1. Mary Parker Co. invested $15,000 in ABC Corporation and received capital stock in exchange. Mary Parker Co.'s journal entry to record this transaction would include a:

a.) Debit to investments.

b.) Credit to retained earnings.

c.) Credit to capital stock.

d.) Debit to expense.

2.Somerset Leasing received $12,000 for 24 months' rent in advance. How should Somerset record this transaction?

a.

Prepaid rent	12,000
Rent expense		12,000

b.

Cash	12,000
Deferred revenue		12,000

c.

Interest expense	12,000
Interest payable		12,000

d.

Salaries expense	12,000
Salaries payable		12,000

3. 3.Ace Bonding Company purchased merchandise inventory on account. The inventory costs $2,000 and is expected to sell for $3,000. How should Ace record the purchase?

Top of Form

a.

Inventory	2,000
Accounts payable		2,000

b.

Cost of goods sold	2,000
Deferred revenue	1,000
Sales in advance		3,000

c.

Cost of goods sold	2,000
Inventory payable		2,000

d.

Cost of goods sold	2,000
Profit	1,000
Sales payable		3,000

Bottom of Form

4. 4. On December 31, 2015, Coolwear, Inc. had a balance in its prepaid insurance account of $48,400. During 2016, $86,000 was paid for insurance. At the end of 2016, after adjusting entries were recorded, the balance in the prepaid insurance account was 42,000. Insurance expense for 2016 would be:

a. $6,400.

b.$134,400.

c. $86,000.

d. $92,400.

5. On November 1, 2016, Tim's Toys borrows $30,000,000 at 9% to finance the holiday sales season. The note is for a six-month term and both principal and interest are payable at maturity. What is the balance of interest payable for the loan as of December 31, 2016?

a. $112,500.

b. $225,000.

c. $450,000.

d. $1,350,000.

6.

Carolina Mills purchased $270,000 in supplies this year. The supplies account increased by $29,000 during the year to an ending balance of $60,000. What was supplies expense for Carolina Mills during the year?

a. $241,000.

b. $299,000.

c. $357,000.

d. $183,000.

7.

Yummy Foods purchased a two-year fire and extended coverage insurance policy on August 1, 2016, and charged the $4,080 premium to Insurance expense. At its December 31, 2016, year-end, Yummy Foods would record which of the following adjusting entries?

a.

Prepaid insurance	3,230
Insurance expense		3,230

b.

Insurance expense	850
Prepaid insurance	3,230
Insurance payable		4,080

c.

Insurance expense	850
Prepaid insurance		850

d.

Prepaid insurance	850
Insurance expense		850

8.

The employees of Neat Clothes work Monday through Friday. Every other Friday the company issues payroll checks totaling $39,000. The current pay period ends on Friday, July 3. Neat Clothes is now preparing quarterly financial statements for the three months ended June 30. What is the adjusting entry to record accrued salaries at the end of June?

a.

Prepaid salaries	11,700
Salaries payable		11,700

b.

Salaries expense	27,300
Salaries payable		27,300

c.

Salaries expense	7,800
Salaries payable		7,800

d.

Salaries expense	27,300
Prepaid salaries	11,700
Salaries payable		39,000

9.

Mama's Pizza Shoppe borrowed $7,400 at 12% interest on May 1, 2016, with principal and interest due on October 31, 2017. The company's fiscal year ends June 30, 2016. What adjusting entry is necessary on June 30, 2016?

a. No entry.

b.

Interest expense	148
Interest payable		148

c.

Interest expense	296
Interest payable		296

d.

Prepaid interest	148
Interest payable		148

10.

On September 15, 2016, Oliver's Mortuary received a $2,400, nine-month note bearing interest at an annual rate of 6% from the estate of Jay Hendrix for services rendered. Oliver's has a December 31 year-end. What adjusting entry will the company record on December 31, 2016?

a.

Interest receivable	144
Interest revenue		42
Cash		102

b.

Interest receivable	42
Notes receivable		42

c.

Interest receivable	42
Interest revenue		42

d.

Interest receivable	102
Interest revenue		102