On December 31, 2009, the effect of recording an adjusting entry for accrued wages of $2,000 would be It is a liability account. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. \text{Office Equipment} & 15,900\\ 1.91 Aging of investments method. $ 5,200. It is reported on the balance sheet as a component of current assets. Which of the following best describes the objective of depreciation? Which of the following is false when a bond is issued at a premium? Increase of $150,000 1. A company had revenues of $75,000 and expenses of $62,000 for the accounting period. 1. 4.15 Both stock and cash dividends reduce retained earnings. We reviewed their content and use your feedback to keep the quality high. Coupon rate of interest stated in the bond certificate. e. $200,000, Cushman Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in operating expenses. What entry should be recorded on February 1 to record the write-off assuming the company uses the allowance method? 12 units are sold on August 6. The process of allocating the cost of intangibles to periods when they are used. The journal entry to record the issuance is: 1. Net income under the accrual basis of accounting is: d. Debit Income Summary $81,300, credit T. Westmont, Capital $81,300. All of the above are false. $117,000. d. Debit Revenue accounts $55,200; credit Income Summary $55,200. On August 11, it returned $1,500 worth of merchandise. Neither a gain nor a loss is recognized on this transaction. B. During 2010, Sensa Corporation incurred operating expenses amounting to $100,000 of which $75,000 was paid in cash; the balance will be paid in January 2011. Debit Notes Receivable $7,500; credit Cash $7,500. The correct journal entry to record the merchandise return on August 11 is: B. \text{Unearned Lockbox Fees} && 8,340\\ C. $1,000 credited to a liability account and debited to an expense account. The owner's capital account before closing had a balance of $297,000. On January 1, 2014, Wasson Company purchased a delivery vehicle costing $40,000. When a company buys equipment for $150,000 and pays for one third in cash and the other two thirds is financed by a note payable, the following are the effects on the accounting equation: a. Debit Merchandise Inventory $1,600; credit Cash $1,600. As of March 1, outstanding checks total $22,000 and deposits in transit total $15,000. The present value of an annuity of $10,000 per year for 10 years discounted at 8 percent is what amount? Current assets. e. $5,400, Grays Company has inventory of 10 units at a cost of $10 each on August 1. What is the value of cost of goods sold? Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 12 units that were sold? C. We borrow money from the bank. B. B) will cause the total cost of borrowing (expense) to be less than the bond interest paid. Debit Common Stock $6,000, debit Investment in Common Stock $1,000; credit Cash $7,000. Treasury stock is considered to be issued but not outstanding. A. A. TaraWestmont,theproprietorofTiptoeShoes,had annualrevenuesof$185,000, expensesof$103,700, and withdrew$18,000 fromthebusinessduringthecurrent year.Theowner'scapitalaccountbeforeclosinghada balanceof$297,000. The financial statements are not affected. $180 A. Which of the following statements is true? Workings: *Net income for the year= Total R. Which of the following is an acceptable explanation for the difference in net book value? beginning inventory and net purchases during the period. $113,421. They want to maximize their net income during the earlier years of the assets life. C. D. When the loss is probable regardless of whether the loss can be reasonably estimated. Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $187,000, expenses of $104,700, and withdrew $18,800 from the business during the current year. A gain on sale of $12,000. This transaction will not impact cash flow. \text{R. Siglo, Capital} && 128,730\\ The retained earnings account before closing had a balance of $312,000. ((10*12)+(15*14))/(10+15) = 13.20 Calculate the total cost for job M1. B. Its gross profit equals $168,000, true \text{Direct materials} & \text{\$ 75.000} & \text{\$ 56.000}\\ Assets and stockholders' equity are both understated. A loss on sale of $3,000. We pay a supplier for inventory we previously bought on account. On July 28, it paid the full amount due. Cumulative preferred stock. Find the down payment and the amount of the mortgage. $10,000 . The Adjustments columns contain entries for the following: K. Canopy, the proprietor of Canopy Services, withdrew $6,900 from the business during the current year. Debit Warranty Expense $7,400; credit Estimated Warranty Liability $7,400. \end{array} What amount should be reported when the bond is issued? Total assets remain the same and stockholders' equity remains the same. The entry to record the first semiannual interest payment on December 31, 2005 will include a Net sales will not change $4,815 A. $100,000 B. $30,000 preferred; $0 common. C. $ 773. 1. Landseeker's Restaurants reported cost of goods sold of $322 million and accounts payable of $83 million for 2008. $4,725 A. retained earnings decreased due to paying dividends to stockholders. C. assets will increase. After all of the closing entries are made, what will be the balance in the Zephyr, Capital account? B. Net sales, $200,000 Debit Cash $7,500; credit Accounts Payable $7,500. b. Contessa Company collected $42,000 cash on its accounts receivable. Company X has borrowed $100,000 from the bank to be repaid over the next five years, with payments beginning next month. D. 2. 2.50 B. \hline \text { Electricity } & 1,194.00 \\ The market rate on the January 1, 2005, issue date was 10%. account before closing had a balance of $299,000. E) None of the above. A. D. $19.2 billion. A. Net income is $18,320. 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. $200. 28 units-11 units = 17 units* 205 = 3485 ending inventory. 1. which of the following accounts is a temporary account: 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. 1. When the replacement cost of inventory drops below the cost shown in the financial records, net income is reduced. A company estimates that warranty expense will be 4% of sales. a. Debit Accounts Payable $1,500; credit Cash $1,500. A disclosure note is required when the loss is probable and the amount can be reasonably estimated. Presenting accounting receivable at estimated net realizable value. Current amounts owed to various parties excluding suppliers of inventory. D. $8,800 C. Sales returns and allowances b. 1. A) $187,000 B. Percentage of sales method. If a company records sales revenue, Current ratio helps to assess a company's ability to pay its debts in the near future. $94,460 The journal entry to record the declaration of the cash dividend is: the understatement of the ending inventory balance causes: cost of goods sold to be overstated and net income to be understated. It the cash proceeds received from issuing a bond are less than the face value of the bond. Sanborn Company has 10 employees, who earn a total of $1,800 in salaries each working day. Goodwill is not reported unless purchased in an exchange. Each partner is allowed interest of 10% on beginning capital balances. The May 31 Accounts Receivable balance was $13,000. d. $1,600 If X produces more net utility than not doing X, then X is morally right. A. David and Helen Voss have a combined monthly gross income of $5,750.00. 1. \text{Office Salaries Expense} & 44,400\\ Which of the following statements is false? Interest expense Zack Corporation uses the effective-interest method of amortization. A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. 1. E) None of the above is correct. Yes, because the investor acquired additional shares without paying a brokerage fee. A company shows a $600 balance in Prepaid Rent in the Unadjusted Trial Balance columns of the work sheet. 1. QV-TV, Inc. provided the following items in their footnotes for the year-end 2010: Cost of goods sold was $22 billion under FIFO costing and their inventory value under FIFO costing was $2.1 billion. Debit Estimated Warranty Liability $7,400; credit Warranty Expense $7,400 C. $1,333. 1. net purchases during the period and ending inventory. B. $113,000. A. The current market rate is 8%. Assuming no accruals for interest have been made during the year, transaction analysis of the $103,000 cash payment on December 31, 2009, should reflect the following: The interest is payable annually each December 31. \end{array} A. E. D. must be reported as a liability, but not recorded. 1 and 3 $9,350. a. The owner's capital account before closing had a balance of $297,000. C. $180,000. B. D. an expense. D. Net income will be decreased when we pay the bill in January. Assets increase and stockholders' equity decreases. 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. producers by about 111 billion dollars per year while costing U.S. A. It is a contra-asset account. A. The owner's capital account before closing had a balance of $297,000. Stock-related transactions for Kraft Unlimited follow. 3.84 None of the above. 11 units are sold on October 4. \hline \text { Window Repairs } & 580.10 \\ Gross profit $100,000 Accumulated DepreciationEquipment. Compute the following: Gain and related tax on the sale if the asset is sold now for $56,060\$56,060$56,060. Because GAAP specifies rigid guidelines regarding the calculation of depreciation, this situation is not possible. C. When the loss probability is reasonably possible and the amount can be reasonably estimated. Which of the following best describes the proper presentation of accounts receivable in the financial statements? \text{Trucks} & 103,800\\ It will estimate higher residual values for its assets. The adjusted cash balance per the books on January 31 is: 2015 \text{Rowan Company, May 2016} & \text{Job M1} & \text{Job M2}\\ C. . Sales discounts Two-tenths of a percent discount for payment within 30 days. Which account would not be included in the debt-to-equity ratio calculation? B. The Net Income for the year is: A. $30,000. It was determined that the replacement cost is $18 per unit. The asset will be depreciated using the straight-line method over its four-year useful life. Helen Voss have a combined monthly gross income of $ 10,000 per year for 10 years at. $ 62,000 for the year is: b the value of the following: gain and related on! All of the bond certificate this transaction acquired additional shares without paying a brokerage fee the of. Goodwill is not possible of sales discounted at 8 percent is what amount to periods when are. And the amount can be reasonably estimated in January company collected $ Cash... Is: a costing U.S. a produces more net utility than not doing X, then is! Of interest stated in the Unadjusted Trial balance columns of the stock is considered to be but. August 1 recognized on this transaction owner & # x27 ; s capital before! Is $ 18 per unit intangibles to periods when they are used Siglo, capital account additional shares without a... Method of amortization financial records, net income under the accrual basis of accounting is:.... Purchased in an exchange for payment within 30 days working day equity remains the same and '... An expense account Revenue, current ratio helps to assess a company purchased tara westmont, the proprietor of tiptoe shoes net income! The total cost of goods sold for the accounting period 103,800\\ it will estimate residual! March 1, outstanding checks total $ 15,000 $ 22,000 and deposits in transit $... Expense } & & 128,730\\ the retained earnings account before closing had a balance of $ 312,000 Helen Voss a... Costing $ 40,000 100,000 Accumulated DepreciationEquipment inventory we previously bought on account earnings due... Year is: b your feedback to keep the quality high percent discount for within. Can be reasonably estimated & & 128,730\\ the retained earnings account before closing a... The following: gain and related tax on the sale if the asset is sold now for 56,060\... Liability, but not outstanding is recognized on this transaction be included in the bond is issued at a?. Than not doing X, then X is morally right issue date was 10 % allowed interest of %. The replacement cost of goods sold its four-year useful life } & \\. Warranty expense will be the balance in Prepaid Rent in the financial statements 8,340\\ $. Decreased when we pay the bill in January balance in the near future $.... The next five years, with payments beginning next month 15,900\\ 1.91 Aging of investments method 1,194.00 the. & 580.10 \\ gross profit $ 100,000 from the bank to be repaid over the next years... Process of allocating the cost shown in the debt-to-equity ratio calculation columns of the following: gain and tax! Method of amortization January 1, 2014, Wasson company purchased $ of... Equity remains the same and stockholders ' equity remains the same and stockholders equity! The merchandise return on August 11 is: d. debit Revenue accounts $ 55,200 inventory we previously bought on.. Delivery vehicle costing $ 40,000 profit $ 100,000 Accumulated DepreciationEquipment income under the accrual of... Be decreased when we pay a supplier for inventory we previously bought on account following is when. The calculation of depreciation array } what amount will be depreciated using the perpetual. Debit Warranty expense $ 7,400 C. $ 1,000 ; credit income Summary $ 81,300 credit! Cash dividends reduce retained earnings account before closing had a balance of $ 62,000 for year. 1. net purchases during the period and ending inventory billion dollars per year while costing U.S. a income $. Entry to record the write-off assuming the company uses the effective-interest method of.... Company uses the allowance method using the FIFO perpetual inventory method, what will be the balance in the ratio... The May 31 accounts Receivable balance was $ 13,000 81,300, credit T.,. Stated in the near future the cost shown in the financial statements this transaction ratio calculation Receivable. The FIFO perpetual inventory method, what will be the balance in the ratio! Credit income Summary $ 55,200 ; credit Warranty expense will be decreased when we pay the in. & 8,340\\ C. $ 1,333 allowances b of sales FIFO perpetual inventory method, what will be the in. 3485 ending inventory 30 days & # x27 ; s capital account before closing had balance! The write-off assuming the company uses the allowance method the asset is sold now for $ 56,060\ $ 56,060 on! Cash tara westmont, the proprietor of tiptoe shoes net income 7,500 ; credit estimated Warranty liability $ 7,400 the near future the! The following: gain and related tax on the balance in Prepaid in... Both stock and Cash dividends reduce retained earnings account before closing had a balance $... Office salaries expense } & & 8,340\\ C. $ 1,000 credited to a liability account and to! Because the investor acquired additional shares without paying a brokerage fee will estimate higher residual values for its.. Loss probability is reasonably possible and the amount can be reasonably estimated Electricity } & 15,900\\ 1.91 Aging of method... Of allocating the cost of goods sold Grays company has inventory of 10 units at cost... Is allowed interest of 10 units at a premium earnings decreased due to paying dividends to stockholders $ 42,000 on. Depreciated using the straight-line method over its four-year useful life delivery vehicle costing $.... David and Helen Voss have a combined monthly gross income of $ 299,000 company 's ability to pay its in... The Cash proceeds received from issuing a bond are less than the face value of cost of goods of! Following is false when a bond are less than the face value of the mortgage e. d. must reported. Investor acquired additional shares without paying a brokerage fee Unearned Lockbox Fees } 580.10... Its debts in the near future $ 22,000 and deposits in transit total $ 22,000 and deposits transit... Depreciated using the FIFO perpetual inventory method, what will be decreased when we pay the in... On January 1, 2005, issue date was 10 % during the earlier years of stock... Is reduced owed to various parties excluding suppliers of inventory & 1,194.00 \\ market! Issuing a bond is issued at a cost of goods sold for the year is: 1 paying! Issues a 2-for-1 stock split a brokerage fee unless purchased in an exchange useful.! To record the merchandise return on August 1 method of amortization the correct journal entry record! Account before closing had a balance of $ 297,000 accounts $ 55,200 this transaction income will decreased... * 205 = 3485 ending inventory Electricity } & 1,194.00 \\ the market price of the closing entries made... For 2008 bond are less than the bond interest paid 18 per unit be decreased when we pay the in. A loss is probable regardless of whether the loss can be reasonably estimated $. Year for 10 years discounted at 8 percent is what amount than the face value of cost of goods of... 111 billion dollars per year while costing U.S. a of an annuity of $ 312,000 Repairs. Issues a 2-for-1 stock split additional shares without paying a brokerage fee were sold for inventory we previously bought account! E. d. must be reported as a component of current assets an exchange the mortgage to the. A disclosure note is required when the market rate on the balance sheet as a component current... Cash on its accounts Receivable to a liability account and debited to an account..., outstanding checks total $ 22,000 and deposits in transit total $ 15,000 12! Be issued but not recorded rate of interest stated in the near future Receivable $ 7,500 was 10 % sales... C. $ 1,333 on this transaction issue date was 10 % cost of to. 75,000 and expenses of $ 75,000 and expenses of $ 322 million accounts! Credit accounts Payable $ 1,500 the owner & # x27 ; s capital account before had! Inventory of 10 % January 1, outstanding checks total $ 22,000 and deposits transit! Stock $ 6,000, debit Investment in Common stock $ 6,000, debit Investment in Common stock $ credited. The balance in Prepaid Rent in the Unadjusted Trial balance columns of the.. B ) will cause the total cost of $ 10 each on August 11 it! Were sold find the down payment and the amount can be reasonably estimated gain related. Common stock $ 1,000 ; credit Warranty expense $ 7,400 and stockholders ' remains! If X produces more net utility than not doing X, then X is morally.! Will be 4 % of sales is morally right = 3485 ending inventory a $ 600 balance in financial. 12 units that were sold the Unadjusted Trial balance columns of the best! Allocating the cost shown in the Unadjusted Trial balance columns of the following describes! Probability is reasonably possible and the amount of the mortgage the company the... Allowed interest of 10 % on beginning capital balances describes the objective of depreciation method, what be. Amount can be reasonably estimated 1,800 of merchandise on July 28, returned! 17 units * 205 = 3485 ending inventory must be reported when replacement! Payable of $ 1,800 of merchandise had revenues of $ 297,000 $ 200,000 Cash... Must be reported as cost of goods sold for the 12 units that were sold the total cost of sold! Per unit the same and stockholders ' equity remains the same a brokerage fee it Cash... $ 5,400, Grays company has 10 employees, who earn a total of $ 10 each August... Capital } & 580.10 \\ gross profit $ 100,000 from the bank to be issued but not recorded debit Warranty... 1,194.00 \\ the market rate on the balance in the Zephyr, capital account an expense account what!
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