27 The following account balances are taken from the December 31, 2020, financial statements of ABZ Advertising Company. The company uses accrual basis accounting. Advertising Revenue$ 46,482Cash 41,516Accounts Receivable 7,296Interest Expense 2,299Accounts Payable 5,000Operating Expenses37,460Deferred Revenue 1,178Equipment18,048Income Tax Expense2,326The following activities occurred in 2021:Performed advertising services on account, $55,000.Received cash payments on account, $10,400.Received deposits from customers for advertising services to be performed in 2022, $2,500.Made payments to suppliers on account, $5,000.Incurred $45,000 of operating expenses; $39,000 was paid in cash and $6,000 was on account and unpaid as of the end of the year.Which of the following is the journal entry that will be used to record activity #1? Multiple Choice Debit Advertising Revenue and credit Accounts Receivable for $55,000 Debit Accounts Receivable and credit Cash for $55,000 Debit Accounts Receivable and credit Advertising Revenue for $55,000 Debit Cash and credit Advertising Revenue for $55,000

In the given question, advertising service is provided on account. Therefore, both advertising…

Answered: The following account balances are…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following account balances are taken from the December 31, 2020, financial statements of ABZ Advertising Company. The company uses accrual basis accounting.

Advertising Revenue	$ 46,482
Cash	41,516
Accounts Receivable	7,296
Interest Expense	2,299
Accounts Payable	5,000
Operating Expenses	37,460
Deferred Revenue	1,178
Equipment	18,048
Income Tax Expense	2,326

The following activities occurred in 2021:

Performed advertising services on account, $55,000.
Received cash payments on account, $10,400.
Received deposits from customers for advertising services to be performed in 2022, $2,500.
Made payments to suppliers on account, $5,000.
Incurred $45,000 of operating expenses; $39,000 was paid in cash and $6,000 was on account and unpaid as of the end of the year.

Which of the following is the journal entry that will be used to record activity #1?

Multiple Choice

Debit Advertising Revenue and credit Accounts Receivable for $55,000
Debit Accounts Receivable and credit Cash for $55,000
Debit Accounts Receivable and credit Advertising Revenue for $55,000
Debit Cash and credit Advertising Revenue for $55,000

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