The Adjusted Balances for Tomas Co

question 14

Multiple Choice

The adjusted balances for Tomas Co. are listed below.
Cash, $20,000
Accounts Receivable, $2,500
Prepaid Insurance, $3,500
Equipment, $15,000
Accumulated Depreciation, $2,000
Accounts Payable, $4,000
J. Tomas, Capital, $30,000
J. Tomas, Drawing, $10,000
Income from Services, $35,000
Wages Expense, $12,000
Rent Expense, $8,000
The entry to close expenses would involve a

• A) debit to Income Summary, $20,000
• B) credit to Income Summary, $20,000
• C) debit to Income Summary, $12,000.
• D) debit to Wages Expense, $12,000, and Rent Expense, $8,000.

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Definitions:

Implied Warranty

A legal concept that guarantees a product will perform as widely expected without being explicitly stated in a contract.

Warranty of Title

A guarantee by a seller to a buyer that the seller has the right to transfer ownership and no undisclosed encumbrances exist.

Patent Violation

The infringement of the exclusive rights attached to a patent, without permission from the patent holder.

Implied Warranty

A legal concept that guarantees a product will meet certain standards of quality and reliability without explicitly stating them in a contract.