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:

Corporate Equity Issues

The process by which companies issue shares of stock to raise equity capital.

Municipal Debt Issues

Bonds or other forms of debt issued by municipalities to finance public projects.

Equity Capital

Funds raised by a company in exchange for shares of ownership.

Selling Bonds

The act of issuing debt securities by governments or corporations to investors in order to raise capital, with an obligation to pay back with interest.