d. income or operating success of a company over a period of time. 14. Frances Company has a note payable from bank for $80,000, made on June 1, 2020. The note matures in 5 years and bears annual interest of 9%. Frances is preparing financial statements for the month ending June 30, 2020. She should make an adjusting entry a. Debiting Interest payable for $600 and crediting Interest expense for $600. b. Debiting Interest expense for $600 and crediting Interest payable for $600 c. Debiting Interest expense for $7,200 and crediting Interest payable for $7,200. d. Crediting Interest receivable for $600 and debiting Interest revenue for $600. 15. In a periodic inventory system, the formula used in computing the cost of goods sold may be summarized as follows: I a. Beginning inventory + net purchases - ending inventory. b. Beginning inventory + purchases - net sales. c. Ending inventory + purchases - net sales. d. Balance in the Cost of Goods Sold account, less the balance in the Inventory Shrinkage account. 16. Land is purchased for $170,000. Additional costs include a $6,300 fee to a broker who arranged the sale of the land, a land survey fee of $1,200, $1,750 to construct a fence and a legal fee of $7,500 required to finalize the sale of the land. What is the cost of the land? a. $178,800 b. $170,000 c. $186,750 d. $185,000 17. Equipment which costs $9,400 and has accumulated depreciation of $3,000 is sold for $5,800. What amount of gain or loss will be recognized when the equipment is sold? a, A. A gain of $600 b. A loss of $600 c. A loss of $3,600 d. A gain of $3,600 18. On April 1, 2020, Tulip Corp. acquired equipment at a cost of $240,000. The equipment is to be depreciated by the straight-line method over six years with no salvage value. Depreciation expense recognized in 2020 will be