QUESTION 47

1. Harrod Company paid $6500 for a 4-month insurance premium in advance on November 1, with coverage beginning on that date. The balance in the prepaid insurance account before adjustment at the end of the year is $6500, and no adjustments had been made previously. The adjusting entry required on December 31 is:

Debit Prepaid Insurance, $1625; credit Insurance Expense, $1625.

Debit Prepaid Insurance, $3250; credit Insurance Expense, $3250.

Debit Insurance Expense, $3250; credit Prepaid Insurance, $3250.

Debit Insurance Expense, $1625; credit Prepaid Insurance, $1625.

Debit Cash, $6500; Credit Prepaid Insurance, $6500.

QUESTION

1. A law firm collected $2100 in advance for work to be performed in three months. Which of the following general journal entries will the firm make to record this transaction?

Debit Accounts Receivable, $2100; credit Unearned Legal Fees Revenue, $2100.

Debit Cash, $2100; credit Accounts Receivable, $2100.

Debit Legal Fees Revenue, $2100; credit Accounts Receivable, $2100.

Debit Cash, $2100; credit Unearned Legal Fees Revenue, $2100.

Debit Accounts Receivable, $2100; credit Legal Fees Revenue, $2100.

Q

1. KLM Corporation's quick assets are $5,902,000, its current assets are $11,880,000 and its current liabilities are $8,008,000. Its acid-test ratio equals:

0.50.

0.74.

2.22.

1.36.

0.67.

QUESTION

1. A company purchased a new delivery van at a cost of $60,000 on July 1. The delivery van is estimated to have a useful life of 6 years and a salvage value of $4800. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the van during the first year ended December 31?

$5000.

$9200.

$6480.

$4600.

$5600.