ACCT Principles 1 Final Exam

24. The following transactions occurred in December of 2011: • Services were provided to customers who paid cash, $5,000 • Services of $2,000 were provided on account to customers in December, • Cash of $1,000 was received on account from customers for services that were provided on account in November of 2011. • The owner invested $3,000 cash.

5,000+2,000 b. 7,000

15. A company has the following accounts and balances in its ledger. The total of the credit column of the trial balance is:

A/P+UR+OC+SR 10+5+85+150 b.250

60. Lansing Co. had the following selected accounts and balances on their unadjusted trial balance. Lansing co.has estimated that 8% accounts receivable will be uncollectible. The adjustment to record bad debts for the period will require a:

Accounts Receivable balance $80,000 * .08 = $6,400 less the balance already in the Allowance for Doubtful Accounts $1,000 = Bad Debt Expense of $5,400 that needs to be recorded. Journal entry would be Debit Bad Debt Expense $5,400 and Credit Allowance for Doubtful Accounts $5,400

44. Tundra Co. uses the periodic inventory method. The company's December 31, 2011 inventory is overstated by $3,000. The amounts in the December 31, 2011 financial statements are:

Assets, COGS Overstated, Understated

46. Tundra Co. uses the periodic inventory method. The company's December 31, 2011 inventory is understated by $3,000. The amounts in the December 31, 2011 financial statements are:

Assets: Understated COGS: Overstated

56. White Company gathered the following in preparing its December bank reconciliation:The amount of cash that should be reported on the December 31 balance sheet is:

Cash balance per books $ 5,300 - Bank charges -20 + EFT receipt from customer +200 - NSF Check -50 - Check recording error - 30 Adjusted Bank Balance $5,400

On July 4, 2011, Montana Mining Company purchased the mineral rights to a granite deposit for $800,000. It is estimated that the recoverable granite will be 400,000 tons. During 2011, 100,000 tons of granite was extracted and 40,000 tons were sold. The amount of the Cost of Goods Sold (Depletion Expense) recognized for 2011 was

a. $ 80,000 Cost of Natural Resource = $800,000 800,000 / 400,000 tons = $2.00 cost per ton Sold 40,000 tons, so depletion expense = 40,000 * $2.00 = $80,000

42. Our company uses the periodic inventory system and the following data are for 2012: Units Unit Cost Totals January 1 Beginning Inventory 10 $5 $ 50 March 9 Purchase 40 $6 240 August 11 Purchase 30 $7 210 80 $500 December 31 Physical inventory count: 20 units on hand What is the value of ending inventory for 2012 if the LIFO method is used?

a. $110

97. Judy and Nancy are partners sharing profits equally and have the following capital balances: Judy, Capital $200,000 Nancy, Capital 250,000 Leah is admitted to the partnership by investing $150,000 for a one-third ownership interest. The balance of Judy's Capital account after Leah is admitted is

a. $175,000

Prious uses the straight-line depreciation method On October 1, 2011, Prious Co. bought a equipment for $45,000. They estimate the equipment will have a $5,000 salvage value and an 5 year service life. What is the depreciation expense reported for this equipment on the December 31, 2011 income statement

a. $2,000 Depreciation expense = (45,000 - 5000) / 5 yrs = $8,000 per year. $8,000 * 3/12 = @2,000 Because equipment was purchased on Oct 1, 2011, can only record 3 months of depreciation at Dec 31, 2011

9. On January 1, 2012, total assets were $1,000 and total liabilities were $600. At December 31, 2012, total assets were $1,200 and total liabilities were $700. During the year the owner made new investments of $100 and withdrew of $200. How much was the net income for 2012?

a. $200

90. Flip and Flop have capital balances at the beginning of the year of $100,000 and $80,000, respectively. The partnership agreement has the following provisions regarding the division of net income: Interest of 5% on capital balances at the beginning of the year Salary allowances of $20,000 and $25,000 respectively, Profit loss ratio is 3:2 If net income were $70,000, what would be Flip's share of the income?

a. $34,600

89. Bing and Bang are partners and have capital balances at the beginning of the year of $30,000 and $50,000, respectively.They divide income according to the partnership agreement as follows: Interest of 10% on beginning of year capital balances Salary allowances of $10,000 and $20,000 respectively Remaining amount in the ratio of1:2 If net income for the year was $80,000, what would be Bang's share?

a. $53,000

21. On the trial balance Supplies supplies is shown with a $200 balance. A physical count of the supplies showed $60 of supplies on the end of the period. The required adjusting entry includes

a. A debit to Supplies Expense for $140 SUPPLY EXPENSE 140 SUPPLIES 140 Supplies used = 200 -60 = 140

92. The individual assets invested by a partner in a partnership

a. Are jointly owned by all partners.

62. Kalamazoo Co. had the following selected accounts and balances on their unadjusted trial balance. Lansing co.has estimated that 2% of net sales will be uncollectible. The adjusting to record bad debts for the period is:

a. Bad Debts Expense 8,000 Allowance for Doubtful Accounts 8,000 Net sales = 400,000 * .02 = 8,000 Debit Bad Debt Expense $8,000 and Credit Allowance for Doubtlful Accounts $8,000

George Co. holds Silver Co.'s $3,000, 60-day, 6% note. When Silver Co. pays the amount due on the note to George Co. they will

a. Credit Interest Revenue for $30 Cash $3,030 Notes Receivable 3,000 Interest Income 30 Interest = 3000 * .06 * 60/360

52. Jack orders the merchandise, Bill receives the merchandise and Ann records the transaction in the accounting records. Which principle of internal control is being followed?

a. Divide responsibility for related transactions

Raul's Fine Dining accepted bank issued MasterCard credit cards from a customers paying their $200 dining bill . MasterCardcharges a 2% fee and the immediately deposits the cash in the company's bank account. How will this transaction affect the accounting records of Raul's Fine Dining

a. Increase Cash by $196. Cash 196 Fee Expense 4 Sales 200 (200 * .02 = 4)

95. The Nolan-Marley partnership is terminated when creditor claims exceed partnership assets by $40,000. Marley is a millionaire and Nolan has no personal assets. Nolan's partnership interest is 75% and Marley's is 25%. Creditors

a. May collect the entire $40,000 from Marley.

94. Mish and Mash formed a new partnership. As a partner

a. Mish may sign a contract committing the partnership to future sales contracts without getting the approval of the other partners.

54. Clark Co. uses cash registers with a locked-in tape or electronic file that makes a record of each cash sale. This is an example of which internal control principle?

a. Technological controls

100. Which of the following statements reflects a characteristic of corporations?

a. There is mutual agency for the stockholders meaning that the stockholders have the power to bind the corporation to contracts.

5. A business received $4,000 from customers paying on their open accounts. The effect of this transaction on the financial statements would be

a. There is no change in total assets. CASH 4,000 ACCOUNTS RECEIVABLE 4,000

1. Tom invested cash of $4,000, inventory of $7,000 and equipment of $14,000 to start his business. The effect of this transaction on the financial statements is:

a. Total assets increase by $25,000 CASH 4,000 INVENTORY 7,000 EQUIPMENT 14,000 OWNER'S EQUITY 25,000

23. On December 1st there is a balance of $60,000 in the unearned revenue account. According to our records, we have earned 1/3 (one-third) of the revenue received in advance. Based on this information, the correct adjusting entry to be recorded on December 31 is

a. Unearned Revenue 20,000 Revenue 20,000

19. Adjusting entries are journal entries made at the end of an accounting period to:

a. Update liability and asset accounts to their proper balances. b. Assign revenues to the periods in which they are earned. c. Assign expenses to the periods in which they are incurred. d. All of the above.

47. You use the periodic inventory system and the LIFO cost flow assumption in accounting for inventory and cost of goods sold.The following data are for the current year: Units Unit Cost Total Cost Beginning Inventory 10 $3 $30 Purchase #1 20 $4 $80 Purchase #2 15 $5 $75 45 $185 A physical count reveals that 12 units remain in inventory at the end of the year. The ending inventory using the LIFO method is:

b. $ 38

33. Based on the following data, the amount of operating income reported on a multi-step income statement would be:

b. $ 4,000 Sales - sales returns - COGS = Gross Profit - Selling Expenses = Operating Income 45000-5000-24000 = 16000 - 12,000 = 4,000

41. Our company uses the periodic inventory system and the following data are for 2012: What is the value of ending inventory for 2012 if the FIFO method is used?

b. $140

On October 10, 2012, Griffen. bought gravel rights for $240,000. Another $10,000 was spent to develop the site. The gravel pit is expected to produce an estimated 500,000 tons of gravel and have no salvage value. During 2012, 100,000 tons were removed and 90,000 were sold. The expense recorded for 2012 would be

b. $45,000 Cost of Natural Resource = $240,000 + 10,000 = $250,000 250,000 / 500,000 tons = $0.50 cost per ton Sold 90,000 tons, so depletion expense = 90,000 * $0.50 = $45,000

78. On January1, 2009, Ocean Co. purchased equipment for $200,000. It is estimated that the equipment will have a $20,000 salvage value at the end of its estimated 4-year useful life. The company uses the double-declining-balance method of depreciation. Depreciation expense for the second calendar year ending on December 31, 2010, would be:

b. $50,000 100% / 4 = 25% x 2 = 50% We will use 50% of Book Value of the asset to calculate depreciation expense. Book value at 1/1/09 = $200,000 * 50% = $100,000 depreciation expense for 2009. Book Value at 1/1/10 is $200,000 - 100,000 = 100,000. So depreciation expense for 2010 = $100,000 * 50% = $50,000

32. Based on the following data, the amount of gross profit reported on a multi-step income statement would be

b. $56,000 Sales - sales returns - COGS = Gross Profit 150,000-10,000-84,000 = 56,000

Queen Co. paid $50,000 for land on which they plan to build a new restaurant.. Closing costs were $3,000. They paid $8,000 to remove an old barn and grade the property. They sold salvaged materials from the old barn for $1,000. A paved driveway and parking lot were installed for $10,000. The cost added to the Land account is

b. $60,000 Cost of Land = $50,000 + 3000 + 8000 -1000 = $60,000 All are costs of acquiring the land. The salvage value of the lumber is deducted from the other costs. Driveway & parking lot are Land Improvements, Not Land

Fusion Co. uses the double declining balance depreciation method On April 1, 2011, Fusion Co. bought a equipment for $24,000. They estimate the equipment will have a $4,000 salvage value and an 4 year service life. What is the depreciation expense reported for this equipment on the December 31, 2011 income statement

b. $9,000 100% / 4 = 25% x 2 = 50% We will use 50% of Book Value of the asset to calculate depreciation expense. Book value at 12/21/11 = $24,000 * 50% = $12,000 * 9/12 = $9,000

82. Sutton Company acquires land for $90,000 cash. Additional costs are as follows: Sutton will record the acquisition cost of the land as

b. $93,500. Cost of Land = $90,000 + 700 + 1500 -200 + 1000 + 500 = $93,500 All are costs of acquiring the land. The salvage value of the lumber is deducted from the other costs. Parking lot is Land Improvements, not Land

29. On July 2, we purchased merchandise inventory on account for $ 15,000 with credit terms of 1/10, n/30. On July 5, we returned $3,000 of the merchandise inventory. On July 10, we paid the amount due. The journal entry to reflect the payment will include

b. A credit to cash of $11,880. Accounts Payable 12,000 Merch Inventory 120 Cash 11,880

70. The reason we record depreciation of a plant asset is to:

b. Allocate the cost of the asset to expense in periods that benefit from its use.

10. The first thing you would do in the accounting cycle is:

b. Analyze transactions and enter in the journal

93. The individual assets invested by a partner in a partnership:

b. Are jointly owned by all partners.

4. A business purchased equipment of $5,000 on account. The effect of this transaction on the financial statements would be:

b. Assets increased by $5,000 and Liabilities increased by $5,000 EQUIPMENT 5,000 ACCOUNTS PAYABLE 5,000

98. Barb, Chris, and Debbie have partnership capital account balances of: Barb, Capital $300,000 Chris, Capital 600,000 Debbie, Capital 140,000 The income and loss sharing ratio is 5:4:1. Barb decides to withdraw from the partnership. It is agreed that partnership assets of $260,000 will be used to pay Barb for her partnership interest. The balances of Chris and Debbie's capital accounts after Barb withdraws would be:

b. Chris, $632,000; Debbie, $148,000

37. Perpetual FIFO inventory records for the year contain the following data:

b. Debit Cost of Goods sold for $100.

51. The checkbook is in the accounting manager's desk. All employees who work in the accounting department can write checks for payments on account Which principal of internal control does this violate?

b. Establish Responsiblilty

91. The characteristic of a partnership that state that every partner can bind the business to a contract within the scope of the normal business operations is called:

b. Mutual agency

101. Which of the following statements reflects a characteristic of corporations

b. The stockholders have unlimited liability and therefore are ultimately responsible for the corporation's debts.

17. Which of the following statements about adjusting entries is correct?

b. They make sure that the income statement of a business reports all revenues earned and all expenses incurred during a given period.

27. One reason we make closing entries is to

b. Transfer net income or net loss, and owner withdrawals for the period into the owner's capital account.

25. The following transactions occurred in December of 2011: Services were provided to customers who paid cash, $10,000 Services of $5,000 were provided on account to customers in December, Cash of $4,000 was received from customers for services to be provided in January of 2012 The owner invested $5,000 cash. The amount of revenue to be recognized in December of 2011 is:

c. $ 15,000

74. Prious uses the double declining balance depreciation method On October 1, 2011, Prious Co. bought a equipment for $45,000. They estimate the equipment will have a $5,000 salvage value and an 5 year service life. What is the depreciation expense reported for this equipment on the December 31, 2011 income statement?

c. $ 4,500 100% / 5 = 20% x 2 = 40% We will use 40% of Book Value of the asset to calculate depreciation expense. Book value at 12/21/11 = $45,000 * 40% = $18,000 * 3/12 = $4,500

80. Prious uses the double declining balance depreciation method On January 1, 2011, Prious Co. bought a equipment for $45,000. They estimate the equipment will have a $5,000 salvage value and an 5 year service life. What is the depreciation expense reported for this equipment on the December 31, 2012 income statement?

c. $10,800 100% / 5 = 20% x 2 = 40% We will use 40% of Book Value of the asset to calculate depreciation expense. Book value at 1/1/11 = $45,000 * 40% = $18,000 depreciation expense for 2011. Book Value at 1/1/12 is $45,000 - 18,000 = 27,000. So depreciation expense for 2012 = $27,000 * 40% = $10,800

40. Our company uses the periodic inventory system and the following data are for 2012 Units Unit Cost Totals January 1 Beginning Inventory 10 $5 $ 50 March 9 Purchase 40 $6 240 August 11 Purchase 30 $7 210 80 $500 December 31 Physical inventory count: 20 units on hand What is the value of ending inventory for 2012 if the weighted average method is used?

c. $125

7. On January 1, 2012, total assets were $500 and total liabilities were $300. At December 31, 2012, total assets were $750 and total liabilities were $500. During the year the owner made withdrawals of $100. What was the net income or net loss for 2012

c. $150 net income Beg 500 300 200 + Net Income 150 Less Withdrawal 100 = Ending 750 500 250 250 = 200 + X - 100 or 250 - 200 + 100 = 150 250 - X = 200 -100 250 - X = 100 X = 150

31. Based on the following data, the amount of gross profit reported on a multi-step income statement would be:

c. $16,000 Sales - sales returns - COGS = Gross Profit 45000-5000-24000 = 16000

96. Judy and Nancy are partners sharing profits equally and have the following capital balances: Judy, Capital $360,000 Nancy, Capital 270,000 Leah is admitted to the partnership by investing $150,000 for a one-fourth ownership interest. The balance of Nancy's Capital account after Leah is admitted is

c. $247,500

8. On January 1, 2012, total assets were $700 and total liabilities were $600. At December 31, 2012, total assets were $800 and total liabilities were $500. During the year the owner made no new investments and had a net income of $500. Compute the amount of withdrawals

c. $300

79. Fusion Co. uses the straight-line depreciation method On July 1, 2011, Fusion Co. bought a equipment for $24,000. They estimate the equipment will have a $4,000 salvage value and an 4 year service life. What is the depreciation expense reported for this equipment on the December 31, 2012 income statement?

c. $5,000

50. You use the periodic inventory system and the FIFO cost flow assumption in accounting for inventory and cost of goods sold.The following data are for the current year: Units Unit Cost Total Cost Beginning Inventory 10 $7 $70 Purchase #1 60 $8 $480 Purchase #2 15 $9 $135 85 $685 A physical count reveals that 20 units remain in inventory at the end of the year. The cost of good sold using the FIFO method is:

c. $510

We purchased new equipment for $50,000. We paid $1,000 to have the it delivered and paid $3,000 to setup and install the equipment. During the first month of use, we performed routine maintenance costing $100. What amount is recorded in the equipment account?

c. $54,000 Cost of Equipment = $50,000 + 1000 + 3000 = $54,000 Routine Maintenance is not part of the equipment cost.

34. Based on the following data, the amount of operating income reported on a multi-step income statement would be:

c. $6,000 Sales - sales returns - COGS = Gross Profit - Selling Expenses = Operating Income 150,000-10,000-84,000 = 56,000 - 50,000 = 6,000

87. On September 1, 2012, Tall Timer purchased timber rights to $750,000. They spent $50,000 to develop the site.They estimated will be 500,000 board feet of lumber. During 2012 50,000 board feet were cut and 45,000 tons were sold. The amount of the Depletion Expense recognized for 2012 was

c. $72,000 Cost of Natural Resource = $750,000 + 50,000 = $800,000 800,000 / 500,000 board feet = $1.60 cost per foot Sold 45,000 tons, so depletion expense = 45,000 * $1.60 = $72,000

55. Green Company gathered the following in preparing its December bank reconciliation: The amount of cash that should be reported on the December 31 balance sheet is:

c. $8,300. Cash balance per books $ 8,400 - Bank charge for check printing -25 + EFT receipt from customer +100 - NSF Check -225 - Check recording error +50 Adjusted Bank Balance $8,300

38. John's Farm Market uses the FIFO perpetual inventory method. On October 15, John purchased 50 pumpkins for $3 each from a local farm. On October 20, John purchased an additional 50 pumpkins for $4 each. On October 29, John sold 60 of the pumpkins for $5 each. The entry or entries to record the October 29 sale would include:

c. A debit to cost of goods sold for $190.

43. Tundra Co. uses the periodic inventory method. The company's December 31, 2011 inventory is overstated by $3,000. The amounts in the December 31, 2011 financial statements are

c. Assets,Liab: Overstated, Overstated Inventory is an asset, so if it's overstated, assets would be overstated. Net Income, would also be overstated because COGS would be understated. Remember: Beginning Inventory + purchases - ending inventory = COGS

45. Tundra Co. uses the periodic inventory method. The company's December 31, 2011 inventory is understated by $3,000. The amounts in the December 31, 2011 financial statements are

c. Assets: Understated Net Income: overstated

61. Flint Co. had the following selected accounts and balances on their unadjusted trial balance. Lansing co.has estimated that 7% of accounts receivable will be uncollectible. The adjusting to record bad debts for the period is:

c. Bad Debts Expense 6,000 Allowance for Doubtful Accounts 6,000 Accounts Receivable balance $100,000 * .07 = $7,000 less the balance already in the Allowance for Doubtful Accounts $1,000 = Bad Debt Expense of $6,000 that needs to be recorded. Journal entry would be Debit Bad Debt Expense $6,000 and Credit Allowance for Doubtful Accounts $6,000

99. barb, Chris, and Debbie have partnership capital account balances of: Barb, Capital $300,000 Chris, Capital 600,000 Debbie, Capital 140,000 The income and loss sharing ratio is 3:2:1. Debbie decides to withdraw from the partnership. It is agreed that partnership assets of $100,000 will be used to pay Debbie for her partnership interest. The balances of Barb and Chris's capital accounts after Debbie withdraws would be:

c. Barb, $324,000; Chris, $616,000

12. A business received cash of $100 for services provided. The journal entry to record the transaction is:

c. Cash 100 Service Revenue 100

14. A business received $6,000 from customers paying on their accounts. The journal entry to record the transaction is:

c. Cash 6,000 Accounts Receivable 6,000

Our $200 petty cash fund was established on January 2. At January 31, just prior to replenishing the fund, our petty cash fund contains $8 of cash and receipts and vouchers which total $180. The journal entry to replenish the fund on January 31 would include a

c. Credit to Cash for $192 Debit Expenses for receipts 180 Debit Cash over/short 12 Credit Cash 192 200 - 8 = 192 cash needed to bring petty cash account back up to $200

59. Jackson Co. had the following selected accounts and balances on their unadjusted trial balance. Jackson has estimated that 2% of the net sales will be uncollectible. The adjustment to record bad debts for the period will require a:

c. Debit to Bad Debts Expense for $6,000 Net sales = 300,000 * .02 = 6,000 Debit Bad Debt Expense $6,000 and Credit Allowance for Doubtlful Accounts $6,000

Pay Almost Nothing Shoe Co. sold merchandise for $5,000 to customers using their VISA, bank issued, credit cards. VISA charges a 2% fee and the immediately deposits the cash in the company's bank account. How will this transaction the company?

c. Increase Cash by $4,900. Cash 4,900 Fee Expense 100 Sales 5,000 (5000 * .02 = 100)

6. In May, a business provided services of $500 to customers who paid $100 and the rest to be paid in the following June

c. Net Income increased by $500 CASH 100 ACCOUNTS RECIEVABLE 400 REVENUE 500

53. Joan opens the mail that includes checks from customers paying on account and then records those checks in the journal. Which principal of internal control does this violate

c. Separate recordkeeping from custody of assets

71. Depreciation is the process of

c. allocating the cost of an asset to expense over its useful life in a rational and systematic manner.

48. You use the periodic inventory system and the FIFO cost flow assumption in accounting for inventory and cost of goods sold.The following data are for the current year: Units Unit Cost Total Cost Beginning Inventory 10 $3 $30 Purchase #1 20 $4 $80 Purchase #2 15 $5 $75 45 $185 A physical count reveals that 12 units remain in inventory at the end of the year. The ending inventory using the FIFO method is:

d. $ 60

On July 15, 2010, GreenForest Co. bought timber rights for $700,000. An additional $100,000 was spent to develop the site. The timber stand is expected to produce an estimated 1,600,000 board feet of lumber and have no salvage value. During 2010 250,000 board feet were cut and 200,000 were sold. The depletion expense recorded for 2010 would be

d. $100,000 Remember that Depletion is just like figuring depreciation using the units of production method. And, depletion expense is calculated on the number of units sold during the period, so..... Cost of Natural Resource = 700,000 + 100,000 = $800,000 800,000 / 1,600,000 board feet = $0.50 cost per foot. Sold 200,000 board feet in 2010, so depletion expense = 200,000 * $0.50 = $100,000

88. Bing and Bang are partners and have capital balances at the beginning of the year of $30,000 and $50,000, respectively.They divide income according to the partnership agreement as follows: Interest of 10% on beginning of year capital balances Salary allowances of $10,000 and $20,000 respectively Remaining amount in the ratio of1:2 If net income for the year was $80,000, what would be Bing's share?

d. $27,000

Fusion Co. uses the straight-line depreciation method On April 1, 2011, Fusion Co. bought a equipment for $24,000. They estimate the equipment will have a $4,000 salvage value and an 4 year service life. What is the depreciation expense reported for this equipment on the December 31, 2011 income statement

d. $3,750 Depreciation expense = (24,000 - 4000) / 4 yrs = $5,000 per year. $5,000 * 9/12 = @3,750 Because equipment was purchased on April 1, 2011, can only record 9 months of depreciation at Dec 31, 2011

49. You use the periodic inventory system and the LIFO cost flow assumption in accounting for inventory and cost of goods sold.The following data are for the current year: Units Unit Cost Total Cost Beginning Inventory 10 $7 $70 Purchase #1 60 $8 $480 Purchase #2 15 $9 $135 85 $685 A physical count reveals that 20 units remain in inventory at the end of the year. The cost of good sold using the LIFO method is:

d. $535

20. On the trial balance Supplies supplies is shown with a $400 balance. A physical count of the supplies showed $50 of supplies on the end of the period. The required adjusting entry includes

d. A debit to Supplies Expense for $350. SUPPLY EXPENSE 350 SUPPLIES 350 Supplies used = 400 -50 = 350

30. Hale Company sells merchandise on account for $3,000 to Karr Company with credit terms of 2/10, n/30. Karr Company immediately returns $500 of merchandise that arrived damaged. Karr pays the amount due within the discount period. The journal entry will Hale makes when they receive Karr's check would include

d. A debit to cash of $2,450 Cash 2,450 Sales Discounts 50 Accounts Receivable 2,500

69. The primary purpose of depreciation accounting is to:

d. Allocate the cost of depreciable assets to expense.

28. The reason we make closing entries is to:

d. Bring to zero the balance of the temporary accounts to prepare them to accumulate information in the next fiscal period.

76. Equipment with a cost of $47,000 and acccumulated depreciation of $37,000 is sold for $12,000 cash. The journal entry to record the asset disposal is:

d. Cash 12,000 Accumulated Depreciation 37,000 Equipment 47,000 Gain on Sale of Plant Asset 2,000

Riptide Co. holds Acre Inc.'s $5,000, 90-day, 4% note. When Riptide Co. receives the check from the Acre Inc. for the full amount of the due, Riptide will

d. Debit Cash for $5,050 Cash $5,050 Notes Receivable 5,000 Interest Income 50 Interest = 5000 * .04 * 90/360

39. Perpetual FIFO inventory records for the year contain the following data: January 1 Beginning Inventory - 10 units at $10 each March 1 Purchase - 50 units at $8 each May 1 Sale - 20 units at $18 each To record the May 1 sale you would:

d. Debit Cost of Goods Sold for $180.

On July 1, we establised a $150 petty cash fund. On July 31, just prior to replenishing the fund, our petty cash fund contains $5 of cash and receipts and vouchers which total $143. The journal entry to replenish the fund on July 31 would include a

d. Debit to Cash Over and Short for $2 Debit Expenses for receipts 143 Debit Cash over/short 2 Credit Cash 145 150 - 5 = 145 cash needed to bring petty cash account back up to $150

13. Joe purchased equipment costing $5,000 by making a $1,000 down payment and signed a note payable for the remaining amount due. The journal entry to record the transaction is:

d. Equipment 5,000 Cash 1,000 Notes Payable 4,000

The Balwin Company uses the allowance method in accounting for uncollectible accounts. On June 1, Baldwin wrote off a $500 account of a customer. Writing off the account will

d. Have no effect on total assets. Journal entry would be a debit to Allowance for Doubtful Accounts for $500 and a credit to Accounts Receivable for $500. Since both Accounts Receivable and the Allowance accounts are Assets and Accounts Receivable has a debit balance and Allowance for Doubtful Accounts has a credit balance, they offset each other. So there is a net zero effect on Assets.

64. The Marquette Co uses the allowance method. On August 1, they wrote off the $200 account of Steve Cook. The effect of this transaction on the financial statements is:

d. Have no effect on total assets. Since both Accounts Receivable and the Allowance accounts are Assets and Accounts Receivable has a debit balance and Allowance for Doubtful Accounts has a credit balance, they offset each other. So there is a net zero effect on Assets.

Ken's Copy Stop has a copy machine with a cost of $40,000 and accumulated depreciation of $32,000. Ken sells this copy machine for $5,000 cash. What is the gain or loss on the sale of the copy machine

d. Loss of $3,000 Book Value of the Copy Machine = 40,000 - 32,000 = 8,000 If they sold it for 5,000, they sold it for $3,000 less than what it's value is, therefore there is a loss of $3,000

35. When a company compares the periodic and perpetual inventory procedures:

d. One can refer to the merchandise inventory account any time throughout the year to see what should be on hand under the perpetual method.

11. The last step of the accounting cycle is:

d. Prepare a post-closing trial balance

18. We make adjusting entries to:

d. To make sure all revenue earned and expenses incurred are reported in the correct accounting period.

2. Jill invested cash of $3,000, inventory of $7,000 and equipment of $10,000 to start his business. Jill still owes $2,000 on the equipment and this note payable will be transferred into her new business. The effect of this transaction on the financial statements is:

d. Total capital increased by $11,000 CASH 3,000 INVENTORY 7,000 EQUIPMENT 10,000 NOTES PAYABLE 2,000 OWNER'S EQUITY 18,000

3. Lucy invested inventory of $5,000, equipment of $8,000 and a note payable of $2,000 was transferred to the business. The effect of this transaction on the financial statements is:

d. Total capital increased by $11,000 INVENTORY 5,000 EQUIPMENT 8,000 NOTES PAYABLE 2,000 OWNER'S EQUITY 11,000

22. On December 1st there is a balance of $100,000 in the unearned revenue account. According to our records, we have earned 3/4 (three-fourths) of the revenue received in advance. Based on this information, the correct adjusting entry to be recorded on December 31 would be:

d. Unearned Revenue 75,000 Revenue 75,000

36. When a company compares the periodic and perpetual inventory procedures:

d. When recording a sale of merchandise when using perpetual inventory procedure, both the Sales account and Cost of Goods sold accounts are affected.

26. Closing entries are made

d. so that revenue, expenses, and the owner's drawings accounts will have zero balances when the next accounting period starts.