Question

Question 5

1. An example of an adjusting entry is

   		the payment of rent in advance.
   		the return of defective inventory.
   		the payment of wages that have been accrued.
   		the accruing of interest expense.
   		collection of an accounts receivable.

1 points

Question 6

1. Table 4-2
   Urban Corporation had the following transactions during April:
   1. The company paid $1,800 for 3 months' rent in advance on April 1.
   2. The company received $800 in advance on April 1 from Wente Company for services to be performed over the next 3 months.
   3. The company borrowed $20,000 from Benson Bank on April 1. The note is for 9 months with all interest due at the end of the note. The bank is charging the company 9% interest.
   4. Okoye Company, a valued customer, placed an order for $1,500 on April 1. Because Okoye is experiencing financial difficulties, it has been allowed to pay with a 3-month note receivable. The interest rate on the note is 8%.
   5. Urban Corporation performed services for a client during April valued at $6,000. The client was billed on May 7.
   
   
   Referring to Table 4-2, part (2), if the $800 received from Wente Company was placed into the Unearned Revenue account, and Urban had completed 30% of the work as of the end of the month, what adjusting entry would Urban Company make on April 30?

   		Prepaid revenue 240 Revenue 240
   		Unearned revenue 560 Revenue 560
   		Revenue 240 Unearned revenue 240
   		Revenue 560 Unearned revenue 560
   		Unearned revenue 240 Revenue 240

1 points

Question 7

1. Table 4-2
   Urban Corporation had the following transactions during April:
   1. The company paid $1,800 for 3 months' rent in advance on April 1.
   2. The company received $800 in advance on April 1 from Wente Company for services to be performed over the next 3 months.
   3. The company borrowed $20,000 from Benson Bank on April 1. The note is for 9 months with all interest due at the end of the note. The bank is charging the company 9% interest.
   4. Okoye Company, a valued customer, placed an order for $1,500 on April 1. Because Okoye is experiencing financial difficulties, it has been allowed to pay with a 3-month note receivable. The interest rate on the note is 8%.
   5. Urban Corporation performed services for a client during April valued at $6,000. The client was billed on May 7.
   
   
   Referring to Table 4-2, part (1), and assuming only asset accounts were used in the April 1 journal entry, what adjusting entry is necessary on April 30?

   		Prepaid rent 600 Rent expense 600
   		Rent expense 600 Rent payable 600
   		Rent expense 600 Prepaid rent 600
   		Unearned rent 600 Rent expense 600
   		Prepaid rent 600 Rent payable 600

Answer 1

Question 5:

Answer: the accruing of interest expense.

Explanation:

the payment of rent in advance.	Payment has been done
the return of defective inventory.	Return has been done
the payment of wages that have been accrued.	Payment has been done
collection of an accounts receivable.	Collection has been done

Above are completed transaction. So that no need of 'Adjusting entries'.

But, accruing of interest expense means interest accrued till the end of the period and it yet to be paid. So that it need adjusting entry for the interest expense upto the end of the period.

Question 6:

Answer: Unearned revenue 240
Revenue 240

Explanation:

Adjusting entry:

Account title and explanation	Debit	Credit
Unearned revenue	$240
Revenue ($800 x 30%)		$240
[To recognize the revenue from Unearned revenue account]

Question 7:

Answer:Rent expense 600
Prepaid rent 600

Explanation:

Rent paid for 3 months on April 1 is $1,800. Rent expense per month = 1,800/3 months = $600.

Hence, Adjusting entry on April 30 is,

Account title and explanation	Debit	Credit
Rent expense	$600
Prepaid rent		$600
[To record rent expense]