Use This Information Pertaining to the Alvino Corporation to Answer $\$ 200$

question 221

Multiple Choice

Use this information pertaining to the Alvino Corporation to answer the following question. 1. The corporation's Store Supplies account showed a beginning debit balance of $\$ 200$ and supplies purchased of $\$ 800$ . There were $\$ 300$ of supplies on hand at year end.
2. Depreciation on a building is estimated to be $\$ 5,000$ .
3. A one-year insurance policy was purchased for $\$ 2,000$ . Three months have passed since the purchase.
4. Accrued interest on a note receivable amounted to $\$ 100$ .
5. The company received a $\$ 3,600$ advance payment during the year on services to be performed. By the end of the vear, one-fouth of the services had been performed.
The adjusting entry for the insurance policy is

• A)
• \(\begin{array} { l l }
• \text { Prepaid Insurance } & 500 \\
• \text { Insurance Expense } && 500
• \end{array}\)
• B)
• \(\begin{array}{c}
• \text { Insurance Expense } &1,500\\
• \text { Prepaid Insurance }&&1,500
• \end{array}\)
• C)
• \(\begin{array}{l}
• \text { Prepaid Insurance }&1,500 \\
• \text { Insurance Expense }&&1,500
• \end{array}\)
• D)
• \(\begin{array} { l l } \text { Insurance Expense } & 500\\
• \text {Prepaid Insurance}&&500
• \end{array}\)

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Definitions:

Machine-Hours

A measure of production output or used capacity based on the number of hours machines are operated.

Spending Variance

The difference between the actual amount spent and the budgeted amount for a particular period, used in budget control and analysis.

Patient-Visits

The number of times patients visit a healthcare provider or facility for treatment or consultation.

Static Budget

A budget that does not change or adjust in response to variations in business activity levels.