Question

X Company prepares monthly financial statements. On October 31, its accountant made adjusting entries to recognize:

• $5,670 of unpaid interest expense on a bank loan
• $1,045 of wages that were earned by employees but not paid
• $3,074 of rent and insurance that had expired
• $7,870 of depreciation

7. What was the effect of these entries on Retained Earnings in October?

A: $-9,983

B: $-13,277

C: $-17,659

D: $-23,486

E: $-31,237

F: $-41,545

G: $-55,255

H: $-73,489

Tries 0/2

8. What was the effect of these entries on total equities in October?

A: $-4,992

B: $-5,840

C: $-6,833

D: $-7,995

E: $-9,354

F: $-10,944

G: $-12,804

H: $-14,981

Answer 1

ANSWER ;-

(7)

Answer is 'C'

Effect on retained earnings:
Unpaid interest expense	-5,670
Accrued wages	-1,045
Rent and insurance	-3,074
Depreciation	-7,870
Net Effect on retained earnings	-17,659
Retained earnings would decrease by $17,659

(8)

Answer is 'F'

The effect of these entries on total equities in October: $-10,944

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