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2.

Unearned revenues are: 
 

A.

Revenues that have been earned and received in cash.

B.

Revenues that have been earned but not yet collected in cash.

C.

Liabilities created when a customer pays in advance for products or services before the revenue is earned.

D.

Recorded as an asset in the accounting records.

E.

Increases to owners’ capital.

3.

The main purpose of adjusting entries is to: 
 

A.

Record external transactions and events.

B.

Record internal transactions and events.

C.

Recognize assets purchased during the period.

D.

Recognize debts paid during the period.

E.

Correct errors.

4.

Merchandise inventory: 
 

A.

Is a long-term asset.

B.

Is a current asset.

C.

Includes supplies.

D.

Is classified with investments on the balance sheet.

E.

Must be sold within one month.

5.

On December 1, Martin Company signed a 90-day, 6% note payable, with a face value of $5,000. What amount of interest expense is accrued at December 31 on the note? 
A. $0
B. $25
C. $50
D. $75
E. $300

6.

Phil Phoenix is paid monthly. For the month of January of the current year, he earned a total of $8,28

8.

The FICA tax for social security is 6.2% and the FICA tax rate for Medicare is 1.45%. The FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s pay. The amount of federal income tax withheld from his earnings was $1,375.17. His net pay for the month is: 
A. $5,190.83
B. $5,844.79
C. $6,278.79
D. $6,566.00
E. $6,792.64

When originally purchased, a vehicle had an estimated useful life of 8 years. The vehicle cost $23,000 and its estimated salvage value is $1,500. After 4 years of straight-line depreciation, the asset’s total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value. The depreciation expense in year 5 equals: 
A. $5,375.00.
B. $2,687.50.
C. $5,543.75.
D. $10,750.00.
E. $2,856.25.

9.

The useful life of a plant asset is: 
 

A.

The length of time it is productively used in a company’s operations.

B.

Never related to its physical life.

C.

Its productive life, but not to exceed one year.

D.

Determined by the FASB.

E.

Determined by law.

10.

Accounts payable:: 
 

A.

Are amounts owed to suppliers for products and/or services purchased on credit..

B.

Are long term liabilities.

C.

Are estimated liabilities.

D.

Do not include specific due dates.

E.

Must be paid within 30 days.

roblem # 1 ( 15 points )

Problem 1 (15 points)

Liberty Accounting Services completed these transactions in February:
(2/1) Purchased office supplies on account, $600.
(2/3) Completed work for a client on credit, $1,500.
(2/10) Paid cash for the office supplies purchased in (a).
(2/12) Completed work for a client and received $1,800 cash.
(2/18) Received $500 cash for the work described in (b).
(2/20) Received $1,200 from a client for accounting services to be performed in March.
Prepare journal entries to record the above transactions.

Neutron uses a periodic inventory system. Prepare general journal entries to record the following transactions for Neutron:
   
  

GENERAL JOURNAL

Page ____________

Date

Account Titles & Explanations

Debit

Credit