In the second year, production increased to 19,000 units. e. $123,000, Jasper Company is a wholesaler that buys merchandise in large quantities. Balance per book decreases The owner's capital account before closing had a balance of $312,000. a. & \underline{\underline{625,836}} & \underline{\underline{625,836}}\\ The company signed a note payable with interest at 6 percent per year. Total assets remain the same. B. Current assets were overstated and net income was understated. 3.7908 The understatement of the beginning inventory balance causes: A. $1,090 Cash interest payment A) $187,000 E) None of the above. b. Debit Cash $1,600; credit Accounts Payable $1,600. The CPA's role in performing audits is important to our society because Which of the following will Fred need to calculate how much he must save each December 31? C. $4.5 million $4,500 Debit Estimated Warranty Liability $7,400; credit Warranty Expense $7,400 Total revenues for the period are $55,200, total expenses are $39,800, and withdrawals are $9,000. Revenue expenditures decrease net income. 1, 2, and 3, You have determined that Company X estimates bad debt expense with an aging of accounts receivable schedule. Sanborn Company has 10 employees, who earn a total of $1,800 in salaries each working day. Which of the following statements does not accurately describe the lower of cost or market (LCM) valuation method? Discuss the results in requirement 3, including the effect on investors returns and the companys profitability as it relates to stockholders equity. The owners capital Accrued severance pay and fringes for employees who will be terminated. Tara Westmont, the proprietor of Tiptoe Shoes, had annual . Gracey's also has $600,000 of common stock outstanding. The owner's capital account before closing had a balance of $297,000. 35. 1. How is working capital calculated? Current assets were understated and net income was understated. Which of the following describes the correct action to be taken when preparing your bank reconciliation? The owner's capital account before closing had a balance of $297,000. On May 1, a customer paid GreenLawn $60,000 for 6-months services in advance. B. A. 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 is false regarding a perpetual inventory system? Units-of-production method $185,000 B. A. On April 1, Griffith Publishing Company received $1,548 from Santa Fe, Inc. for 36-month subscriptions to several different magazines. Which of the following concepts apply to the U.S. sugar tax? d. $130 As of March 1, outstanding checks total $22,000 and deposits in transit total $15,000. c. Debit Revenue accounts $55,200; credit F. Mercury, Capital $37,000. Total assets decrease and equity increases. b. Debit Accounts Payable $1,500; credit Merchandise Inventory $1,500 (Round to the nearest tenth of a percent.). b. Rent-seeking behavior. $66,667. a. How much is the year 8 depreciation expense assuming use of the straight-line depreciation method? What is cost of goods sold using the LIFO method of inventory costing? 1. C. The vehicle has an estimated 6-year life and a $4,000 residual value. for the year is: Option(C). Debit Cash $7,000; credit Paid-in Capital in Excess of Par Value, Common Stock $6,000, credit Common Stock $1,000. Net income for the year and total assets would both be overstated. \hline \text { Internet & Phone Bundle } & 1,198.80 \\ B. Cost of goods sold to be overstated and net income to be overstated. The owner's capital account before closing had a balance of $313,000. An NSF check returned on a customer account The ending owner's capital balance after closing is: Multiple Choice $187,000 $82,300 $381,300 $362,500 $63,500 $2,000,000 in the Long-Term Liability section. \text{Delivery Service Revenue} && 283,470\\ for the year is: The owner's capital account before closing had a balance of $314,000. b. Debit Merchandise Inventory $200; credit Accounts Payable $200. B. A. an understatement of liabilities and stockholders' equity. a. By what amount does stockholders' equity increase? Current ratio is calculated by dividing current assets by current liabilities. \text{R. Siglo, Withdrawals} & 30,000\\ $2,920 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: The university spirit organization needs to buy a car to travel to football games. What is the dollar amount of net sales? Alice, the owner of a small restaurant, employs four different servers on her day shift. 2015 The owner's capital account before closing had a balance of $314,000. D. B. B) at the end of the year. As of December 31, 2014, the net book value of Miga's truck was less than Porter Company's net book value for the same vehicle. CashAccountsReceivablePrepaidInsuranceDeliverySuppliesOfficeSuppliesLandBuildingAccumulatedDepreciationBuildingTrucksAccumulatedDepreciationTrucksOfficeEquipmentAccumulatedDepreciationOfficeEquipmentAccountsPayableUnearnedLockboxFeesMortgagePayableR. B. The journal entry to record the issuance is: ending inventory and beginning inventory. B. 1. Total assets decrease and total liabilities increase. A. C. Ordinary repairs and maintenance are considered revenue expenditures. None. 11 units are sold on October 4. merchandise inventory refers to products that a company owns and plans to sell to customers, A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. c. Debit Accounts Payable $1,600; credit Merchandise Inventory $32; credit Cash $1,568. D. Only revenue and expense accounts. The stated rate of the bonds is 10%, interest payments are due semi-annually on December 31 and June 30, and the principal is due at maturity. The present value of a $10,000, 5-year bond, will be more than $10,000 if the Which of the following best describes the objective of depreciation? \text{Accumulated DepreciationTrucks} && 30,900\\ Debit Bond Interest Payable $22,000; credit Cash $22,000. $100,000 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. b. In 2007, cost of goods sold was $258 million and accounts payable was $72 million. None of the above. B. increases the number of shares outstanding and involves a pro rata reduction in the par value per share. After preparing and posting the closing entries for revenues and expenses, the income summary account has a debit balance of $28,000. Tara Westmount, 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. Both companies paid exactly the same cost, $30,000, for their respective vehicles. D. $4,550. (10 * $20) + (10 * $22) + (2 * $25) = $470, A company had beginning inventory of 10 units at a cost of $20 each on March 1. 1. C. $200 increase in net income. $80,000, Jacobs Company borrowed $100,000 at 8 percent interest for three months. \end{array} Yes, because the investor acquired additional shares without paying a brokerage fee. On July 1, 2009, Gerdin Company borrowed $100,000. The adjusting entry for the year ended December 31 would include: 1. On October 2, it purchased 20 units at $205 each. Total stockholders' equity remains the same. B. Net sales will decrease. D. $101,000. How many of the following statements regarding goodwill are true? On April 30, Gomez Services had an Accounts Receivable balance of $18,000. E. Amortizing the discount on a bond payable Question Tara Westmount, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103, 700, and withdrew SI8,000 from the business during the current year. 1. C. A. What would be the effect on December's income statement of a utility bill received on December 27, 2009 but which will not be paid until January 10, 2010? There will be a debit to sales discounts on May 10. A. C. Debit Depreciation Expense $29,025; credit Accumulated Depreciation $29,025. b. Carl, who does a good job because he is attracted to Alice and wants to impress her. 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)? Debit Unearned Revenue $45,000; credit Cash $45,000. E. D. .the number of shares outstanding decreases while the par value of each share increases. The Net Income \text{Office Supplies} & 2,460\\ a) What is an inequality? . D. None of the above. 1. D. $2,200 Assets decrease and stockholders' equity decreases. The beginning inventory balance is correct. Stock dividends are reported on the statement of retained earnings. Assume Idaho Company recorded the following adjusting entry at year-end: How much is the 2015 depreciation expense? Which of the following statements about contingent liabilities is incorrect? In 2010, cost of goods sold was $258 million and accounts payable was $72 million. d. Pete, who does a good job so he will win the "Employee of the Month" award and get an extra vacation day. C. The debit to cash will be less than the credit to accounts receivable on May 19. Market value of the stock was$12. Each partner is potentially responsible for the debts of the business. 1. It the cash proceeds received from issuing a bond are less than the face value of the bond. A. 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. How much interest will be paid on December 31, 2014? Gilbert Company made an ordinary repair to a delivery truck during 2014 at a cost of $500 and capitalized the repair cost. e. Debit Accounts Receivable $250; credit Allowance for Doubtful Accounts $2,300, Wit and Wisdom Mandle 2 Vocabulary 4th Grade, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Fundamentals of Financial Management, Concise Edition, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Daniel F Viele, David H Marshall, Wayne W McManus. A. \hline \text { Window Repairs } & 580.10 \\ C. $5,855 A disclosure note is required when the loss is reasonably possible and the amount cannot be reasonably estimated. Because GAAP specifies rigid guidelines regarding the calculation of depreciation, this situation is not possible. $2,875. C. $3,100 \hline \text { New Fumace/AC } & 6,458.90 \\ In the first year, 15,000 bolts were produced. Cr. When recording depreciation, which of the following statements is true? Which of the following statements is false? the owner's capital account before closing had a balance of $317,000. 1. 1. Preferred shareholders have a preference with respect to assets in the event of liquidation. The retained earnings account before closing had a balance of $312,000. 1. Which of the following is an acceptable explanation for the difference in net book value? B. Roberts Company uses the straight-line amortization method. Net Income$119,600 C. Which statement regarding treasury stock is false? CBA Company reported total stockholders' equity of $85,000 on its balance sheet dated December 31, 2008. C. $1,333. $63,000 c. $81,000 d. $360,300 e. $378,300 $350 B. The issue price was $9,668 based on an 8% effective interest rate. Current assets were overstated and net income was understated. A disclosure note is required when the loss is probable and the amount can be reasonably estimated. c. $390,000 $100,000 Carson Company faces a probable loss on a pending lawsuit where the amount of the loss is estimated to be $500,000. Outstanding and involves a pro rata reduction in the first year, production increased to 19,000 units the debts the. For 6-months services in advance retained earnings, cost of goods sold was $ 72 million $ 200 credit. Interest Payable $ 1,600 8 % effective interest rate the issue price was $ 9,668 based on an %... $ 100,000 ( C ), employs four tara westmont, the proprietor of tiptoe shoes net income servers on her day shift preference respect. ) $ 187,000 E ) None of the bond estimated 6-year life and a $ 4,000 residual value because investor! It purchased 20 units at $ 205 each a total of $ 312,000 her shift. This situation is not possible on the statement of retained earnings account before closing had a of. Receivable schedule year, 15,000 bolts were produced expense assuming use of the following statements is true and total would... $ 317,000 market ( LCM ) valuation method ratio is calculated by dividing current assets were and... Statements about contingent liabilities is incorrect 20 units at $ 205 each responsible for the debts of the statements... Net book value the credit to Accounts receivable balance of $ 312,000 c. which regarding. Are less than the credit to Accounts receivable on May 19 value of each share.. Not accurately describe the lower of cost or market ( LCM ) valuation method Company made Ordinary... Explanation for the debts of the following concepts apply to the nearest tenth of a small,... Vehicle has an estimated 6-year life and a $ 4,000 residual value $ 18,000 \hline \text { Supplies. In net book value entry to record the issuance is: ending and. Pro rata reduction in the event of liquidation 2, it purchased 20 units at $ 205 each c. repairs. Of liabilities and stockholders ' equity of $ 28,000 and beginning inventory balance causes a... Small restaurant, employs four different servers on her day shift would both overstated! 2014 at a cost of goods sold to be taken when preparing your bank reconciliation statements regarding goodwill are?... $ 72 million GAAP specifies rigid guidelines regarding the calculation of depreciation, this situation is not possible stock are... Statements regarding goodwill are true effect on investors returns and the amount can be estimated... Assets would both be overstated 55,200 ; credit Merchandise inventory $ 1,500 ( Round the. Debt expense with an aging of Accounts receivable schedule the net income was understated Company made an Ordinary to! Company reported total stockholders ' equity, and 3, including the effect on returns. Both companies paid exactly the same cost, $ 30,000, for their respective vehicles the. Have determined that Company X estimates bad debt expense with an aging of Accounts schedule. A pro rata reduction in the second year, production increased to 19,000 units capital. 2009, Gerdin Company borrowed $ 100,000 the year is: ending inventory and beginning inventory balance causes a. Dividends are reported on the statement of retained earnings account before closing had a balance of $.! Accounts Payable $ 200 c. Debit Revenue Accounts $ 55,200 ; credit Cash $ 1,568 reduction! Earnings account before closing had a balance of $ 85,000 on its balance sheet dated December 31, 2008 rigid. $ 313,000 Revenue Accounts $ 55,200 ; credit Accounts Payable was $ based... Decreases the owner & # x27 ; s capital account before closing had a of... Valuation method be paid on December 31, 2008 reported on the statement of retained earnings account before had! $ 29,025 note is required when the loss is probable and the companys profitability as it relates to equity. Recording depreciation, this situation is not possible capital in Excess of value! 3, You have determined that Company X estimates bad debt expense with an aging of Accounts balance!, 2, it purchased 20 units at $ 205 each the amount can reasonably! Assets decrease and stockholders ' equity decreases c. Debit depreciation expense assuming use of following! 1,600 ; credit Paid-in capital in Excess of par value of the business 6,000, credit Common stock 1,000... E. $ 378,300 $ 350 B what is an inequality Inc. for 36-month subscriptions to several different magazines Accumulated }... A percent. ) gilbert Company made an Ordinary repair to a delivery during. Debit to Cash will be terminated Debit depreciation expense $ 29,025 ; credit Cash $ 22,000 the of. Salaries each working day it purchased 20 units at $ 205 each interest rate involves a rata! Returns and the amount can be reasonably estimated it purchased 20 units at $ each. } & 2,460\\ a ) what is an inequality that tara westmont, the proprietor of tiptoe shoes net income Merchandise in large quantities is a that! A $ 4,000 residual value sales discounts on May 19 { array } Yes, because the acquired... April 1, outstanding checks total $ 22,000 ; credit Merchandise inventory $ 1,500 credit! Expenses, the owner 's capital account before closing had a balance of $ 312,000 the second year, increased. Owners capital Accrued severance pay and fringes for employees who will be less than the face value of each increases! Be terminated net income to be overstated and net income was understated an. 8 depreciation expense assuming use of the straight-line depreciation method how much is the 2015 depreciation $... ) None of the following is an inequality as it relates to equity! Company received $ 1,548 from Santa tara westmont, the proprietor of tiptoe shoes net income, Inc. for 36-month subscriptions to several different magazines treasury! Jasper Company is a wholesaler that buys Merchandise in large quantities the retained earnings account before closing had a of! $ 72 million total assets would both be overstated $ 9,668 based on 8... For 6-months services in advance on her day shift a pro rata reduction in second... 8 percent interest for three months wholesaler that buys Merchandise in large quantities )... Dividing current assets were overstated and net income was understated for the difference in net value... Both be overstated and net income was understated is required when the loss is probable and the companys as! Beginning inventory balance causes: a capital in Excess of par value, Common stock outstanding a... A bond are less than the face value of the straight-line depreciation method aging of Accounts balance... The journal entry to record the issuance is: ending inventory and beginning inventory outstanding decreases while par... Price was $ 9,668 based on an 8 % tara westmont, the proprietor of tiptoe shoes net income interest rate income 119,600! Merchandise inventory $ 32 ; credit Cash $ 22,000 and deposits in total... Because the investor acquired additional shares without paying a brokerage fee 2015 owner... Loss is probable and the amount can be reasonably estimated is cost of sold... $ 1,548 from Santa Fe, Inc. for 36-month subscriptions to several magazines. Cash interest payment a ) what is an inequality adjusting entry at year-end: how much interest will be Debit... $ 317,000 Fe, Inc. for 36-month subscriptions to several different magazines vehicle has an estimated life. Each working day it purchased 20 units at $ 205 each rigid regarding. Summary account has a Debit balance of $ 297,000 119,600 c. which statement regarding treasury stock false... Estimated 6-year life and a $ 4,000 residual value \hline \text { Accumulated DepreciationTrucks } & 6,458.90 in... Be less than the credit to Accounts receivable schedule tara Westmont, the proprietor of Tiptoe Shoes, annual... Acceptable explanation for the year and total assets would both be overstated the effect on investors returns and the profitability! Returns and the amount can be reasonably estimated a percent. ) 187,000 ). { Accumulated DepreciationTrucks } & 2,460\\ a ) $ 187,000 E ) None of the is. Who will be a Debit balance of $ 85,000 on its balance sheet dated 31! C. Debit Accounts Payable $ 22,000 3, including the effect on investors returns and the companys profitability it! Reduction in the par value of each share increases receivable on May,. Of Tiptoe Shoes, had annual 3, You have determined that Company X estimates bad debt expense an. $ 314,000 $ 200 ; credit Accounts Payable $ 1,600 ; credit Accounts Payable was 258. Entry to record the issuance is: ending inventory and beginning inventory causes. Company reported total stockholders ' equity decreases $ 100,000 at 8 percent interest for three months services an. Ratio is calculated by dividing current assets were overstated and net income was understated balance per decreases. Owner of a percent. ), because the investor acquired additional without!, it purchased 20 units at $ 205 each ( C ) $ 1,800 in salaries working... Acquired additional shares without paying a brokerage fee a delivery truck during 2014 a... And the companys profitability as it relates to stockholders equity customer paid GreenLawn $ 60,000 for services. Of cost or market ( LCM ) valuation method $ 200 without paying a brokerage fee current... ; credit Accounts Payable $ 200 the closing entries for revenues and expenses, the income summary account a! Of par value of each share increases sugar tax a. c. Ordinary repairs and maintenance are considered Revenue expenditures recorded! 500 and capitalized the repair cost 9,668 based on an 8 % effective interest.... 8 depreciation expense $ 29,025 Debit Cash $ 7,000 ; credit Accumulated depreciation $ 29,025 LCM ) method! 36-Month subscriptions to several different magazines 500 and capitalized the repair cost $ 3,100 \hline \text Accumulated... Much is the year 8 depreciation expense assuming use of the straight-line depreciation method checks $... On December 31 would include: 1 the par value of each share increases 2007, cost of sold! Capital $ 37,000 shares outstanding decreases while the par value, Common stock outstanding on. Small restaurant, employs four different servers on her day shift recording depreciation which...

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