Question
Use the following information for questions 13. Coffey County Bank agrees to lend Adcock Brick Company $200,000 on January 1. Adcock Brick Company signs a
Use the following information for questions 13.
Coffey County Bank agrees to lend Adcock Brick Company $200,000 on January 1. Adcock Brick Company signs a $200,000, 8%, 9-month note.
1.The entry made by Adcock Brick Company on January 1 to record the proceeds and issuance of the note is
a.Interest Expense..................................................................... 12,000
Cash....................................................................................... 188,000
Notes Payable............................................................... 200,000
b.Cash....................................................................................... 200,000
Notes Payable............................................................... 200,000
c.Cash....................................................................................... 200,000
Interest Expense..................................................................... 12,000
Notes Payable............................................................... 212,000
d.Cash....................................................................................... 200,000
Interest Expense..................................................................... 12,000
Notes Payable............................................................... 200,000
Interest Payable............................................................. 12,000
2.What is the adjusting entry required if Adcock Brick Company prepares financial statements on June 30?
a.Interest Expense..................................................................... 8,000
Interest Payable............................................................. 8,000
b.Interest Expense..................................................................... 8,000
Cash.............................................................................. 8,000
c.Interest Payable...................................................................... 8,000
Cash.............................................................................. 8,000
d.Interest Payable...................................................................... 8,000
Interest Expense............................................................ 8,000
3.What entry will Adcock Brick Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30?
a.Notes Payable........................................................................ 212,000
Cash.............................................................................. 212,000
b.Notes Payable........................................................................ 200,000
Interest Payable...................................................................... 12,000
Cash.............................................................................. 212,000
c.Interest Expense..................................................................... 12,000
Notes Payable........................................................................ 200,000
Cash.............................................................................. 212,000
d.Interest Payable...................................................................... 8,000
Notes Payable........................................................................ 200,000
Interest Expense..................................................................... 4,000
Cash.............................................................................. 212,000
4.Sales taxes collected by a retailer are recorded by
a.crediting Sales Taxes Revenue.
b.debiting Sales Taxes Expense.
c.crediting Sales Taxes Payable.
d.debiting Sales Taxes Payable.
5.Unearned Rental Revenue is
a.a contra account to Rental Revenue.
b.a revenue account.
c.reported as a current liability.
d.debited when rent is received in advance.
6.The current portion of long-term debt should
a.be paid immediately.
b.be reclassified as a current liability.
c.be classified as a long-term liability.
d.not be separated from the long-term portion of debt.
Use the following information for questions 7-10.
The following totals for the month of April were taken from the payroll register of Main Company.
Salaries$24,000
FICA taxes withheld1,100
Income taxes withheld5,000
Medical insurance deductions900
Federal unemployment taxes64
State unemployment taxes432
7.The journal entry to record the monthly payroll on April 30 would include a
a.debit to Salaries Expense for $24,000.
b.credit to Salaries Payable for $24,000.
c.debit to Salaries Payable for $24,000.
d.debit to Salaries Expense for $17,000.
8.The entry to record the payment of net payroll would include a
a.debit to Salaries Payable for $16,504.
b.debit to Salaries Payable for $17,000.
c.debit to Salaries Payable for $15,900.
d.credit to Cash for $18,100.
9.The entry to record accrual of Main Companys payroll taxes would include a
a.debit to Payroll Tax Expense for $496.
b.debit to Payroll Tax Expense for $1,596.
c.credit to FICA Taxes Payable for $2,200.
d.credit to Payroll Tax Expense for $496.
10.The entry to record the accrual of federal unemployment taxes would include a
a.credit to Federal Unemployment Taxes Payable for $64.
b.debit to Federal Unemployment Taxes Expense for $64.
c.credit to Payroll Tax Expense for $64.
d.debit to Federal Unemployment Taxes Payable for $64
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Auditing Cases An Active Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
2nd Edition
0130674842, 978-0130674845
