accounting final exam

The following accounts appear in the ledger of Monroe Entertainment Co. All accounts have normal balances. Accounts Payable$489 Fees Earned$2,129 Accounts Receivable692 Insurance Expense461 Prepaid Insurance4,974 Land1,572 Cash1,331 Wages Expense783 Drawing327 Capital7,522 Total assets are

$ 8,569

The following accounts appear in the ledger of Monroe Entertainment Co. All accounts have normal balances. Accounts Payable$1,500 Fees Earned $3,600 Accounts Receivable 1,800 Insurance Expense1,300 Prepaid Insurance 2,000 Land 3,000 Cash 3,200 Wages Expense1,400 Drawing 1,200 Capital 8,800 Total assets are

$10,000

Norfolk Sporting Goods purchases merchandise with a catalog list price of $15,400. The retailer receives a 28% trade discount and credit terms of 2/10, n/30. What amount should Norfolk debit to the merchandise inventory account?

$10,866

If total liabilities decreased by $22,656 during a period of time and owner's equity increased by $34,404 during the same period, the amount and direction (increase or decrease) of the period's change in total assets would be a

$11,748 increase

A company using the periodic inventory system has the following account balances: Merchandise Inventory at the beginning of the year, $4,301; Freight In, $483; Purchases, $15,746; Purchases Returns and Allowances, $3,002; Purchases Discounts, $444. The cost of merchandise purchased is equal to

$12,783

If total assets decreased by $83,838 during a period of time and owner's equity increased by $70,203 during the same period, then the amount and direction (increase or decrease) of the period's change in total liabilities would be a(n)

$154,041 decrease

If the estimated rate of gross profit is 30%, what is the estimated cost of the merchandise inventory on September 30, based on the following data? Sep. 1 Merchandise inventory (at cost) $73,431 Sep. 1-30 Purchases, net (at cost)173,337 Sep. 1-30 Sales 131,350

$154,823

Using the following information, what is the amount of net income? Purchases $32,576 Selling expenses $985 Merchandise inventory, September 15,665 Merchandise inventory, September 3010,414 Administrative expenses 1,159 Sales 48,396 Rent revenue 926 Interest expense 1,051

$18,300

Minor Company had checks outstanding totaling $5,913 on its April bank reconciliation. In May, Minor Company issued checks totaling $39,989. The May bank statement shows that $26,593 in checks cleared the bank in May. A check of $748 from one of Minor Company's customers was also returned marked "NSF." The amount of outstanding checks on Minor Company's May bank reconciliation should be

$19,309

Donner Company is selling a piece of land adjacent to its business premises. An appraisal reported the market value of the land to be $220,637. Focus Company initially offered to buy the land for $176,408. The companies settled on a purchase price of $209,649. On the same day, another piece of land on the same block sold for $238,395. Under the cost concept, at what amount should the land be recorded in the accounting records of Focus Company?

$209,649

Using the following information, determine the cost of merchandise sold. Purchases $25,510 Selling expenses $619 Merchandise inventory, September 16,921 Merchandise inventory, September 308,918 Administrative expenses 1,191 Sales 55,649 Rent revenue 1,130 Interest expense 1,170

$23,513

The ending balance in C. Finley, Capital is

$25,000

Merchandise is purchased for $3,700 on September 2 subject to terms of 1/10, n/30, FOB destination. What is the cost of the merchandise if paid on September 12, assuming the discount is taken?

$3,663

On October 1, Black Company receives a 6% interest-bearing note from Reese Company to settle a $20,200 account receivable. The note is due in six months. At December 31, Black should record interest revenue of

$303

Diane's Designs purchased a one-year liability insurance policy on March 1 of a year for $4,020 and recorded it as a prepaid expense. Which of the following amounts would be recorded as insurance expense during the adjusting process at the end of Diane's first month of operations on March 31?

$335

Weber Company purchased a mining site for $623,306 on July 1. The company expects to mine ore for the next 10 years and anticipates that a total of 98,068 tons will be recovered. The estimated residual value of the property is $46,108. During the first year, the company extracted 6,223 tons of ore. The depletion expense is

$36,626.66

Equipment with an estimated market value of $27,658 is offered for sale at $49,093. The equipment is acquired for $15,791 in cash and a note payable of $21,488 due in 30 days. The amount used in the buyer's accounting records to record this acquisition is

$37,279

Rodgers Company gathered the following reconciling information in preparing its May bank reconciliation. Determine the adjusted balance on May 31. Cash balance per company records, May 31 $3,582 Deposits in transit 282 Notes receivable and interest collected by bank 739 Bank charge for check printing 28 Outstanding checks 1,400 NSF check 192

$4,101

The assets and liabilities of a company are $126,558 and $82,209, respectively. Owner's equity should equal

$44,349

A fixed asset with a cost of $21,941 and accumulated depreciation of $19,747 is traded for a similar asset priced at $44,476 (fair market value) in a transaction with commercial substance. Assuming a trade-in allowance of $5,260, at what cost will the new equipment be recorded in the books?

$44,476

The unearned rent account has a balance of $69,443. If $19,198 of the $69,443 remains unearned at the end of the accounting period, the amount of the adjusting entry is

$50,245

If the cost of an item of inventory is $54 and the current replacement cost is $69, the amount included in inventory according to the lower-of-cost-or-market method is

$54

The inventory data for an item for November are: Nov. 1 Inventory20 units at $19 4 Sale 10 units 10 Purchase 30 units at $20 17 Sale 20 units 30 Purchase 10 units at $21 Using a perpetual system, what is the cost of merchandise sold for November if the company uses FIFO?

$580

The inventory data for an item for November are: Nov. 1 Inventory20 units at $19 4 Sale 10 units 10 Purchase 30 units at $20 17 Sale 20 units 30 Purchase 10 units at $21 Using a perpetual system, what is the cost of merchandise sold for November if the company uses LIFO?

$590

The supplies account had a balance of $4,265 at the beginning of the year and was debited during the year for $2,316, representing the total of supplies purchased during the year. If $287 of supplies are on hand at the end of the year, the supplies expense to be reported on the income statement for the year is

$6,294

The inventory data for an item for November are: Nov. 1 Inventory24 units at $20 4 Sale 9 units 10 Purchase 34 units at $21 17 Sale 24 units 30 Purchase 22 units at $22 Using a perpetual system, what is the cost of merchandise sold for November if the company uses LIFO?

$684

The net income reported on the income statement is $81,090. However, adjusting entries have not been made at the end of the period for the supplies expense of $2,136 and accrued salaries of $1,799. Net income, as corrected, is

$77,155

Merchandise subject to terms 3/10, n/30, FOB shipping point, is sold on account to a customer for $28,400. What is the amount of the sales discount allowable?

$852

The balance in the office supplies account on January 1 was $7,420, the supplies purchased during January were $3,633, and the supplies on hand on January 31 were $2,051. The amount to be used for the appropriate adjusting entry is

$9,002

Computer equipment was acquired at the beginning of the year at a cost of $57,001 that has an estimated residual value of $2,018 and an estimated useful life of 6 years. Determine the second-year depreciation using the straight-line method.

$9,163.83

The following accounts appear in the ledger of Monroe Entertainment Co. All accounts have normal balances. Accounts Payable $495 Fees Earned $3,245 Accounts Receivable $899 Insurance Expense $401 Cash $2,158 Kim Monroe, Capital $5,612 Kim Monroe, Drawing $746 Land $2,706 Prepaid Insurance $1,827 Wages Expense $615 When a trial balance is prepared, the total of the debits will be

$9,352

Abbie Marson is the sole owner and operator of Great Plains Company. As of the end of its accounting period, December 31, Year 1, Great Plains Company has assets of $914,414 and liabilities of $270,790. During Year 2, Marson invested an additional $28,423 and withdrew $25,874 from the business. What is the amount of net income during Year 2, assuming that as of December 31, Year 2, assets were $982,361 and liabilities were $237,889?

$98,299

Which of the following errors would cause the trial balance totals to be unequal?

A payment of $5,550 to a creditor was posted as a debit of $5,600 to Accounts Payable and a credit of $550 to Cash.

Which of the following reflects a weak internal control system?

A single employee is responsible for collecting and recording cash.

On November 10, JumpStart provides $2,060 in services to clients. At the time of service, the clients paid $440 in cash and put the balance on account. a. Journalize this event. If an amount box does not require an entry, leave it blank. b. On November 20, JumpStart's clients paid an additional $400 on their accounts due. Journalize this event. If an amount box does not require an entry, leave it blank. c. Compute the accounts receivable balance on November 30.

A. Nov 10. Cash 440 Accounts Receivable 1620 Fees Earned 2060 b. Nov 20. Cash 400 Accounts Receivable 400 c. 1220

Office supplies purchased by Janer's Cleaning Service on account were returned. Which of the following entries for Janer's Cleaning Service records this transaction?

Accounts Payable, debit; Office Supplies, credit

At the end of the current year, fees of $6,535 have been earned but have not been billed to clients. Journalize the adjusting entry to record the accrued fees. If an amount box does not require an entry, leave it blank.

Accounts Receivable 6535 Fees Earned 6535

Pierce Company sold merchandise to Stanton Company on account FOB shipping point, 1/10, net 30, for $11,900. Pierce prepaid the $294 shipping charge. Which of the following entries does Pierce make for this sale?

Accounts Receivable—Stanton, debit $11,781; Sales, credit $11,781, and Accounts Receivable—Stanton, debit $294; Cash, credit $294

On August 30, JumpStart paid the following expenses: rent, $820; utilities, $287; wages, $2,425, and miscellaneous, $207. Journalize these payments as one entry. If an amount box does not require an entry, leave it blank.

Aug 30 Rent Expense 820 utilities exp. 287 wages exp. 2425 misc. exp. 207 cash 3739

Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $392,000 and credit sales are $1,000,000. An aging of accounts receivable shows that approximately 6% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if Allowance for Doubtful Accounts has a credit balance of $3,000 before adjustment?

Bad Debt Expense 20,520 Allowance for Doubtful Accounts 20,520

Which of the following account groups does not include a nominal account?

Cash, Prepaid Insurance, Wages Payable

Office supplies were sold by Janer's Cleaning Service at cost to another repair shop, with cash received. Which of the following entries for Janer's Cleaning Service records this transaction?

Cash, debit; Office Supplies, credit

If a fixed asset, such as a computer, were purchased on January 1 for $1,594 with an estimated life of 5 years and a salvage or residual value of $120, the journal entry for monthly expense under straight-line depreciation is

Depreciation Expense 24.57 Accumulated Depreciation 24.57

Gently Laser Clinic purchased laser equipment for $6,082 and paid $690 down, with the remainder to be paid later. The correct entry would be

Equipment 6,082 Accounts Payable 5,392 Cash 690

The two most widely used methods for determining the cost of inventory are

FIFO and LIFO

Which of the following is not a certification for accountants?

IRS

On June 30 (the end of the period), Brown Company has a credit balance of $2,115 in Allowance for Doubtful Accounts. An evaluation of accounts receivable indicates that the proper balance should be $29,250.Journalize the appropriate adjusting entry. If an amount box does not require an entry, leave it blank.

June 30 Bad Debt Expense 27135 Allow. for DA 27135

The inventory method that assigns the most recent costs to cost of merchandise sold is

LIFO

Which one of the fixed asset accounts listed will not have a related contra asset account?

Land

Determine the net income (loss) for the period.

Net income is $1,361.

Paper Company receives a $4,479, three-month, 3% promissory note from Dame Company in settlement of an open accounts receivable. What entry will Paper Company make upon receiving the note?

Notes Receivable, Dame Company 4,479 Accounts Receivable, Dame Company 4,479

On October 17, Nickle Company purchased a building and a plot of land for $604,900. The building was valued at $278,300 while the land carried a value of $326,600. Nickle paid $59,500 down in cash and signed a note payable for the balance. Journalize the entry required for this transaction. If an amount box does not require an entry, leave it blank.

Oct 17 Building 278300 Land 326600 Cash 59500 Notes Payable 545400

Merchandise is sold for cash. The selling price of the merchandise is $2,300, and the sale is subject to a 8% state sales tax. The journal entry for the sale would include a credit to

Sales Tax Payable for $184

The supplies account had a beginning balance of $1,931. Supplies purchased during the period totaled $4,292. At the end of the period before adjustment, $305 of supplies was on hand. Journalize the adjusting entry for supplies. If an amount box does not require an entry, leave it blank.

Supplies Exp. 5918 Supplies 5918

What is the major difference between the unadjusted trial balance and the adjusted trial balance?

The adjusted trial balance reflects the updated balances in the accounts after the adjusting entries.

A copy machine acquired with a cost of $1,410 has an estimated useful life of 4 years. It is also expected to have a useful operating life of 13,350 copies. Assuming that it will have a residual value of $75, determine the depreciation for the first year by the following methods: For part a, enter your answer to two decimal places. a. Straight-line method b. Double-declining-balance method c. Units-of-activity method (4,500 copies were made the first year)

a. 333.75 b. 705 c. 450

Sampson Co. sold merchandise to Batson Co. on account, $39,700, terms 2/15, net 45. The cost of the merchandise sold is $29,775. Batson Co. paid the invoice within the discount period. Assume both Sampson and Batson use a perpetual inventory system. Journalize these transactions for Sampson Co. If an amount box does not require an entry, leave it blank. Journalize these transactions for Batson Co. If an amount box does not require an entry, leave it blank.

a. AR - Batson Co. 34,407 Sales 34,407 b. COMS 29,775 Merch. Invt. 29,775 c. Cash 38,906 AR - Batson Co. 38,906 ----- a. Merch. Invt. 38,906 AP - Sam Co. 38,906 c. AP - Sam Co. 38,906 Cash 38,906

The debit balance in Cash Short and Over at the end of an accounting period is reported as

an expense on the income statement

Land originally purchased for $26,331 is sold for $74,115 in cash. What is the effect of the sale on the accounting equation?

assets increase by $47,784; owner's equity increases by $47,784

Unearned fees appear on the

balance sheet as a current liability

Notes receivable due in 350 days appear on the

balance sheet in the Current Assets section

Which of the following is included in the cost of land?

brokerage commission

Merchandise with a sales price of $2,600 is sold on account with terms 2/10, n/30. The journal entry for the sale would include a

credit to Sales for $2,548

The expenses would be closed by

crediting Wages Expense for $19,211, Rent Expense for $5,207, and Depreciation Expense for $5,844

Allowance for Doubtful Accounts has a debit balance of $1,006 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $13,357. Which of the following entries records the proper adjustment for bad debt expense?

debit Bad Debt Expense, $14,363; credit Allowance for Doubtful Accounts, $14,363

Cumberland Co. sells $1,167 of merchandise to Hancock Co. for cash. Cumberland paid $612 for the merchandise. Under a perpetual inventory system, which of the following is the correct journal entry(ies)?

debit Cash, $1,167; credit Sales, $1,167; and debit Cost of Merchandise Sold, $612; credit Merchandise Inventory, $612

Which of the following entries records the investment of cash by Taylor Thomas, owner of a proprietorship?

debit Cash; credit Taylor Thomas, Capital

Which of the following is the proper adjusting entry, based on a prepaid insurance account balance before adjustment of $15,234 and unexpired insurance of $3,603, for the fiscal year ending on April 30?

debit Insurance Expense, $11,631; credit Prepaid Insurance, $11,631

Smokey Company purchases a one-year insurance policy on July 1 for $4,560. The adjusting entry on December 31 is

debit Insurance Expense, $2,280; credit Prepaid Insurance, $2,280

The balance in the prepaid rent account before adjustment at the end of the year is $17,063, which represents 6 months' rent paid on December 1. The adjusting entry required on December 31 is

debit Rent Expense, $2,844; credit Prepaid Rent, $2,844

Buster Industries pays weekly salaries of $44,300 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is

debit Salary Expense, $17,720; credit Salaries Payable, $17,720

Which of the following entries records the withdrawal of cash by Sally Anderson, owner of a proprietorship, for personal use?

debit Sally Anderson, Drawing; credit Cash

The balance in the supplies account before adjustment at the end of the year is $6,807. The proper adjusting entry if the amount of supplies on hand at the end of the year is $1,541 would be

debit Supplies Expense, $5,266; credit Supplies, $5,266

An aging of a company's accounts receivable indicates that the estimate of uncollectible receivables totals $4,240. If Allowance for Doubtful Accounts has a $907 credit balance, the adjustment to record the bad debt expense for the period will require a

debit to Bad Debt Expense for $3,333.

An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts totals $4,313. If Allowance for Doubtful Accounts has a $1,294 debit balance, the adjustment to record the bad debt expense for the period will require a

debit to Bad Debt Expense for $5,607.

A $138 petty cash fund has cash of $20 and receipts of $114. The journal entry to replenish the account would include a

debit to Cash Short and Over for $4

Adjusting entries affect at least one

income statement account and one balance sheet account

Michael Anderson is starting a computer programming business and has deposited an initial investment of $15,000 into the business cash account. Identify how the accounting equation will be affected.

increase in assets (Cash) and increase in owner's equity (Michael Anderson, Capital)

The debit side of an account

is the left side of the account

Ending inventory is made up of the oldest purchases when a company uses

last-in, first-out

Two common areas of accounting that respectively provide information to internal and external users are

managerial accounting and financial accounting

Sarbanes-Oxley applies to

publicly held companies

Taking a physical count of inventory

should be done near year-end

Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?

specific identification

The first item appearing on the statement of owner's equity is

the beginning balance of owner's equity

A characteristic of a fixed asset is that it is

used in the operations of a business