Chapter 3 Test Bank 3
Chapter 3 Test Bank 3
Chapter 3 Test Bank 3
Assuming that the company does use reversing entries, what entry should be made on
April 1, 2013 when the annual interest payment is received?
a. Cash ................................................................................... 800
Interest Revenue ..................................................... 800
b. Cash ................................................................................... 2,400
Interest Receivable ................................................. 2,400
c. Cash .................................................................................. 3,200
Interest Receivable ................................................. 2,400
Interest Revenue ..................................................... 800
d. Cash ................................................................................... 3,200
Interest Revenue...................................................... 3,200
96. Murphy Company sublet a portion of its warehouse for five years at an annual rental of
$30,000, beginning on May 1, 2012. The tenant, Sheri Charter, paid one year's rent in
advance, which Murphy recorded as a credit to Unearned Rent Revenue. Murphy
reports on a calendar-year basis. The adjustment on December 31, 2012 for Murphy
should be
a. No entry
b. Unearned Rent Revenue .................................................... 10,000
Rent Revenue ......................................................... 10,000
c. Rent Revenue ..................................................................... 10,000
Unearned Rent Revenue ......................................... 10,000
d. Unearned Rent Revenue .................................................... 20,000
Revenue Revenue................................................... 20,000
97. During the first year of Wilkinson Co.'s operations, all purchases were recorded as
assets. Supplies in the amount of $25,800 were purchased. Actual year-end supplies
amounted to $8,600. The adjusting entry for store supplies will
a. increase net income by $17,200.
b. increase expenses by $17,200.
c. decrease supplies by $8,600.
d. debit Accounts Payable for $8,600.
98. Big-Mouth Frog Corporation had revenues of $300,000, expenses of $180,000, and
dividends of $45,000. When Income Summary is closed to Retained Earnings, the
amount of the debit or credit to Retained Earnings is a
a. debit of $75,000.
b. debit of $120,000.
c. credit of $75,000.
d. credit of $120,000.
*99. The income statement of Dolan Corporation for 2012 included the following items:
Interest revenue $131,000
Salaries and wages expense 170,000
Insurance expense 15,200
The following balances have been excerpted from Dolan Corporation's balance sheets:
December 31, 2012 December 31, 2011
Interest receivable $18,200 $15,000
Salaries and wages payable 17,800 8,400
Prepaid insurance 2,200 3,000
The following balances have been excerpted from Olsen's balance sheets:
December 31, 2012 December 31, 2011
Prepaid insurance $ 2,400 $ 3,000
Interest receivable 7,400 5,800
Salaries and wages payable 24,600 21,200
The following balances have been excerpted from Olsen's balance sheets:
December 31, 2012 December 31, 2011
Prepaid insurance $ 2,400 $ 3,000
Interest receivable 7,400 5,800
Salaries and wages payable 24,600 21,200
The following balances have been excerpted from Olsen's balance sheets:
December 31, 2012 December 31, 2011
Prepaid insurance $ 2,400 $ 3,000
Interest receivable 7,400 5,800
Salaries and wages payable 24,600 21,200