Accounting 2301 – Practice Questions for Exam #2

1. Mahler Company began the accounting period with a $5,000 debit balance in its accounts receivable account. During the accounting period Mahler recorded revenue on account amounting to $17,000. The accounts receivable account at the end of the accounting period contained a $8,000 debit balance. Based on this information alone, the cash collected from accounts receivables during the period is A) $14,000 B) $17,000 C) $20,000 D) $22,000

2. Credit entries will: A) increase contributed capital accounts. B) decrease asset accounts. C) increase liability accounts. D) All of the above.

3. On January 1, 20X1 the Green Acre Company purchased an tractor that cost $25,000; had a five year useful life; and a $5,000 salvage value. Which of the following is the correct general journal entry to record depreciation expense for the 20X2 fiscal year? A) Depreciation Exp. 4,000 Acc. Depreciation 4,000 B) Acc. Depreciation 4,000 Depreciation Exp. 4,000 C) Depreciation Exp. 8,000 Acc. Depreciation 8,000 D) Acc. Depreciation 8,000 Depreciation Exp. 8,000

4. On November 1, 20X2, Jackson Company paid $2,400 in advance for an insurance policy that covered the company for six months. Assuming that Howard recorded this purchase as an asset, the adjusting entry required on December 31, 20X2 would include: A) a debit to prepaid insurance for $2,400. B) a credit to prepaid insurance for $800. C) a credit to insurance expense for $800. D) a credit to insurance expense for $1,600

5. Sullivan Company issued a $10,000 face value note to the First Bank on