26. Meat Puppets Company purchased equipment for $7,200 on December 1. It is est

Question

26. Meat Puppets Company purchased equipment for $7,200 on December 1. It is estimated that annual depreciation on the equipment will be $1,800. If financial statements are to be prepared on December 31, the company should make the following adjusting entry:
a. Debit Depreciation Expense, $1,800; Credit Accumulated Depreciation, $1,800.
b. Debit Depreciation Expense, $150; Credit Accumulated Depreciation, $150.
c. Debit Depreciation Expense, $5,400; Credit Accumulated Depreciation, $5,400.
d. Debit Equipment, $7,200; Credit Accumulated Depreciation, $7,200.

27. At December 31, 2015, before any year-end adjustments, Murmur Company's Insurance Expense account had a balance of $2,450 and its Prepaid Insurance account had a balance of $3,800. It was determined that $2,800 of the Prepaid Insurance had expired. The adjusted balance for Insurance Expense for the year would be
a. $2,450.
b. $3,450.
c. $2,800.
d. $5,250.

28. Fugazi City College sold season tickets for the 2015 football season for $240,000. A total of 8 games will be played during September, October and November. In September, three games were played. The adjusting journal entry at September 30
a. is not required. No adjusting entries will be made until the end of the season in November.
b. will include a debit to Cash and a credit to Ticket Revenue for $60,000.
c. will include a debit to Unearned Ticket Revenue and a credit to Ticket Revenue for $90,000.
d. will include a debit to Ticket Revenue and a credit to Unearned Ticket Revenue for $80,000.

Explanation / Answer

26. Answer - (b) Debit Depreciation Expense, $150; Credit Accumulated Depreciation, $150.

Depreciation should be charged for 1 month / 12 = $150

so $150 should be debited as depreciation expense.

27. Answer - (d) $5,250

Insurance expense for the year = $2,450 + $2,800 = $5,250

28. Answer - (c) a debit to Unearned Ticket Revenue and a credit to Ticket Revenue for $90,000

Unearned revenue would be debited because in the month of september revenue has earned which is calculated as = $240,000 x 3/8 = $90,000.

"It would be appreciated if you give your feedback"

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.