Accounting 222 Exam One
The inventory records for Radford Co. reflected the following Beginning inventory @ May 1 400 units @ $ 2.40 First purchase @ May 7 500 units @ $ 2.60 second purchase @ May 17 700 units @ $ 2.70 Third purchase @ May 23 300 units @ $ 2.80 Sales @ May 31 1,500 units @ $ 4.30 Determine the amount of ending inventory assuming the FIFO cost flow method.
$1110 = 100(2.7)+300(2.8)
On January 1, Year 2, the Accounts Receivable balance was $29,000 and the balance in the Allowance for Doubtful Accounts was $3,400. On January 15, Year 2, an $980 uncollectible account was written-off. The net realizable value of accounts receivable immediately after the write-off is:
$25,600. Explanation: $29,000 - $980 = $28,020 accounts receivable balance after the write-off. $3,400 - $980 = $2,420 allowance balance after the write-off. $28,020 - $2,420 = $25,600 net realizable value after the write-off.
The Miller Company earned $123,000 of revenue on account during Year 2. There was no beginning balance in the accounts receivable and allowance accounts. During Year 2, Miller collected $82,000 of cash from its receivables accounts. The company estimates that it will be unable to collect 3% of its sales on account. The amount of uncollectible accounts expense recognized on the Year 2 income statement was:
$3,690
Leach Inc. experienced the following events for the first two years of its operations: 2018: Issued $10,000 of common stock for cash. Provided $90,000 of services on account. Provided $33,000 of services and received cash. Collected $57,000 cash from accounts receivable. Paid $22,000 of salaries expense for the year. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. 2019: Wrote off an uncollectible account for $700. Provided $110,000 of services on account. Provided $25,000 of services and collected cash. Collected $92,000 cash from accounts receivable. Paid $30,000 of salaries expense for the year. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. What is the net realizable value of the accounts receivable at December 31, 2018?
$31,350
What is the amount of total assets at the end of the period? 1. Acquired $30,000 cash from the issue of common stock. 2. Purchased inventory for $18,000 cash. 3. Sold inventory costing $15,000 for $32,000 cash.
$47,000
Record the events in a horizontal statement model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, or NC for net change in cash. If the element is not affected by the event, leave the cell blank. 1. Acquired $30,000 cash from the issue of common stock. 2. Purchased inventory for $18,000 cash. 3. Sold inventory costing $15,000 for $32,000 cash.
1. $30,000 Cash, Common Stock, Cash Flow FA 2. ($18,000)Cash $18,000 Inventory, Cash Flow OA 3a. $32,000 Cash RE Revenue Net Income Cash Flow OA 3b. ($15,000) Inventory RE Net Income $15,000 Expense
Leach Inc. experienced the following events for the first two years of its operations: 2018: Issued $10,000 of common stock for cash. Provided $90,000 of services on account. Provided $33,000 of services and received cash. Collected $57,000 cash from accounts receivable. Paid $22,000 of salaries expense for the year. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. Required Organize the transaction data in accounts under an accounting equation
1. 10,000 Cash & Common Stock 2. 90,000 Accounts Receivable & Retained Earnings, Service Revenue 3. 33,000 Cash & Retained Earnings, Service Revenue 4. 57,000 Cash (57,000) Accounts Receivable 5. (22,000) Cash & Retained Earnings, salaries expense 6. 1650 Allowances (1650) Retained Earnings, Uncollectible accounts expense
Record the above events in a horizontal statement model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, or NC for net change in cash. If the element is not affected by the event, leave the cell blank. The beginning balances have been recorded as an example. 1. Acquired $60,000 cash from the issue of common stock. 2. Purchased $65,000 of inventory on account. 3. Received goods purchased in Event 2 FOB shipping point; freight cost of $900 paid in cash. 4. Sold inventory on account that cost $38,000 for $71,000. 5. Freight cost on the goods sold in Event 4 was $620. The goods were shipped FOB destination. Cash was paid for the freight cost. 6. Customer in Event 4 returned $4,200 worth of goods that had a cost of $2,150. 7. Collected $58,300 cash from accounts receivable. 8. Paid $59,200 cash on accounts payable. 9. Paid $2,600 for advertising expense. 10. Paid $3,100 cash for insurance expense.
1. 60,000 Cash, Common Stock, Cash Flow FA 2. 65,000 Inventory, Accounts Payable 3. (900) Cash, Cash Flows OA 900 Inventory 4a. (38,000) Inventory, RE, Net income 38,000 Expenses 4b. 71,000 Accounts receivable, RE, revenue, net income 5. (620) Cash, RE, Net income, cash flows OA 620 Expenses 6a. (4200) Accounts receivable, RE, revenue, net income 6b. 2,150 Inventory, RE, net income (2150) Expenses 7. 58,300 Cash, cash flows OA (58,300) Accounts receivable 8. (59,200) Cash, Accounts payable, Cash flows OA 9. 2,600 Expenses (2,600) Cash, RE, net income, cash flows OA 10. 3,100 Expenses (3,100) Cash, RE, net income, cash flows OA
For each of the following events, indicate whether the freight terms are FOB destination or FOB shipping point. 1. sold merchandise and the buyer paid the freight costs 2. purchased merchandise and the seller paid the freight costs 3. sold merchandise and paid freight costs 4. purchased merchandise and paid freight costs
1. FOB shipping point 2. FOB destination 3. FOB destination 4. FOB shipping point
1. Acquired $1,000 cash from the issue of common stock. 2. Paid $24 cash for utilities expense. 3. Paid a $1,500 cash dividend to the stockholders. 4. Provided boarding services for $6,000 cash. 5. Purchased additional land for $2,500 cash. 6. Determined the market value of the land to be $24,000 at the end of the accounting period. 7. Acquired an additional $16,000 cash from the issue of common stock. 8. Paid $3,500 cash for salary expense. 9. Borrowed $10,000 cash from New South Bank. 10. Paid $6,000 cash to purchase land. 11. Provided additional boarding services for $10,500 cash. Required Classify each event as an asset source, use, or exchange transaction or as not applicable (NA).
1. asset source 2. asset use 3. asset use 4. asset source 5. asset exchange 6. N/A 7. asset source 8. asset use 9. asset source 10. asset exchange 11. asset source
Which of these events affect period (selling and administrative) costs? Which result in product costs? If neither, label the transaction NA. 1. Acquired $60,000 cash from the issue of common stock. 2. Purchased $65,000 of inventory on account. 3. Received goods purchased in Event 2 FOB shipping point; freight cost of $900 paid in cash. 4. Sold inventory on account that cost $38,000 for $71,000. 5. Freight cost on the goods sold in Event 4 was $620. The goods were shipped FOB destination. Cash was paid for the freight cost. 6. Customer in Event 4 returned $4,200 worth of goods that had a cost of $2,150. 7. Collected $58,300 cash from accounts receivable. 8. Paid $59,200 cash on accounts payable. 9. Paid $2,600 for advertising expense. 10. Paid $3,100 cash for insurance expense.
1. n/a 2. product costs 3. product costs 4. product costs 5. period costs 6. product costs 7. n/a 8. n/a 9. period costs 10. period costs
Which of the following would be added to the Inventory account for a merchandising business using the perpetual inventory system? 1. transportation out 2. purchase discount 3. transportation in 4. purchase of new computer to be used by business 5. purchase of inventory 6. allowance received for damaged inventory
1. no 2. no 3. yes 4. no 5. yes 6. no
Leach Inc. experienced the following events for the first two years of its operations: 2019: Wrote off an uncollectible account for $700. Provided $110,000 of services on account. Provided $25,000 of services and collected cash. Collected $92,000 cash from accounts receivable. Paid $30,000 of salaries expense for the year. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. What is the net realizable value of the accounts receivable at December 31, 2019?
47,785
The following information is available for Trinkle Company for the month of June: The unadjusted balance per the bank statement on June 30 was $60,356. Deposits in transit on June 30 were $2,760. A debit memo was included with the bank statement for a service charge of $21. A $3,225 check written in June had not been paid by the bank. The bank statement included a $1,350 credit memo for the collection of a note. The principal of the note was $1,295, and the interest collected amounted to $55. Required Determine the true cash balance as of June 30. (Hint: It is not necessary to use all of the preceding items to determine the true balance.)
59,891
The accounts receivable balance for Renue Spa at December 31, 2017, was $86,000. Also on that date, the balance in the Allowance for Doubtful Accounts was $2,700. During 2018, $2,800 of accounts receivable were written off as uncollectible. In addition, Renue unexpectedly collected $190 of receivables that had been written off in a previous accounting period. Services provided on account during 2018 were $218,000, and cash collections from receivables were $220,000. Uncollectible accounts expense was estimated to be 1 percent of the sales on account for the period. Required Organize the information in accounts under an accounting equation. (1) Balance of Allowance for Doubtful Accounts at December 31, 2018. (2) Balance of Accounts Receivable at December 31, 2018. (3) Net realizable value of Accounts Receivable at December 31, 2018.
86,000 accounts receivable - 2700 allowance 1. (2,800) accounts receivable-(2,800) allowance 2a. 190 accounts receivable-190 allowance 2b. 190cash= (190)accounts receivable 3. 218,000accounts receivable=218,000Retained Earnings Revenue 4. 220,000 cash+ (220,000) accounts receivable 5. - 2,180allowance = +(2,180)retained earnings Uncollectible accounts expense Bal. 220,190 81,200 2,270 0 215,820
Borrowing cash from the bank is an example of which type of transaction?
Asset Source
Are adjusting or closing entries recorded first?
Adjusting entries
Leach Inc. experienced the following events for the first two years of its operations: 2019: Wrote off an uncollectible account for $700. Provided $110,000 of services on account. Provided $25,000 of services and collected cash. Collected $92,000 cash from accounts receivable. Paid $30,000 of salaries expense for the year. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. Prepare the balance sheet for 2019.
Assets Cash $165,000 Accounts receivable $50,300 Less: Allowance for doubtful accounts 50,300 Total assets $215,300 Liabilities $0 Stockholders' equity Common stock $10,000 Retained earnings 202,785 Total stockholders' equity 212,785 Total liabilities and stockholders' equity $212,785
Leach Inc. experienced the following events for the first two years of its operations: 2019: Wrote off an uncollectible account for $700. Provided $110,000 of services on account. Provided $25,000 of services and collected cash. Collected $92,000 cash from accounts receivable. Paid $30,000 of salaries expense for the year. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. Organize the transaction data in accounts under an accounting equation.
Bal. 78,000Cash+33,000AR-1,650Allowance=10,000CS+99,350RE 1. (700)AR-(700)AL 2. 110,000AR=110,000RE Service revenue 3. 25,000Cash=25,000RE Service revenue 4. 92,000Cash+(92,000)AR 5. (30,000)Cash= (30,000)RE Salaries expense 6. 1,565AL= (1,565)RE Uncollectible accounts expense Bal. 165,000 + 50,300 - 2,515 = 0 + 10,000 + 202,785
Mijka Company was started on January 1, 2018. During 2018, the company experienced the following three accounting events: (1) earned cash revenues of $28,600, (2) paid cash expenses of $13,200, and (3) paid a $1,500 cash dividend to its stockholders. These were the only events that affected the company during 2018. create a balance sheet
Balance Sheet Assets Cash 13,900 Total assets 13900 Liabilities 0 Stockholders' equity Common stock 0 Retained earnings 13,900 Total stockholders' equity 13900 Total liabilities and stockholders' equity 13900
Holmes Cleaning Service began operation on January 1, 2018. The company experienced the following events for its first year of operations: Events Affecting 2018: Provided $170,000 of cleaning services on account. Collected $127,500 cash from accounts receivable. Paid salaries of $28,000 for the year. Adjusted the accounts to reflect management's expectations that uncollectible accounts expense would be $1,900. The expense was determined using the percent of revenue method. Organize the transaction data in accounts under an accounting equation.
Balance Sheet 1. $170,000 Accounts receiveable, retained earnings, service revenue 2. $127,500 Cash (127,500) accounts receivable 3. ($28,000) Cash, Retained earnings, salaries expense 4. 1,900 Allowance (1900) retained earnings, uncollectible accounts expense
Leach Inc. experienced the following events for the first two years of its operations: 2018: Issued $10,000 of common stock for cash. Provided $90,000 of services on account. Provided $33,000 of services and received cash. Collected $57,000 cash from accounts receivable. Paid $22,000 of salaries expense for the year. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. Prepare a statement of changes in stockholders' equity
Beginning common stock $0 Plus: Common stock issued 10,000 Ending common stock $10,000 Beginning retained earnings 0 Plus: Net income 99,350 Ending retained earnings 99,350 Total stockholders' equity $109,350
The transaction, "provided services for cash," affects which two accounts?
Cash and Revenue
Yard Professionals Inc. experienced the following events in 2018, its first year of operation: Performed services for $35,000 cash. Purchased $6,000 of supplies on account. A physical count on December 31, 2018, found that there was $1,800 of supplies on hand. Prepare a statement of cash flows
Cash flows from operating activities Cash receipt from revenue $35,000 Net cash flow from operating activities $35,000 Cash flows from investing activities 0 Cash flows from financing activities 0 Net change in cash 35,000 Plus: Beginning cash balance $0 Ending cash balance $35,000
Holmes Cleaning Service began operation on January 1, 2018. The company experienced the following events for its first year of operations: Events Affecting 2018: Provided $170,000 of cleaning services on account. Collected $127,500 cash from accounts receivable. Paid salaries of $28,000 for the year. Adjusted the accounts to reflect management's expectations that uncollectible accounts expense would be $1,900. The expense was determined using the percent of revenue method. Prepare a statement of cash flows for 2018.
Cash flows from operating activities Inflow from customers $127,500 Outflow for expenses (28,000) Net cash flow from operating activities $99,500 Cash flows from investing activities $0 Cash flows from financing activities $0 Net change in cash 99,500 Plus: Beginning cash balance $0 Ending cash balance 99,500
Yard Designs (YD) experienced the following events in 2018, its first year of operation: On October 1, 2018, YD collected $54,000 for consulting services it agreed to provide during the next 12 months. Adjusted the accounts to reflect the amount of consulting service revenue recognized in 2018. Prepare a statement of cash flows for the 2018 accounting period.
Cash flows from operating activities: Cash receipt from revenue: $54,000 Net cash flow from operating activities: $54,000 Net change in cash: $54,000 Plus: Beginning cash balance $0 Ending cash balance: $54,000
Reynolds Company experienced an accounting event that affected its financial statements as indicated below: assets (+)= liabilities (n/a) + equity (+) revenue (+) - expenses (n/a) = net income (+) cash flow (+) = OA Which of the following accounting events could have caused these effects on Reynolds' statements?
Earned cash revenue.
Yard Professionals Inc. experienced the following events in 2018, its first year of operation: Performed services for $35,000 cash. Purchased $6,000 of supplies on account. A physical count on December 31, 2018, found that there was $1,800 of supplies on hand. Record the events under an accounting equation.
Event Assets = Liabilities + Stockholders' Equity Cash & Supplies =AccountsPayable + Retained Earnings 1. 35,000 cash 35,000 RE 2. 6,000 supplies. 6,000 AP 3. Used supplies(4,200) (4,200) RE Totals 35,000 1,800 = 6,000 + 30,800
Which financial statement matches asset increases from operating a business with asset decreases from operating the business?
Income Statement
Prepare an income statement for 2018 (use the multistep format). 1. Acquired $30,000 cash from the issue of common stock. 2. Purchased inventory for $18,000 cash. 3. Sold inventory costing $15,000 for $32,000 cash.
Net Sales $32,000 Cost of Goods Sold $15,000 Gross Margin $17,000 Operating Expense $0 Net Income $17,000
Which of the following correctly states the proper order of the accounting cycle?
Record transactions, adjust accounts, prepare statements, close temporary accounts.
Which of the following statements is true in regard to accrual accounting?
Revenue is recorded in the period when it is earned and expenses are recorded when they are incurred.
Yard Professionals Inc. experienced the following events in 2018, its first year of operation: Performed services for $35,000 cash. Purchased $6,000 of supplies on account. A physical count on December 31, 2018, found that there was $1,800 of supplies on hand. Prepare an income statement
Revenues $35,000 Expense (4,200) Net income $30,800
Yard Designs (YD) experienced the following events in 2018, its first year of operation: On October 1, 2018, YD collected $54,000 for consulting services it agreed to provide during the next 12 months. Adjusted the accounts to reflect the amount of consulting service revenue recognized in 2018. Prepare an income statement
Revenues: $13,500 Expenses: 0 Net income: $13,500
Mijka Company was started on January 1, 2018. During 2018, the company experienced the following three accounting events: (1) earned cash revenues of $28,600, (2) paid cash expenses of $13,200, and (3) paid a $1,500 cash dividend to its stockholders. These were the only events that affected the company during 2018. create an Statement of Changes in Stockholders' Equity
Statement of Changes in Stockholders' Equity Beginning common stock $0 Plus: Common stock issued $0 Ending common stock $0 Beginning retained earnings $0 Plus: Net income 15,400 Less: Dividends 1500 Ending retained earnings 13,900 Total stockholders' equity 13,900
Which of the following statements concerning internal controls is true?
Strong internal controls provide reasonable assurance that the objectives of a company will be accomplished.
Study Highlighted Example on notes from August 29
Study Highlighted Example on notes from August 29
Which of the following is not a primary role of an independent auditor?
advise client on tax strategies
The accounts receivable balance for Renue Spa at December 31, 2017, was $86,000. Also on that date, the balance in the Allowance for Doubtful Accounts was $2,700. During 2018, $2,800 of accounts receivable were written off as uncollectible. In addition, Renue unexpectedly collected $190 of receivables that had been written off in a previous accounting period. Services provided on account during 2018 were $218,000, and cash collections from receivables were $220,000. Uncollectible accounts expense was estimated to be 1 percent of the sales on account for the period. Based on the preceding information, compute (after year-end adjustment): (1) Balance of Allowance for Doubtful Accounts at December 31, 2018. (2) Balance of Accounts Receivable at December 31, 2018. (3) Net realizable value of Accounts Receivable at December 31, 2018. What amount of uncollectible accounts expense will Renue Spa for 2018?
b-1. Allowance for doubtful accounts $2,270 b-2. Accounts receivable $81,200 b-3. Net realizable value $78,930 c. Uncollectible accounts expense $2,180
Yard Designs (YD) experienced the following events in 2018, its first year of operation: On October 1, 2018, YD collected $54,000 for consulting services it agreed to provide during the next 12 months. Adjusted the accounts to reflect the amount of consulting service revenue recognized in 2018. Ignoring all other future events, what is the amount of service revenue that would be recognized in 2019?
service revenue to be recognized in 2019 $40,500
The term "FOB Shipping Point" means:
the buyer of the merchandise is responsible for transportation costs.
Companies make sacrifices known as expenses to obtain benefits called revenues. The accurate measurement of net income requires that expenses be matched with revenues. In some circumstances, matching a particular expense directly with revenue is difficult or impossible. In these circumstances, the expense is matched with the period in which it is incurred. Distinguish the following items that could be matched directly with revenues from the items that would be classified as period expenses: 1. sales commission 2. salaries expense 3. advertising expense
1. directly matched 2. directly matched 3. period expense
Identify the events that would require a year-end adjusting entry. 1. Recognized revenue on account 2. Issued common stock. 3. Paid cash to purchase supplies. 4. Collected a cash advance for services that will be provided during the coming year. 5. Paid a cash dividend to the stockholders. 6. Paid cash for an insurance policy that provides coverage during the next year. 7. Collected cash from accounts receivable. 8. Paid cash for operating expenses. 9. Paid cash to settle an account payable. 10. Paid cash to purchase land.
1. no 2. no 3. yes 4. yes 5. no 6. yes 7. no 8. no 9. no 10. no
Beginning balance 3/1/2018 $15,000.00 Total deposits and other credits 7,000.00 Total checks and other debits 6,000.00 Ending balance 3/31/2018 16,000.00 Checks and Debits Deposits and Credits Check No. Amount Date Amount 1462 $ 1,163.00 March 1 $ 1,000.00 1463 62.00 March 2 1,340.00 1464 1,235.00 March 6 210.00 1465 750.00 March 12 1,940.00 1466 1,111.00 March 17 855.00 1467 964.00 March 22 1,480.00 DM 15.00 CM 175.00 1468 700.00 The following is a list of checks and deposits recorded on the books of Pyle Garage for March 2018: Date Check No. Amount of Check Date Amount of Deposit March 1 1463 $ 62.00 March 1 $ 1,340.00 March 5 1464 1,235.00 March 5 210.00 March 6 1465 750.00 March 9 1466 1,111.00 March 10 1,940.00 March 10 1467 964.00 March 14 1468 70.00 March 16 855.00 March 19 1469 1,500.00 March 19 1,480.00 March 28 1470 102.00 March 29 2,000.00 Check no. 1462 was outstanding from February. A credit memo for collection of accounts receivable was included in the bank statement. All checks were paid at the correct amount. The bank statement included a debit memo for service charges. The February 28 bank reconciliation showed a deposit in transit of $1,000. Check no. 1468 was for the purchase of equipment. The unadjusted Cash account balance at March 31 was $16,868. How the adjustments described above affect the cash account?
1. not affected 2. Increased 3. not affected 4. decreased 5. not affected 6. decreased
The following account balances were drawn from the financial records of Kent Company (KC) as of January 1, 2018: Assets, $35,000; Liabilities, $6,000; Common Stock, $12,000; and Retained Earnings, $17,000. KC has agreed to pay the creditors $400 of interest per year. Further, KC agrees that for the 2018 fiscal year any annual earnings remaining after the interest charges will be paid out as dividends to the owners. Required 1. Assuming KC earns a before interest expense recognition profit of $1,600 during 2018, determine the amount of interest and dividends paid. 2. Assuming KC earns a before interest expense recognition profit of $900 during 2018, determine the amount of interest and dividends paid. 3. Assuming KC earns a before interest expense recognition profit of $300 during 2018, determine the amount of interest and dividends paid.
1a. 400 1b. 1200 2a. 400 2b. 500 3a. 400 3b. 0
Leach Inc. experienced the following events for the first two years of its operations: 2018: Issued $10,000 of common stock for cash. Provided $90,000 of services on account. Provided $33,000 of services and received cash. Collected $57,000 cash from accounts receivable. Paid $22,000 of salaries expense for the year. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. Prepare a balance sheet
Assets Cash $78,000 Accounts receivable $33,000 Less: Allowance for doubtful accounts 1,650 $31,350 Total assets $109,350 Liabilities $0 Stockholders' equity Common stock $10,000 Retained earnings 99,350 Total stockholders' equity 109,350 Total liabilities and stockholders' equity $109,350
Holmes Cleaning Service began operation on January 1, 2018. The company experienced the following events for its first year of operations: Events Affecting 2018: Provided $170,000 of cleaning services on account. Collected $127,500 cash from accounts receivable. Paid salaries of $28,000 for the year. Adjusted the accounts to reflect management's expectations that uncollectible accounts expense would be $1,900. The expense was determined using the percent of revenue method. Prepare a balance sheet
Assets Cash $99,500 Accounts receivable $42,500 Less: Allowance for doubtful accounts (1,900) 40,600 Total assets $140,100 Liabilities $0 Stockholders' Equity Retained earnings $140,100 Total stockholders' equity $140,100 Total liabilities and stockholders' equity $140,100
Mijka Company was started on January 1, 2018. During 2018, the company experienced the following three accounting events: (1) earned cash revenues of $28,600, (2) paid cash expenses of $13,200, and (3) paid a $1,500 cash dividend to its stockholders. These were the only events that affected the company during 2018. create a general ledger
Assets = Liabilities + Stockholders' Equity Cash = + Common Stock + Retained Earnings Cash: 28600, 13200, -1500 Common Stock: 0 Retained Earnings: 28600, 13200, -1500 Total: 40,300=40,300
Yard Professionals Inc. experienced the following events in 2018, its first year of operation: Performed services for $35,000 cash. Purchased $6,000 of supplies on account. A physical count on December 31, 2018, found that there was $1,800 of supplies on hand. Prepare a balance sheet
Assets: Cash $35,000 Supplies $1,800 Total assets $36,800 Liabilities Accounts payable $6,000 Total liabilities $6,000 Stockholders' Equity Retained earnings 30,800 Total stockholders' equity 30,800 Total liabilities and stockholders' equity $36,800
Yard Designs (YD) experienced the following events in 2018, its first year of operation: On October 1, 2018, YD collected $54,000 for consulting services it agreed to provide during the next 12 months. Adjusted the accounts to reflect the amount of consulting service revenue recognized in 2018. Prepare a balance sheet
Assets: Cash: $54,000 Total assets: $54,000 Liabilities: Unearned revenue: $40,500 Total liabilities: $40,500 Stockholders' Equity: Retained earnings: $13,500 Total stockholders' equity: $13,500 Total liabilities and stockholders' equity: $54,000
Yard Designs (YD) experienced the following events in 2018, its first year of operation: On October 1, 2018, YD collected $54,000 for consulting services it agreed to provide during the next 12 months. Adjusted the accounts to reflect the amount of consulting service revenue recognized in 2018. Record the events under an accounting equation.
Assets=Liabilities+Stockholders' Equity Cash=Unearned Revenue+Retained Earnings Event 54,000 Cash = 54,000 UR Adjusting 0= (13,500)UR + 13,500 RE Total 54,000 = 40,500. UR + 13,500 RE
As of June 30, 2018, the bank statement showed an ending balance of $18,604. The unadjusted Cash account balance was $17,280. The following information is available: Deposit in transit, $2,290. Credit memo in bank statement for interest earned in June, $10. Outstanding check, $3,612. Debit memo for service charge, $8.
Bank Reconciliation Unadjusted bank balance 6/30/2018 $18,604 Add: Deposit in transit 2,290 Less: Outstanding check (3,612) True cash balance 6/30/2018 $17,282 Unadjusted book balance 6/30/2018 $17,280 Add: Credit memo for interest earned 10 Less: Debit memo for service charge (8) True cash balance 6/30/2018 $17,282
Leach Inc. experienced the following events for the first two years of its operations: 2019: Wrote off an uncollectible account for $700. Provided $110,000 of services on account. Provided $25,000 of services and collected cash. Collected $92,000 cash from accounts receivable. Paid $30,000 of salaries expense for the year. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. Prepare the statement of changes in stockholders' equity for 2019.
Beginning common stock $10,000 Plus: Common stock issued 0 Ending common stock $10,000 Beginning retained earnings $99,350 Plus: Net income 103,435 Ending retained earnings 202,785 Total stockholders' equity $212,785
Leach Inc. experienced the following events for the first two years of its operations: 2019: Wrote off an uncollectible account for $700. Provided $110,000 of services on account. Provided $25,000 of services and collected cash. Collected $92,000 cash from accounts receivable. Paid $30,000 of salaries expense for the year. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. Prepare the statement of cash flows for 2019.
Cash flows from operating activities Inflow from customers $117,000 Outflow for expenses (30,000) Net cash flow from operating activities $87,000 Cash flows from investing activities 0 Cash flows from financing activities 0 Net change in cash 87,000 Plus: Beginning cash balance 78,000 Ending cash balance $165,000
Leach Inc. experienced the following events for the first two years of its operations: 2018: Issued $10,000 of common stock for cash. Provided $90,000 of services on account. Provided $33,000 of services and received cash. Collected $57,000 cash from accounts receivable. Paid $22,000 of salaries expense for the year. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. Prepare a statement of cash flows
Cash flows from operating activities Inflow from customers $90,000 Outflow for expenses (22,000) Net cash flow from operating activities $68,000 Cash flows from investing activities 0 Cash flows from financing activities 0 Inflow for issue of common stock 10,000 Net change in cash 78,000 Plus: Beginning cash balance 0 Ending cash balance $78,000
Cordell Inc. experienced the following events in 2018, its first year of operation: Received $40,000 cash from the issue of common stock. Performed services on account for $82,000. Paid a $6,000 cash dividend to the stockholders. Collected $76,000 of the accounts receivable. Paid $53,000 cash for other operating expenses. Performed services for $19,000 cash. Recognized $3,500 of accrued utilities expense at the end of the year. Required a. & c. Identify the events that result in revenue or expense recognition and those which affect the statement of cash flows. In the Statement of Cash Flows column, use OA to designate operating activity, FA for financing activity, or IA for investing activity. If the element is not affected by the event, leave the cell blank. Identify the events that result in revenue or expense recognition and those which affect the statement of cash flows. In the Statement of Cash Flows column, use OA to designate operating activity, FA for financing activity, or IA for investing activity. If the element is not affected by the event, leave the cell blank. (Enter any decreases to account balances and cash outflows with a minus sign. Not all cells will require entry.)
Event Revenue Expense Statement of Cash Flows 1 40,000 FA 2 82000 3 -6000 FA 4 76,000 OA 5 53,000. -53,000 OA 6 19,000 19,000 OA 7 -3500
Cortez Company sells chairs that are used at computer stations. Its beginning inventory of chairs was 200 units at $50 per unit. During the year, Cortez made two batch purchases of this chair. The first was a 330-unit purchase at $55 per unit; the second was a 355-unit purchase at $57 per unit. During the period, it sold 570 chairs. Required Determine the amount of product costs that would be allocated to cost of goods sold and ending inventory, assuming that Cortez uses FIFO. LIFO. Weighted average.
FIFO: cost of goods sold- 30,430 ending inventory-17,955 LIFO: cost of goods sold-32,060 ending inventory-16,325 Weighted Average: cost of goods sold-31,163 ending inventory-17,222
Beginning balance 3/1/2018 $15,000.00 Total deposits and other credits 7,000.00 Total checks and other debits 6,000.00 Ending balance 3/31/2018 16,000.00 Checks and Debits Deposits and Credits Check No. Amount Date Amount 1462 $ 1,163.00 March 1 $ 1,000.00 1463 62.00 March 2 1,340.00 1464 1,235.00 March 6 210.00 1465 750.00 March 12 1,940.00 1466 1,111.00 March 17 855.00 1467 964.00 March 22 1,480.00 DM 15.00 CM 175.00 1468 700.00 The following is a list of checks and deposits recorded on the books of Pyle Garage for March 2018: Date Check No. Amount of Check Date Amount of Deposit March 1 1463 $ 62.00 March 1 $ 1,340.00 March 5 1464 1,235.00 March 5 210.00 March 6 1465 750.00 March 9 1466 1,111.00 March 10 1,940.00 March 10 1467 964.00 March 14 1468 70.00 March 16 855.00 March 19 1469 1,500.00 March 19 1,480.00 March 28 1470 102.00 March 29 2,000.00 Check no. 1462 was outstanding from February. A credit memo for collection of accounts receivable was included in the bank statement. All checks were paid at the correct amount. The bank statement included a debit memo for service charges. The February 28 bank reconciliation showed a deposit in transit of $1,000. Check no. 1468 was for the purchase of equipment. The unadjusted Cash account balance at March 31 was $16,868. Prepare the bank reconciliation for Pyle Garage at the end of March.
PYLE GARAGE Bank Reconciliation March 31, 2018 Unadjusted Bank Balance, March 31, 2018 $16,000 Add: Deposit in transit 2,000 Less: Outstanding checks #1469 $1,500 Less: Outstanding checks #1470 102 1,602 True Cash Balance, March 31, 2018 $16,398 Unadjusted Book Balance, March 31, 2018 $16,868 Add: Credit memo for collection of notes receivable 175 Less: Error in Recording Check #1468 630 Less: Debit Memo for Service Charges (15) 615 True Cash Balance, March 31, 2018 $16,428
Leach Inc. experienced the following events for the first two years of its operations: 2018: Issued $10,000 of common stock for cash. Provided $90,000 of services on account. Provided $33,000 of services and received cash. Collected $57,000 cash from accounts receivable. Paid $22,000 of salaries expense for the year. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. 2019: Wrote off an uncollectible account for $700. Provided $110,000 of services on account. Provided $25,000 of services and collected cash. Collected $92,000 cash from accounts receivable. Paid $30,000 of salaries expense for the year. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. Prepare an income statement
Service revenue $123,000 Operating expenses Salaries expense $22,000 Uncollectible accounts expense 1,650 Total operating expenses 23,650 Net income $99,350
Holmes Cleaning Service began operation on January 1, 2018. The company experienced the following events for its first year of operations: Events Affecting 2018: Provided $170,000 of cleaning services on account. Collected $127,500 cash from accounts receivable. Paid salaries of $28,000 for the year. Adjusted the accounts to reflect management's expectations that uncollectible accounts expense would be $1,900. The expense was determined using the percent of revenue method. Prepare an income statement
Service revenue $170,000 Operating expenses Salaries expenses (28,000) Uncollectible accounts expense (1,900) Total operating expenses (29,900) Net income $140,100
Leach Inc. experienced the following events for the first two years of its operations: 2019: Wrote off an uncollectible account for $700. Provided $110,000 of services on account. Provided $25,000 of services and collected cash. Collected $92,000 cash from accounts receivable. Paid $30,000 of salaries expense for the year. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible. Prepare an income statement for 2019.
Service revenues $135,000 Operating expenses Salaries expense $30,000 Uncollectible accounts expense 1,565 Total operating expenses 31,565 Net income $103,435
A review of the bank statement and accounting records of the Blake Company revealed the following items: Item no. Description 1) Three outstanding checks 2) A debit memo showing a bank service charge 3) A deposit in transit 4) An NSF check written by one of Blake's customers 5) A certified check written by Blake 6) A credit memo reflecting interest revenue earned by Blake Which of the item(s) would be added to the unadjusted bank balance to determine the true cash balance?
a deposit in transit
Cordell Inc. experienced the following events in 2018, its first year of operation: Received $40,000 cash from the issue of common stock. Performed services on account for $82,000. Paid a $6,000 cash dividend to the stockholders. Collected $76,000 of the accounts receivable. Paid $53,000 cash for other operating expenses. Performed services for $19,000 cash. Recognized $3,500 of accrued utilities expense at the end of the year. Required b. Based on your response to Requirement a, determine the amount of net income reported on the 2018 income statement. d. Based on your response to Requirement c, determine the amount of cash flow from operating activities reported on the 2018 statement of cash flows. e. What is the before- and after-closing balance in the service revenue account? f. What is the balance of the retained earnings account that appears on the 2018 balance sheet?
b. Net income $44,500 d. Net cash flow from operating activities $42,000 e1. Before-closing balance $101,000 e2. After-closing balance $0 f. Balance of retained earnings $38,500
Yard Professionals Inc. experienced the following events in 2018, its first year of operation: Performed services for $35,000 cash. Purchased $6,000 of supplies on account. A physical count on December 31, 2018, found that there was $1,800 of supplies on hand. What is the balance in the Supplies account as of January 1, 2019? What is the balance in the Supplies Expense account as of January 1, 2019?
c. Supplies $1,800 d. Supplies expense $0
T/F Merchandising businesses include retail companies and manufacturing companies.
false
Which of the following is an asset source transaction?
issued common stock
How will a certified check be treated in a company's bank reconciliation?
it is not included in the bank's reconciliation
The purpose of common size financial statements is to:
make comparisons between firms of different sizes and between different time periods.
Aaron Company uses the periodic inventory cost flow method. If Aaron's ending inventory is understated due to an accounting error, what is the effect on net income and the ending balance of retained earnings?
net income: understated retained earnings: understated
The inventory records for Radford Co. reflected the following Beginning inventory @ May 1 2,100 units @ $ 5.80 First purchase @ May 7 2,200 units @ $ 6.00 second purchase @ May 17 2,400 units @ $ 6.10 Third purchase @ May 23 2,000 units @ $ 6.20 Sales @ May 31 6,600 units @ $ 7.70 Determine the weighted average cost per unit (rounded) for May.
only average the purchases : $6.03
Which of the following items would appear in the cash flow from financing activities section of a statement of cash flows?
paying cash for dividends and receiving cash from common stock would both appear in the cash flow from financing activities section.
Expenses that are matched with the period in which they are incurred are frequently called:
period costs
Mijka Company was started on January 1, 2018. During 2018, the company experienced the following three accounting events: (1) earned cash revenues of $28,600, (2) paid cash expenses of $13,200, and (3) paid a $1,500 cash dividend to its stockholders. These were the only events that affected the company during 2018. create an income statement
revenue: $28,600 expense: $13,200
