ADJUST THE ACCOUNTS-24 points 1. Ford began 2016 with supplies of $6,000. During

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ADJUST THE ACCOUNTS-24 points 1. Ford began 2016 with supplies of $6,000. During the year, Ford purchased additional supplies for $1,300. If an inventory of supplies taken on December 31, 2016 indicates that $4,200 of supplies were used during the year then Ford's adjusting entry on December 31, 2016 would include a A) Debit to supplies expense for $2,900 8) Credit to supplies for $4,200 c) Debit to supplies for $5,500 D) Debit to supplies expense for $3,100 2. Ford calculated that as of December 31, 2016 it had earned $6,500 on a $9,500 contract that will be completed and billed in August 2017. Ford's adjusting entry on December 31, 2016 would include a A) Debit to accounts receivable for $6,50 B) No entry is required on December 31, 2016 C) Credit to unearned revenue for $3,000 D) Debit to accounts receivable for $9,500 E) Debit to unearned revenue for $3,000 Ford purchased equipment for $120,000. if deprecation for the year is estimated to be $20,000 then Ford 's adjusting entry would include a 3. A) Debit to accumulated depreciation for $20,000 8) Credit to accumulated depreciation for $20,000 C) Credit to depreciation expense for $20,000. D) Credit to equipment for $20,000. Ford's weekly (5-day) payroll of $2,500 is paid on Fridays. if December 31 falls on a Thursday, what adjusting entry should Ford make? 4. A) Debit salaries expense $500 and credit salaries payable $500 8) Debit salaries expense $2,000 and credit salaries payable $2,000 C) Debit unpaid salaries $2,000 and credit salaries payable $2,000 D) Debit salaries payable $2,000 and credit salaries expense $2,000 S. In 2016, Ford received an advance payment of $25,000 for services to be performed. What adjusting entry would Ford make if 40% of the advance fee was earned in 2016? A) Debit service revenue $10,000 and credit unearned revenue $10,000 B) Debit service revenue $15,000 and credit unearned revenue $15,000 C) Debit unearned revenue $15,000 and credit service revenue $15,000 E) Debit unearned revenue $10,000 and credit service revenue $10,000 in 2016. If interest and principal are both due when the note matures in 2017, what 6. Ford borrowed $50,000 adjusting entry should Ford make on December 31, 2016 A) Debit interest expense and credit interest payable. B) No entry is required. C) Debit unpaid interest and credit note payable. D) Debit interest expense and credit note payable Ford Consulting

Explanation / Answer

1) Supplies used during the year = $4200
Entry to record use of supplies =
Supplies expense $4200
   Supplies $4200.

Closing supplies on hand = $6000+$1300-$4200 = $3100
SO, the answer is Option B

2) NEt recievable = $6500.
Entry will be
Accounts receivable $6500
   Sale revenue $6500

So, the answer is Option A

3) Entry for depreciation =
Equipment $20000
   Accumulated depreciation $20000
Option B

4) Amount payable per day = $2500/5 = $500 per day
Since it is still an expense and it is payable by the end of the next day, a liability is created.
Entry will be
Salaries expense $500
   Salaries payable $500
Option A

5) When the advance was received, the entry would have been
Cash $25000
   Unearned revenue $25000

Now, when the revenue is earned, the entry will be
Unearned revenue $10000
Service revenue $10000
Option E

6) Since the interest and principal are both payable but are not yet paid, an adjusting entry will be passed when the payment is made.
So, no entry is required.
Option B

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