charles w. fairbanks

1.
Correct answer: a Correct answer: aYour answer:

The following is the adjusted trial balance for Steely Company.
Steely Company
Adjusted Trial Balance
For the Year ended December 31, 2008

Cash
$5,619

Accounts Receivable
$2,120

Prepaid Expenses
$720

Equipment
$14,819

Accumulated Depreciation $1,735
Accounts Payable $1,690
Notes Payable $5,873
Common Stock $12,274
Dividends
$733 Fees Earned $6,585
Wages Expense
$2,605

Rent Expense
$795

Utility Expense
$444

Depreciation Expense
$203

Miscellaneous Expense
$99

Totals
$28,157
$28,157
Determine the net income (loss) for the period.
a. Net income $2,439

b. Net loss $2,439

c. Net income $28,157

d. Net loss $4,146

2.
Correct answer: c Correct answer: cYour answer:

Land, originally purchased for $26,241, is sold for $78,161 in cash. What is the effect of the sale on the accounting equation?
a. assets increase $78,161; stockholder's equity increases $78,161

b. assets increase $78,161; liabilities decrease $26,241; stockholder's equity increases $51,920

c. assets increase $51,920; stockholder's equity increases $51,920

d. assets increase $19,951; no change for liabilities; stockholder's equity increases $78,161

3.
Correct answer: b Correct answer: bYour answer:

The balance in the prepaid rent account before adjustment at the end of the year is $14,111, which represents 8 months' rent paid on December 1. Determine the adjusting entry required on December 31.
a. debit Rent Expense, $12,347, credit Prepaid Rent, $1,764

b. debit Rent Expense, $1,764, credit Prepaid Rent, $1,764

c. debit Prepaid Rent, $12,347, credit Rent Expense, $1,764

d. debit Prepaid Rent, $1,764, credit Rent Expense, $1,764

4.
Correct answer: d Correct