 – Supplies Used
Supplies Used = $940
The Adjusting Entry would have effect of increase in Supplies Expense and decrease in Supplies. The Entry would be:
Supplies Expense 940
Supplies 940
Answer to Question 16:
Option A i.e. $7,550
Ending Cash Balance = Beginning Cash Balance + Cash receipts – Cash Payments
$36,300 = Beginning Cash Balance + $212,500 - $183,750
Beginning Cash Balance = $7,550
Answer to Question 17:
Option A i.e. Assets increase and Assets Decrease.
The receipt of Cash from Customer who has been already billed will decrease Accounts Receivable and increase cash. In Other words, Assets will increase and decrease by same amount.
Answer to Question 18:
Option B i.e. Asset Increase and Owners’ Equity increases.
Providing of services on account will generate Revenue, which in turn will increase Net Income / Owners’ Equity and Accounts Receivable will increase, as the amount is due from Customer.
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