Question

On April 30, 2016, Rudolph Inc. purchased a three-year insurance policy with a cash payment of $ 19,800. Coverage began immediately.

What is the amount of Insurance Expense relating to this insurance policy that will be reported for the year ended December 31, 2016?

$8,800

$2,200

$4,400

$6,600

Three months of rent were prepaid on May 1 for $7,200, but two months have now expired, leaving only one month prepaid at June 30. What is the amount of rent expense that will be recorded in the related adjusting entry dated June 30?

$0

$2,400

$4,800

$7,200

A company pays salaries and wages every two weeks. Salaries and wages amount to $100 a day and the company has a seven-day work week. On March 31, the company pays wages for the two weeks ending March 24 and recorded the related journal entry. The adjusting journal entry, dated March 31, to record unpaid wages and salaries owed since March 25 will include a debit to:

Salaries and Wages Payable and a credit to Salaries and Wages Expense for $1,400.

Salaries and Wages Expense and a credit to Salaries and Wages Payable for $700.

Salaries and Wages Payable and a credit to Cash for $700.

Salaries and Wages Expense and a credit to Salaries and Wages Payable for $1,400.

On December 31, 2015, interest of $500 is owed on a bank loan that will not be paid until June 30, 2016. What is the necessary adjusting journal entry on December 31, 2015?

Debit Interest Expense and credit Cash for $500

Debit Interest Expense and credit Interest Payable for $500

Debit Interest Payable and credit Interest Expense for $500

Debit Interest Receivable and credit Interest Revenue for $500

Wiggly Pet Store had $6,000 of supplies at the end of October. During November, the company bought $2,000 of supplies. At the end of November, the company had $1,000 of supplies remaining. Which of the following statements is not correct?

During November, the company used $7,000 of supplies.

Supplies should be reported at $1,000 on the balance sheet.

An expense should be debited for $7,000 in November.

An asset should be debited for $1,000 in November.

Answer 1

Solution:
1st	Answer is 3rd option $4,400
Working Notes:
	$19,800 paid for 3 year means 36 months on April 30, so in 2016 insurance covered only 8 months till December 31st 2016,
	Insurance Expense relating to this insurance policy that will be reported for the year ended December 31, 2016
	Insurance Expense = (Total amount paid / total period covered) x Period covered till date
	=($19,800/36) x 8
	=$4,400
2nd	Answer is 3rd option $4,800
Working Notes:
	on June 30 , since two months expired , two month Rent expense will be booked.
	Rent Expense	4,800
	[(7,200/3)x 2 = 4,800]
	Prepaid rent		4,800
3rd	Answer is 2nd option Salaries and Wages Expense and a credit to Salaries and Wages Payable for $700.
Working Notes:
	from march 25 to march 31 = 7 days
	as till march 24 is already paid , on 31st march only 7 days payment will be outstanding.
	Adjusting entry	Debit	Credit
	Salaries and Wages Expense	700
	Salaries and Wages Payable		700
	$100 x 7 = $700
4th	Answer is 2nd option Debit Interest Expense and credit Interest Payable for $500
Working Notes:
	Adjusting entry will be	Debit	Credit
	Interest Expense	$500
	Interest Payable		$500
5th	Answer is 4th option An asset should be debited for $1,000 in November.
Working Notes:
	Since, supplies is already debited when it is purchased , we have not to again debit supplies account to report in balance sheet
	Consumed supplies =Beginning + purchased - Balance
	=$6,000+$2,000-$1,000
	=$7000
Hence,	All the 1st 2nd & 3rd are correct only 4th option is not correct
Please feel free to ask if anything about above solution in comment section of the question.