Question

please help on the mutiple choice questions below

The accountant for Lily's Emporium, Inc. prepared the following trial balance at December 31, 2021: Debit Credit Cash 5,700 Accounts Receivable 2,500 Notes Receivable 2,000 Supplies 600 Equipment 18,000 Unearned Consulting Fees 3,300 Capital Stock 15,600 Retained Earnings, January 1, 2021 0 Dividends 3,300 Consulting Fees Earned 26,800 Insurance Expense 2,100 Salaries Expense 7.700 Utilities Expense 1,700 Rent Expense 2.100 $45.700 $45,700 Additional information items: a The Note Receivable is a 8%, 5-month note dated November 1, 2021 b A count of the Supplies on December 31, 2021 shows $150 in supplies on hand, The Insurance Expense is for a 12-month policy, paid on October 1, 2021 d The equipment has a life of 7 years, was purchased on May 2021, and Lilly will use the straight-line method of recording depreciation. Lily expects that the equipment will have a $500 salvage value. Consulting Fees Earned includes a $1,200 prepayment by a client on June 30, 2021 for consulting services to be rendered for twelve months С e

Answer 1

1) Answer is third option A deferral with credit to Insurance expense for $1,575 Prepaid insurance Insurance for 3 months Unexpired insurance $2,100 $525 $2,100/12*3 $1,575 Credit General Journal Prepaid expense Insurance expense Debit $1,575 $1,575 2) Answer is $1,667 Cost of machine Salvage value Depreciable cost Years of life Annual depreciation $18,000 $5001 $17,500 a 7b $2,500 a/b Depreciation for 8 months $1,667 $2,500/12*8 3) Answer is fourth option A Deferral with a debit to Consulting Fees earned $600 Prepayment consulting 6 months unearned $1,2001 $600 $1,200/12*6 Credit General Journal Consulting Fees earned Unearned Consulting Fees Debit $6001 $600 4) Answer is A Deferral with a debit to Supplies expense for $450 Debit General Journal Supplies Expenses Supplies $450 Credit $600-$150 $450 5) Answer is Insurance and Consulting fees Insurance is expense for next year hence it will be reversed Consulting fees is earned for next year hence it is reversed Supplies and Depreciation expense are not reversed Interest expense is not reversed 6) Answer is An accrual of $27 Interest revenue Interest accrued Note receivable Interest rate per annum Interest accrued for 2 months Interest revenue $2,000 8% $27 $2,000*8%/12*2 Credit General Journal Interest receivable Interest revenue Debit $27 $27