6. Iron Inn is a resort located in Canada. Wave Inn collects cash when guests ma

Question

6. Iron Inn is a resort located in Canada. Wave Inn collects cash when guests make a reservation. During December 2016, Iron Inn collected 150,000 of cash and recorded the receipt by recognizing unearned revenue. By the end of the month Iron Inn had earned one third of this amount, the other two thirds will be earned during January 2017. The adjusting entry required at December 31, 2016 would impact the statement of financial position by a. Increased Equity 100,000 b. Decreased Liabilities 50,000. c. Increased Assets 150,000 d. Decreased Equity 50,000. 7. Bread Basket provides baking supplies to restaurants and grocery stores. During December 2017, Bread Basket's employees worked 2,400 hours at an average rate ofe15 per hour. At December 31, 2017, Bread Basket has paid 21,000 of salary expense. If Bread Basket fails to make the appropriate adjusting entry, which of the following is true regarding its December 31,2017 statement of financial position? a. Equity is overstated by 21,000 b. Equity is understated by 15,000 c. Liabilities are understated by 15,000. d. Liabilities are overstated by 21,000. 2017 and recorded the S. Cara, Inc. purchased supplies costing 7,500 on January 1, transaction by debiting an expense. on hand. If Cara, Inc. does not make the on its statement of financial position at At the end of the year 3,000 of the supplies are sill appropriate adjusting entry, what is the impact December 31, 2017? a. Assets understated by 64,500. Equity understated by 64,500. c. Equity overstated by 3,000 d. Assets understated by 3,000. b.

Explanation / Answer

6 b. As unearned income is our liablity so when one third income is earned it reduces the liablity in this case that is 50000 so 50000 liablity is reduced

7 c.

8 d.

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