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COMMERCE 1AA3 Study Guide - Quiz Guide: Interest Expense, Deferral, Promissory NoteExam

3 pages102 viewsFall 2018

Department
Commerce
Course Code
COMMERCE 1AA3
Professor
Emad Mohammad
Study Guide
Quiz

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COMMERCE 1AA3- September 26, 2018
Week 3
Accounting Quiz Corrections
Suppose Donald's Ltd. holds a loan receivable from a client. At the end of May, $ 125 of interest
revenue has been earned but not received. Prepare the adjusting entry at May 31. (Record
debits first, then credits. Exclude explanations from journal entries.)
Journal Entry
Date Accounts Debit Credit
May 31 Interest Receivable 125
Interest Revenue 125
TRUE- In accrual accounting, revenue may be earned prior to or after cash is received.
The following transactions for Habari Company occurred during January 2017:
Jan 1 Purchased a two-year insurance policy for cash, $8,400.
Jan 4 Paid utilities bill that was received in December 2015, $450.
Jan 9 Performed a service on account, $12,000.
Jan 16 Paid monthly salary to employees, $2,700.
Jan 21 Received $18,000 from a customer on account.
Jan 25 Received $600 from January 9 transaction.
Jan 31 Prepared the adjusting entry for insurance from January 1 transaction.
Jan 31 Accrued wages of $2,750.
Do not enter commas, spaces, decimals, or dollar signs in your answer. For example, if your
answer is $2,333, then enter it as 2333
I
f your answer is negative, i.e. a net loss of $2,333, then enter your answer in brackets without
commas, spaces, decimals, or dollar signs as: (2333)
What is the amount of income under the cash basis?
7050
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