Question

QUESTION 1 On October 1, 2020, Top of the World purchases equipment for $28,000 in cash. The equipment has an expected useful life of four years and has no salvage value. The firm uses straight-line depreciation method. What adjusting entry should the company record on December 31, 2020? Assume the company uses an annual accounting period and makes all adjusting entries on December 31st a. None of the answers given are correct. ob. Debit Depreciation Expense and credit Accumulated Depreciation for $7,000. OC. Debit Depreciation Expense and credit Equipment for $1,750. od Debit Depreciation Expense and credit Cash for $28,000. O e Debit Depreciation Expense and credit Accumulated Depreciation for S1,750 QUESTION 2 Which of the following items is reported in the statement of stockholders' equity? O a Operating cash flows. b. Net income. Total assets. O d. None of the other answers are correct. O e Total expenses.

Answer 1

Question:1

The Answer is E. Debit Depreciation Expense and Credit Accumulated Depreciation for $ 1,750

Entry:

DESCRIPTION	DEBIT	CREDIT
Depreciation Expense[28000/4*3/12]	$        1,750
Accumulated Depreciation- Vehicle		$        1,750
(To record depreciation expense)

So, Remaining options are Incorrect.

Question:2

The Answer is B. Net Income

Explanation:

Net Income is one of the item which is considered in stockholders` equity statement other than dividends and other comprehensive income and retained earnings

So, Remaining options are Incorrect.

Question:3

The Answer is B. Increase assets and increase liabilities.

Entry:

Office Supplies [Asset]	$                           -
Accounts Payable [Liabilities]		$                  -
(To record supplies purchase)

So, Remaining options are Incorrect.

Question:4

The Answer is C. Four

Explanation:

Long term assets includes Land, Good will, Buildings and Equipment Only in the given list.

So, Remaining options are Incorrect.