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__ 1. The financial statement that is represented by the accounting equation is the:
a. Retained Earnings Statement
b. None of the financial statements are represented by the accounting equation
c. Income Statement
d. Balance Sheet
_ 2. Supplies has a balance of $8,000 on January 1. On January 15, $6,000 of additional supplies
were purchased on account and the transaction was appropriately recorded. A count of actual
supplies on hand at the end of January indicates a balance of $5,000. As part of the AJE at
January 31, the company will debit Supplies Expense for
You can draw a “t-account”. Beginning debit balance is $8,000.
Add $6,000 debit.
is $14,000 debit.
However, at month-end, we should only have $5,000 in the account to
match what we have on hand.
Thus, we must have used $9,000 to get the account to
balance (use of supplies is debit to supplies expense; credit to supplies)
_ 3. On August 20, Donkey Kong, Inc. prepaid $18,000 cash for 12 months of maintenance (for
maintenance from September 1 through the following August 31). On August 20, when
Donkey Kong records the $18,000 payment, they will debit maintenance expense for:
d. $0 (they will not debit maintenance expense)
When they pay, they will debit Prepaid Maintenance and credit cash for $18,000.
that NO Maintenance expense is recorded for this as they are pre-paying for September
through the following August.
Thus, it goes into a prepaid asset account.