ABC Inc. purchased a 12-month insurance policy on January 1, 2019 for OMR 2400. At June 30, 2019, The Adjusting Entry should be: Select one: a. Debit to Insurance Expense, OMR 1200; Credit to Prepaid Insurance for OMR1200 O b. None of the answers are correct Oc Debit to Insurance Expense. OMR 2400 Credit to Prepaid Insurance for OMR 2400 O d. Debit to Prepaid Insurance, OMR 1400; Credit to Insurance Expense for OMR 1400 O e. Debit to Prepaid Insurance. OMR 2400 Credit to Cash for OMR 2400 Clear my choice

ABC Inc. purchased a 12-month insurance policy on January 1, 2019 for OMR 2400. At June 30, 2019, The Adjusting Entry should be: Select one: a. Debit to Insurance Expense, OMR 1200; Credit to Prepaid Insurance for OMR1200 O b. None of the answers are correct Oc Debit to Insurance Expense. OMR 2400 Credit to Prepaid Insurance for OMR 2400 O d. Debit to Prepaid Insurance, OMR 1400; Credit to Insurance Expense for OMR 1400 O e. Debit to Prepaid Insurance. OMR 2400 Credit to Cash for OMR 2400 Clear my choice

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 3MCQ

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Similar questions

At the end of 2019, Framber Company received 8,000 as a prepayment for renting a building to a tenant during 2020. The company erroneously recorded the transaction by debiting Cash and crediting Rent Revenue in 2019 instead of 2020. Upon discovery of this error in 2020, what correcting journal entry will Framber make? Ignore income taxes.
If the Prepaid Insurance account had a balance of $12,000, representing one years policy premium, which was paid on July 1, what entry would be needed to adjust the Prepaid Insurance account at the end of December, before preparing the financial statements?
In December 2019, Swanstrom Inc. receives a cash payment of $3,500 for services performed in December 2019 and a cash payment of S4,500 for services to be performed in January 2020. Swanstrom also receives the December utility bill for S600 but does not pay this bill until 2020. For 2019, under the accrual basis of accounting, Swanstrom would recognize: a. $8,000 of revenue and $600 of expense. b. $8,000 of revenue and $0 of expense. c. $3,500 of revenue and $600 of expense. d. $3,500 Of revenue and $0 of expense.
Dallas Company loaned to Ewing Company on December 1, 2019. Ewing will pay Dallas $720 of interest ($60 per month) on November 30, 2020. Dallass adjusting entry at December 31, 2019, is: a. Interest Expense ........... 60 c. Interest Receivable ....... 60 Cash ......................... 60 Interest Income ........ 60 b. Cash ............................ 60 d. No adjusting entry is required. Interest Income ........ 60
The unadjusted trial balance of Recessive Interiors at January 31, 2019, the end of the year, follows: The data needed to determine year-end adjustments are as follows: a. Supplies on hand at January 31 are 2,850. b. Insurance premiums expired during the year are 3,150. c. Depreciation of equipment during the year is 5,250. d. Depreciation of trucks during the year is 4,000. e. Wages accrued but not paid at January 31 are 900. Instructions 1. For each account listed in the unadjusted trial balance, enter the balance in the appropriate Balance column of a four-column account and place a check mark () in the Posting Reference column. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (3) as needed. 3. Journalize and post the adjusting entries, inserting balances in the accounts affected. Record the adjusting entries on Page 26 of the journal. The following additional accounts from Recessive Interiors chart of accounts should be used: Wages Payable, 22; Depreciation ExpenseEquipment, 54; Supplies Expense, 55; Depreciation ExpenseTrucks, 56; Insurance Expense, 57. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a statement of owners equity (no additional investments were made during the year), and a balance sheet. 6. Journalize and post the closing entries. Record the closing entries on Page 27 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 7. Prepare a post-closing trial balance.
Reversing Entries On December 31, 2019, Kellams Company made the following adjusting entries for its annual accounting period: Required: Prepare whatever reversing entries are appropriate.
The balance in Ashwood Companys accounts payable account at December 31, 2019, was 1,200,000 before any necessary year-end adjustment relating to the following: Goods were in transit from a vendor to Ashwood on December 31, 2019. The invoice cost was 85,000, and the goods were shipped FOB shipping point on December 29, 2019. The goods were received on January 2, 2020. Goods shipped FOB shipping point on December 20, 2019, from a vendor to Ashwood were lost in transit. The invoice cost was 40,000. On January 5, 2020, Ashwood filed a 40,000 claim against the common carrier. Goods shipped FOB destination on December 22, 2019, from a vendor to Ashwood were received on January 6, 2020. The invoice cost was 20,000, What amount should Ashwood report as accounts payable on its December 31,2019, balance sheet? a. 1,260,000 b. 1,285,000 c. 1,325,000 d. 1,345,000
Worksheet Victoria Company has the following account balances on December 31, 2019, prior to any adjustments: Additional adjustment information: (a) depreciation on buildings, 1,100; on equipment, 600; (b) bad debts expense, 240; (c) interest accumulated but not paid: on note payable, 50; on mortgage payable, 530 (this interest is due during the next accounting period); (d) insurance expired, 175; (e) salaries accrued but not paid 370; (f) rent was collected in advance and the performance obligation is now satisfied, 800; (g) office supplies cm hand at year-end, 230 (expensed when originally purchased earlier in the year); and (h) the income tax rate is 30% on current income and is payable in the first quarter of 2020. Required: 1. Transfer the account balances to a 10-column worksheet and prepare a trial balance. 2. Prepare the adjusting entries in the general journal and complete the worksheet. 3. Prepare the companys income statement, retained earnings statement, and balance sheet. 4. Prepare closing entries in the general journal.
Each of the following independent situations relates to the recognition of revenue: a. On June 2, 2019, a customer books travel on an airline, paying 500 for a round-trip ticket that departs July 15, 2019, and returns July 20, 2019. In addition, once the round-trip ticket is used, the airline credits the passengers frequent-flier account for 500 miles. The airline determines that each frequent-flier point has a value of 0.01. b. On May 1, 2019, a retailer enters into a contract with a construction company. The construction company will build a new warehouse for the retailer at a price of 2 million. The retailer will make four equal payments to the construction company over the 1-year construction period, starting on May 1, 2019, and then every 4 months. The retailer can cancel construction at any time and will own any construction to date; however, it must pay the construction company for work done up to the cancellation date. The building is completed on April 30,2019. c. Morning Donut agrees to supply donuts and coffee on a daily basis to a local business. The contract starts on January 1, 2019, and runs for 1 year. Morning Donut charges 400 per week for the donuts and coffee. d. The Raleigh Knights sell four season tickets to a customer. The Knights play 10 regular season games, and the cost of one season ticket is 250. Required: For each situation, use the 5-step process to determine when revenue can be recognized. Determine (1) if a contract exists, (2) the performance obligations in the contract, (3) the transaction price in the contract, (4) how the transaction price is allocated to the performance obligations, and (5) when revenue is recognized.
Maple Tree Inc. purchased a 12-month insurance policy on March 1, 2019 for $900. At December 31, 2019, the adjusting journal entry to record expiration of this asset will include a: o Debit to Insurance Expense and a credit to Prepaid Insurance for $900 o Debit to Prepaid Insurance and a credit to Insurance Expense for $100 o Debit to Insurance Expense and a credit to Prepaid Insurance for $75 o None of the above
At 31 October 2019 before any year-end adjustments, a companies insurance expense had a normal balance of 3800 and its prepaid insurance account had a normal balance of 1450. It is revealed that 3000 of the 5250 total related to benefits that expired in the year 2019. The required adjusting entry is: a) debit insurance expense for 3000 b) credit prepaid insurance for 800 c) credit prepaid insurance for 1450 d) debit prepaid insurance for 800
On January 18, 2019, Big City Co, paid $36,000 for a two-year insurance premium that covers February 1, 2019 through January 31, 2021. Big City Co’s year-end is March 31, 2019. What entry is made on January 18, 2019? What adjusting entry should be made on March 31, 2019 before the financial statements are prepared for the year ending March 31, 2019?