1) Mary Parker Co

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1) Mary Parker Co. invested $15,000 in ABC Corporation and received capital stock in exchange. Mary Parker Co.'s journal entry to record this transaction would include a:

a.) Debit to investments.

b.) Credit to retained earnings.

c.) Credit to capital stock.

d.) Debit to expense.

2.Somerset Leasing received $12,000 for 24 months' rent in advance. How should Somerset record this transaction?

a.

Prepaid rent	12,000
Rent expense		12,000

b.

Cash	12,000
Deferred revenue		12,000

c.

Interest expense	12,000
Interest payable		12,000

d.

Salaries expense	12,000
Salaries payable		12,000

3.
3.Ace Bonding Company purchased merchandise inventory on account. The inventory costs $2,000 and is expected to sell for $3,000. How should Ace record the purchase?

Top of Form

a.

Inventory	2,000
Accounts payable		2,000

 

b.

Cost of goods sold	2,000
Deferred revenue	1,000
Sales in advance		3,000

 

c.

Cost of goods sold	2,000
Inventory payable		2,000

 

d.

Cost of goods sold	2,000
Profit	1,000
Sales payable		3,000

 

Bottom of Form

4. 4. On December 31, 2015, Coolwear, Inc. had a balance in its prepaid insurance account of $48,400. During 2016, $86,000 was paid for insurance. At the end of 2016, after adjusting entries were recorded, the balance in the prepaid insurance account was 42,000. Insurance expense for 2016 would be:

a. $6,400.

b.$134,400.

c. $86,000.

d. $92,400.