Question

The following information is available for the Higgins Travel Agency. After closing entries are posted, what will be the balance in the Retained earnings account?

Net Income	$	62,500
Retained earnings		140,000
Dividends		20,000

The Retained earnings account has a credit balance of $49,000 before closing entries are made. Total revenues for the period are $67,200, total expenses are $45,800, and dividends are $13,800. What is the correct closing entry for the expense accounts?

Multiple Choice

• Debit Income Summary $45,800; credit Retained earnings $45,800.

• Debit Income Summary $45,800; credit Expense accounts $45,800.

• Debit Expense accounts $49,000; credit Retained earnings $49,000.

• Debit Expense accounts $45,800; credit Income Summary $45,800.

• Credit Expense accounts $45,800; debit Retained earnings $45,800.

On January 1, Parson Freight Company issues 8.0%, 10-year bonds with a par value of $4,200,000. The bonds pay interest semiannually. The market rate of interest is 9.0% and the bond selling price was $3,926,833. The bond issuance should be recorded as:

Multiple Choice

• Debit Cash $3,926,833; debit Discount on Bonds Payable $273,167; credit Bonds Payable $4,200,000.

• Debit Cash $4,200,000; credit Bonds Payable $3,926,833; credit Discount on Bonds Payable $273,167.

• Debit Cash $3,926,833; debit Interest Expense $273,167; credit Bonds Payable $4,200,000.

• Debit Cash $4,200,000; credit Bonds Payable $4,200,000.

• Debit Cash $3,926,833; credit Bonds Payable $3,926,833.

Jones Corp. reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet. The current ratio is:

Multiple Choice

• 1.4:1.

• 0.3:1.

• 0.4:1.

• 1:1.

• 0.7:1.

Answer 1