QuizSolution 2 2006

QuizSolution 2 2006 - Quiz #2 Solution Problem I-Multiple...

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Quiz #2 Solution Problem I--Multiple Choice 1. E —The correct journal entry would be a debit to inventory for $29,000 and a credit to accounts payable for $29,000. 2. B —The revenue account (an owners equity account) is overstated by $23,000 and thus the unearned revenue account (a liability account) is understated by $23,000. 3. A —This question is best approached using a T-account. The beginning balance in the prepaid rent account is $10,600 and the ending balance is $4,200. During the year additional debits were made in the amount of $3,600 (2*$1,800). To properly state the prepaid rent account a credit to prepaid rent of $10,000 (10,600+3,600-4,200) must be made. The debit will be posted to rent expense, therefore the adjusting entry will increase rent expense by $10,000. 4. C —Once again a T-account is a useful tool for this problem. The A/R account has a beginning balance of $4,290 and an ending balance of $17,030. Since all sales are made on credit, the customer payment of $48,950 must all be credits to
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This note was uploaded on 06/11/2008 for the course ACC 471 taught by Professor Winkle during the Spring '08 term at University of Michigan.

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QuizSolution 2 2006 - Quiz #2 Solution Problem I-Multiple...

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