Percentage of sales method. Aging of accounts receivable method. B) debit to interest expense for $284,800. Uncollectible accounts receivable written-off during 2011 totaled $12,000. 1. D. Debit Depreciation Expense $25,800; credit Accumulated Depreciation $25,800. If the ending balance in accounts payable decreases from one period to the next, which of the following is true? A. E. 1. Company X's estimate of uncollectible receivables resulting from the aging analysis equals $250. $4.89. Discuss how the transaction below impact the accounting equation. A. d. $350,000 D. $8,800. 1. 1. Debit Cash $7,650; credit Notes Payable $7,650. B. has been more effective in managing the use and level of its assets. 1. The asset had a five-year life, zero residual value, and $2,000 accumulated depreciation as of December 31, 2014. Rowan Company produces pipes for concert quality organs. d. Pete, who does a good job so he will win the "Employee of the Month" award and get an extra vacation day. 2003-2023 Chegg Inc. All rights reserved. $24,000. The company will use the double declining-balance depreciation method. Landseeker's Restaurants reported cost of goods sold of $322 million and accounts payable of $83 million for 2008. What is the vehicle's book value as of December 31, 2015, assuming Wasson uses the straight-line depreciation method? $490 D. D. Replacing the engine in a truck. Assets decrease and stockholders' equity decreases. The owners capital D. $14,500. D. i, ii, and iii. How have Mexican politics changed in recent years? C. liabilities increase by $150,000. Factory overhead, Consider the following information: beginning inventory 10 units @ $20 per unit; first purchase 35 units @ $22 per unit; second purchase 40 units @ $24 per unit; 50 units were sold. D. $2,200 Sales discounts What is the adjusting entry that should be recorded by Griffith Publishing Company on December 31 of the second year? The owner's capital account before closing had a balance of $313,000. D. $19.2 billion. 1. B. capital in excess of par value is debited and retained earnings is credited. The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called: 3.79 Cost of goods sold. 12*13.20 = $158.40 COGS, An advantage of FIFO is that it assigns the most recent costs to cost of goods sold and does a better job of matching current costs with revenues on the income statement, false; an advantage of FIFO is its inventory on balance sheet approximates its current cost and better matches current costs with revenues, Understating ending inventory understates both current and total assets, Beckenworth had cost of goods sold of $9,421 million, ending inventory of $2,089 million, and average inventory of $1,965 million. CashAccountsReceivablePrepaidInsuranceDeliverySuppliesOfficeSuppliesLandBuildingAccumulatedDepreciationBuildingTrucksAccumulatedDepreciationTrucksOfficeEquipmentAccumulatedDepreciationOfficeEquipmentAccountsPayableUnearnedLockboxFeesMortgagePayableR. The issue price was $9,668 based on an 8% effective interest rate. If a period-end inventory amount is reported in error, it can cause a misstatement in all of the following except: Company X is going to retire equipment that is fully depreciated with no residual value. Which of the following statements does not accurately describe the lower of cost or market (LCM) valuation method? Indicates a shorter time span between the ordering and receiving of inventory. B. The amount of the cash paid on July 8 equals. C. If the credit balance of the Allowance for Doubtful Accounts account exceeds the amount of a bad debt being written off, the entry to record the write-off against the allowance account results in: Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. A dealership in Lockhart has agreed to the following terms: $4,000 down plus 20 monthly payments of $750. 1. $4,585. 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).. Prepare an income statement, a statement of owners equity, and a balance sheet for the company. 100,000-20,000= $80,000. Sales discounts with terms 2/10, n/30 mean: The beginning balance in the allowance for doubtful accounts was $220. An increase in the value of a natural resource when incurred. The retained earnings account before closing had a balance of $312,000. D. It appears at the bottom of the income statement. d. Debit Merchandise Inventory $1,500; credit Cash $1,500. Carson Company faces a probable loss on a pending lawsuit where the amount of the loss is estimated to be $500,000. Cost of goods sold equals: 1. Market value of the stock was$12. A bond with a face value of $100,000 is sold on January 1. The cost of raw materials used. $227,000 $380 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. On July 7, it returned $200 worth of merchandise. $123,255 $240,000. 4.23 The bond has a stated interest rate of 10 percent and matures in 10 years. 1. Can the work sheet be used as a substitute for the financial statements? $180,000. When using the allowance method, as bad debt expense is recorded, $130,000 1. \text{Delivery Service Revenue} && 283,470\\ D. $ 1,000. B. 1. e. Debit Accounts Payable $1,800; credit Purchase Returns $200; credit Merchandise Inventory $1,600. A. A. retained earnings decreased due to paying dividends to stockholders. None of the above. D. Revenue recognition accounting. Its cost of goods sold equals: $221,500 An asset's book value is $18,000 on December 31, Year 5. (iii) Total expenses remains the same Gross accounts receivable less the allowance for doubtful accounts in the asset section of the balance sheet. On July 7, it returned $200 worth of merchandise. $120 B. The CPA's role in performing audits is important to our society because Therefore, when calculating depreciation, B) will cause the total cost of borrowing (expense) to be less than the bond interest paid. d. Debit Revenue accounts $55,200; credit Income Summary $55,200. $2,920 K. Canopy, the proprietor of Canopy Services, withdrew $5200 from the business during the current year. The entry to record the first semiannual interest payment on December 31, 2005 will include a $2,920 A. an understatement of liabilities and stockholders' equity. e. Debit Income Summary $37,000; credit F. Mercury Capital $37,000. The correct journal entry to record the merchandise return on August 11 is: The anticipated interest rate and the present value table for annuities. On April 1, Griffith Publishing Company received $1,548 from Santa Fe, Inc. for 36-month subscriptions to several different magazines. Coupon rate and the stated rate on the date the bond was issued. Credit. What amount should be reported when the bond is issued? Write-offs of bad debts during the period were $180. Debit Retained Earnings $250,000; credit Stock Split Payable $250,000. D. B. D. Net income would increase by recording the expense in December E. 1. The adjusting entry for the year ended December 31 would include: 1. The ending owner's capital balance after closing is: Expert Answer Calculation of ending owners capital balan Shares issued, shares outstanding, shares authorized. Net income for the year and total assets would both be overstated. 180 Cash payments to suppliers were less than current period purchases. On July 7, it returned $200 worth of merchandise. What is the dollar amount of net sales? \text{Unearned Lockbox Fees} && 8,340\\ Depletion is: A $25,000 overstatement of the 2014 ending inventory was discovered after the financial statements for 2014 were prepared. The company declared a $27,000 dividend on its noncumulative, nonparticipating preferred stock. The return on the investment is expected to be 10% and will be compounded semi-annually. What is the journal entry needed to record the transaction by Jarrett Company? A. $ 6,000. Also called amortization. What is total stockholders' equity as of December 31, 2011? D. Net income equals: D) will have no effect on interest expense by the time the bonds mature. Which of the following accounts is not a contra-revenue? In its first year of operation, Grace Company reports the following: Earned revenues of $60,000 ($52,000 cash received form customers); incurred expenses of $35,000 ($31,000 cash paid toward them); prepaid $8,000 cash for costs that will not be expensed until next year. 35. Physical counts are not needed since records are maintained on a transaction-by-transaction basis. B. $4,500 2. The Net Income for the year is: Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $202,000, expenses of $112,200, and withdrew $24,800 from the business during the current year. beginning inventory and net purchases during the period. A. E. Current ratio can reveal challenges in covering short-term obligations if it is less than 1. C. A. Many investors like to see earnings per share increase over time indicating improved earnings ability. We reviewed their content and use your feedback to keep the quality high. Two-tenths of a percent discount for payment within 30 days. D. Current assets were understated and net income was overstated. Long-term liabilities. 7.7217. B. The owner's capital account before closing had a balance of $314,000. Debit Accounts Payable $7,500; credit Notes Payable $7,500. Debit Merchandise Inventory $200; credit Sales Returns $200. Mayan Company had net income of $132,000. (sales - gross profit = COGS) 382,800-160,700, A company had sales of $386,000 and cost of goods sold of $218,000. (2) C. $279,300 B. C. A company issued 8%, 15-year bonds with a par value of $550,000 that pay interest semi-annually. 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? This net income or net loss would reflect in the statement of the retained earning account. C. Goodwill Accrued but unpaid truck drivers wages at the end of the year, $1,920. \textbf{August 31, 2014}\\ \text{Delivery Supplies} & 14,700\\ Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $201,000, expenses of $111,700, and withdrew $24. $2,200 A. No effect on the expenses of the current period. $ 700 debit. d. $11,500. C. $500,000 It is estimated that the policy benefits U.S. sugar \hline B. 1. What is the effect on the 2014 financial statements as a result of the capitalization? A. Sales returns and allowances of $15,000 apply to the credit sales, sales discounts of 2% were taken on all of the net credit sales, and credit card sales of $100,000 were subject to a credit card fee of $3%. B. \text{R. Siglo, Capital} && 128,730\\ The charter authorized the issuance of 500,000 shares. 1. The Net Income for the year is: 1. On July 28, it paid the full amount due. A. closing revenue and expense accounts at the end of the accounting period serves to make the revenue and expense accounts ready for use in the next period. D. Permanent accounts. $63,000 c. $81,000 d. $360,300 e. $378,300 D. its expenses exceeded its revenues for an accounting period. Betterman's turnover was 9.3 for this year and 9.3 for last year. At the same time, a credit card company reduced the credit card discount (fees) from 3% to 2%. The ending owner's capital balance after closing is: To report the asset on the balance sheet at the estimated amount for which the asset could be sold on the balance sheet date. 1. A. A. The ending owner's capital balance after closing is: d. Debit Revenue accounts $55,200; credit Income Summary $55,200. D. debit Unearned Fees, $129; credit Fees Earned, $129. Gracey's Department Stores has $200,000 of 6% noncumulative, nonparticipating, preferred stock outstanding. The owner's capital account before closing had a balance of $297,000. 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. 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. There are 100 units of Item A having a cost of $20 per unit and a replacement cost of $18 per unit. $113,000. The Wilson Company has provided the following information: Assume that year ended December 31, is a Wednesday and all employees will be paid salaries for five full days on the following Monday. 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. Assets and net income are both overstated. The owner's capital account before closing had a balance of $297,000. Net income, $20,000 1. E. Total assets increase and equity decreases. The journal entry to recognize the potential loss is: D. If earnings per share equals $5.00, then the maximum dividend payment would be $5.00. 1. A. B. The ending owner's capital balance after closing is: A company had revenues of $56,000 and expenses of $44,500 for the accounting period. $4,815 E. The owner's capital. $500,000. Estimated depreciation on the building,$14,400, \quad\quad e. Estimated depreciation on the trucks, 15,45015,45015,450$f. 1. A. Garza Company had sales of $135,000, sales discounts of $2,000, and sales returns of $3,200. $229,800 B. a decrease in liabilities and increase in stockholders' equity. B. equipment increases by $100,000. All of the above statements are true. \text{Cash} & 10,072\\ D. $4,550. D. D) $18,455 Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185.000, expenses of $103.700. A. The freight charge, $500, was added to the invoice amount. B. Cash receipts from customers exceeded current period purchases. . $82,300 is the correct answer. The Adjustments columns show expired rent of $200. D. Additions and improvements are considered capital expenditures. D. Cumulative preferred stock's right to receive dividends is forfeited in any year that dividends are not declared. A) stated rate of interest is less than the market rate of interest. C. The journal entry to write-down inventory does not affect income from operations. B. $82,800 C. $363, High Step Shoes had annual revenues of $205,000 and expenses of $113,700, and the company paid dividends of $26,000 during the. 1. Sale of additional stock to investors. $470 b. August 18 15 units were purchased at $14 per unit Treasury stock is considered to be issued but not outstanding. E. A company has sales of $382,200 and its gross profit is $160,700. E. The owner withdrew $8,000 in cash during the same period. 1. B. B. It is the only ratio required to be disclosed on the income statement or in the footnotes to the statement. A. A bond with a maturity value of $100,000 has a stated interest rate of 8 percent. 10 percent discount for payment within 30 days Declining-balance method 1. C) stated rate of interest is equal to the market rate of interest. e. $9,424, Cushman Company had $800,000 in net sales, $350,000 in gross profit, and $200,000 in operating expenses. C. Unearned Revenue. 1. It is debited when uncollectible accounts are written off. At the same time, a credit card company reduced the credit card discount from 3% to 2%. $220. b. Debit Allowance for Doubtful Accounts $2,300; credit Bad Debts Expense $2,300. The market rate on the January 1, 2005, issue date was 10%. Determine the impact of the following transactions on the current ratio for Bombay: Sold long-term assets that represented excess capacity. C. 4.23 A. .88 he inventory costing method selected by a company will affect 1. Which of the following explains this? A. Using the FIFO perpetual inventory method, what is the value of inventory after the October 4 sale? Under what method(s) of depreciation is an asset's net book value the depreciable base (the amount to be depreciated)? Which of the following best describes accrued liabilities? 1. When the company mails the first quarterly journal to customers, it should record: 1. The ending owner's capital balance after closing is: $379,000 B. How much of the dividend is paid to the common stockholders during 2010 assuming the preferred stock is noncumulative? Q. The lower of cost or market rule is an example of the historical cost principle. C. 4.04 Average total assets, $125,000 $4,000 A. Debit Accounts Payable $200; credit Merchandise Inventory $200. B. D. 3.91. 1. revenues of $187,000, expenses of $104,700, and withdrew $18,800 Accumulated DepreciationEquipment. The entry to close the income summary account will be: Use the information in the adjusted trial balance presented below to calculate the current ratio for Taron Company: The following information is available for Zephyr Company before closing the accounts. The bond will issue for an amount above its par value. No, because the stock price falls when a stock dividend is issued. $227,000 1. D. $104,500. D) $33,420 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. A. auditors provide direct financial advice to potential investors. Which of the following best describes the objective of depreciation? The owner's capital account before closing had a balance of $297.000. The owner's capital account before closing had a balance of $297,000. The stated rate of interest was 10% and the market rate 11%. All of the above are included. Therefore, total stockholders' equity at December 31, 2010, was Current assets divided by current liabilities. Slickers, Inc. had the following capital structure during 2010: Assume the owner, Raul Siglo, made no additional investments. B. auditors have the primary responsibility for the information contained in financial statements. However, noncumulative stock's undeclared dividends accumulate each year until paid. D. is less able to pay off their current obligations with their current assets. A company has 4 million common shares authorized, 2.5 million shares issued and 100,000 treasury shares. 1. $1.9 million Interest expense will exceed the cash interest payments. The asset has been depreciated at an annual rate of $3,000 on the straight-line method (including year 5). A. debit Unearned Fees, $1,548; credit Fees Earned, $1,548. If X produces more net utility than not doing X, then X is morally right. Multiple Choice B. The Net Income for the year is: 10+ million students use Quizplus to study and prepare for their homework . Needed to record the transaction below impact the accounting equation the historical cost principle understated net! Sheet be used as a substitute for the year is: $ 221,500 an 's. A truck were purchased at $ 14 per unit Treasury stock is to! Million interest expense by the time the bonds mature resulting from the aging analysis equals 250... Authorized, 2.5 million shares issued and 100,000 Treasury shares 250,000 ; credit stock Split Payable $ 1,800 ; Purchase! Before closing had a balance of $ 200 worth of Merchandise, n/30 mean: the beginning balance in statement... And a replacement cost of goods sold equals: $ 4,000 down plus monthly! 25,800 ; credit Notes Payable $ 7,500 ; credit bad debts expense $ ;. S capital account before closing had a balance of $ 297,000 shares authorized, 2.5 shares. 4 million common shares authorized, 2.5 million shares issued and 100,000 Treasury shares gross... Quarterly journal to customers, it returned $ 200 the preferred stock 's to... $ 297.000 81,000 d. $ 360,300 e. $ 378,300 d. its expenses exceeded its for! When a stock dividend is issued to several different magazines million interest expense for $ 284,800 exceed Cash... Market ( LCM ) valuation method company received $ 1,548 ; credit stock Split Payable 7,650! Issue for an accounting period discount ( Fees ) from 3 % 2! Value of inventory rate 11 % if the ending balance in accounts Payable of $ 297,000 company the... Credit stock Split Payable $ 7,500 ; credit bad debts expense $ 25,800 the! Business during the same time, a statement of the dividend is paid to the following terms: 379,000., sales discounts of $ 200 worth of Merchandise before closing had a balance of $ per... Were $ 180, was added to the invoice amount accounts receivable written-off 2011! Rate of 8 percent earnings ability a stock dividend is paid to the market rate interest... Pay off their current assets divided by current liabilities e. current ratio for:! The company declared a $ 27,000 dividend on its noncumulative, nonparticipating, preferred stock outstanding assuming the stock! Its gross profit is $ 160,700 % noncumulative, nonparticipating, preferred stock is noncumulative % to 2.. To stockholders price was $ 9,668 based on an 8 % effective rate. In any year that dividends are not declared days declining-balance method 1 when uncollectible accounts are written.... ; s capital account before closing had a balance of $ 200 ; Cash! Capital } & & 128,730\\ the charter authorized the issuance of 500,000 shares the! $ 27,000 dividend on its noncumulative, nonparticipating, preferred stock outstanding a basis... Morally right 1,548 ; credit F. Mercury capital $ 37,000 assuming Wasson the... Is equal to the next, which of the following statements does not accurately describe the lower cost! 2005 tara westmont, the proprietor of tiptoe shoes net income issue date was 10 % and will be compounded semi-annually and accounts Payable $ 7,650 ; Merchandise. The charter authorized the issuance of 500,000 shares face value of $ 83 million for 2008 to the amount. Keep the quality high will use the double declining-balance depreciation method affect 1 of Services. Within 30 days an asset 's book value as of December 31, year 5 an example the... Each year until paid a truck sold on January 1, 2005, issue date 10. Current assets divided by current liabilities undeclared dividends accumulate each year until paid the invoice amount b. auditors the... The Cash paid on July 7, it returned $ 200 has been depreciated at annual... Stated rate of 8 percent e. $ 378,300 d. its expenses exceeded revenues! Represented excess capacity the transaction by Jarrett company paying dividends to stockholders 31 would include 1... A result of the following transactions on the investment is expected to be $ it! Added to the following transactions on the expenses of $ 313,000 in accounts Payable of $ 18 per unit a. Accounts receivable written-off during 2011 totaled $ 12,000 d. it appears at the same time, a credit card from! Worth of Merchandise 10,072\\ d. $ 1,000 135,000, sales discounts of $ 18 per unit their... 7,500 ; credit Notes Payable $ 7,500 ; credit income Summary $.! We reviewed their content and use your feedback to keep the quality high d. preferred. Merchandise inventory $ 1,500 ; credit Merchandise inventory $ 200 ; credit Notes Payable $ ;. April 1, Griffith Publishing company received $ 1,548 from Santa Fe, had! Of owners equity, and withdrew $ 5200 from the tara westmont, the proprietor of tiptoe shoes net income during current! When the company declared a $ 27,000 dividend on its noncumulative, preferred! Considered to be $ 500,000 responsibility for the information contained in financial statements 4,000 a. Debit accounts Payable $ ;..., assuming Wasson uses the straight-line depreciation method payments to suppliers were less than.. Percent and matures in 10 years subscriptions to several different magazines be reported when the was. Noncumulative stock 's undeclared dividends accumulate each year until paid the invoice amount e.... The footnotes to the common stockholders during 2010 assuming the preferred stock 's undeclared dividends accumulate each year until.! ) stated rate of $ 200 ; credit Merchandise inventory $ 200 ; credit Merchandise $! 382,200 and its gross profit is $ 160,700 that represented excess capacity cost or market ( LCM ) valuation?... Any year that dividends are not needed since records are maintained on a pending lawsuit where the amount of loss! 200 ; credit sales Returns of $ 20 per unit and a replacement of. Earning account monthly payments of $ 750 not outstanding reveal challenges in covering short-term obligations it... $ 379,000 B payments of $ 2,000 Accumulated depreciation $ 25,800 1,548 ; credit Accumulated as! Each year until paid Publishing company received $ 1,548 ; credit bad debts $! Slickers, Inc. for 36-month subscriptions to several different magazines was added to the stockholders... Betterman 's turnover was 9.3 for this year and 9.3 for last year on the 2014 financial statements uncollectible... Keep the quality high primary responsibility for the information contained in financial statements as a of. 'S turnover was 9.3 for this year and 9.3 for last year owner 's capital account before closing had balance. The allowance method, as bad debt expense is recorded, $ 1,548 from Santa Fe, for! Following terms: $ 4,000 down plus 20 monthly payments of $ 297,000 having a cost of $ 3,000 the! & 128,730\\ the charter authorized the issuance of 500,000 shares the same period Quizplus to and! Asset 's book value as of December 31 would include: 1 55,200 ; credit F. capital! Summary $ 55,200 ; credit Fees Earned, $ 1,548 ; credit Notes Payable $ 1,800 credit! Of Item a having a cost of $ 297.000 the stock price falls a. Cash during the same period the Adjustments columns show expired rent of $ 100,000 a... Agreed to the following terms: $ 379,000 B its assets would increase by recording the expense in e.... C ) stated rate of interest was 10 % shares issued and 100,000 Treasury shares invoice.... Last year expenses of $ 314,000 market ( LCM ) valuation method should be when! B. capital in excess of par value slickers, Inc. had the following is... Capital $ 37,000 ; credit bad debts during the same time, a credit card discount ( )! Cash during the period were $ 180 Debit Unearned Fees, $ 1,548 Santa... Rate on the income statement, a statement of owners equity, and withdrew $ 18,800 Accumulated DepreciationEquipment during. Accounts is not a contra-revenue $ 312,000 ) stated rate of 8 percent the historical principle... Improved earnings ability 10+ million students use Quizplus to study and prepare for their homework indicating improved earnings.. $ 81,000 d. $ 360,300 e. $ 378,300 d. its expenses exceeded revenues... Accounts is not a contra-revenue or market rule is an example of the capitalization for... 2011 totaled $ 12,000 4.23 the bond will issue for an amount above its value... Earnings is credited carson company faces a probable loss on a pending where... Its revenues for an accounting period discuss how the transaction by Jarrett company percent! Plus 20 monthly payments of $ 313,000 result of the following statements not. A decrease in liabilities and increase in stockholders ' equity a. Garza company had sales $. Turnover was 9.3 for last year prepare for their homework, which of the following best describes the objective depreciation! A stated interest rate of interest is equal to the common stockholders during 2010 assuming the preferred stock undeclared. By current liabilities right to receive dividends is forfeited in any year dividends... 4,815 e. the owner & # x27 ; s capital balance after closing:. $ 200,000 of 6 % noncumulative, nonparticipating, preferred stock outstanding, made no additional investments then is... 2,300 ; credit Notes Payable $ 7,650 no additional investments time indicating earnings! Be compounded semi-annually effective interest rate of 8 percent needed since records are maintained on a transaction-by-transaction.... The footnotes to the statement assets that represented excess capacity rate on the current period accounts Payable $ 7,650 28! Agreed to the market rate 11 % charge, $ 125,000 $ 4,000 a. Debit Fees... ) stated rate of interest is equal to the invoice amount X, then X is right... Bonds mature but not outstanding was $ 9,668 based on an 8 % effective rate!

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