BUSA HW 3

Record the entry for the sale and the cost of the sale of merchandise to a customer on account for $800, which cost $500, by selecting which accounts are debited and which are credited.

-debit cost of goods sold -credit inventory -credit sales revenue -debit accounts receivable

Royal Flush Plumbing, Inc., performed $1,000 of services on account of which it has collected $600. Revenues on the income statement equals? DO NOT INCLUDE $ IN YOUR ANSWER.

1,000

Given the Accounts Payable T-account, match the correct description with each number. For the beginning (1. or 2.) and ending balances (5. or 6.), select "Blank" for the side that is opposite the account's normal balance.

1. Blank 2. Beginning balance 3. payments to merchandisers 4. purchases on account 5. blank 6. ending balance

Given the Unearned Revenue T-account, match the correct description with each number. For the beginning (1. or 2.) and ending (5. or 6.) balances, select "Blank" for the side that is opposite the account's normal balance.

1. Blank 2. Beginning balance 3. revenues earned 4. collections in advance from customers 5. blank 6. ending balance

List the steps in the accounting cycle in chronological order.

1. Record a journal entry 2. summarize in the ledger (T-accounts) 3. prepare an unadjusted trial balance 4. record and post the adjusting entries 5. prepare an adjusted trial balance 6. prepare financial statements 7. record and post the closing entries 8. prepare a post-closing trial balance

Given the Prepaid Rent T-account, match the correct description with each number. For the beginning(1. or 2.) and ending (5. or 6.) balances, select "Blank" for the side that is opposite the account's normal balance.

1. beginning balance 2. blank 3. payments in advance 4. rent used 5. ending balance 6. blank

John Dear, Inc. bought machinery at a cost of $729,000 on January 1, Year 1. Assuming its salvage value is $0 (i.e., it plans to dispose of the machinery and not try to sell it) and its useful life is 10 years, Accumulated Depreciation at December 31, Year 2 equals ______.

145,800

After preparing an unadjusted trial balance using the accounts above, what would the total debit column equal on the unadjusted trial balance?

15,600

Curl Up & Dye, Inc. began Year 2 with $300 of supplies. It purchased $730 of supplies on account during the year. It paid $490 of the amount it owed for its supplies during the year. At December 31, Year 2, it only had $170 of supplies left. Supplies on the Balance Sheet at December 31, Year 2 equals ______.

170

Using the amounts from above, what does Retained Earnings equal on the post-closing trial balance?

1850

On January 1, Year 1, The Sweet Dairy Air, Inc., paid $26,000 for a 4-year advertising campaign beginning on that date and runs the same number of advertisements each month. Prepaid Advertising at December 31, Year 1 equals ______.

19,500

How many of the following accounts have a normal debit balance and are found on the income statement? accounts receivable accumulated depreciation wages expense wages payable depreciation expense sales revenue

2

On November 1, Year 1, Pitts' Pits, Inc., paid $46,000 for a 4-month insurance policy beginning on that date. Prepaid Insurance at December 31, Year 1 equals ______.

23,000

how many of the following accounts have a normal debit balance? Accounts Receivable Unearned Revenue Wages Expense Wages Payable Depreciation Expense Sales Revenue

3

Melon-Cauli Grocers, Inc. had a $10,000 balance in Accounts Payable at the beginning of the month. During the month, it made $60,000 of purchases on account due within one month and paid $40,000 of the amounts owed. The Accounts Payable balance at the end of the month has a ______ balance.

30,000 credit

Using the information found in the financial statements for the month ended May 31 and the Accounts Receivable T-account, determine its May 31 balance found on the balance sheet. Assume all sales are on account. Balance Sheet at April 30: Accounts Receivable = $2,000 Statement of Cash Flows: Cash Collected from Customers on the Statement of Cash Flows = $6,000 Income Statement: Sales = $7,000 Balance Sheet at May 31: Accounts Receivable = ______?

3000

On October 31, Year 1, Pitts' Pits, Inc., paid $48,000 for a 3-month insurance policy beginning on that date. Insurance Expense for the year ended December 31, Year 1 equals ______.

32,000

John Dear, Inc. bought machinery at a cost of $205,000 on January 1, Year 1. Assuming its salvage value is $0 (i.e., it plans to dispose of the machinery and not try to sell it) and its useful life is 10 years, Accumulated Depreciation at December 31, Year 2 equals ______

41000

How many of the above accounts are closed at the end of the accounting period?

5

Kincaid Company's Retained Earnings balance on january 1 was $6,000. During the current year, Kincaid earned $6,400 in revenues and incurred $4,200 in expenses. Kincaid paid $2,500 in dividends, all in cash. After the closing entries are made, Kincaid's Retained Earnings balance on December 31 will be ______.

5,700

Lox, Stock & Bagel, Inc. bought machinery at a cost of $512,000 on January 1, Year 1. It plans to dispose of the machinery after 10 years of use. Depreciation Expense for the year ended December 31, Year 2 equals ______.

51,200

Lox, Stock & Bagel, Inc. bought machinery at a cost of $555,000 on January 1. If its salvage value is $0 (i.e., it plans to not sell the machinery when it is done using it) and its useful life is 10 years, Depreciation Expense for the year ended December 31, Year 1 equals ______.

55,500

Using the information in the Accounts Receivable ledger account shown below: Determine the missing amounts on the financial statements 1. Cash Collected from Customers on the Statement of Cash Flows equals [a]. 2. Sales on the Income Statement equals [b]. 3. The amount not yet collected on the Balance Sheet equals [c].

700 900 300

A company started the year with $400 of supplies. During the year, the company purchased additional supplies costing $1,600 on account of which it paid $600 later in the year. There were $800 of supplies on hand at the end of the year. An adjusted trial balance prepared at the end of the year will show a Supplies with a ______ balance.

800 debit

Doolittle & Dalley, Inc., provided $800 of services on account.

Account Receivable 800 Revenue 800

Which accounts are increased by debits?

Assets, expenses and dividends

Which of the following statements is true?

Income statement accounts are temporary accounts, while balance sheet accounts are permanent accounts.

On May 10, Lord of the Fries, Inc., sold $100 of inventory to a customer for $300 on account. Record the May 10 sale entry and then record the cost of the sale. DO NOT INCLUDE $ SIGNS IN YOUR ANSWER.

account receivable 300 sales revenue 300 cost of goods sold 100 inventory 100

Which of the following have normal credit balances? (Select all that apply.)

accounts payable notes payable common stock

When a company makes a payment for amounts owed from prior purchases of inventory, it will record a debit to ______ and a credit to ______.

accounts payable; cash

The adjusting entry to record revenue earned but not yet billed to customers includes a debit to ______.

accounts receivable

On May 31, Squid Roe, Inc., recorded the adjusting entry to recognize $800 of revenues earned but not yet billed.

accounts receivable 800 sales revenue 800

Which report is constructed immediately prior to preparing the financial statements with the purpose of demonstrating that the accounts balance?

adjusted trial balance

Identify the normal balance of each account below. service revenue notes payable interest expense dividends inventory accumulates depreciation unearned revenue

credit credit debit debit debit credit credit

The beginning balance in Lucre's Notes Payable was $50,000. During the month, Lucre borrowed $60,000 cash from Last National Bank and then paid First National Bank the $40,000 it had borrowed five months prior. The balance in Lucre's Notes Payable is now a ______.

credit of $70,000

On May 1, its first month of business, Squid Roe, Inc., recorded the receipt of $900 in advance for services to be performed over the three months as Unearned Revenue. Record the May 31 adjusting entry to recognize the first month of revenue earned. (Select all that apply.)

credit revenue $300 debit Unearned revenue $300

The adjusting entry to record depreciation on equipment includes a ______. (Select all that apply.)

credit to accumulated depreciation debit to depreciation expense

Record the adjusting entry on December 31 for wages owed to employees that will be paid in January, the next accounting period. (Select all that apply.)

credit wages payable debit wages payable

The normal balance of Sales Revenue is a ______ because it is a(n) ______.

credit, shareholders' equity

The normal balance of Accounts Payable is a ______ because it is a(n) ______.

credit; liability

A company paid $500 for supplies that it purchased last month. The decrease in liabilities would be recorded with a ______ to Supplies Payable.

debit

Accounts receivable accounts payable salary payable sales accumulated depreciation depreciation expense salary expense unearned revenue common stock supplies

debit credit credit credit credit debit debit credit credit debit

Accounts receivable Accounts Payable Salary Expense Dividends Equipment Depreciation Expense Salary Payable Supplies Supplies Expense Sales

debit credit debit debit debit debit credit debit debit credit

Which of the following adjusting entries represent accruals that adjust for amounts earned or incurred that are owed? (Select all that apply.)

debit accounts receivable and credit revenue debit wages expense and credit wages payable

A company pays $100,000 per week payroll for a 40-hour, five-day work week ending on Fridays. The adjusting entry on December 31, which is a Tuesday, is a ______.

debit to Wages Expense for $40,000 and a credit to Wages Payable for $40,000

A company started the year with $400 of supplies. During the year, the company purchased an additional $1,200 of supplies on account of which it paid $1,000. There were $700 of supplies on hand at the end of the year. An adjusting entry prepared at the end of the account period includes a _______.

debit to suplies expense for $900

Expenses are increased with ______.

debits because they decrease shareholders' equity

Which of the following adjusting entries represent deferral adjustments that adjust for amounts expired or used during the period? (Select all that apply.)

debut insurance expense and credit prepaid insurance debit supplies expense and credit supplies

The entry to close expense accounts ______.

decreases retained earnings

The debit side of the Retained Earnings T-Account will include which of the following after recording the closing entries? (Select all that apply.)

dividends for the month expenses for the month

Which of the following transactions will increase an asset and increase shareholders' equity?

performing a service on account for a customer

When a company pays cash in advance for rent that is to be used over the next two years, the company records a debit to ______ and a credit to ______.

prepaid rent; cash

Journals are used to ______.

record transactions chronologically

Squid Roe, Inc., had Salary Expense of $900 on its adjusted trial balance. Record the entry to close this expense at the end of the accounting period. DO NOT INCLUDE $ SIGNS IN YOUR ANSWER.

retained earnings 900 salary expense 900

The adjusting entry to record revenue earned but not yet billed to customers includes a credit to ______.

revenue

Revenue for the year totaled $900. Record the entry to close revenues at the end of the year. DO NOT INCLUDE $ SIGNS IN YOUR ANSWER.

revenue 900 retained earnings 900

Record the adjusting entry to show that $300 of supplies were used during the month. DO NOT INCLUDE $ SIGNS IN YOUR ANSWER.

supplies expense 300 supplies 300

Which statement about a journal entry is NOT true?

the journal entry shows the balance in each account

What is a good starting point for determining which accounts require adjustment?

unadjusted trial balance

On May 1, its first month of business, Squid Roe, Inc., recorded the receipt of $800 in advance from customers for services to be performed over the next four months starting May 1. Record the May 31 adjusting entry to recognize the first month of revenue earned. DO NOT INCLUDE $ SIGNS IN YOUR ANSWER.

unearned revenue 200 revenue 200

On July 31, Squid Roe, Inc., recorded the adjusting entry of $900 for wages owed to employees that will be paid in August, the next accounting period.

wages expense 900 wages payable 900