Question

Can someone please answer?

56. A magazine company received $1,200 cash for subscriptions in August for magazines to be mailed in September 2004 through December 2004. It originally recorded the amount received in a "temporary" account. After mailing 1/4 of the magazines in September 2004, the correct adjusting entry at the end of September (adjusting entries are made monthly by the Company) will be:

		Subscriptions Revenue 300 Unearned Revenue 300
		Subscriptions Revenue 900 Unearned Revenue 900
		Unearned Revenue 300 Subscriptions Revenue 300
		Unearned Revenue 900 Subscriptions Revenue 900
		None of the above.

58. The accountant for the McCarthy Company forgot to make an adjusting entry to record depreciation for the current year. The effect of this error would be:

		An overstatement of net income and an understatement of assets.
		An overstatement of assets offset by an understatement of owners' equity.
		An overstatement of assets, net income, and owners' equity.
		An overstatement of assets and of net income and an understatement of owners' equity.

60.

At the end of its first year of operations, after adjustments were properly recorded, White, Inc. had the following adjusted account balances:

Prepaid Rent          2,000       Accumulated Depreciation-Trucks   6,000

Insurance Expense    4,000 Interest Expense                 4,000

Supplies Expense        8,000       Accounts Receivable              39,000

Accounts Payable 11,000 Unearned Revenue                  1,000

Service Revenue       160,000       Prepaid Insurance                 2,000

Trucks    66,000       Wages Expense                    92,000

Wages Payable 5,000    Depreciation Expense              6,000

Dividends               3,000    Common Stock                     45,000

Interest Revenue     2,000       Cash                              4,000

Each of these accounts has the normal debit or credit balance.

In preparing the closing entries, the fourth closing entry, to close the Dividends account, would include a:

		debit to Income Summary of $3,000.
		credit to Income Summary of $3,000.
		debit to Retained Earnings of $3,000.
		credit to Retained Earnings of $3,000.
		None of the above

62.

1. The following balances were taken from the ADJUSTED TRIAL BALANCE of Terrapin Corp. for the fiscal year ending December 31, 2003.

   Cash $ 8,500 Accounts Receivable 25,000
   Prepaid Rent 2,000 Equipment 42,000
   Accumulated Depreciation – Equipment 5,500 Accounts Payable 7,000
   Unearned Revenue 1,000 Wages Payable 2,000
   Common Stock 30,000 Retained Earnings, 1/1/2003 5,000
   Dividends 1,000 Service Revenue 30,000
   Notes Payable, Due 5/1/2005 21,500 Rent Expense 3,000
   Interest Expense 1,000 Wages Expense 17,000
   Depreciation Expense -- Equipment 3,500 Notes Payable, Due 5/1/2004 1,000   

   Each of these accounts has the normal debit or credit balance.

   
   The NET INCOME for the year is:

   		$ 4,500
   		$ 6,500
   		$ 5,500
   		$ 30,000
   		None of the above

Answer 1

56.

Subscription revenue for 4 months = $1,200

Subscription revenue for the month of September = 1,200 x 1/4

= $300

Unearned Subscription revenue on September 30 = 1,200 - 300

= $900

The following adjusting entry will be made at the end of September:

Sep. 30	Subscription revenue	900
	Unearned revenue		900

Second option is the correct option.

58.

The accountant for the McCarthy Company forgot to make an adjusting entry to record depreciation for the current year. The effect of this error would be: An overstatement of net income and an understatement of assets.

First option is the correct option.

60.

The entry to close the Dividends account is:

Retained earnings	3,000
Dividends		3,000

In preparing the closing entries, the fourth closing entry, to close the Dividends account, would include a: debit to Retained Earnings of $3,000

Third option is the correct option.

62.

Net income = Service revenue - Rent expense - Interest expense -  Wages Expense - Depreciation Expense

= 30,000 - 3,000 - 1,000 - 17,000 - 3,500

= $5,500

The NET INCOME for the year is: $5,500

Third option is the correct option.