Homework #2

LATEST SUBMISSION GRADE

50%
1.Question 1
Which of these transactions would produce $10,000 of revenue in December? (check all
that apply)

BOC Bank is owed $10,000 of interest on a loan for December and receives the payment in
January.

BOC Realty leases space to a tenant for December and sends a bill for the $10,000 rent to be
paid in January.

BOC Realty leases space to a tenant for December and the tenant pays the $10,000 rent in cash
in December.

Correct
The two revenue recognition criteria are earned and realized. Both criteria are satisfied in
December.

BOC Bank receives a check for $10,000 in December for November's interest amount.

This should not be selected

The two revenue recognition criteria are earned and realized. In this choice, the revenue would
be recorded in November when the interest was earned.

BOC Realty leases space to a tenant for December and January. The tenant pre-paid the
$20,000 rent for the two months in November.

0 / 1 point

2.Question 2
Which of these transactions would produce $10,000 of expenses in December? (check all
that apply)

BOC signs a contract in December to buy $10,000 of copper.

BOC sells batteries costing $10,000 in December for $12,000 cash.

BOC sells batteries costing $8,000 in December for $10,000 cash.

BOC buys $10,000 of copper in December.

This should not be selected

These are product costs, which will become expenses when the batteries are sold. No batteries
have been sold yet.

BOC uses copper to make batteries at a total cost of $10,000 in December.

0 / 1 point

3.Question 3
Which journal entry reflects the following transaction?:

BOC receives a $2,000 cash deposit from a customer for custom goods that will be
delivered next year.

Dr. Cash 2,000

Cr. Inventory 2,000

Dr. Advances from Customers 2,000

Cr. Cash 2,000

Dr. Deposits 2,000

Cr. Future Revenue 2,000

Dr. Cash 2,000

Cr. Advances from Customers 2,000

Dr. Cash 2,000

Cr. Revenue 2,000

Correct
We debit cash to increase it and we credit a liability for the obligation to deliver goods in the
future, which I have called Advances from Customers.

1 / 1 point

4.Question 4
Which journal entry(s) reflects the following transaction?:

BOC received $10,000 of cash from a customer who took delivery of goods that originally
cost BOC $8,000 to acquire.

Dr. Cash 10,000

Cr. Revenue 10,000

Dr. Accounts Payable 8,000

Cr. Inventory 8,000

Dr. Cash 10,000

Cr. Revenue 10,000

Dr. Cost of Goods Sold 8,000

Cr. Inventory 8,000

Dr. Cash 10,000

Cr. Revenue 10,000

Dr. Cash 10,000

Cr. Inventory 8,000

 Cr. Revenue 2,000

Dr. Cash 10,000

Cr. Inventory 10,000

Incorrect
Missing the expenses.

0 / 1 point

5.Question 5
How much annual depreciation expense would be recognized for a truck that originally
cost $30,000 and has an estimated useful life of 5 years with a $5,000 salvage value?

$10,000

$3,333

$5,000

$7,000

$6,000

Correct
Under straight-line depreciation, the annual expense would be:

(30,000 - 5,000) / 5 = 5,000.

1 / 1 point

6.Question 6
Which journal entry reflects the adjusting entry needed on December 31?:

In November, BOC prepaid $30,000 of rent for December, January, and February (and it
was recorded properly). Now, it is December 31, the end of the fiscal year.
Dr. Rent Expense 30,000

Cr. Cash 30,000

Dr. Rent Expense 30,000

Cr. Prepaid Rent 30,000

No entry needed.

Dr. Rent Expense 10,000

Cr. Prepaid Rent 10,000

Dr. Rent Expense 10,000

Cr. Cash 10,000

Correct
We recognize Rent Expense for the month of December ($10,000 = $30,000 / 3) and credit
Prepaid Rent to reduce it by $10,000 (its original balance was $30,000).

1 / 1 point

7.Question 7
Which journal entry reflects the adjusting entry needed on December 31?:

Last year, BOC purchased a building for $1,000,000. The expected life of the building is 20
years and its expected salvage value is $200,000. Now, it is December 31, the end of the
fiscal year. No other entries were recorded for this building during the year.

Dr. Depreciation Expense 50,000

Cr. Accumulated Depreciation 50,000

Dr. Depreciation Expense 50,000

Cr. Building 50,000

No entry needed. The building was not purchased this year.

Dr. Depreciation Expense 40,000

Cr. Accumulated Depreciation 40,000

Dr. Depreciation Expense 40,000

Cr. Building 40,000

Correct
The journal entry for depreciation is Dr. Depreciation Expense and Cr. Accumulated
Depreciation. The amount is (1,000,000 - 200,000) / 20 = 40,000.

1 / 1 point

8.Question 8
Which journal entry reflects the adjusting entry needed on December 31?:

In September, BOC received an order for $500,000 of products that will be delivered and
billed in January. Now, it is December 31, the end of the fiscal year, and no prior entry has
been recorded for this order.

No entry needed.

Dr. Order Backlog 500,000

Cr Revenue 500,000

Dr. Accounts Receivable 500,000

Cr Unearned Revenue 500,000

Dr. Accounts Receivable 500,000

Cr Revenue 500,000
Dr. Advances from Customers 500,000

Cr Revenue 500,000

Incorrect
There should be no adjusting entry. There has been no transaction yet and no revenue has been
earned.

0 / 1 point

9.Question 9
Which item would not appear on the Income Statement?

Pre-tax Income

Dividends

Gross Profit

Operating Income

SG&A Expense

Correct
Dividends do not show up on the Income Statement!

1 / 1 point

10.Question 10
Which of the following are temporary accounts? (check all that apply)

Cost of Goods Sold

Correct
Appears on the Income Statement and, thus, is a temporary account.

Retained Earnings
This should not be selected
Retained Earnings (SE) and Dividends Payable (L) are permanent accounts

Dividends Payable

Income Tax Expense

Sales Revenue

0 / 1 point