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Window Help 39% uottawa.brightspace.com 2185 paf MICKE Work station-white-IKEA Mid-term example- ADM1340(A) Financia Question No. 1 (continued) (80 marks) Part2: (MC Questions 29 to 54 worth 2 marks each) 29, On March 1, Shogun Corporation borrowed S35,000 from its bank, and signed a 6%, 4- month bank loan. Principal and interest are due on July 1. If Shogun's year end is May 31, the adjusting entry that it should prepare for interest on May 31 would be: a. Debit Interest Expense, $525; credit Interest Payable, $525. b. Debit Interest Expense, $1,575; credit Interest Payable, $1,575 c. Debit Bank Loan Payable, $700; credit Cash, $700. d. Debit Interest Expense, $700; credit Interest Payable, $700. The balance in the Prepaid Rent account before adjustment at the end of the year is S12,000 and represents four months' rent starting on October 1. The adjusting entry 30. required on December 31 is: a. b. c. d. debit Prepaid Rent, $3,000; credit Rent Expense $3,000. debit Prepaid Rent, $9,000; credit Rent Expense, $9,000. debit Rent Expense, $12,000; credit Prepaid Rent, $12,000. debit Rent Expense, $9,000; credit Prepaid Rent, $9,000. Use the following information to answer questions 31 and 32 The followine data for Sorensen Companv is presented below:

Explanation / Answer

Option a is correct.

As the loan has taken used for this year ended only for 3 months. We need to recognize expense by debiting interest and credit the interest payable by =35000*6%*3/12=575

30)option d is correct.

We will transfer the prepaid rent for 3 months from October 1 to December 31 I. E. 3months.Prepaid rent is of 4 months. Transfer of expense amount is calculated as follow. 12000/4*3=9000

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