11) Mac, Inc. purchased a truck on October 1, 2011 in exchange for a month, 9%, $100,000 note. What effect does the October 31, 2011 adjusting entry for interest have on the company’s total assets?
A) increase
B) decrease
C) no effect
12) Mac, Inc. purchased a truck on October 1, 2011 in exchange for a month, 9%, $100,000 note. What effect does the October 31, 2011 adjusting entry for interest have on the company’s total liabilities?
A) increase
B) decrease
C) no effect
13) Mac, Inc. purchased a truck on October 1, 2011 in exchange for a month, 9%, $100,000 note. What effect does the October 31, 2011 adjusting entry for interest have on the company’s total shareholders’ equity?
A) increase
B) decrease
C) no effect
14) Mariner, Inc. bought a lobster boat on November 1, 2011 in exchange for a 2-month, 6%, $80,000 note. The note plus interest will be repaid on January 1, 2012, the maturity date. How much interest expense should the company report on its income statement for the month ended November 30, 2011?
A) $0
B) $4,800
C) $400
D) $800
15) Mariner, Inc. bought a lobster boat on November 1, 2011 in exchange for a 2-month, 6%, $80,000 note. The note plus interest will be repaid on January 1, 2012, the maturity date. How much interest payable should the company report on its balance sheet at November 30, 2011?
A) $0
B) $4,800
C) $400
D) $800
16) Mariner, Inc. bought a lobster boat on November 1, 2011 in exchange for a 2-month, 6%, $80,000 note. The note plus interest will be repaid on January 1, 2012, the maturity date. How much interest payable should the company report on its balance sheet at December 31, 2011?
A) $0
B) $4,800
C) $400
D) $800
17) Mariner, Inc. bought a lobster boat on November 1, 2011 in exchange for a 2-month, 6%, $80,000 note. The note plus interest will be repaid on January 1, 2012, the maturity date. How much interest expense should the company report on its income statement for the month ended December 31, 2011?
A) $0
B) $4,800
C) $400
D) $800
18) Salaries payable on the balance sheet most likely means that ________.
A) the company is in serious financial difficulty. It doesn’t even have enough cash to pay its employees
B) the company’s accountants are seriously confused. Salaries appear on the income statement, not on the balance sheet
C) employees did not receive payment for the last few days of work because the last day of the accounting period was not a payday
D) employees were overpaid and now owe the company money
19) The employees of Roll n Dough, Inc. get paid every Friday for a 5-day workweek (Monday through Friday). The total payroll is $3,000 per day of work. If the accounting period ends on Thursday of a given week, what adjustment must be made to the company’s accounting records?
A) Increase Salaries payable by $15,000 and decrease shareholders’ equity by recognizing Salaries expense for the same amount.
B) Increase Salaries payable by $12,000 and decrease shareholders’ equity by recognizing Salaries expense for the same amount.
C) Decrease Cash by $12,000 and decrease shareholders’ equity by recognizing Salaries expense for the same amount.
D) No adjustment is necessary because there is no expense until the employees are paid on Friday.
20) The employees of Roll n Dough, Inc. get paid every Friday for a 5-day workweek (Monday through Friday). The total payroll is $4,000 per day of work. If the accounting period ends on Wednesday of a given week, what adjustment must be made to the company’s accounting records?
A) Decrease Cash by $12,000 and decrease shareholders’ equity by recognizing Salaries expense for the same amount.
B) Increase Salaries payable by $20,000 and decrease shareholders’ equity by recognizing Salaries expense for the same amount.
C) Increase Salaries payable by $12,000 and decrease shareholders’ equity by recognizing Salaries expense for the same amount.
D) No adjustment is necessary because there is no expense until the employees are paid on Friday.