Accounting II 4.03 & 4.04

On December 3, Franklin Company received $6,000, covering December and January rent from their renters. Franklin Company initially records all rent payments received as unearned rent. The unearned or deferred rent needs an adjusting entry on December 31st. Which is the appropriate adjusting entry?

• Debit Rent Expense and credit Unearned Rent

• Debit Rental Income and credit Unearned Rent

• Debit Unearned Rent and credit Rent Expense

• Debit Unearned Rent and credit Rental Income

Brown Company has a 90-day, 15% note payable for $8,000 dated December 12 in which interest has accrued. As of December 31 of the current year, what is the appropriate adjusting entry to record the accrued interest?

• Debit Interest Expense $300.00 and credit Interest Payable $300.00

• Debit Interest Expense $63.33 and credit Interest Payable $63.33

• Debit Interest Payable $63.33 and credit Interest Expense $63.33

• Debit Interest Payable $300.00 and credit Interest Expense $300.00

Jones Company has a 90-day, 12% note payable for $6,500 dated December 17 in which interest has accrued. On December 31, adjusting entries were recorded for the accrued interest and on January 1, reversing entries were recorded to prepare the accounts for the new fiscal period. On the maturity date, what is the correct journal entry to record payment of the note payable?

• Debit Notes Payable and Interest Income and credit Cash

• Debit Cash and Interest Income and credit Notes Payable

• Debit Notes Payable and Interest Expense and credit Cash

• Debit Cash and Interest Expense and credit Cash

On December 5, Johnson Company borrowed $3,000 from Bulldog Bank and Trust by issuing a 30-day, noninterest-bearing note payable. The bank discounted the note at 15% deducting $37.50 in advance. The amount of interest expense for the current period is $32.50. On December 31, Johnson Company needs to record the adjusting entry for prepaid interest expense. Determine the correct adjusting entry.

• Debit Interest Income $37.50 and credit Notes Payable $37.50

• Debit Interest Expense $32.50 and credit Discount on Notes Payable $32.50

• Debit Notes Payable $37.50 and credit Interest Income $37.50

• Debit Discount on Notes Payable $32.50 and credit Interest Expense $32.50

Shaw Company initially records their supplies as an expense. What is the adjusting entry if ending inventory is $2,050?

• Debit Supplies - Office $2,050 and credit Supplies Expense - Office $2,050

• Debit Supplies - Office $6,950 and credit Supplies Expense - Office $6,950

• Debit Supplies Expense - Office $2,050 and credit Supplies - Office $2,050

• Debit Supplies Expense - Office $6,950 and credit Supplies - Office $6.950

Shaw Company initially records their supplies as an expense. On January 1, after adjusting and closing entries have been posted, a reversing entry is needed. What is the reversing entry if ending inventory is $2,050?

• Debit Supplies - Office $2,050 and credit Supplies Expense - Office $2,050

• Debit Supplies - Office $6,950 and credit Supplies Expense - Office $6,950

• Debit Supplies Expense - Office $2,050 and credit Supplies - Office $2,050

• Debit Supplies Expense - Office $6,950 and credit Supplies - Office $6,950

Fast Wheels Company has two notes receivable outstanding. The accrued interest for Note #1 is $7.50. The accrued interest for Note #2 is $3.50. No money has been received. On January 1, after adjusting and closing entries have been posted, a reversing entry is needed. Determine the appropriate reversing entry needed.

• Debit Interest Income $3.50 and credit Interest Receivable $3.50

• Debit Interest Income $11.00 and credit Interest Receivable $11.00

• Debit Interest Receivable $11.00 and credit Interest Income $11.00

• Debit Interest Receivable $7.50 and credit Interest Income $7.50

Shaw Company initially records their prepaid insurance as an expense. What is the adjusting entry if unexpired insurance premium totals $2,200?

• Debit Prepaid Insurance $1,300 and credit Insurance Expense $1,300

• Debit Insurance Expense $1,300 and credit Prepaid Insurance $1,300

• Debit Prepaid Insurance $2,200 and credit Insurance Expense $2,200

• Debit Insurance Expense $2,200 and credit Prepaid Insurance $2,200

Fast Wheels Company has two notes receivable outstanding. The accrued interest for Note #1 is $7.50. The accrued interest for Note #2 is $3.50. No money has been received. On December 31, an adjusting entry is needed to show the accrued interest. Determine the appropriate adjusting entry.

• Debit Interest Income $3.50 and credit Interest Receivable $3.50

• Debit Interest Receivable $11.00 and credit Interest Income $11.00

• Debit Interest Receivable $7.50 and credit Interest Income $7.50

• Debit Interest Income $11.00 and credit Interest Receivable $11.00

Davis Company has 60-day, 10% note payable for $4,500 dated December 14 in which interest has accrued. On January 1, after adjusting and closing entries have been posted, what is the appropriate reversing entry?

• Debit Interest Payable $21.25 and credit Interest Expense $21.25

• Debit interest Expense $21.25 and credit Interest payable $21.25

• Debit Interest Expense $75.00 and credit interest payable $75.00

• Debit Interest Payable $75.00 and credit interest Expense $75.00