13 (1 point) Patterson Realty Company received a cheque for $21,000 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client. Unearned Rent Revenue was credited for the full $21,000. Financial statements will be prepared on July 31. Patterson Realty should make the following adjusting entry on July 31 debit Rent Revenue, $3,500; credit Unearned Rent Revenue, $3,500. debit Unearned Rent Revenue, $21,000; credit Rent Revenue, $21,000. debit Cash, $21,000; credit Rent Revenue, $21,000. debit Unearned Rent Revenue, $3,500; credit Rent Revenue, $3,500. Question 12 (1 point) The Kookie Kutter Bakery purchased $6,500 worth of baking supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the baking supplies indicated only $3,000 on hand. The adjusting entry that should be made by the company on June 30 is debit Baking Supplies Expense, $3,500; credit Baking Supplies, $3,500. debit Baking Supplies Expense, $3,500; credit Baking Supplies, $3,000. debit Baking Supplies Expense, $3,000; credit Baking Supplies, $3,000. debit Baking Supplies, $3,500; credit Baking Supplies Expense, $3,500. A company is required to prepare adjusting entries for its financial statements because c) long-term assets must be expensed when purchased. b) the cash balance would not be properly reflected. d) transactions may relate to more than one accounting period. a) Canada Revenue Agency requires adjusting entries. Question 11 (1 point) A company spends $10 million for an office building. Over what period of time should the cost be written off? when the $10 million is expended in cash over the useful life of the building over the physical life of the building all in the first year The Hungry Bear Gift shop signs a three-month, 6% note payable to help finance increases in inventory for the Christmas shopping season. The note is signed on November 1 in the amount of $40,000. What is the adjusting entry to be made on December 31 for the interest expense accrued to that date, if no entries have been made previously for the interest? Interest Expense.... 400 Interest Payable Interest Expense 400 2,400 Note Payable 2,400 Interest Expense.. 600 Interest Payable........... 600 Interest Expense... 2,400 Interest Payable.......... 2,400 ABC Company purchased office supplies costing $4,000 and debited Office Supplies for the full amoun At the end of the accounting period, a physical count office supplies revealed $1,600 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be debit Office Supplies, $1,600; credit Office Supplies Expense, $1,600. debit Office Supplies Expense, $1,600; credit Office Supplies, $1,600. debit Office Supplies Expense, $2,400; credit Office Supplies, $2,400. debit Office Supplies, $2,400; credit Office Supplies Expense, $2,400. . In a service-type business, revenue is recognized when cash is received. at the end of the month. when the service is performed. at the end of the year. Question 2 (1 point) If a business has received cash in advance of services performed and credits a liability account, the adjusting entry needed after the services are performed will be debit Unearned Revenue and credit Accounts Receivable. debit Unearned Revenue and credit Prepaid Expense. debit Unearned Revenue and credit Service Revenue. debit Unearned Revenue and credit Cash. An adjusting entry is always a compound entry. affects two income statement accounts. affects two balance sheet accounts. affects a balance sheet account and an income statement account. Question 4 (1 point) The revenue recognition criteria states that revenue of a business is recognized when cash is received. at the end of the year. in the period that the expenses are incurred. when the service is provided or the goods. delivered. Prepaid expenses are paid and recorded in an asset account after they are used or consumed. paid and recorded in an asset account before they are used or consumed. incurred but not yet paid or recorded. incurred and already paid or recorded. Question 6 (1 point) Under the accrual basis of accounting profit is calculated by matching cash outflows against cash inflows. the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles. cash must be disbursed before an expense is recognized. events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received. A furniture factory's employees work overtime to finish an order that is sold on February 28. The office sends a statement to the customer in early March and payment is received by mid-March. According to the expense recognition criteria the overtime wages should be expensed in either in February or March depending on when the pay period ends. March. February. the period when the workers receive their cheques