Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Rockville Company adjusts its accounts at the end of each month. The following i has been assembled in order to prepare the required adjusting entries
Rockville Company adjusts its accounts at the end of each month. The following i has been assembled in order to prepare the required adjusting entries at December 31: nformation (1) A one-year bank loan of $360,000 at an annual interest rate of 12% had been o DecemberI (2) The company's pays all employees up-to-date each Friday. Since December 31 fell on Tuesday, there was a liability to employees at December 31 for two day's pay amounting to $5,900. (3) On December 1 rent on the office building had been paid for four months. Monthly rent is $3,000 (4) Depreciation of office equipment is based on a lifetime of six years. The balance in the Office Equipment account is $7,200; no change has occurred in the account during the year. (5) Fees of $7,600 were earned during the month for clients who had paid in advance. 1. What amount of interest expense has accrued on the bank loan? A) $2,400 B) $3,000. C) $3,600. D) $4,200. 2. The accrued interest should be: A) Debited to Notes Payable. B) Credited to Interest Payable. C) Credited to Cash. D) Credited to Interest Expense. 3. By what amount will the book value of the office equipment decline after the appropriate December adjustment is recorded? A) $1,200. B) $100. C) SO. D) Some other amount
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started