Homework #2 LATEST SUBMISSION GRADE 50% 1.Question 4 Which of these transactions would produce $10,000 of revenue in December? (check all that apply) c BOC Bank is owed $10,000 of interest on a loan for December and recaives the payment in January. Do BOC Realty leases space to a tenant for December and sends a bill for the $10,000 rent to be paid in January. r 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 eared and realized. Both criteria are satisfied in December. r 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 eamed and realized. In this choice, the revenue would be recorded in November when the interest was eared, r 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. 2.Question 2 Which of these transactions would produce $10,000 of expenses in December? (check all that apply) r BOC signs a contract in December to buy $10,000 of copper.r BOC sells batteries costing $10,000 in December for $12,000 cash. r BOC sells batteries costing $8,000 in December for $10,000 cash r 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. r BOC uses copper to make batteries at a total cost of $10,000 in December. 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. c Dr. Cash 2,000 Cr. Inventory 2,000 c Dr. Advances from Customers 2,000 Cr. Cash 2,000 c Dr. Deposits 2,000 Cr. Future Revenue 2,000 c Dr. Cash 2,000 Cr. Advances from Customers 2,000c 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, 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. c 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 c Dr. Cash 10,000 Cr. Revenue 10,000 c Dr. Cash 10,000 Cr. Inventory 8,000Cr. Revenue — 2,000 c Dr. Cash 10,000 Cr. Inventory 10,000 Incorrect Missing the expenses. 0/4 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? c $10,000 7 $3,333 $5,000 $7,000 c $6,000 Correct Under straight-line depreciation, the annual expense would be: (30,000 - 5,000) / 5 = 5,000. TTI 6.Question 6 Which journal entry reflects the adjusting entry needed on December 317: 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. 6Dr. RentExpense 30,000 Cr. Cash 30,000 c Dr. Rent Expense 30,000 Cr. Prepaid Rent 30,000 c No entry needed. 6 Dr. Rent Expense 10,000 Cr. Prepaid Rent 10,000 C 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). i 14 point 7.Question 7 Which journal entry reflects the adjusting entry needed on December 317: 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. c Dr. Depreciation Expense 50,000 Cr. Accumulated Depreciation 50,000 ° Dr. Depreciation Expense 50,000 Cr. Building 50,000c No entry needed. The building was not purchased this year. o Dr. Depreciation Expense 40,000 Cr. Accumulated Depreciation 40,000 o 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. 1p 8.Question 8 Which journal entry reflects the adjusting entry needed on December 317: 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. c No entry needed, c Dr. Order Backlog 500,000 Cr Revenue 500,000 c Dr. Accounts Receivable 500,000 Cr_Unearned Revenue 500,000 c Dr. Accounts Receivable 500,000 Cr Revenue 500,000c 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 eared. 9.Question 9 Which item would not appear on the Income Statement? © Pre-tax income C Dividends c Gross Profit c Operating Income c SGBA Expense Correct Dividends do not show up on the Income Statement! 10.Question 10 Which of the following are temporary accounts? (check all that apply) r Cost of Goods Sold Correct ‘Appears on the Income Statement and, thus, is a temporary account. co Retained EarningsThis should not be selected Retained Earnings (SE) and Dividends Payable (L) are permanent accounts oO Dividends Payable r Income Tax Expense r Sales Revenue