6.

Question 6

Which of the following transactions would result in an increase in Owners' Equity (assuming no other transactions)?

1 point

A company sold finished goods of a $40,000 cost for $45,000, delivered the products, and received cash from the customer

A company purchased some raw materials for $10,000, paid $5,000 in cash, and will pay the remaining $5,000 next month

A company purchased some office equipment for $10,000 and paid the full amount in cash

A company repaid $60,000 of a 10-year loan it previously took from a bank (ignoring any interest)

7.

Question 7

A company sells its products to a customer for $5,000 on account. The cost of the products sold is $2,000. Select the journal entries that are correct (assuming no other transactions).

(1) Accounts Receivable (A) (inc) 5,000

...Retained Earnings (OE) (revenue) (inc) 5,000

(2) Retained Earnings (OE) (COGS) (dec) 2,000

...Inventory (A) (dec) 2,000

(3) Accounts Receivable (A) (inc) 5,000

...Inventory (A) (dec) 2,000

...Retained Earnings (OE) (Net Earnings) (inc) 3,000

(4) Retained Earnings (OE) (COGS) (dec) 5,000

...Inventory (A) (dec) 5,000

(5) Accounts Receivable (A) (inc) 2,000

...Retained Earnings (OE) (revenues) (inc) 2,000

1 point

(1) and (4)

(2) and (5)

(3)

(1) and (2)

8.

Question 8

In January, a company paid rental fees of $10,000 for February. Which of the following journal entries should be recorded in January and February?

1 point

In January: Retained Earnings (OE) (rent expense) (dec) 10,000

...Prepaid Rent (A) (dec) 10,000

In February: Prepaid Rent (A) (inc) 10,000

...Cash (A) (dec) 10,000

In January: Prepaid Rent (A) (inc) 10,000

...Cash (A) (dec) 10,000

In February: Retained Earnings (OE) (rent expense) (dec) 10,000

...Prepaid Rent (A) (dec) 10,000

In January: Retained Earnings (OE) (rent expense) (dec) 10,000

...Cash (A) (dec) 10,000

In February: Retained Earnings (OE) (rent expense) (dec) 10,000

...Cash (A) (dec) 10,000

9.

Question 9

On November 1, a company pays a total of $3,000 in rent for November, December, and January. What amount should the company record as rent expense in November and what is the balance in the Prepaid Rent account on December 31 (assuming no other transactions)?

1 point

November Rent Expense: $2,000; Prepaid Rent @ Dec. 31: $1,000

November Rent Expense: $3,000; Prepaid Rent @ Dec. 31: 0

November Rent Expense: $1,500; Prepaid Rent @ Dec. 31: 0

November Rent Expense: $1,000; Prepaid Rent @ Dec. 31: $1,000

10.

Question 10

On January 1, a company purchased a truck for $60,000. To pay for the truck, it took out a 3-year loan that was to be repaid in 3 equal principal payments over the 3 years. The truck is estimated to be used for 5 years. Which of the following accurately describes the depreciation expense that the company should record related to the truck?

1 point

The company should record a total of $20,000 of depreciation expense per year for each of the 3 years of the life of the loan

The company should record a total of $12,000 of depreciation expense per year for each of the 5 years of the estimated useful life of the truck

The company should record no depreciation expense for the truck until after the estimated useful life of 5 years

The company should record $60,000 of depreciation expense in the year the truck was purchased

11.

Question 11

At the end of January, the amount a company owes its employees for time worked in January totals $50,000, all of which will be included in their paychecks on February 5. Which of the following journal entries should be recorded in January and February?

1 point

In January: Retained Earnings (OE) (wage expense) (dec) 50,000

...Wage Payable (L) (inc) 50,000

In February: Wage Payable (L) (dec) 50,000

...Cash (A) (dec) 50,000

In February: Retained Earnings (OE) (wage expense) (dec) 50,000

...Cash (A) (dec) 50,000

In January: Wage Payable (L) (dec) 50,000

...Cash (A) (dec) 50,000

In February: Retained Earnings (OE) (wage expense) (dec)

...50,000 Wage Payable (L) (inc) 50,000

In January: Wage Payable (L) (dec) 50,000

...Cash (A) (dec) 50,000

12.

Question 12

On July 1, 2020, company takes out a $100,000 5-year loan with annual interest rate of 5%. Principal is scheduled to all be paid at the end of the loan term of 5 years, and interest payable annually on June 30. The company is getting ready to prepare financial statement for the year ending Dec 31, 2020. Which of the following entries correctly reflects what the company records, related to interest, for 2020 (assuming no other transactions affecting the relevant accounts)?

1 point

On Dec 31, 2020: Retained Earnings (OE) (interest expense) (dec) 2,500

...Interest Payable (L) (inc) 2,500

On Dec 31, 2020: Retained Earnings (OE) (interest expense) (dec) 2,500

...Cash (A) (dec) 2,500

No interest expense should be recorded until interest is paid on July 1, 2021

On July 1, 2020: Retained Earnings (OE) (interest expense) (dec) 25,000

...Interest Payable (L) (inc) 25,000