Learning Objective B-3
1) The adjusting entry to accrue interest owed on a note payable will include a ________.
A) credit to Interest revenue
B) credit to Interest receivable
C) credit to Interest expense
D) credit to Interest payable
2) The adjusting entry to record the prepaid rent used during the month will include a ________.
A) credit to Cash
B) debit to Prepaid rent
C) debit to Rent expense
D) credit to Accumulated depreciation
3) The adjusting entry to record depreciation on equipment will include a ________.
A) credit to Equipment
B) credit to Depreciation expense
C) credit to Accumulated depreciation
D) credit to Cash
4) On January 1,
2011, Truckin, Inc. purchased a $100,000 truck with an estimated useful life of 10 years and a $0 residual value. The adjusting entry to record depreciation on the truck for the year ended December 31 will include a ________.
A) credit to Truck of $10,000
B) credit to Depreciation expense of $10,000
C) credit to Accumulated depreciation of $10,000
D) debit to Accumulated depreciation of $10,000
5) On November 1, 2011, Lucky Luke, Inc. borrowed $20,000 on a 3-month, 9% note. The adjusting entry to record interest for the year ended December 31 would include a ________.
A) credit to Interest payable of $300
B) credit to Cash of $300
C) debit to Interest expense of $600
D) credit to Cash of $600
6) Soles for Souls, Inc. borrows $2,000 from a bank on February 1, 2011 and agrees to pay it back two years later with 6% interest. On February 1, 2011, the entry recorded in the journal would include a ________.
A) credit to Notes receivable of $2,000
B) credit to Cash of $2,000
C) debit to Interest expense of $120
D) credit to Notes payable of $2,000
7) In its first month of business, Anudu, Inc. purchased supplies for $5,000 on account. During the month, Anudu, Inc. paid $1,000 of the amount owed for the supplies. On May 31, Anudu, Inc. had only $2,000 of supplies left. The May 31 adjusting entry would include a ________.
A) debit to Supplies of $2,000
B) debit to Supplies expense of $2,000
C) credit to Supplies of $3,000
D) credit to Cash of $3,000
8) Chutes, Inc. had supplies of $600 on May 1. It purchased $800 of supplies on account on May 3. At May 31, $500 of supplies remained. The adjusting entry to record on May 31 is a debit to ________.
A) Supplies expense of $900 and a credit to Cash of $900
B) Supplies of $500 and a credit to Cash of $500
C) Supplies expense of $900 and a credit to Supplies of $900
D) Accounts payable of $500 and a credit to Supplies of $500
9) Ledgers, Inc. had prepaid insurance of $500 on May 1 of which $300 had expired as of May 31. The adjusting entry to record on May 31 is a debit to ________.
A) Insurance expense of $300 and a credit to Cash of $300
B) Prepaid insurance of $200 and a credit to Cash of $200
C) Insurance expense of $200 and a credit to Prepaid insurance of $200
D) Insurance expense of $300 and a credit to Prepaid insurance of $300
10) Lay-Z Floors, Inc.'s Unearned revenue balance on its December 31, 2011 unadjusted trial balance was $3,000. As of December 31, 2011, Lay-Z Floors had earned $1,000 of the amounts collected in advance. The adjusting entry to record is a debit to ________.
A) Unearned revenue of $1,000 and a credit to Revenue of $1,000
B) Cash of $1,000 and a credit to Revenue of $1,000
C) Accounts receivable of $2,000 and a credit to Revenue of $2,000
D) Revenue of $2,000 and a credit to Unearned revenue of $2,000