Chapter 1-3 Quiz
Chase Company rents space to a tenant for $2,900 per month. The tenant currently owes rent for November and December. The tenant has agreed to pay the November, December, and January rents in full on January 15 and has agreed not to fall behind again. The adjusting entry needed on December 31 is:
$2,900 × 2 = $5,800 Debit Accounts Receivable, $5,800; Rent Revenue, $5,800.
A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below. What amount will be posted to Retained earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.) Retained earnings$9,250 Dividends $12,950 Services $37,000 Rent expense $3,700 Salaries expense $8,600 Insurance expense $415 Depreciation expense-equipment $640 Accumulated depreciation-equipment $1,920
$37,000 Credit $3,700 Debit $8,600 Debit $415 Debit $640 Debit = $ 23,645 credit, closed with a debit of $23,645; credit to Retained earnings
A company's Office Supplies account shows a beginning balance of $780 and an ending balance of $760. If office supplies expense for the year is $4,000, what amount of office supplies was purchased during the period?
$780 + Supplies Purchased − $4,000 = $760 Supplies Purchased − $3,220 = $760 Supplies Purchased = $3,980
A company pays each of its two office employees each Friday at the rate of $290 per day for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is:
2 employees × 2 days × $290/employee/day = $1,160
A company's balance sheet shows: Cash $42,000, Accounts receivable $26,000, Office equipment $60,000, and Accounts payable $27,000. What is the amount of total equity?
Assets = Liabilities + Equity Cash + Accounts Receivable + Office Equipment = Accounts Payable + Equity $42,000 + $26,000 + $60,000 = $27,000 + Equity$128,000 = $27,000 + EquityEquity = $101,000
A company reported total equity of $181,000 at the beginning of the year. The company reported $246,000 in revenues and $183,000 in expenses for the year. Liabilities at the end of the year totaled $110,000. What are the total assets of the company at the end of the year?
Assets = Liabilities + EquityAssets = $110,000 + (Beginning Equity + Revenues − Expenses) Assets = $110,000 + ($181,000 + $246,000 − $183,000) Assets = $110,000 + $244,000; Assets = $354,000
Saddleback Company paid off $39,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?
Assets = Liabilities + EquityAssets would decrease by $39,000 in Cash due to the payment of the accounts payable. Liabilities would also decrease by $39,000 in Accounts Payable due to the payment of an obligation. There is no effect on Equity.
At the beginning of the year, a company's balance sheet reported the following balances: Total Assets = $215,000; Total Liabilities = $26,550; Common Stock of $61,950; and Retained Earnings = $126,500. During the year, the company reported revenues of $54,100 and expenses of $35,400. In addition, dividends for the year totaled $23,600. Assuming no other changes to Retained earnings, the balance in the Retained earnings account at the end of the year would be:
Beginning Retained earnings $126,500 + Revenues $54,100 − Expenses $35,400 − Dividends $23,600 = Ending Retained earnings $121,600.
On January 1 of the current year, Jimmy's Sandwich Company reported total equity of $126,000. During the current year, total revenues were $102,000, while total expenses were $111,500. No other changes in equity occurred during the year. The change in total equity during the year was:
Beginning Total Equity + Revenues − Expenses = Ending Total Equity $126,000 + $102,000 − $111,500 = Ending Total Equity Ending Total Equity = $116,500 Change in Equity = Beginning Total Equity − Ending Total Equity Change in Equity = $126,000 − $116,500 = $9,500 Decrease
Chase Company has 10 employees, who earn a total of $2,700 in salaries each working day. They are paid on Monday for the five-day work week ending on the previous Friday. Assume that year ended on December 31, which is a Wednesday, and all employees will be paid salaries for five full days on the following Monday. The adjusting entry needed on December 31 is:
Debit Salaries Expense, $8,100; credit Salaries Payable, $8,100. $2,700 × 3 = $8,100
At the end of the current year, James Company reported total liabilities of $301,000 and total equity of $101,000. The company's debt ratio was:
Debt Ratio = Total Liabilities/Total Assets Debt Ratio = $301,000/$402,000*; Debt Ratio = 0.749 = 74.9%* Total Assets = Total Liabilities + Total Equity Total Assets = $301,000 + $101,000; Total Assets = $402,000
Doc's Ribhouse had beginning equity of $65,500; net income of $23,000. The company has no other transactions impacting equity. Calculate the ending equity
Ending Equity = Beginning Equity + Net Income Ending Equity = $65,500 + $23,000 = $88,500
Cruz Company had revenues of $112,000 and expenses of $66,000 for the year. Its assets at the beginning of the year were $416,000. At the end of the year, assets were worth $466,000. Calculate its return on assets.
Return on Assets = Net Income/Average Total Assets Return on Assets = (Revenues − Expenses)/Average Total Assets Return on Assets = ($112,000 − $66,000)/[($416,000 + $466,000)/2] Return on Assets = $46,000/$441,000 = 0.1043 = 10.4%
The following transactions occurred during July: Received $1,090 cash for services provided to a customer during July. Collected $5,800 cash for services previously completed in June. Received $940 from a customer in partial payment of his account receivable which arose from sales in June. Provided services to a customer on credit, $565. Borrowed $7,900 from the bank by signing a promissory note. Received $1,440 cash from a customer for services to be performed next year. What was the amount of revenue for July?
Revenues = $1,090 (from #1) + $565 (from #4) = $1,655 Counting receiving cash and providing service.