Practice Exam 1 – ACC 221 (PREVIEW)

Each Thursday, your lemonade stand employees are paid for that week’s work of creating lemonade. The wages are paid in cash and are recorded by the company. Although the last payday of March was on Thursday, March 30th, 2021, the employees worked the following day (the last day of March) and earned $3,200.

What adjusting entry should you make related to wages as of March 31st, 2021?

On March 1st, a customer paid your lemonade stand $3,000 cash in advance for 3 months of lemonade delivery service, performed for the customer at a rate of $1,000 per month, with the service starting to be provided on March 1st.

What is the entry that you should make into your accounting system on March 1st to record the receipt of advance payment?

On March 1st, a customer paid your lemonade stand $3,000 cash in advance for 3 months of lemonade delivery service, performed for the customer at a rate of $1,000 per month, with the service starting to be provided on March 1st.

What adjusting entry should you make prior to preparing financial statements on April 30th?

So far, your lemonade stand has made only the following two entries related to this advance payment:

1. The March 1st entry to record the receipt of the $3000 cash.
2. The March 31st adjusting entry.