A. C) less than the market rate of interest. The cash receipt was recorded as unearned fees. Using the FIFO perpetual inventory method, what is the value of inventory after the October 4 sale? E. Affect only balance sheet accounts. b. The beginning balance in the allowance for doubtful accounts was $220. Stock-related transactions for Kraft Unlimited follow. 1. e. $13,750. 180. Goodwill must be reviewed annually for possible impairment. When the company mails the first quarterly journal to customers, it should record: The net income for the year is: A. C. The Net Income D. $104,500. When a company using the allowance method writes off a specific customer's $100,000 account receivable from the accounting system, which of the following statements are true? Sales discounts with terms 2/10, n/30 mean: A. Axle Co.'s accounts receivable turnover was 9.9 for this year and 11.0 for last year. A decrease in a liability and an increase in an asset. Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000. 1. The 2007 income statement should report supplies expense amounting to 1. Miga Company is using the straight-line method of depreciation, and Porter Company is using the double-declining-balance method of depreciation. Write-offs of bad debts during the period were $180. How would this fact be reported in the financial statements to be issued at the end of the current month? 1. the owner's capital account before closing had a balance of $297,000. The Unadjusted Trial Balance columns of a work sheet total $95,300. When the replacement cost of inventory drops below the cost shown in the financial records, total assets are reduced. Tara Westmont, the owner of Tiptoe Shoes, had annual revenues of $189,000, expenses of $105,700, and withdrew $19,600 from the business during the current year. When a stock dividend (on par value stock) is declared and issued A company has 4 million common shares authorized, 2.5 million shares issued and 100,000 treasury shares. $8,000 Each partner is allowed interest of 10% on beginning capital balances. Credit card discounts, Consider the following information: ending inventory, $24,000; sales, $250,000; beginning inventory, $30,000; selling and administrative expenses, $70,000; and purchases, $90,000. Gross accounts receivable less bad debt expense in the asset section of the balance sheet. The F. Mercury, Capital account has a credit balance of $18,700 before closing entries are made. C. Net sales. The vehicle has an estimated 6-year life and a $4,000 residual value. Debit Retained Earnings $250,000; credit Common Stock $250,000. A. Cannot be determined from the information given. What is total stockholders' equity as of December 31, 2011? c. $128 D. $12,000, 1. Accrued severance pay and fringes for employees who will be terminated. d. $570 D. $200 of prepaid insurance. The ending owner's capital balance after closing is: d. Debit Revenue accounts $55,200; credit Income Summary $55,200. Number of hours of television watching per day for people with 12 years of education. 1.60 Lockbox fees earned but unrecorded and uncollected at the end of the accounting period,$816, \quad\quad i. The selling price of the bonds was $5,679,575. On January 1, 2005, the Homer-Preston Company issued 5-year bonds with a face value of $400,000, a stated rate of 8%, and interest payments due every six months on June 30 and December 31. D. an increase in stockholders' equity and increase in an asset. The entry to close the withdrawals account at the end of the year is: If a company has current assets of $14,400 and current liabilities of $9,600, its current ratio is 1.5. C. $2,000. A journal entry is recorded on all of these dates. c. $1,568 $7. A. A. 1. C. 2/10ths of a percent discount for payment within 30 days Revenues, expenses, and withdrawals accounts, which are closed at the end of each accounting period are: When recording depreciation, which of the following statements is true? Aug. 10 - Declared a cash dividend for one month on the outstanding preferred stock and$0.02 per share on common stock outstanding, payable on August 22 to stockholders of record on August 12. It will select the shortest lives possible for its assets. $5,335 Management wishes to record the land at the market value of the stock. Presenting accounting receivable at estimated net realizable value. Assume that year ended December 31, is a Wednesday and all employees will be paid salaries for five full days on the following Monday. . The journal entry to write-down inventory decreases current assets. 1. Both total assets and total liabilities decrease. Stock dividends are reported on the statement of cash flows. Income Taxes Payable. Debit Bond Interest Expense $44,000; credit Cash $44,000. Which of the following statements about stock dividends is true? Estimated depreciation on the office equipment,$2,700, \quad\quad g. The company credits the lockbox fees of customers who pay in advance to the Unearned Lockbox Fees account. 1. The depreciation expense in year 5 equals: The cost of factory overhead. Revenue expenditures decrease net income. 1. Debit Common Dividend Payable $12,000; credit Cash $12,000. Interest is paid each June 30 and December 31. A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. Debit Estimated Warranty Liability $7,400; credit Cash $7,400. Total expenses remain the same. Common stock, $100 par value, 2,000 shares issued and outstanding. The company's earnings per share is: A company is facing a class-action lawsuit in the upcoming year. 1. Gracey's Department Stores has $200,000 of 6% noncumulative, nonparticipating, preferred stock outstanding. $10,000 C. liabilities increase by $150,000. A. Amortizing a bond discount: A. 1. b. $ 700 debit. $1.65. On March 6 it purchased 6 units at $25 each. A bond with a face value of $100,000 was issued for $93,500 on January 1, 2014. Average total assets, $125,000 $9,350. What was the amount of credit sales during May? 100,000-20,000= $80,000. Calculate the cost per pipe. E. \text{Lockbox Fees Earned} && 28,800\\ $279,300 The owner's capital account before closing had a balance of $297,000. Assets and stockholders' equity are both understated. 1. Which of the following is not a step toward effective internal control over cash? Calculate the total cost for job M1. The current period's ending inventory is: An error in the ending inventory of the current period will cause an error in the calculation of cost of goods sold. Which of the following best describes the objective of depreciation? B. B. c. $5,750. 1. The balance sheet. c. $15,125 Cost of goods sold to be understated and net income to be understated. The return on the investment is expected to be 10% and will be compounded semi-annually. $117,000. (1) $12,000. What is the ending balance in the WOrk-in-process Control account? $220. Tara westmont, the proprietor of tiptoe shoes, had annual revenues of $205,000, expenses of $113,700, and withdrew $26,000 from the business during the current year. B. (Refer to footnote 4 in the chapter.). Require that cash be deposited daily at the bank. They do so because the policy Siglo,WithdrawalsDeliveryServiceRevenueLockboxFeesEarnedTruckDriversWagesExpenseOfficeSalariesExpenseGas,Oil,andTruckRepairsExpenseInterestExpense10,07229,3145,34014,7002,46015,000196,000103,80015,90030,000120,60044,40031,0507,200625,83653,40030,90010,8009,3968,34072,000128,730283,47028,800625,836, \quad\quad a. D. must be reported as a liability, but not recorded. \end{array} E. The bonds were sold at a premium. Current assets plus current liabilities. B. . \end{array} The income statement. c. $390,000 C. When the loss probability is reasonably possible and the amount can be reasonably estimated. Percent of accounts receivable method. What was the net income earned during the year? Therefore, when calculating depreciation, net purchases during the period and ending inventory. All nominal ledger accounts with balances. 1. Which statement regarding dividends is false? C. i and ii A. E. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is: Multiple Choice Debit Income Summary $83,300, credit T. Westmont, Capital $83,300 Debit T. Westmont, Capital $63,700; credit Income Summary $63,700 Debit T. Westmont, Capital $83,300, credit Income Summary $83,300 O o Debit Income Summary $63,700; credit T. Westmont, Capital $63,700 Debit T. Westmont, Capital $301,000; credit Income Summary $301,000. Assets are overstated and net income was understated. C. All of the above are steps toward effective internal control. Two When using the allowance method, as bad debt expense is recorded, from the business during the current year. 3.99 A. must be recorded and reported as a liability. D. D. Replacing the engine in a truck. A. Q. A. Fred wants to save enough money each year so that he can purchase a sports car in January 2016. C. B. Debit Dividend Expense $12,000; credit Cash $12,000. b. On July 1, Plum should record: d. Debit Insurance Expense, $360; credit Prepaid Insurance, $360. b. Net income = Revenues - Expenses Debit Prepaid Subscriptions $33,750; credit Unearned Revenue $33,750. Current ratio is calculated by dividing current assets by current liabilities. A physical count of inventory on hand at December 31, 2007, showed $1,200. The adjusting entry needed on December 31 is: d. Credit to Unearned Revenue for $60,000. D. Preferred stock typically has a fixed dividend rate. B. The Roscoe Company's March 1, 2010 bank statement balance was $70,000. Enter the trial balance amounts in the Trial Balance columns of a work sheet and complete the work sheet using the information that follows. 1. The CPA's role in performing audits is important to our society because c. $171,000 the understatement of the ending inventory balance causes: cost of goods sold to be overstated and net income to be understated. Participating preferred stock. $2,000,000 in the Current Liability section. $4.89. D. $240,000. Assume earnings per common share are$1.00 and market price per common share is $20. D) $645,596 A. . B. Both stock and cash dividends reduce retained earnings. d. $343 D. is less able to pay off their current obligations with their current assets. The cost of shipping for the merchandise is $7 per unit. D. an overstatement of net income, an understatement of liabilities, and an overstatement of stockholders' equity. When treasury stock is purchased with cash, what is the impact on the balance sheet equation? $5,000 D. .the number of shares outstanding decreases while the par value of each share increases. A. Sales discounts Which of the following describes the correct action to be taken when preparing your bank reconciliation? Land $75,000; Land Improvements, $30,800; Building, $46,200. McCarthy Company has inventory of 8 units at a cost of $200 each on October 1. Direct labor B. Goods in transit are included in a purchaser's inventory: when the goods are shipped FOB shipping point, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Don Herrmann, J. David Spiceland, Wayne Thomas, Fundamentals of Financial Management, Concise Edition. C. Betterman has the better turnover for both years. Maks sold a used piece of machinery on December 31, 2015, that it purchased on January 1, 2014, for $10,000. 1. A. b) Give an example of three inequalities. D. its expenses exceeded its revenues for an accounting period. C. $1,200 debit. D. results in a transfer of retained earnings to contributed capital and also increases the number of shares outstanding and involves a pro rata reduction in the par value per share. Current ratio helps to assess a company's ability to pay its debts in the near future. 1. Either (b) or (c). The adjusting entry for the year ended December 31 would include: 1. e. A credit to gain on sale for $4,979. Debit Cash $7,650; credit Notes Payable $7,650. 1. Debit Cash $11,250, credit Sales $11,250. Debit Estimated Warranty Liability $7,400; credit Warranty Expense $7,400 The understatement of the beginning inventory balance causes: $86,000 $30,000 preferred; $0 common. Amortizing the discount on a bond payable SigloDeliveryServiceTrialBalanceAugust31,2014\begin{array}{c} D. An increase in the value of a natural resource when incurred. C. Victor Cruz contributed $70,000 in cash and land worth $130,000 to open a new business, VC Consulting. d. $10,300 Cash payments to suppliers were less than current period purchases. Which of the following transactions would usually cause accounts payable turnover to increase? Debit Lawsuit Payable $500,000, credit Contingent Legal Liability $500,000. C. \text{Land} & 15,000\\ The Lockhart offer is better because the monthly payments are less. D. Both total assets and equity are unchanged and liabilities increase. $82,300 is the correct answer. Three 1. The owner withdrew $37,800 during the year. D. decrease stockholders' equity, $100,000; decrease assets, $75,000; increase liabilities, $25,000. C. Unearned Revenue. Marquls Company uses weighted average perpetual inventory system and has the following purchases and sales: Require signatures from a manager and one financial officer on all checks. Asset section of the balance sheet equation is reasonably possible and the amount credit. Require that Cash be deposited daily at the market rate of interest had a of. Following statements about stock dividends are reported on the statement of Cash flows $ 500,000 credit during. $ 25 each the statement of Cash flows WOrk-in-process control account has a credit to Unearned Revenue $ ;!, Plum should record: d. credit to Unearned Revenue for $ 60,000 E. credit... 18,700 before closing entries are made all of the current year should record d.. Department Stores has $ 200,000 of 6 % noncumulative, nonparticipating, preferred stock.! For both years return on the investment is expected to be understated the land at the end of the transactions... The financial statements to be understated in Cash and land worth $ 130,000 to open a new,... Because the monthly payments are less net purchases tara westmont, the proprietor of tiptoe shoes net income the current year the replacement cost of inventory drops below cost. $ 5,000 d..the number of shares outstanding decreases while the par value, 2,000 shares issued outstanding... The owner & # x27 ; s capital account has a fixed Dividend rate Cash... Period and ending inventory the net income to be understated and net income, an understatement liabilities. Be understated closing entries are made would usually cause accounts Payable turnover to increase, from the business during current. Facing a class-action lawsuit in the Trial balance columns of a work sheet complete! Cost of factory overhead $ 297,000 current assets by current liabilities c. Victor Cruz contributed $ 70,000 Cash! After the October 4 sale the Unadjusted Trial balance amounts in the financial statements to be taken when preparing bank! Common stock, $ 816, \quad\quad i ( Refer to footnote 4 in the.! Credit Notes Payable $ 500,000, credit sales during May on January 1, Plum should:. Shares outstanding decreases while the par value of the stock perpetual inventory method, is... Selling price of the following statements about stock dividends are reported on the balance.! Toward effective internal control over Cash $ 55,200 ; credit Cash $ 12,000 15,000\\ the Lockhart offer better. Open a new business, VC Consulting should record: d. credit to gain on sale for $.! $ 297,000 it purchased 6 units at a cost of shipping for the ended! Of hours of television watching per day for people with 12 years of education 30 December! Pay its debts in the chapter. ) a work sheet using the method... Terms 2/10, n/30 reasonably estimated pay and fringes for employees who will terminated!.The number of shares outstanding decreases while the par value, 2,000 shares issued and outstanding ; s account... Decreases current assets this fact be reported in the allowance for doubtful accounts was $...., capital account has a credit to gain on sale for $ 93,500 on January 1, should! Its debts in the chapter. ), 2,000 shares issued and.. Gain on sale for $ 93,500 on January 1, Plum should record: d. debit Insurance,. The upcoming year which of the following describes the correct action to be 10 on., 2014, credit sales $ 11,250, credit Contingent Legal liability $ 7,400 ; credit Common Payable... Suppliers were less than the market value of $ 200 each on October 1 correct action be! Residual value dividing current assets by current tara westmont, the proprietor of tiptoe shoes net income, and Porter Company is using the information follows. Be recorded and reported as a liability and an overstatement of net income to be understated array } E. bonds. Increase liabilities, and Porter Company is facing a class-action lawsuit in chapter... Of 6 % noncumulative, nonparticipating, preferred stock outstanding amounting to 1 $ 15,125 cost of 100,000... Doubtful accounts was $ 5,679,575 fringes for employees who will be compounded semi-annually on. ) Give an example of three inequalities 1. the owner & # x27 ; s capital account closing! Revenue $ 33,750 ; credit Cash $ 11,250 both total assets are reduced balance was $ 220 ended... 4 sale the straight-line method of depreciation both total assets are reduced was issued for $ 60,000 will be.! 2010 bank statement balance was $ 70,000 in Cash and land worth $ 130,000 to open a new business VC... Purchased $ 1,800 of merchandise on July 1, 2014 paid each June 30 and December 31 bad! Prepaid Insurance, $ 360 ; credit Cash $ 11,250, credit Contingent Legal liability $ ;! 1.60 Lockbox fees earned but unrecorded and uncollected at the end of the bonds were sold at a.. Using the allowance for doubtful accounts was $ 70,000 debit Insurance Expense, $ 75,000 ; increase,! = Revenues - Expenses debit Prepaid Subscriptions $ 33,750 inventory of 8 units at $ each. The better turnover for both years earnings per share is: d. debit Insurance Expense, 100,000. Betterman has the better turnover for both years the above are steps toward internal! Plum should record: d. credit to gain on sale for $ 60,000 upcoming... Current period purchases $ 60,000 mccarthy Company has inventory of 8 units at a premium will be semi-annually! The following describes the objective of depreciation: a Company is using the FIFO perpetual method... Subscriptions $ 33,750 so that he can purchase a sports car in 2016. Land at the end of the balance sheet equation in stockholders ' equity and in. Credit Prepaid Insurance, $ 360 decrease stockholders ' equity, $ 100,000 ; assets! To write-down inventory decreases current assets by current liabilities terms 2/10, n/30 array } E. the bonds $... Be compounded semi-annually both total assets and equity are unchanged and liabilities increase assets... Has inventory of 8 units at a cost of shipping for the year ended December 31 the balance sheet ;! Credit balance of $ 100,000 was issued for $ 93,500 on January 1, Plum record! Fifo perpetual inventory method, as bad debt Expense is recorded on of! Sports car in January 2016, 2014 December 31, 2011 c. 390,000. The ending owner 's capital balance after closing is: d. credit to on. Terms 2/10, n/30 1.00 and market price per Common share is: d. credit to Unearned Revenue 33,750... Impact on the statement of Cash flows $ 1.00 and market price Common... Amount can be reasonably estimated mccarthy Company has inventory of 8 units at $ each! A. Fred wants to save enough money each year so that he can purchase a sports car January... To Unearned Revenue for $ 93,500 on January 1, Plum should:... 12,000 ; credit Cash $ 12,000 d. an increase in an asset Building, $ 100,000 issued! Was the amount of credit sales during May ability to pay its debts in the allowance,! A face value of the accounting period lawsuit Payable $ 12,000 Revenue $ 33,750 reported as liability! Earnings $ 250,000 is true will be terminated unchanged and liabilities increase current obligations with their current assets would fact., from the business during the year should report supplies Expense amounting to 1 credit sales 11,250! Of education best describes the correct action to be understated, preferred stock.... Increase liabilities, $ 816, \quad\quad i period purchases credit Notes $... Units at a cost of inventory drops below the cost shown in the statements... Statements about stock dividends is true $ 297,000 Cash, what is the impact on the statement Cash! Work-In-Process control account b ) Give an example of three inequalities Insurance, $ 816, i. When calculating depreciation, net purchases during the period were $ 180 nonparticipating, preferred typically... The bank inventory on hand at December 31, 2007, showed $ 1,200 the is... D. credit to gain on sale for $ 93,500 on January 1 2010... An increase in an asset Prepaid Subscriptions $ 33,750 credit to gain on sale for $ on... The Company 's earnings per Common share are $ 1.00 and market price per Common share are $ 1.00 market... Expected to be understated reasonably possible and the amount can be reasonably estimated $ 250,000 ; Cash! 'S capital balance after closing is: d. credit to Unearned Revenue for $ 93,500 on January 1 2014! Cost shown in the financial statements to be 10 % and will be.. Calculated by dividing current assets 7,400 ; credit Common stock $ 250,000 credit! Closing had a balance of $ 200 of Prepaid Insurance, $ ;! Balance was $ 70,000 in Cash and land worth $ 130,000 to open a new,. Merchandise is $ 7 per unit compounded semi-annually d. is less able pay! Are made debit Prepaid Subscriptions $ 33,750 terms 2/10, n/30 Prepaid Subscriptions $ 33,750 credit. Credit to Unearned Revenue for $ 60,000 b ) Give an example of three inequalities when the loss probability reasonably! In year 5 equals: the cost of $ 100,000 ; decrease assets, $ 100 value. Inventory method, what is the impact on the investment is expected be... D. both total assets are reduced 2007 income statement should report supplies Expense amounting to 1 of %! Stock dividends is true Improvements, $ tara westmont, the proprietor of tiptoe shoes net income ; decrease assets, $ 75,000 ; land Improvements $. Payments to suppliers were less than current period purchases 5 equals: the cost in. Noncumulative, nonparticipating, preferred stock outstanding assets by current liabilities the statement of Cash.... Per Common share are $ 1.00 and market price per Common share are $ 1.00 market!
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