(ii) Total assets remains the same $2,667. Net sales will not change. 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. Rate answer . For a business organized as a general partnership, which statement is true? A dealership in Leander will agree to a $1,000 down payment plus 20 monthly payments of $850. What is the correct closing entry for the revenue accounts? $4,585. Of the amount credited to this account during the year, 5,630hadbeenearnedbyAugust31.5,630 had been earned by August 31.5,630hadbeenearnedbyAugust31. C) $32,000 Debit Cash $7,000; credit Paid-in Capital in Excess of Par Value, Common Stock $6,000, credit Common Stock $1,000. 1. Timing flexibility associated with the payment of interest. D. $4,550. The carrying value (net liability) of the bonds will equal the market price $18. Axle Co.'s accounts receivable turnover was 9.9 for this year and 11.0 for last year. When originally purchased, a vehicle costing $23,000 had an estimated useful life of 8 years and an estimated salvage value of $3,000. A) $16,000 Assume Idaho Company recorded the following adjusting entry at year-end: $100,000 in the Long-Term Liability section. D. Cumulative preferred stock's right to receive dividends is forfeited in any year that dividends are not declared. B) $679,575 $10,000 $100,000 A journal entry is not recorded on what date? The understatement of the beginning inventory balance causes: the net income for the year is: 1 See answer Advertisement AlanDoris The owner's capital account before closing had a balance of $297,000. Revenue expenditures decrease net income. C. $109,000 Homework Answers 139 Views The retained earnings account before closing had a balance of $312,000. An increasing inventory turnover ratio net purchases during the period and ending inventory. A. A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and the length of time past due is the: The entry to write-off a bad account (one that will never be collected) should be: 1. 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: D. C. D. an increase in stockholders' equity and increase in an asset. The asset has been depreciated at an annual rate of $3,000 on the straight-line method (including year 5). 1. B. A. 1. Net income will be overstated, but there would be no affect on total assets. The stated rate of interest was 8 percent and the market rate of interest was 10 percent when the bond was sold. An increase in an asset and a decrease in another asset. What is cost of goods sold using the FIFO method of inventory costing? On December 31, 2009, Goode paid $103,000 to settle the debt in full. Which of the following concepts apply to the U.S. sugar tax? B. Which of the following best describes the proper presentation of accounts receivable in the financial statements? $113,421. The owners capital The purchase of supplies for cash would $2,000,000 in the Current Liability section. It was determined that the replacement cost is $18 per unit. A. decrease stockholders' equity, $75,000; decrease assets, $75,000. 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. Assets are overstated and net income is overstated. Debit Cash $7,000; credit Common Stock $7,000. D) the bond is convertible to common stock. $0 preferred; $30,000 common. 1. 1. b. Debit Income Summary $75,000; Credit Revenues $75,000. 1. A. 2015 Net income will not be impacted as a result of this transaction. $770,000 $117,000 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. The journal entry to write-down inventory increases cost of goods sold. Which of the following is false regarding a perpetual inventory system? E) none of the above. Tara Westmont, the stockholder of Tiptoe Shoes, Inc., had annual revenues of $200,000, expenses of $111, 200, and the company paid $24,000 cash in dividends to the owner (sole stockholder). $480. B. equipment increases by $100,000. 1. $250 E) None of the above. The May 31 Accounts Receivable balance was $13,000. A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. A. By what amount does stockholders' equity increase? Rusty's incremental borrowing rate is 8%. Preferred stock which confers rights to prior periods' unpaid dividends even if they were not declared is called: All three, Which inventory method provides a better matching of current costs with sales revenue on the income statement and outdated values for inventory on the balance sheet? Assume that year ended December 31, is a Wednesday and all employees will be paid salaries for five full days on the following Monday. Debit Unearned Revenue $45,000; credit Cash $45,000. The company had declared a dividend of $1.3 million during the year. The Lockhart offer is better because the monthly payments are less. C. This system has a useful life of 10 years and a salvage value of $400. This transaction will not impact cash flow. D. When the loss is probable regardless of whether the loss can be reasonably estimated. (1) 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 12 is: 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? \text{Delivery Supplies} & 14,700\\ 1. The Net Income Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. B) $63,500 Tara Westmont, the proprietor of Tiptoe Shoes, had annual Assets are overstated and net income was understated. Failure to record amortization expense on a patent during the current year will result in which of the following? Which of the following entries could NOT be a closing entry? Management wishes to record the land at the market value of the stock. Shares authorized, shares issued, shares outstanding. Which of the following accounts are permanent (real) accounts? Assuming the asset's salvage value is $2,000, what will be the amount of accumulated depreciation on this asset on December 31, Year 3? \text{Accounts Receivable} & 29,314\\ C. The shares authorized, issued, outstanding, and held in treasury will all quadruple while the par value will be reduced to $.25 per share. 1. The allowance for doubtful accounts balance on January 1, 2011 was $15,000. E) $381,300. \text{Cash} & 10,072\\ Both companies elected straight-line depreciation, but Miga Company used a longer estimated life. A. D. Either (b) or (c), 1. The Net Income for the year is: 10+ million students use Quizplus to study and prepare for their homework . B. increase total assets. $ 1,547. E. 1. The cash receipt was recorded as unearned fees. B. $2,000,000 in the Long-Term Liability section. One drives up the domestic price of sugar and increases their Direct write-off method. 1. Debit Prepaid Subscriptions $11,250, credit Sales $11,250. Assuming the asset is sold on December 31, Year 5 for $15,000, the company should record: Current assets. Which is the better deal, and why? It is possible, but not probable, that the company will have to pay a settlement of approximately $2,000,000. A. A. E) none of the above. Issued by the bank. A. e. $13,750. Cash, short-term investments, and current receivables. E. 1. $1,180 B. If a company failed to make the end-of-period adjustment to move the amount of management fees that were earned from the Unearned Management Fees account to the Management Fees Revenue account, this omission would cause: 1. Real accounts. a. B. its assets decreased during an accounting period. d. The special-interest effect. $279,300 Assets are understated and net income is overstated. D. Debit Accounts Payable $1,800; credit Purchase Returns $200; credit Merchandise Inventory $1,600. 1. b. The anticipated interest rate and the future value of $1 table. Net income under the accrual basis of accounting is: d. Debit Income Summary $81,300, credit T. Westmont, Capital $81,300. a. A. C. D. B. E. 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. In the first year, 15,000 bolts were produced. C. Closing accounts. Total assets remain the same and stockholders' equity remains the same. Net sales. B. If total revenues for the period are $60,200, total expenses are $43,600, and withdrawals are $9,900, what is the ending balance in the F. Mercury, Capital account after all closing entries are made? A. 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. C. An entry was journalized and posted as a debit to wages expense for $20,000 and a debit to wages payable for $20,000. \text{Annual Home Expenses}\\\begin{array}{|l|r|} A. 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. A. a liability. $2,920 Total assets decrease and stockholders' equity decreases. Debit Retained Earnings $250,000; credit Stock Split Payable $250,000. The ending retained earnings balance of Juan's Mexican Restaurant chain increased by $3.2 million from the beginning of the year. The ending owner's capital balance after closing is: $379,000 B. E. Because GAAP specifies rigid guidelines regarding the calculation of depreciation, this situation is not possible. D. Assets and stockholders' equity are both understated. d. $350,000 D. decrease liabilities, $100,000; decrease stockholders' equity, $3,000; and decrease assets, $103,000. Which of the following statements doesn't correctly describe preferred stock? E. debit Unearned Fees, $387; credit Fees Earned, $387. D. 220, 1. The owner's capital account before closing had a balance of $297,000. 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. Reflects a decrease in amount due to a supplier. Company X is going to retire equipment that is fully depreciated with no residual value. $5,335 Carson Company faces a probable loss on a pending lawsuit where the amount of the loss is estimated to be $500,000. b. E) on the date of issuance. 2003-2023 Chegg Inc. All rights reserved. Gracey's Department Stores has $200,000 of 6% noncumulative, nonparticipating, preferred stock outstanding. $94,112 The asset had a five-year life, zero residual value, and $2,000 accumulated depreciation as of December 31, 2014. Assets decrease and stockholders' equity increases. A. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is: Assets are often classified into current assets, long-term investments, plant assets and intangible assets. Sales discounts A. an understatement of liabilities and stockholders' equity. A. Reflects an increase in amount due from a customer. The present value of an annuity of $10,000 per year for 10 years discounted at 8 percent is what amount? Which of the following general journal entries will VC Consulting make to record this transaction? 1. E. Debit Amortization Expense $24,000; credit Accumulated Amortization $24,000. Interest expense reduces taxable income. B. C. Replacement of all florescent light tubes in an office. Debit Merchandise Inventory $200; credit Sales Returns $200. What is the journal entry required to close the Income Summary account at. $87,707 A. The bond matures in 10 years. D. 4. Axle's credit policies are too loose. Debit Warranty Expense $7,400; credit Estimated Warranty Liability $7,400. A post-closing trial balance reports: No effect on the expenses of the current period. $1.99. $200 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. 1. Direct manufacturing labor is paid at the rate of $25 per hour. B. On September 1, Ziegler Corporation had 50,000 shares of $5 par value common stock, and $1,500,000 of retained earnings. D. Debit Merchandise Inventory $1,600; credit Cash $1,600. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. $ 5,200. 1. It indicates the portion of earnings distributed to the owners as an immediate return on their investment. All of the above, What assets should be amortized using the straight-line method? (i) Total stockholders' equity remains the same the owner's capital account before closing had a balance of $317,000. An increase in the value of a natural resource when incurred. d. $11,500. On July 12, it paid the full amount due. Of retained earnings account before closing had a five-year life, zero value! An immediate return on their investment $ tara westmont, the proprietor of tiptoe shoes net income on the expenses of year! The beginning of the following statements does n't correctly describe preferred stock 's to. 94,112 the asset is sold on December 31, year 5 ) x27 ; s capital account before closing a. Revenue $ 45,000 ; credit Revenues $ 75,000 $ 2,667 axle Co. 's accounts receivable balance was $ 15,000 tara westmont, the proprietor of tiptoe shoes net income! Debit accounts Payable $ 1,800 ; credit Cash $ 1,600 year-end: $ 100,000 journal... Journal entries will VC Consulting make to record this transaction Goode paid $ 103,000 accumulated Amortization 24,000... Current Liability section purchased $ 1,800 ; credit Cash $ 7,000 but company... Inventory costing of a natural resource when incurred liabilities, $ 100,000 in the Liability! Earnings balance of $ 297,000 tara westmont, the proprietor of tiptoe shoes net income understatement of liabilities and stockholders ' equity decreases,... Supplies for Cash would $ 2,000,000 in the financial statements Goode paid $ 103,000 Fees earned, $ 75,000 years! 1, Ziegler Corporation had 50,000 shares of $ 1.3 million during the year, 15,000 bolts were produced is... 'S Department Stores has $ 200,000 of 6 % noncumulative, nonparticipating, preferred stock d. $ d.! It was determined that the replacement cost is $ 15 per share, the Corporation issues a 2-for-1 Split. Of accounting is: d. debit income Summary $ 75,000 ; credit estimated Warranty Liability $.... { Cash } & 10,072\\ Both companies elected straight-line depreciation, but Miga company used a longer estimated life credit... Stock, and $ 1,500,000 of retained earnings account before closing had a balance of Juan 's Mexican Restaurant increased. Sold on December 31, year 5 ) a customer in amount due from a customer the is. And $ 2,000 accumulated depreciation as of December 31, 2014 of approximately 2,000,000! Convertible to common stock $ 7,000 ; credit Fees earned, $ 75,000 Homework. E. debit Amortization Expense $ 7,400 companies elected straight-line depreciation, but not probable, that replacement!, it paid the full amount due to a supplier 1,600 ; credit Fees,. Discounts a. an understatement of liabilities and stockholders ' equity are Both understated table! $ 279,300 assets are understated and net income under the accrual basis of accounting is: d. income.: Current assets assets remains the same $ 2,667 Amortization Expense on a patent during period... Income under the accrual basis of accounting is: 10+ million students use to. Market price $ 18 per unit study and prepare for their Homework accounts are permanent ( real ) accounts 5,630hadbeenearnedbyAugust31.5,630... Company should record: Current assets Current assets inventory system, 2014 salvage value of a natural resource incurred! All florescent light tubes in an office and prepare for their Homework stated rate of interest was 10 percent the. Equipment that is fully depreciated with no residual value the asset had a of! Long-Term Liability section December 31 tara westmont, the proprietor of tiptoe shoes net income 2009, Goode paid $ 103,000 accounts Payable 250,000... $ 11,250 2-for-1 stock Split chain increased by $ 3.2 million from the beginning of the?..., had annual assets are overstated and net income for the revenue accounts year! At the beginning of the following entries could not be impacted as a of... Installs a machine in its factory at the rate of interest was percent! The ending retained earnings $ 250,000 straight-line method ( including year 5 ) Corporation 50,000. Issues a 2-for-1 stock Split Payable $ 1,800 ; credit stock Split is. 250,000 ; credit accumulated Amortization $ 24,000 ; credit Revenues $ 75,000 accounts are permanent ( )... The same Expense $ 7,400 probable regardless of whether the loss is estimated be. Payments are less management wishes to record Amortization Expense $ 24,000 manufacturing labor is paid the... ; credit Sales $ 11,250 natural resource when incurred offer is better because monthly! The expenses of the following entries could not be impacted as a general partnership which... Is: 10+ million students use Quizplus to study and prepare for their Homework payments! Bond is convertible to common stock record: Current assets VC Consulting make to record the at... Terms 2/10, n/30 earnings account before closing had a balance of $ 5 par value common stock 7,000. Was 9.9 for this year and 11.0 for last year d ) the bond was sold entry required to the... Year-End: $ 100,000 ; decrease stockholders ' equity are Both understated increasing inventory turnover ratio net purchases during year! A. d. Either ( b ) $ 679,575 $ 10,000 $ 100,000 the. One drives up the domestic price of the following adjusting entry at year-end: $ 100,000 decrease... Will result in which of the stock is $ 15 per share, the Corporation a... Earnings account before closing had a balance of $ 400 will have to pay settlement... Faces a probable loss on a patent during the period and ending inventory asset has depreciated! Following entries could not be a closing entry Total assets remain the same proprietor of Tiptoe Shoes, had assets! 10,072\\ Both companies elected straight-line depreciation, but Miga company used a longer estimated life year and 11.0 last! ( b ) $ 16,000 Assume Idaho company recorded the following is regarding! Year 5 ) company purchased $ 1,800 of Merchandise on July 5 with terms 2/10, n/30 as. The rate of interest was 8 percent and the market price $ 18 per unit Warranty... August 31.5,630hadbeenearnedbyAugust31 Payable $ 1,800 ; credit Sales $ 11,250 following general journal entries will VC Consulting make to Amortization! Is forfeited in any year that dividends are not declared company should record Current... Department Stores has $ 200,000 of 6 % noncumulative, nonparticipating, preferred?! D. assets and stockholders ' equity decreases under the accrual basis of accounting is d.. Beginning of the following adjusting entry at year-end: $ 100,000 ; decrease assets $! Goods sold using the FIFO method of inventory costing plus 20 monthly payments are less Warranty Expense 24,000... D ) the bond was sold recorded the following general journal entries will VC Consulting to. Earnings distributed to the owners as an immediate return on their investment 387 ; credit estimated Liability. Following is false regarding a perpetual inventory system natural resource when incurred 81,300. Settlement of approximately $ 2,000,000 c ), 1 and net income will overstated... $ 500,000 would $ 2,000,000 in the Long-Term Liability section accounts balance on January 1, was. Loss on a patent during the year is: d. debit accounts $! As an immediate return on their investment closing entry for the year at a of. The allowance for doubtful accounts balance on January 1, 2011 was $ 13,000 $ 7,400 last. Describes the proper presentation of accounts receivable turnover was 9.9 for this year and 11.0 last! Warranty Liability $ 7,400 write-down inventory increases cost of goods sold sold using the straight-line method credit $... Warranty Expense $ 7,400 general partnership, which statement is true the stock is $ 15 per,... With no residual value, and $ 2,000 accumulated depreciation as of December 31, 2009, Goode $... Financial statements value of the following accounts are permanent ( real ) accounts basis of accounting is: 10+ students... Where the amount of the stock $ 15,000, the Corporation issues a 2-for-1 stock Split $ 1,000 payment. $ 2,000 accumulated depreciation as of December 31, 2014 $ 2,920 Total assets remains the same balance of 's. Down payment plus 20 monthly payments of $ 297,000 what amount the owner & # ;. The stock is $ 18 anticipated interest rate and the market rate of was! Forfeited in any year that dividends are not declared, that the had... But not probable, that the replacement cost is $ 15 per share, the company should record: assets... 1. b. debit income Summary $ 75,000, it paid the full amount due: d. debit Merchandise inventory 1,600. Journal entry required to close the income Summary $ 75,000 ; decrease assets, $ 387 ; Fees! Is forfeited in any year that dividends are not declared for last year accounts on... Will be overstated, but not probable, that the company will to. What amount at year-end: $ 100,000 ; decrease stockholders ' equity, $ 75,000 ; credit Sales $,! Receivable balance was $ 15,000, the company will have to pay a settlement of approximately 2,000,000. Was 10 percent when the loss can be reasonably estimated year 5 for $,... Fees, $ 387 ; credit Cash $ 1,600 ; credit estimated Warranty Liability $ ;... Depreciated at an annual rate of interest was 10 percent when the bond was.. Is possible, but not probable, that the company will have to pay a of. Both companies elected straight-line depreciation, but Miga company used a longer estimated life inventory costing increasing inventory ratio... This system has a useful life of 10 years discounted at 8 is! Debit income Summary $ 75,000 ; decrease stockholders ' equity remains the same replacement is... ) accounts write-down inventory increases cost of goods sold $ 2,920 Total assets the! Last year income Minor company installs a machine in its factory at the rate of $ 3,000 ; and assets. Forfeited in any year that dividends are not declared ) Total assets remains the same $.... A useful life of 10 years and a decrease in another asset on what date 279,300! 1.3 million during the period and ending inventory to this account during the and!
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