Question 1

A:

In November 2019 Yammy Fun Inc Purchase advertising for $1000 that ran in the local November News Paper. All Purchases and services are made on credit. The bookkeeper Patrick Fitz recorded the advertising by crediting supplies inventory (asset) and debiting account payable, In 2020 ( The following year) the new bookkeeper Tua saw this entry and asked you to help him analyze the entry, which is the correct entry for 2020?

1. Debit Retained Earnings for 1000, debit supplies inventory for $1000, and credit accounts payable for $2000
2. Debit retained Earning for 1000 and credit account payable for 1000
3. Debit supplies inventory and credit retained earnings for 1000.
4. Debit advertising expense for 1000 debit supplies inventory for 1000 and credit account payable for 2000.
5. Debit supplies inventory and credit advertising expense

B:

On September 1 2020 Eureka Inch Paid $24000 for a 12-month insurance policy covering its major assets and business operations. The insurance policy runs from September 1 2020 to August 31, 2021. The bookkeeper recorded this purchase (the original entry in the insurance expense account. The year-end December) adjusting the entry would be:

1. Debit insurance expense $16,000 credit prepaid insurance $16,000
2. Debit insurance expense $8,000 credit prepaid insurance $8,000
3. Debit prepaid insurance $8,000, Credit insurance expense $8,000
4. Debit prepaid insurance $16,000, credit insurance expense $16,000.

Note: I tried a couple time but there was incorrect,