True/False Questions (8 points)
1. Adjusting entries are recorded in the journal (i.e., journalized) and then they are
posted to the ledger.
2. Closing entries usually are journalized throughout the accounting period; however,
they almost always are posted to the ledger at the end of the annual accounting
Response: False! Closing entries are not journalized nor posted until the end of
the accounting period. That is, they are closed at year-end.
Multiple Choice Questions (25 points) (single answer)
1. On January 1, 2006 Mammoth Corporation had retained earnings of $4,000,000.
During 2006, they had net income of $750,000 and dividends of $100,000.
What is the amount of Mammoth's retained earnings at the end of 2006?
None of the above is correct
Assume Idaho Company recorded the following adjusting entry at year-end:
If the beginning balance in prepaid insurance was $500 and $2,500 was paid
for an insurance premium during the year, the ending balance in the prepaid
insurance account (after the above adjusting entry) would be
A) $1,200 debit.
C) $2,200 debit.
D) $1,000 debit.
None of the above is correct.
3. At the end of 2009, the following data were taken from the accounts of Albert