Q1. When a company sells gift cards, it is considered to be:

Expense

Sales Revenue

Asset

Unearned revenue

Q2. Sports Illustrated sells two-year subscriptions for $240 on January 1st of each year. Subscription revenues are evenly earned over the two year period. On December 31st of year 1, what is the journal entry required?

Dr. Cash 240; Cr. Unearned Subscription Revenue 240

Dr. Unearned Subscription Revenue 120; Cr. Subscription Revenue 120

Dr. Subscription Revenue 120 ; Cr. Unearned Subscription Revenue 120

Dr. Unearned Subscription Revenue 240; Cr. Subscription Revenue 240

Q3. Assume a company has the following information:

Note Payable: $100,000

Interest Rate: 6%

Issue Date: October 1

Year-end: December 31

Q4. Assuming adjustments are made at year-end, which of the following statements is true at year-end?

Interest Expense is credited for $1,500

Cash is credited for $1,500

Interest Payable is debited for $500

Interest Expense is debited for $1,500

Q5. Assume a company has the following information:

Note Payable: $100,000

Interest Rate: 12%

Issue Date: October 1, Year 1

Year-end: December 31, Year 1

Maturity Date: January 31, Year 2

The journal entry on the notes maturity date will include:

A debit to Interest Payable of $4,000

A credit to Cash of $100,000

A debit to Interest Expense of $4,000

A credit to Cash of $104,000