Question

6- SELECT THE BEST ANSWER The policy at Sheffield Corp. is to expense all office supplies at the time of purchase. On the last day of the accounting period, there are $1170 of unused office supplies on hand and the balance of supplies expense is $3710. What should the accountant do? Nothing, company policy says to expense supplies when purchased. Debit Supplies and credit Supplies Expense for $1170. Convince management to change its policy to avoid problems in the future. Debit Supplies Expense for $2540 and credit Supplies for $2540. 7- Oriole Company received a check for $26880 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client. Uneamed Rent Revenue was credited for the full $26880. Financial statements will be prepared on July 31. Oriole's should make the following adjusting entry on July 31: debit Unearned Rent Revenue, $26880; credit Rent Revenue, $26880. debit Unearned Rent Revenue, $4480; credit Rent Revenue, $4480. debit Rent Revenue, S4480; credit Unearned Rent Revenue, $4480. debit Cash, $26880; credit Rent Revenue, S26880. B Mary Richardo has performed $550 of CPA services for a client but has not billed the client as of the end of the accounting period. What adjusting entry must Mary make? Debit Unearned Service Revenue and credit Service Revenue Debit Cash and credit Unearned Service Revenue Debit Accounts Receivable and credit Unearned Service Revenue Debit Accounts Receivable and credit Service Revenue

Answer 1

6

The company should reverse Supplies expense for $1170

Debit Supplies and credit Supplies Expense for $1170

7

Rent revenue earned = 26880*1/6= $4480

debit Unearned Rent revenue $4480; credit Rent Revenue $4480

8

Debit Accounts Receivable and credit Service Revenue