in inventory at year-end with a replacement cost of $50 each. The ending inventory at lower-of-cost-or-market is a. $9,000. b. $10,000. c. $5,000 d. $1,000. 20. Toy R We Company purchased 1,000 toys at a cost of $60 each. Toy R We has 200 toys 21. The revenue recognition principle dictates that revenue should be recognized in the accounting records a. when cash is received. b. when the performance obligation is satisfied. c. at the end of the month. d. in the period that income taxes are paid. 22. Companies may be motivated to overstate closing inventories in order a to maintain or boost its stock price. b. for managers to earn higher bonuses. c. to prevent lenders from finding out the company's financial weakness. d. all of these. 23. Adjusting entries can be classified as a. postponements and advances. b. accruals and deferrals c. deferrals and postponements. d. accruals and advances. 24. Wallowa Company purchased supplies costing $6,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of supplies revealed $1,800 sill on hand. The appropriate adjusting journal entry to be made at the end of the period would be a. Debit Supplies Expense, $1,800; Credit Supplies, $1,800. b. Debit Supplies, $4,200, Credit Supplies Expense, $4,200. c. Debit Supplies Expense, $4,200; Credit Supplies, $4,200. d. Debit Supplies, $1,800; Credit Supplies Expense, $1,800. 25. 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 a. debit Unearned Service Revenue and credit Cash. b. debit Unearned Service Revenue and credit Service Revenue. c. debit Unearned Service Revenue and credit Prepaid Expense d. debit Unearned Service Revenue and credit Accounts Receivable. ACCOUNTING 101 SPRING 2018 PAGE |4