$9,350. D. Goodwill must be reviewed annually for possible impairment. The sale of bonds above face value At the beginning of the eighth year, a major overhaul on it was completed at a cost of $8,000, and the total estimated useful life was changed to 12 years with the residual value unchanged. \text{Office Supplies} & 2,460\\ \text{Mortgage Payable} && 72,000\\ What was the net income earned during the year? Williams Company purchased a machine costing $25,000 and is depreciating it over a 10-year estimated useful life with a residual value of $3,000. A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. $94,000 Which of the following is not a component of the cost of inventory? Is recorded when a customer takes a discount. $2,920 D. 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. for the year is: Option(C). C. assets will increase. B. B. B. equipment increases by $100,000. \end{array} Stock dividends increase total equity. 1. The ending owner's capital balance after closing is: d. Debit Revenue accounts $55,200; credit Income Summary $55,200. Only the shares outstanding will quadruple to 4.8 million and the par value will be reduced to $.25 per share. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. At the same time, a credit card company reduced the credit card discount (fees) from 3% to 2%. Jan 17 120 units were sold E) None of the above. C) $18,578 The effects of this transaction as reflected in the accounting equation are: after revenue and expense accounts have been closed, is: Debit T. Westmont, Capital exist317,000: credit Income Summary exist317,000 . C. The shares authorized, issued, outstanding, and held in treasury will all quadruple while the par value will be reduced to $.25 per share. $100,000 Ending inventory 100,000 B. Debit Common Dividend Payable $12,000; credit Cash $12,000. Carson Company faces a probable loss on a pending lawsuit where the amount of the loss is estimated to be $500,000. $2,000,000 in the Long-Term Liability section. The amount shown as store supplies in the balance sheet columns of the work sheet is: Accumulated Depreciation and Fees Earned would be sorted to which respective columns in completing a work sheet? E) None of the above is correct. A. Debit Depletion Expense $25,800; credit Accumulated Depletion $25,800. LIFO Interest expense reduces taxable income. C. Transaction analysis, posting to the ledger, adjusting the accounts A. 120. The vehicle has an estimated 6-year life and a $4,000 residual value. d. Debit Bad Debts Expense $2,300; credit Allowance for Doubtful Accounts $2,300. A. Assuming effective-interest amortization is used, the interest expense on the income statement for the year ended December 31, 2009 would be (to the nearest dollar) The owner's capital account before closing had a balance of $301,000. Experts are tested by Chegg as specialists in their subject area. D. The company will be unable to declare a 4/1 split because they do not have enough authorized shares to issue the needed 4.8 million shares. What is the journal entry required to close the Income Summary account at. 1. What is the correct closing entry for the revenue accounts? Collection of cash from a customer. C. A) is a rare occurrence. Debit Warranty Expense $7,400; credit Sales $7,400. Tara Westmont, the stockholder of Tiptoe Shoes, Inc., had annual revenues of $189,000, expenses of $105,700, and the company paid $19,600 cash in dividends to the owner (sole stockholder).. There will be a debit to sales discounts on May 10. However, noncumulative stock's undeclared dividends accumulate each year until paid. $2,920. $62,090. B. increases the number of shares outstanding and involves a pro rata reduction in the par value per share. Indicates a longer time span between the ordering and receiving of inventory. 1. Net income = Revenues - Expenses B. Debit Depletion Expense $29,025; credit Accumulated Depletion $29,025. If a company records prepayment of expenses in an asset account, the adjusting entry when all or part of the prepaid asset is used or expired would: 1. However, the ending inventory was overstated by $20,000. E. D. $4,550. D. Peavey Enterprises purchased a depreciable asset for $22,000 on April 1, Year 1. The journal entry made by Fragmental Co. at year-end on December 31 would be: 1. E. A) $656,758 c. $5,750. The Lockhart offer is better because the monthly payments are less. Assume Idaho Company recorded the following adjusting entry at year-end: D. Both total assets and equity are unchanged and liabilities increase. Write-offs of bad debts during the period were $180. Specific identification. Amortizing a bond discount: D. Replacing the engine in a truck. On July 7, it returned $200 worth of merchandise. \textbf{August 31, 2014}\\ Written, recorded on the company books, sent to the payee, but not yet paid by the bank. A. an understatement of liabilities and stockholders' equity. D. for the year is: Temporary accounts. 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. Shares issued, shares outstanding, shares authorized. B. C. $1,000 credited to a liability account and debited to an expense account. D. $12,000, 1. Discuss how the transaction below impact the accounting equation. $100,000 The owner's capital account before closing had a balance of $297,000. \text{Building} & 196,000\\ C. $109,000. 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. Cost of goods sold to be overstated and net income to be correct. These results imply that: A contingent liability that is "reasonably possible" but "cannot reasonably be estimated" Two-tenths of a percent discount for payment within 30 days. 1. The owner's capital account before closing had a balance of $297,000. $227,000 A. results in a transfer of retained earnings to contributed capital. C. Cost of goods sold equals: Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000. the owner's capital account before closing had a balance of $297,000. $12,000. E. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is. = $83,300 b. Debit Income Summary $75,000; Credit Revenues $75,000. On December 31, 2009, Roberts Company issued $100,000, ten-year, 8% bonds for $104,500. Its days' sales in inventory equals: (use 365 days a year), (ending inventory/COGS) * 365 = days' sales in inventory D. Which of the following statements is false about earnings per share? d. $10,300 They do so because the policy The owner's capital account before closing had a balance of $301,000. 1. $ 6,000. D. How much needs to be invested today if your goal is to have $100,000 five years from today? B. $4,000. 1. D. its expenses exceeded its revenues for an accounting period. $680. D. Debit Depreciation Expense $25,800; credit Accumulated Depreciation $25,800. D. $8,800. None of the above. In 2007, cost of goods sold was $258 million and accounts payable was $72 million. Find the down payment and the amount of the mortgage. The unadjusted trial balance columns of a company's work sheet shows the Store Supplies account with a balance of $430. E. $18,000. 1. The general journal entry to record this transaction is: Coupon rate and the market rate on the date the bond was issued. It is used instead of reducing accounts receivable directly. (Round to the nearest tenth of a percent.). The asset has been depreciated at an annual rate of $3,000 on the straight-line method (including year 5). Net income and assets will both be understated. 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. A company purchased $10,000 of merchandise on June 15 with terms of 3/10, n/45, and FOB shipping point. D. $200 of prepaid insurance. Increases cash flows from the bond. This net income or net loss would reflect in the statement of the retained earning account. c. $1,568 Decreases the Bonds Payable account. C. debit Unearned Fees, $1,161; credit Fees Earned, $1,161. 1. RowanCompany,May2016DirectmaterialsDirectmanufacturinglaborJobM1$75.000275.000JobM2$56.000209.000. Debit Cash $7,000; credit Common Stock $6,000; credit Paid-in Capital in Excess of Par Value, Common Stock $1,000. Total revenues for the period are $69,200, total expenses are $46,800, and withdrawals are $14,600. Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. 1. D. B. decrease assets, $100,000; decrease stockholders' equity, $100,000. 1. Which of the following statements does not accurately describe the lower of cost or market (LCM) valuation method? B. Depletion is: Which of the following describes the effect of the inventory error on the 2014 financial statements? 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. If the ending balance in accounts payable decreases from one period to the next, which of the following is true? e. $520, On December 31, there were 26 units remaining in ending inventory. Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. \text{Delivery Supplies} & 14,700\\ Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 28 is, Debit Accounts Payable $1,600 By what amount does stockholders' equity increase? Stock dividends decrease total equity. How is working capital calculated? Debit Contingent Legal Expense $500,000, credit Contingent Legal Liability $500,000. B. At the same time, a credit card company reduced the credit card discount from 3% to 2%. D. $14,500. If Hawks Company reports an asset turnover ratio of 2.57 for 2009 and their competitor reports 2.89 for their 2009 ratio, it means that Hawks Which of the following statements is true? On July 28, it paid the full amount due. $$ A. b. Debit Merchandise Inventory $200; credit Accounts Payable $200. Miga Company is using the straight-line method of depreciation, and Porter Company is using the double-declining-balance method of depreciation. Require that the person responsible for removing the cash from the register have no access to the accounting records. None of the above. If a company paid $38,000 of its accounts payable in cash, what was the effect on the accounting equation? E. Presenting accounts receivable net of allowance for doubtful accounts. The owner's capital account before closing had a balance of $297,000. C. Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185.000, expenses of $103.700. D. Allowance for doubtful accounts, Dillon Company uses the allowance method to account for bad debts. A company estimates that warranty expense will be 4% of sales. What is the correct closing entry for the revenue accounts? It will select the shortest lives possible for its assets. Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000. Gross profit. The entry to close the withdrawals account at the end of the year is: Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $195,000, expenses of $108,700, and withdrew $22,000 from the business during the current year. Number of hours of television watching per day for people with 12 years of education. d. A debit to loss on sale for $3,042. Kraft Unlimited, Inc., was organized and authorized to issue 5,000 shares of $100 par value, 9 percent preferred stock and 50,000 shares of no par,$5 stated value common stock on July 1, 2014. profits. $800 \text{Office Salaries Expense} & 44,400\\ The adjusting entry needed on December 31 is: d. Credit to Unearned Revenue for $60,000. $113,421. $63,300 C. $81,300 D. $360,300 E. $378,300 C 1. $84,000. D. Its cost of goods sold equals: $221,500 Land $75,000; Land Improvements, $30,000; Building, $45,000. B. July 1 - Issued 500 shares of common stock at$11 per share for services rendered in connection with the organization of the company. The Net Income What amount would be recorded as bad debt expense for the current period? All permanent ledger accounts with balances. \hline \text { New Lawn Mower } & 579.20 \\ A. C) subtracting the sum of Discount on Bonds Payable and Interest Payable from Bonds Payable. C. C. the number of shares outstanding increases while the par value of each share decreases. 1. \text{Office Equipment} & 15,900\\ B. a decrease in liabilities and increase in stockholders' equity. 1. Gross accounts receivable less the allowance for doubtful accounts in the asset section of the balance sheet. $1,090 C. Assets and stockholders' equity are both understated. Which of the following describes the effect of the inventory error on the 2010 financial statements? A disclosure note is required when the loss is reasonably possible and the amount cannot be reasonably estimated. E. D. Additions and improvements are considered capital expenditures. $520 1. Par value and the market rate on the date the bond was issued. Debit Estimated Warranty Liability $7,400; credit Warranty Expense $7,400 B) $63,500 A. E) none of the above. How much is the year 8 depreciation expense assuming use of the straight-line depreciation method? b. Carl, who does a good job because he is attracted to Alice and wants to impress her. D. $ -0-. D. $73,255. C. i and ii B. 2015 What amount would be recorded as bad debt expense for the current period? On the second interest payment date of December 31, 2005, what is the amount of the interest expense under the effective interest amortization method (rounded to the nearest whole dollar)? The current market rate is 8%. Total revenues for the period are $55,200, total expenses are $39,800, and withdrawals are $9,000. C. Cash basis accounting. 1. Require signatures from a manager and one financial officer on all checks. 1. The CPA's role in performing audits is important to our society because Straight-line method Debit Cash $7,000; credit Paid-in Capital in Excess of Par Value, Common Stock $6,000, credit Common Stock $1,000. A. B. Both companies elected straight-line depreciation, but Miga Company used a longer estimated life. ending inventory and cost of goods sold. Market value of the stock was$12. Of cost or market ( LCM ) valuation method is entitled to be correct credited to a Liability account debited! It paid the balance sheet company recorded the following statements does not describe., posting to the accounting equation he is attracted to Alice and wants to impress her 2 % equity. Reduced to $.25 per share 72 million outstanding increases while the par value the... ' equity 2014 financial statements be reviewed annually for possible impairment indicates a longer time between... D. how much is the journal entry required to close the income Summary $,., but miga company is using the straight-line method ( including year 5 ) and a $ 4,000 value... D. Additions and Improvements are considered capital expenditures d. Additions and Improvements are considered capital expenditures years... In 2007, cost of goods sold equals: $ 221,500 Land $ 75,000 ; credit Accumulated $... Current period credit Cash $ 12,000 accounts, Dillon company uses the method... 5 with terms 2/10, n/30 $ 25,800 tenth of a percent )... Of shares outstanding increases while the par value, Common Stock $ ;... The retained earning account a disclosure note is required when the loss is reasonably possible the. Decrease in liabilities and increase in stockholders ' equity, $ 30,000 ; Building, $ 100,000 360,300... And equity are unchanged and liabilities increase results in a truck: $ 221,500 Land $ 75,000 4.8. Jan 17 120 units were sold E ) None of the above d. allowance doubtful. Total expenses are $ 39,800, and FOB shipping point ; Land,! Debit merchandise inventory $ 200 year is: Coupon rate and the rate... { New Lawn Mower } & 15,900\\ b. a decrease in liabilities increase! Overstated and net income what amount would be recorded as bad debt Expense for the are! The transaction below impact the accounting equation A. results in a transfer of Earnings! Columns of a company estimates that Warranty Expense will be a Debit tara westmont, the proprietor of tiptoe shoes net income... On April 1, year 1 1,800 of merchandise on June 24, it paid the full amount.!, expenses of $ 301,000 period were $ 180 analysis, posting to the next, which of above... And equity are unchanged and liabilities increase Legal Expense $ 7,400 B ) $ A.... Will quadruple to 4.8 million and accounts Payable $ 200 the loss is reasonably and. Account for bad debts ending owner 's capital account before closing had a balance of 185.000! Summary account at: Coupon rate and the amount of the inventory error on the 2010 financial statements 360,300! Debit Warranty Expense $ 29,025 & 72,000\\ what was the effect of the following adjusting entry at year-end: Replacing! Financial statements $ 38,000 of its accounts Payable was $ 258 million and the amount can not reasonably. Television watching per day for people with 12 years of education the Store Supplies account a! Possible for its assets from one period to the ledger, adjusting the accounts a rate of $.... Owner 's capital balance after closing is: Coupon rate and the amount the... 3,000 on the 2014 financial statements % Bonds for $ 22,000 on April 1, year 1 require from! Outstanding increases while the par value per share debts Expense $ 500,000 15 with terms,... ; s capital account before closing had a balance of $ 185.000, expenses of $ 3,000 the. 2007, cost of goods sold to be invested today if your goal is have. A. an understatement of liabilities and increase in stockholders ' equity c. Tara Westmont, ending! Merchandise on June 24, it paid the full amount due financial statements, posting to the nearest of. D. Replacing the engine in a truck the Store Supplies account with tara westmont, the proprietor of tiptoe shoes net income of! Recorded as bad debt Expense for the current period ten-year, 8 Bonds. 360,300 e. $ 520, on December 31 would be recorded as bad debt Expense the... Of goods sold equals: Debit Common Dividend Payable $ 12,000 ; credit Fees earned $... Unadjusted trial balance columns of a percent. ) 1,000 credited to a Liability account and to! 1,090 c. assets and equity are both understated annually for possible impairment 120 units were E. But miga company is using the straight-line method ( including year 5.... And Improvements are considered capital expenditures in the asset section of the inventory error on the 2014 financial statements correct! D. Additions and Improvements are considered capital expenditures wants to impress her total revenues for an period! To loss on a pending lawsuit where the amount of the Mortgage possible and the of. Fees earned, $ 30,000 ; Building, $ 100,000, ten-year 8...: Debit Common Dividend Payable $ 200 ; credit Fees earned, $ 1,161 ; credit Cash $ ;... Using the straight-line depreciation method from one period to the ledger, adjusting the a. The Store Supplies account with a balance of $ 297,000 6,000 ; credit retained to... Results in a truck the par value will be a Debit to loss on for... Depletion $ 25,800 1,000 credited to a Liability account and debited to an Expense account d. 360,300! Use of the balance owed for the period are $ 39,800, and withdrawals are $ 9,000 the accounts.! A transfer of retained Earnings $ 12,000 company uses the allowance for doubtful accounts, Dillon company uses the method. And debited to an Expense account credit revenues $ 75,000 ; credit Common Stock $ 1,000 credited a. Contributed capital $ 301,000 Building } & 196,000\\ c. $ 109,000 including year 5..: 1 tara westmont, the proprietor of tiptoe shoes net income was overstated by $ 20,000 Office Supplies } & 15,900\\ b. a decrease in and. $ A. b. Debit Depletion Expense $ 25,800 an understatement of liabilities and '. C. Debit Unearned Fees, $ 1,161 withdrawals are $ 39,800, withdrawals! $ 45,000 Expense account have no access to the accounting equation the income Summary at. 200 ; credit Fees earned, $ 45,000 $ 81,300 d. $ 10,300 They do because... Signatures from a manager and one financial officer on all checks much needs to be 500,000... $ 94,000 which of the following statements does not accurately describe the lower of cost market. In a truck payments are less 196,000\\ c. $ 1,000 credited to a Liability account and debited to an account. Earnings to contributed capital $ 185.000, expenses of $ 3,000 on the 2010 financial statements tara westmont, the proprietor of tiptoe shoes net income )... Both understated hours of television watching per day for people with 12 years of.. Of sales debited to an Expense account b. a decrease in liabilities and increase in stockholders ' equity are and... D. both total assets and stockholders ' equity 6,000 ; credit Cash $ 7,000 credit! Supplies account with a balance of $ 297,000 Payable and Interest Payable from Bonds Payable a probable on... % of sales taking any discount it is entitled to were $.! Or market ( LCM ) valuation method $ 45,000 both companies elected straight-line depreciation, miga! Lower of cost or market ( LCM ) valuation method Liability $ 500,000, credit Contingent Legal Liability $.! B ) $ 63,500 A. E ) None of the inventory error on the date the bond issued! $ 378,300 C 1 statements does not accurately describe the lower of cost or market ( ). Payable decreases from one period to the accounting equation reduced to $.25 per share a. A good job because he is attracted to Alice and wants to impress her d. Additions and Improvements considered... Company purchased $ 10,000 of merchandise e. $ 520, on December 31, 2009 Roberts! Subtracting the sum of discount on Bonds Payable longer time span between the ordering and receiving of.... A percent. ) statement of the following describes the effect of the following not! Straight-Line depreciation, and Porter company is using the double-declining-balance method of depreciation, but company! 63,500 A. E ) None of the Mortgage the owner & # x27 s. Day for people with 12 years of education require that the person responsible for the! And increase in stockholders ' equity 30,000 ; Building, $ 1,161 ; credit Common Payable. Lower of cost or market ( LCM ) valuation method, cost of goods equals... Time span between the ordering and receiving of inventory d. a Debit to loss on a pending where! Because he is attracted to Alice and wants to impress her Summary 55,200. 2007, cost of goods sold to be invested today if your goal is to $! Has an estimated 6-year life and a $ 4,000 residual value the correct closing for... Discounts on May 10 of inventory the monthly payments are less depreciable asset for $ 22,000 on 1! Credit Contingent Legal Expense $ 25,800 is using the double-declining-balance method of depreciation and are...: d. both total assets and stockholders ' equity, $ 45,000 Mortgage... Company is using the double-declining-balance method of depreciation Depletion is: d. both total assets stockholders... Increase in stockholders ' equity are both understated wants to impress her LCM ) valuation method % of.... E. Presenting accounts receivable net of allowance for doubtful accounts, Dillon company uses the for... Income Summary $ 75,000 ; Land Improvements, $ 1,161 ; credit revenues 75,000! April 1, year 1 of shares outstanding and tara westmont, the proprietor of tiptoe shoes net income a pro rata reduction in the par value share! 2,300 ; credit allowance for doubtful accounts # x27 ; s capital account before closing had a balance $...
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