1. In December 2019, Swanstrom Inc. receives a cash payment of $3,500 for services performed in December 2019 and a cash payment of $4,500 for services to be performed in January 2020. Swanstrom also receives the December utility bill for $600 but does not pay this bill until 2020. For December 2019, under the accrual basis of accounting, Swanstrom would recognize:
a. $8,000 of revenue and $600 of expense.
b. $8,000 of revenue and $0 of expense.
c. $3,500 of revenue and $600 of expense.
d. $3,500 of revenue and $0 of expense?
2. Dallas Company loaned $10,000 to Ewing Company on December 1, 2019. Ewing will pay Dallas $720 of interest ($60 per month) on November 30, 2020. Dallas's adjusting entry at December 31, 2019, is:
a. Interest Expense ........................................ 60
Cash ...................................................................... 60
b. Cash ......................................................... 60
Interest Income .......................................... 60
c. Interest Receivable ............................ 60
Interest Income ......................................... 60
d. No adjusting entry is required.
3. In September 2019, Golf-World Magazine obtained $15,000 of subscriptions for 1 year of magazines and credited Unearned Sales Revenue. The magazines will begin to be delivered in October 2019. At December 31, 2019, Golf-World should make the following adjustment:
a. Debit Sales Revenue by $3,750 and credit Unearned Sales Revenue by $3,750.
b. Debit Unearned Sales Revenue by $3,750 and credit Sales Revenue by $3,750.
c. Debit Sales Revenue by $11,250 and credit Unearned Sales Revenue by $11,250.
d. Debit Unearned Sales Revenue by $11,250 and credit Sales Revenue by $11,250?
4. Hurd Inc. prepays rent every 3 months on March 1, June 1, September 1, and December 1. Rent for the 3 months totals $3,600. On December 31, 2019, Hurd will report Prepaid Rent of:
a. $0
b. $1,200
c. $2,400
d. $3,600
5. Reinhardt Company reported revenues of $122,000 and expenses of $83,000 on its 2019 income statement. In addition, Reinhardt paid $4,000 of dividends during 2019. On December 31, 2019, Reinhardt prepared closing entries. The net effect of the closing entries on retained earnings was a(n):
a. Decrease of $4,000.
b. Increase of $35,000.
c. Increase of $39,000.
d. Decrease of $87,000.