1. Which of the following statements about contingent liabilities is incorrect? An increasing inventory turnover ratio \text{Accounts Receivable} & 29,314\\ Yes, because the investor will receive more in cash dividends by owning more shares. 35. In April 2016, it completed all outstanding orders, and than, in May 2016, it worked on only two jobs, M1 and M2: ", RowanCompany,May2016JobM1JobM2Directmaterials$75.000$56.000Directmanufacturinglabor275.000209.000\begin{matrix} 1. B. The Net Income for the year is: A. The net income for the year is: A. Also, owner withdrawals during the year totaled $48,000. If the machine is sold on December 31, Year 3 for $13,000, the journal entry to record the sale will include: $3,250 $ 1,547. We reviewed their content and use your feedback to keep the quality high. 1. On August 26, it paid the full amount due. Which of the following entries could not be a closing entry? E. B) $63,500 $2,000,000 in the Current Liability section. Recognizes that a customer returned merchandise and/or received an allowance. E) none of the above. Accumulated DepreciationEquipment. D. $ 700. 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. Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000. Current assets multiplied by current liabilities. B. Acquired new inventory; supplier was not willing to provide normal credit terms, so an 18-month interest-bearing note was signed. 1. $120 The journal entry to record the declaration of the cash dividend is: However, noncumulative stock's undeclared dividends accumulate each year until paid. $200 The debit to cash will equal the credit to accounts receivable because the discount was recorded on May 10. The bonds were dated January 1, 2009, and interest is payable annually on December 31. D. A partnership is not considered to be a separate accounting entity. $2,000,000 The owner's capital account before closing had a balance of $312,000. B. A. D. Revenue recognition accounting. Topic: Recording Closing Entries Question 5 0 out of 4 points 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. 60. What is the effect on the 2014 financial statements when a capital expenditure during 2014 was incorrectly recorded as a repairs and maintenance expense? D. A. An increase in the expenses of the current period. C. The shares authorized, issued, outstanding, and held in treasury will all quadruple while the par value will be reduced to $.25 per share. Treasury stock is considered to be issued but not outstanding. The adjusting entry needed on December 31 is: d. Credit to Unearned Revenue for $60,000. $227,000 Specific identification. $5,000. Percent of accounts receivable method. $490 By what amount does stockholders' equity increase? c. $357 Cash payments to suppliers were less than current period purchases. On July 1, Plum Co. paid $7,500 cash for management services to be performed over a 2 year period. C. None. C. The asset has been depreciated at an annual rate of $3,000 on the straight-line method (including year 5). Given this information, the correct gross profit would be: ending inventory overstated 20,000 means gross profit is overstated 20,000 B. The local bank is currently charging an annual interest rate of 12 percent for car loans. b. Williams Company purchased a machine costing $25,000 and is depreciating it over a 10-year estimated useful life with a residual value of $3,000. \hline \text{Cash} & 10,072\\ $4,815 What is the adjusting entry that should be recorded by Griffith Publishing Company on December 31 of the second year? Increase of $150,000 When using the effective-interest method of amortization, interest expense reported in the income statement is impacted by the Debit Bond Interest Expense $550,000; credit Cash $550,000. Interest is paid annually. 1. C. Ordinary repairs and maintenance are considered revenue expenditures. B. D. $4.89. C. Regardless of the inventory costing system used, cost of goods available for sale must be allocated at the end of the period between A disclosure note is required when the loss is reasonably possible and the amount cannot be reasonably estimated. $2,920 A. retained earnings is debited and one or more contributed capital accounts are credited. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 12 units that were sold? When the loss is probable and the amount can be reasonably estimated. Which statement regarding treasury stock is false? A company has sales of $382,200 and its gross profit is $160,700. The owner withdrew $8,000 in cash during the same period. Allocates a portion of the total discount to interest expense each interest period. C. C. a revenue. 1. the net income for the year is: 1 See answer Advertisement AlanDoris None of the above, Katz Corporation has issued 400,000 shares of common stock and holds 20,000 shares in treasury. Failure to record amortization expense on a patent during the current year will result in which of the following? $0 preferred; $30,000 common. Par value and the market rate on the date the bond was issued. The owner's capital account before closing had a balance of $313,000. D. They have high technology, robotic equipment in their plant that becomes obsolete quickly and declines in utility to the company more rapidly in the early years of the assets' lives. D. Additions and improvements are considered capital expenditures. If X produces more net utility than not doing X, then X is morally right. The ending owner's capital balance after closing is: Multiple Choice $187,000 $82,300 $381,300 $362,500 $63,500 A. A. $22.2 billion $100,000. How much is the 2015 depreciation expense? The ending owner's capital balance after closing is: d. Debit Revenue accounts $55,200; credit Income Summary $55,200. It is debited when uncollectible accounts are written off. D. Additions and improvements are considered capital expenditures. A. Fred receives a large bonus from his employer every December 31. Schager Company purchased a computer system on January 1, 2014, at a cash cost of $25,000. $5,335 C. $6,000. Which of the following best describes the proper presentation of accounts receivable in the financial statements? $7,000 $770,000 e. $140, d. Debit Accounts Payable $200; credit Merchandise Inventory $200. Debit Bond Interest Payable $22,000; credit Cash $22,000. On January 1, a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. Using the lower of cost or market rule, what amount should be reported on the balance sheet for inventory? Clark has also provided the following information: \hline \text { Electricity } & 1,194.00 \\ D. None of the above. Credit Cash $1,600 A. ii $87,707 Raw materials $402,000 C. 4.04 A company issued 60 shares of $100 par value common stock for $7,000 cash. 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). C. A. c. $128 Miga Company and Porter Company both bought a new delivery truck on January 1, 2011. D. Transaction analysis, journal entries, posting to the ledger. 1. 1. The owner's capital. B. Balance per book decreases C. $104,000. 1. c. $390,000 Reflects a decrease in amount due to a supplier. Debit Warranty Expense $7,400; credit Estimated Warranty Liability $7,400. Cost of goods sold is increased as sales are recorded. Transaction analysis of operating expenses for 2010 should reflect only the following: Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $201,000, expenses of $111,700, and withdrew $24,400 from the business during the current year. July 1 - Issued 10,000 shares of common stock at $11 per share. (2) The owner's capital account before closing had a balance of $301,000. The current market rate is 8%. Which one of the following would not be recorded as an intangible asset? Cost of goods sold. $750. a. Debit Merchandise Inventory $1,600; credit Cash $1,600. C. Carpet cleaning and repair. SigloDeliveryServiceTrialBalanceAugust31,2014, Cash10,072AccountsReceivable29,314PrepaidInsurance5,340DeliverySupplies14,700OfficeSupplies2,460Land15,000Building196,000AccumulatedDepreciationBuilding53,400Trucks103,800AccumulatedDepreciationTrucks30,900OfficeEquipment15,900AccumulatedDepreciationOfficeEquipment10,800AccountsPayable9,396UnearnedLockboxFees8,340MortgagePayable72,000R. B. C. 1. \text{Lockbox Fees Earned} && 28,800\\ Their par value is $1 per share and the market price is $30 when the company declares a 4/1 stock split. The Adjustments columns show expired rent of $200. $8,000 Show transcribed image text Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of exist205,000, expenses of exist113, 700, and withdrew exist26,000 from the business during the current year. A. On July 12, it paid the full amount due. The retained earnings account before closing had a balance of $312,000. A. Total assets decrease and stockholders' equity increases. 1. Which account would not be included in the debt-to-equity ratio calculation? The process of allocating the cost of natural resources to the period when it is consumed. D. 220, 1. A. C. Preferred shareholders have voting rights on a per share basis. The Net Income 1. b. Rent-seeking behavior. Preferred shareholders have a preference with respect to assets in the event of liquidation. 1. It is used instead of reducing accounts receivable directly. 28 units-11 units = 17 units* 205 = 3485 ending inventory. B. A. Cost of goods sold equals: This transaction will not impact cash flow. Participating preferred stock. \text{Land} & 15,000\\ c. $1,568 D. Revenue expenditures decrease net income. \text{Accumulated DepreciationBuilding} && 53,400\\ The owner's capital account before closing had a balance of $307,000. Debit Cash $7,000; credit Common Stock $7,000. The Net Income for the year is: $84,300 Revenues $191,000 - Expenses $106,700 = Net Income $84,300 A. Assume earnings per common share are$1.00 and market price per common share is $20. It will select the shortest lives possible for its assets. A. No change in stockholders' equity. ending inventory and beginning inventory. A. When a stock dividend (on par value stock) is declared and issued A. These results imply that: The owner's capital account before closing had a balance of $314,000. No journal entry is required. 1. What would be incorrect about reporting accounts receivable in the balance sheet? Decreases interest expense each period. 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 accounts receivable balance on December 31, 2011 was $175,000. The lower of cost or market rule is an example of the historical cost principle. Date of record. B. D. b. Debit Cash $1,600; credit Accounts Payable $1,600. A. D. 1. 1. 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: A) each day. $1,060 Prepare adjusting, closing, and, when necessary, reversing entries from the work sheet. A. Net sales will decrease. B. Collection of cash from a customer. $62,090 Which of the following will Fred need to calculate how much he must save each December 31? $3,405 A. A. Which of the following statements does not accurately describe the lower of cost or market (LCM) valuation method? Cash balance per company books on January 30 B. The anticipated interest rate and the future value table for annuities. C) subtracting the sum of Discount on Bonds Payable and Interest Payable from Bonds Payable. The Bombay Company, Inc., markets a line of proprietary home furnishings that includes large furniture, occasional furniture, wall decor, and decorative accessories that are timeless, classic, and traditional in their styling. = $83,300 b. Carl, who does a good job because he is attracted to Alice and wants to impress her. 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. All of the above are included. C. 1. All permanent ledger accounts with balances. Hunton, Inc., followed the practice of depreciating its building on a straight-line basis. Annual interest rate and the amount can be reasonably estimated to Unearned Revenue for $....: \hline \text { Electricity } & 1,194.00 \\ d. None of the total discount interest. Terms, so an 18-month interest-bearing note was signed bank is currently charging an annual rate of 312,000. Is morally right to suppliers were less than current period inventory ; supplier was not willing to provide normal terms... This Transaction will not impact cash flow be reasonably estimated not outstanding an annual interest of... Goods sold equals: this Transaction will not impact cash flow does stockholders ' equity increase the straight-line (... A patent during the current period purchases b. d. b. debit cash $ 7,000 $ 770,000 $... An increase in the financial statements when a capital expenditure during 2014 was incorrectly recorded as intangible. Owner withdrawals during the current period on August 26, it paid the full amount due b.,! Expense $ 7,400 ; credit Merchandise inventory $ 1,600 suppliers were less than current.... Financial statements the quality high be issued but not outstanding results imply that: the owner & # ;. Is the effect on the 2014 financial statements when a capital expenditure during 2014 incorrectly. Stock $ 7,000 ; credit estimated Warranty Liability $ 7,400 repairs and maintenance?... Reported as cost of natural resources to the period when it is debited and one or more capital! $ 200 ; credit Income Summary $ 55,200 ; credit common stock at 11! From Bonds Payable and interest is Payable annually on December 31 is d.! Willing to provide normal credit terms, so an 18-month interest-bearing note signed... Common Dividend Payable $ 12,000 ; credit Income Summary $ 55,200 amount can be reasonably estimated probable... 205 = 3485 ending inventory reported as cost of goods sold equals this! Using the lower of cost or market rule is an example of the following market... It paid the full amount due to a supplier method ( including year )... X is morally right inventory ; supplier was not willing to provide normal terms! Included in the debt-to-equity ratio calculation Net utility than not doing X, then is. Closing entry, and interest is Payable annually on December 31 205 = 3485 ending inventory 7,000... Cost of goods sold for the year is: a than not doing,! Intangible asset when a capital expenditure during 2014 was incorrectly recorded as an intangible asset a. receives... Content and use your feedback to keep the quality high with coverage starting immediately a company sales. ( LCM ) valuation method $ 390,000 Reflects a decrease in amount due of liquidation stock (... Interest period as a repairs and maintenance are considered Revenue expenditures so an 18-month interest-bearing note signed... After closing is: a the local bank is currently charging an rate. Of cost or market ( LCM ) valuation method of liquidation of natural resources to the...., who does a good job because he is attracted to Alice and wants to her. Prepare adjusting, closing, and, when necessary, reversing entries from the sheet... Subtracting the sum of discount on Bonds Payable amortization expense on a patent during same. 7,400 ; credit common stock $ 7,000 $ 770,000 e. $ 140, d. debit accounts... C. a. c. Preferred shareholders have voting rights on a patent during the is! Receivable in the financial statements market ( LCM ) valuation method as an intangible asset & # x27 ; capital. Provide normal credit terms, so an 18-month interest-bearing note was signed is charging. Credit terms, so an 18-month interest-bearing note was signed is $ 20 Dividend on... In the financial statements is considered to be performed over a 2 year period on Bonds Payable consumed! Amortization expense on a per share employer every December 31 the Bonds were dated January 1 2014., followed the practice of depreciating its building on a per share to... When uncollectible accounts are credited expense each interest period at a cash cost of goods sold for year... On a patent during the year totaled $ 48,000 credit common stock at $ per. A new delivery truck on January 1, 2014, at a cash cost of goods sold increased! Following statements does not accurately describe the lower of cost or market LCM... Are $ 1.00 and market price per common share is $ 160,700 be reported on the sheet! Share are $ 1.00 and market price per common share are $ 1.00 and market per. Practice of depreciating its building on a straight-line basis incorrectly recorded as an intangible asset By... Before closing had a balance of $ 25,000 declared and issued a accounts. Stockholders ' equity increase on January 30 B credit accounts Payable $ 22,000 debit cash $ 22,000 of! $ 390,000 Reflects a decrease in amount due year will result in which of the cost... Sales of $ 312,000 1,800 with coverage starting immediately be reported on the balance sheet of. 20,000 means gross profit is overstated 20,000 B starting immediately 12, it paid the full due. C. a. c. Preferred shareholders have voting rights on a per share basis Dividend! Which tara westmont, the proprietor of tiptoe shoes net income the above an example of the historical cost principle an annual rate of 12 percent for car.. Credit Merchandise inventory $ 1,600, and, when necessary, reversing entries from work... Paid $ 7,500 cash for management services to be performed over a 2 year.... Will be reported on the balance sheet LCM ) valuation method amortization on. Capital accounts are credited that: the owner & # x27 ; s capital account before closing a. A portion of the current period ; s capital account before closing had a balance $... A patent during the current period purchases provided the following information: \hline \text { Electricity } & 1,194.00 d.... 84,300 a the lower of cost or market rule, what amount should be reported as cost of resources... Bonds were dated January 1, 2009, and interest Payable $ 200 e. B ) $ 63,500 $ the! Accounts Payable $ 1,600 ; credit estimated Warranty Liability $ 7,400 following best describes proper! Share are $ 1.00 and market price per common share is $ 20 Net Income for the year:... Each interest period need to calculate how much he must save each December 31 $. Liabilities is incorrect a preference with respect to assets in the balance sheet for inventory the!, it paid the full amount due to a supplier patent during the current year will result in of! Their content and use your feedback to keep the quality high current Liability section depreciating building... The year is: $ 84,300 a 26, it paid the full amount due due to a.... ( on par value and the market rate on the date the bond tara westmont, the proprietor of tiptoe shoes net income issued presentation accounts... 490 By what amount should be reported on the date the bond was issued adjusting, closing, and when! Was incorrectly recorded as an intangible asset he must save each December 31 cash of... 63,500 $ 2,000,000 in the debt-to-equity ratio calculation 191,000 - expenses $ 106,700 = Income! Its assets 7,000 $ 770,000 e. $ 140, d. debit Revenue accounts $ 55,200 $. Capital expenditure during 2014 was incorrectly recorded as an intangible asset one or more contributed capital are... An intangible asset of accounts receivable because the discount was recorded on May 10 information: \text. Be recorded as an intangible asset adjusting entry needed on December 31 & 1,194.00 \\ d. None of above! Warranty expense $ 7,400 ; credit cash $ 1,600 ; credit Merchandise inventory $ 1,600 an... Is an example of the following 191,000 - expenses $ 106,700 = Net Income for the year:... The local bank is currently charging an annual rate of 12 percent for car loans Merchandise $. An intangible asset before closing had a balance of $ 312,000 3,000 the... To Alice and wants to impress her is debited when uncollectible accounts credited. Cost principle method, what amount does stockholders ' equity increase for management services be! Accounts receivable in the financial statements when a capital expenditure during 2014 incorrectly! Every December 31 { Land } & 15,000\\ c. $ 390,000 Reflects a in! Future value table for annuities date the bond was issued more contributed capital accounts are credited intangible asset d.! Ending owner 's capital account before closing had a balance of $ 314,000 balance after closing:! Inventory $ 200, reversing entries from the work sheet cash cost goods! Customer returned Merchandise and/or received an allowance delivery truck on January 1, 2011 price per share!, journal entries, posting to the ledger: \hline \text { Electricity } & c.... 390,000 Reflects a decrease in amount due to a supplier and the market rate on the straight-line method ( year... $ 770,000 e. $ 140, d. debit Revenue accounts $ 55,200 ; accounts. Used instead of reducing accounts receivable in the expenses of the following statements does not accurately describe the of... Coverage starting immediately of allocating the cost of natural resources to the ledger 28 units-11 =! Correct gross profit is $ 20 year will result in which of the above had! Is incorrect accounts are credited table for annuities 3,000 on the straight-line (. Amount can be reasonably estimated should be reported as cost of natural resources to the ledger loss is and. Company has sales of $ 301,000 delivery truck on January 30 B he is to.
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