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QUESTION 47 1. Harrod Company paid $6500 for a 4-month insurance premium in advance on November...


QUESTION 47
1. Harrod Company paid $6500 for a 4-month insurance premium in advance on November 1, with coverage beginning on that date. The balance in the prepaid insurance account before adjustment at the end of the year is $6500, and no adjustments had been made previously. The adjusting entry required on December 31 is:
Debit Prepaid Insurance, $1625; credit Insurance Expense, $1625.
Debit Prepaid Insurance, $3250; credit Insurance Expense, $3250.
Debit Insurance Expense, $3250; credit Prepaid Insurance, $3250.
Debit Insurance Expense, $1625; credit Prepaid Insurance, $1625.
Debit Cash, $6500; Credit Prepaid Insurance, $6500.
QUESTION
1. A law firm collected $2100 in advance for work to be performed in three months. Which of the following general journal entries will the firm make to record this transaction?
Debit Accounts Receivable, $2100; credit Unearned Legal Fees Revenue, $2100.
Debit Cash, $2100; credit Accounts Receivable, $2100.
Debit Legal Fees Revenue, $2100; credit Accounts Receivable, $2100.
Debit Cash, $2100; credit Unearned Legal Fees Revenue, $2100.
Debit Accounts Receivable, $2100; credit Legal Fees Revenue, $2100.


Q
1. KLM Corporation's quick assets are $5,902,000, its current assets are $11,880,000 and its current liabilities are $8,008,000. Its acid-test ratio equals:

0.50.
0.74.
2.22.
1.36.
0.67.
QUESTION
1. A company purchased a new delivery van at a cost of $60,000 on July 1. The delivery van is estimated to have a useful life of 6 years and a salvage value of $4800. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the van during the first year ended December 31?

$5000.
$9200.
$6480.
$4600.
$5600.
Business   Accounting   
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Homework Answers

Answer #1

47) Adjusting entry

Date General Journal Debit Credit
Dec 31 Insurance expense (6500/4)*2 3250
Prepaid insurance 3250

So answer is c) Debit Insurance Expense, $3250; credit Prepaid Insurance, $3250.

48) Journal entry

Date General Journal Debit Credit
Cash 2100
Unearned fees revenue 2100

So answer is d) Debit Cash, $2100; credit Unearned Legal Fees Revenue, $2100.

49) Acid test ratio = Quick assets/Current liabilities = 5902000/8008000 = 0.74

So answer is b) 0.74

50) Depreciation expense = (60000-4800/6)*6/12 =4600

SO answer is d) $4600

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