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Accounting : Adjusting Entry, Revenue, Expenses and Trial Balance

1) Garcia Corporation received cash of $9,000 on August 1, 1998 for
one year's rent in advance and recorded the transaction with a
credit to Rent Revenue. The December 31, 1998 adjusting entry is

a. debit Rent Revenue and credit Unearned Rent, $3,750.

b. debit Rent Revenue and credit Unearned Rent, $5,250.

c. debit Unearned Rent and credit Rent Revenue, $3,750.

d. debit Cash and credit Unearned Rent, $5,250.

2) In November and December 1998, Kay Co., a newly organized magazine
publisher received $90,000 for 1,000 three-year subscriptions at $30
per year, starting with the January 1999 issue. Kay included the
entire $90,000 in its 1998 income tax return. What amount should
Kay report in its 1998 income statement for subscriptions revenue?

a. $0.

b. $5,000.

c. $30,000.

d. $90,000.

3) Porter Corp. reports operating expenses in two categories: (1)
selling and (2) general and administrative. The adjusted trial
balance at December 31, 1998, included the following expense
accounts:

Accounting and legal fees $140,000

Advertising 120,000

Freight-out 75,000

Interest 60,000

Loss on sale of long-term investments 30,000

Officers' salaries 180,000

Rent for office space 180,000

Sales salaries and commissions 110,000

One-half of the rented premises is occupied by the sales department.

How much of the expenses listed above should be included in Porter's
selling expenses for 1998?

a. $230,000.

b. $305,000.

c. $320,000.

d. $395,000.

Solution Preview

1). B
debit Rent Revenue and credit Unearned Rent, $5,250. (7 months of rent ...

Solution Summary

Adjusting Entries, Revenue, Expenses and Trial Balance are investigated.

$2.19