The Year-End Adjustment to Recognize One Month's Work on the Three-Month

question 123

Multiple Choice

The year-end adjustment to recognize one month's work on the three-month contract results in a $2,000 decrease in liabilities (unearned revenue) and an increase in equity (retained earnings due to recognizing revenue) .
The following account balances were drawn from the 2016 financial statements of Grayson Company:

-Sheldon Company began 2016 with $1,200 in its supplies account.During the year,the company purchased $3,400 of supplies on account.The company paid $3,000 on accounts payable by year end.On December 31,2016,Sheldon counted $1,400 of supplies on hand.Sheldon's financial statements for 2016 would show:

• A)$1,600 of supplies;$200 of supplies expense
• B)$1,400 of supplies;$2,000 of supplies expense
• C)$1,400 of supplies;$3,200 of supplies expense
• D)$1,600 of supplies;$3,400 of supplies expense

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Definitions:

Primates

An order of mammals that includes humans, apes, monkeys, and prosimians, characterized by opposable thumbs, high intelligence, and complex behaviors.

Arboreal Primate

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