1. Q 25 30

   Frakasaw Company started business on May 3, 2020 and reported the following balance sheet on Dec. 31, 2020.

   Balance Sheet as of Dec. 31, 2020
   Assets		Liabilities
   Cash	$12,000	Accounts payable	$300
   Supplies	$700	Unearned revenue	$4,500
   Accounts receivable	$940	Refunds payable	$1,440
   Merchandise inventory	$26,000	Equity
   Estimated returns inventory	$600	Common stock	$30,000
   		Retained earnings	$4,000

   During 2021, Frakasaw had following transactions:

   • Jan. 19. A customer returned $40 merchandise whose cost was $18. The $40 cash was returned to the customer.
   • Mar. 3. Purchased supplies of $7,000 on account.
   • Apr. 11. Made cash payments for all remaining accounts payable.
   • Jul. 16. Completed service to the client related with the unearned revenue of $4,500 on the Dec. 31, 2020 balance sheet.
   • Aug. 8. Purchased merchandise inventory of $5,000 on account.
   • Sep. 1. Issued six-month 9% note payable to borrow $11,000 cash. The principal and interest will be paid on Feb. 28, 2022. (9% is annual interest rate.)
   • Nov. 1. Received $14,000 cash from Exito Co. On Nov. 1, Frakasaw started performing educational services for Exito and expects that it will take four months, completing one-fourth at the end of each month.
   • Dec. 1. Paid four-month rent for $8,000. Frakasaw will use the rental property from Dec. 1, 2021 to Mar. 31, 2022.
   • Dec. 31. Physical count of supplies revealed that $2,300 of supplies remain.
   • During the year, Frakasaw sold $40,000 on credit and collected $34,940 cash. The cost of goods sold is $21,000.

   25. What is the supplies expense recognized on Dec. 31, 2021?

   		$5,000
   		$5,200
   		$5,400
   		$5,600

2. 26. What is the balance of Prepaid Rent account on Dec. 31, 2021?

   		$2,000
   		$4,000
   		$6,000
   		$8,000

3. 27. What is the balance of Unearned Revenue account on Dec. 31, 2021?

   		$3,500
   		$7,000
   		$10,500
   		$14,000

4. 28. What is the interest expense incurred during 2021 for the note payable issued on Sep. 1, 2021?

   		$330
   		$440
   		$550
   		$660

5. 29. What is Frakasaws retained earnings on Dec. 31, 2021?

   		$24,440
   		$26,440
   		$28,440
   		$30,440

6. 30. What is the book value of current assets on Dec. 31, 2021?

   		$62,600
   		$64,900
   		$75,500
   		$81,500