On June 1, 2017 Baker received an advance payment of $24,000 from a customer. The payment was for six months of services Baker would perform for the customer at the rate of $4,000 per month. Baker started providing the service on June 1, 2017. On June 1, 2017 Baker made the following entry to record the receipt of the advance payment: Dr. Cr. Cash 24,000 Unearned Revenue 24,000 At the end of June, and at the end of July, Baker made the correct adjusting entries related to this advance payment. Select the August 31, 2017 adjusting entry Baker should make related to this advance payment: (A) Unearned Revenue 12,000 _________ Service Unearned Revenue ___________ 12,000 (B) service Revenue 4,000 _______ Unearned Revenue _______ 4,000 (C) Unearned Revenue 4,000 _______ Service Revenue ___________ 4,000 (D) Service Revenue 12,000 ________ Unearned Revenue _________ 12,000 QUESTION 1a If Baker did not make the August 31 adjusting entry related to the advance payment in question 1: A. The errors on the Income Statement for August would be: items uderstated: none items overstated: Service Revenue, Net Income The errors on the August 31 Balance Sheet would be: items understated: Unearned Revenue, Total Liabilities items overstated: Retained Earnings, Total Equity B. The errors on the Income Statement for August would be: items understated: Service Revenue, Net Income items overstated: none The errors on the August 31 Balance Sheet would be: items understated: Retained Earnings, Total Equity items overstated: Unearned Revenue, Total Liabilities C. The errors on the Income Statement for August would be: item understated: Service Revenue item overstated: Net Income The errors on the August 31 Balance Sheet would be: items understated: Retained Earnings, Total Liabilities items overstated: Total Equity, Unearned Revenue QUESTION 1b On July 31, 2017 Baker completed a $1,500 service job for a customer. The customer did not pay cash for the job when it was completed – the customer will pay for the job on August 15, 2017. It was late in the day when the job was completed and Baker’s accounting department did not have time to invoice the customer for the $1,500 completed job. Select the adjusting entry Baker should make as of July 31, 2017 related to the unbilled service job: Service Revenue 1,500 Accounts Receivable 1,500 Unearned Revenue 1,500 Service Revenue 1,500 Accounts Receivable 1,500 Service Revenue 1,500 No adjusting entry is required None of the above QUESTION 1 c f Baker did not make the July 31 adjusting entry related to the unbilled service job in question 3: The errors on the Income Statement for July would be: u items understated: none u items overstated: Service Revenue, Net Income The errors on the July 31 Balance Sheet would be: u items understated: none u items overstated: Accounts Receivable, Total Assets, Retained Earnings, Total Equity, Total Liabilities and Equity The errors on the Income Statement for July would be: u item understated: Service Revenue u item overstated: Net Income The errors on the July 31 Balance Sheet would be: u items understated: Retained Earnings, Total Equity, Total Liabilities and Equity u items overstated: Accounts Receivable, Total Assets The errors on the Income Statement for July would be: u items understated: Service Revenue, Net Income u items overstated: none The errors on the July 31 Balance Sheet would be: u items understated: Accounts Receivable, Total Assets, Retained Earnings, Total Equity, Total Liabilities and Equity u items overstated: none There would not be any errors, as no adjusting entry is required.
On June 1, 2017 Baker received an advance payment of $24,000 from a customer. The payment was for six months of services Baker would perform for the customer at the rate of $4,000 per month. Baker started providing the service on June 1, 2017.
On June 1, 2017 Baker made the following entry to record the receipt of the advance payment:
Dr. Cr.
Cash 24,000
Unearned Revenue 24,000
At the end of June, and at the end of July, Baker made the correct
Select the August 31, 2017 adjusting entry Baker should make related to this advance payment:
(A) Unearned Revenue 12,000 _________
Service Unearned Revenue ___________ 12,000
(B) service Revenue 4,000 _______
Unearned Revenue _______ 4,000
(C) Unearned Revenue 4,000 _______
Service Revenue ___________ 4,000
(D) Service Revenue 12,000 ________
Unearned Revenue _________ 12,000
QUESTION 1a
If Baker did not make the August 31 adjusting entry related to the advance payment in question 1:
A.
The errors on the Income Statement for August would be:
items uderstated: none
items overstated: Service Revenue, Net Income
The errors on the August 31
items understated: Unearned Revenue, Total Liabilities
items overstated:
B.
The errors on the Income Statement for August would be:
items understated: Service Revenue, Net Income
items overstated: none
The errors on the August 31 Balance Sheet would be:
items understated: Retained Earnings, Total Equity
items overstated: Unearned Revenue, Total Liabilities
C.
The errors on the Income Statement for August would be:
item understated: Service Revenue
item overstated: Net Income
The errors on the August 31 Balance Sheet would be:
items understated: Retained Earnings, Total Liabilities
items overstated: Total Equity, Unearned Revenue
QUESTION 1b
On July 31, 2017 Baker completed a $1,500 service job for a customer. The customer did not pay cash for the job when it was completed – the customer will pay for the job on August 15, 2017. It was late in the day when the job was completed and Baker’s accounting department did not have time to invoice the customer for the $1,500 completed job.
Select the adjusting entry Baker should make as of July 31, 2017 related to the unbilled service job:
-
Service Revenue 1,500
Accounts Receivable 1,500 -
Unearned Revenue 1,500
Service Revenue 1,500
-
Accounts Receivable 1,500
Service Revenue 1,500
-
No adjusting entry is required
-
None of the above
QUESTION 1 c
-
f Baker did not make the July 31 adjusting entry related to the unbilled service job in question 3:
-
The errors on the Income Statement for July would be:
u items understated: none
u items overstated: Service Revenue, Net Income
The errors on the July 31 Balance Sheet would be:
u items understated: none
u items overstated: Accounts Receivable, Total Assets, Retained Earnings, Total Equity, Total
Liabilities and Equity
-
The errors on the Income Statement for July would be:
u item understated: Service Revenue
u item overstated: Net Income
The errors on the July 31 Balance Sheet would be:
u items understated: Retained Earnings, Total Equity, Total Liabilities and Equity
u items overstated: Accounts Receivable, Total Assets
-
The errors on the Income Statement for July would be:
u items understated: Service Revenue, Net Income
u items overstated: none
The errors on the July 31 Balance Sheet would be:
u items understated: Accounts Receivable, Total Assets, Retained Earnings, Total Equity, Total
Liabilities and Equity
u items overstated: none
-
There would not be any errors, as no adjusting entry is required.
-
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