Jenning Co -Refer to the Trial Balance of Jenning Co

question 112

Multiple Choice

Jenning Co. adjusts its books each month but closes its books at the end of the year. The trial balance at July 31 before adjustments is as follows:
$\begin{array} { l r r } & \text { Debit } & \text { Credit } \\ \text { Cash } & \$ 12,920 & \\ \text { Accounts Receivable } & 9,620 & \\ \text { Supplies } & 1,400 & \\ \text { Prepaid Insurance } & 3,120 & \\ \text { Equipment } & 26,000 & \\ \text { Accumulated Depreciation-Equipment } && \$ 10,400 \\\text { Unearned Service Revenue } && 6,500 \\\text { Capital Stock } && 7,190 \\\text { Retained Earnings } && 23,500\\\text { Dividends } & 1,560 & \\\text { Service Revenue } & & 16,510 \\\text { Wages and Salaries Expense } & 7,800 & \\\text { Utilities Expense } & 380 & \\\text { Rent Expense } & 1,300 \\&\$ 64.100& \$ 64.100\\\end{array}$
-Refer to the trial balance of Jenning Co. On July 1, Tracy paid four months in advance for insurance.Which of the following is included in the adjusting entry at July 31?

• A) A debit to Prepaid Insurance for $780
• B) A credit to Prepaid Insurance for $2,340
• C) A debit to Prepaid Insurance for $2,340
• D) A credit to Prepaid Insurance for $780

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Definitions:

Income Effect

The change in consumption that results when a price change moves the consumer to a higher or lower indifference curve

Aggregate Demand

Aggregate demand represents the total demand for goods and services within an economy at a given overall price level and in a given time period.

Future Generations

Individuals or populations that will exist in the future, beyond the current members of society, whose interests are considered in long-term policy making.

Budget Deficit

A shortfall of tax revenue from government spending