Accounting Final - Word Problems

a. $470 (10 * $20) + (10 * $22) + (2 * $25) = $470

A company had beginning inventory of 10 units at a cost of $20 each on March 1. On March 2, it purchased 10 units at $22 each. On March 6 it purchased 6 units at $25 each. On March 8, it sold 22 units for $54 each. Using the FIFO perpetual inventory method, what was the cost of the 22 units sold? a. $470 b. $490 c. $450 d. $570 e. $520

b. Debit Income Summary $75,000; Credit Revenues $75,000

A company had revenues of $75,000 and expenses of $62,000 for the accounting period. The owner withdrew $8,000 in cash during the same period. Which of the following entries could NOT be a closing entry? a. Debit Income Summary $13,000; Credit Owner's Capital $13,000 b. Debit Income Summary $75,000; Credit Revenues $75,000 c. Debit Revenues $75,000; Credit Income Summary $75,000 d. Debit Income Summary $62,000; Credit Expenses $62,000 e. Debit Owner's Capital $8,000; Credit Owner's Withdrawals $8,000

c. Land $82,750; Land Improvements, $33,100; Building, $49,650. (Total cost to allocate = $150,000 + ($150,000 * .07) + 5,000 = $165,500)

A company paid $150,000, plus a 7% commission and $5,000 in closing costs for a property. The property included land appraised at $87,500, land improvements appraised at $35,000, and a building appraised at $52,500. What should be the allocation of this property's costs in the company's accounting records? a. Land $75,000; Land Improvements, $30,000; Building, $45,000. b. Land $75,000; Land Improvements, $30,800; Building, $46,200. c. Land $82,750; Land Improvements, $33,100; Building, $49,650. d. Land $80,250; Land Improvements, $32,100; Building, $48,150. e. Land $77,500; Land Improvements; $31,000; Building; $46,500.

c. Debit Accounts Payable $1,600; credit Merchandise Inventory $32; credit Cash $1,568.

A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 12, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 12 is: a. Debit Merchandise Inventory $1,600; credit Cash $1,600. b. Debit Cash $1,600; credit Accounts Payable $1,600. c. Debit Accounts Payable $1,600; credit Merchandise Inventory $32; credit Cash $1,568. d. Debit Accounts Payable $1,800; credit Cash $1,800. e. Debit Accounts Payable $1,600; credit Cash $1,600.

d. Debit Accounts Payable $200; credit Merchandise Inventory $200

A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the merchandise return on July 7 is: a. Debit Merchandise Inventory $1,600; credit Cash $1,600. b. Debit Merchandise Inventory $200; credit Accounts Payable $200. c. Debit Merchandise Inventory $200; credit Sales Returns $200 d. Debit Accounts Payable $200; credit Merchandise Inventory $200 e. Debit Accounts Payable $1,800; credit Purchase Returns $200; credit Merchandise Inventory $1,600.

d. $1,600

A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. The amount of the cash paid on July 28 equals: a. $200 b. $1,564 c. $1,568 d. $1,600 e. $1,800

e. $9,424

A company purchased $10,000 of merchandise on June 15 with terms of 3/10, n/45, and FOB shipping point. The freight charge, $500, was added to the invoice amount. On June 20, it returned $800 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals: a. $9,224 b. $10,200 c. $10,500 d. $10,300 e. $9,424

c. 1.14

A company's current assets are $23,420, its quick assets are $13,890 and its current liabilities are $12,220. Its acid-test ratio equals: a. .88 b. 1.91 c. 1.14 d. .52 e. 1.41

b. A debit to loss on sale for $2,625.

A machine costing $75,000 is purchased on September 1, Year 1. The machine is estimated to have a salvage value of $10,000 and an estimated useful life of 4 years. Double-declining-balance depreciation is used. If the machine is sold on December 31, Year 3 for $13,000, the journal entry to record the sale will include: a. A credit to gain on sale for $8,000. b. A debit to loss on sale for $2,625. c. A credit to accumulated depreciation for $59,375. d. A debit to loss on sale for $3,042. e. A credit to gain on sale for $4,979.

e. $123,000

At the beginning of the year, Sigma Company's balance sheet reported Total Assets of $195,000 and Total Liabilities of $75,000. During the year, the company reported total revenues of $226,000 and expenses of $175,000. Also, owner withdrawals during the year totaled $48,000. Assuming no other changes to owner's capital, the balance in the owner's capital account at the end of the year would be: a. $174,000 b. $78,000 c. $171,000 d. $120,000 e. $123,000

b. $450,000

Cushman Company had $800,000 in net sales, $350,000 in gross profit, and $200,000 in operating expenses. Cost of goods sold equals: a. $150,000 b. $450,000 c. $800,000 d. $350,000 e. $200,000

d. $115,000

Cushman Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in operating expenses. Net income equals: a. $770,000 b. $402,000 c. $390,000 d. $115,000 e. $408,000

b. $124

Grays Company has inventory of 10 units at a cost of $10 each on August 1. On August 3, it purchased 20 units at $12 each. 12 units are sold on August 6. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 12 units that were sold? a. $120 b. $124 c. $128 d. $130 e. $140

d. Credit to Unearned Revenue for $60,000

GreenLawn Co. provides landscaping services to clients. On May 1, a customer paid GreenLawn $60,000 for 6-months services in advance. GreenLawn's general journal entry to record this transaction will include a: a. Debit to Unearned Revenue for $60,000 b. Credit to Accounts Receivable for $60,000 c. Credit to Cash for $60,000 d. Credit to Unearned Revenue for $60,000 e. Debit to Accounts Receivable for $60,000

d. $25,000

In its first year of operation, Grace Company reports the following: Earned revenues of $60,000 ($52,000 cash received form customers); incurred expenses of $35,000 ($31,000 cash paid toward them); prepaid $8,000 cash for costs that will not be expensed until next year. Net income under the accrual basis of accounting is: a. $17,000 b. $21,000 c. $13,000 d. $25,000 e. None of the above

c. $357

Jasper Company is a wholesaler that buys merchandise in large quantities. Its supplier's catalog indicates a list price of $500 per unit on merchandise Jasper intends to purchase, and offers a 30% trade discount for large quantity purchases. The cost of shipping for the merchandise is $7 per unit. Jasper's total purchase price per unit will be: a. $507 b. $350 c. $357 d. $343 e. $493

b. Debit Accounts Payable $1,500; credit Merchandise Inventory $1,500

Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 26, it paid the full amount due. The correct journal entry to record the merchandise return on August 11 is: a. Debit Accounts Payable $1,500; credit Cash $1,500. b. Debit Accounts Payable $1,500; credit Merchandise Inventory $1,500 c. Debit Merchandise Inventory $1,500; credit Sales Returns $1,500. d. Debit Merchandise Inventory $1,500; credit Cash $1,500. e. Debit Accounts Payable $1,500; credit Purchase Returns $1,500.

b. $47,000

On April 30, Gomez Services had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May? a. $5,000 b. $47,000 c. $52,000 d. $57,000 e. $32,000

b. $3,270

On December 31, there were 26 units remaining in ending inventory. Using the perpetual LIFO inventory costing method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.) : a. $3,405 b. $3,270 c. $3,200 d. $3,364 e. $5,400

c. Debit Allowance for Doubtful Accounts $2,300; credit Accounts Receivable $2,300

On February 1, a customer's account balance of $2,300 was deemed to be uncollectible. What entry should be recorded on February 1 to record the write-off assuming the company uses the allowance method? a. Debit Bad Debts Expense $2,300; credit Accounts Receivable $2,300. b. Debit Allowance for Doubtful Accounts $2,300; credit Bad Debts Expense $2,300. c. Debit Allowance for Doubtful Accounts $2,300; credit Accounts Receivable $2,300 d. Debit Bad Debts Expense $2,300; credit Allowance for Doubtful Accounts $2,300. e. Debit Accounts Receivable $250; credit Allowance for Doubtful Accounts $2,300

d. Debit Insurance Expense, $360; credit Prepaid Insurance, $360 (1800 * 1/5 = 360 a year)

On January 1, a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is: a. Debit Prepaid Insurance, $1,800; credit Cash, $1,800 b. Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440 c. Debit Prepaid Insurance, $360; credit Insurance Expense, $360 d. Debit Insurance Expense, $360; credit Prepaid Insurance, $360 e. Debit Insurance Expense, $1,440; credit Prepaid Insurance, $1,440

c. A debit to a prepaid expense and a credit to Cash for $7,500

On July 1, Plum Co. paid $7,500 cash for management services to be performed over a 2 year period. Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. On July 1, Plum should record: a. A debit to an expense and credit to a prepaid expense for $7,500 b. A debit to an expense and credit to Cash for $7,500 c. A debit to a prepaid expense and a credit to Cash for $7,500 d. A credit to a prepaid expense and a debit to Cash for $7,500 e. A debit to Cash for $7,500 and a credit to an expense for $7,500

e. $13,750

Peavey Enterprises purchased a depreciable asset for $22,000 on April 1, Year 1. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $2,000, what will be the amount of accumulated depreciation on this asset on December 31, Year 3? a. $5,000 b. $15,000 c. $15,125 d. $20,000 e. $13,750

a. Debit Salaries Expense, $5,400; credit Salaries Payable, $5,400 ($1,800 * 3 = $5,400)

Sanborn Company has 10 employees, who earn a total of $1,800 in salaries each working day. They are paid on Monday for the five-day workweek ending on the previous Friday. Assume that year ended December 31, 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: a. Debit Salaries Expense, $5,400; credit Salaries Payable, $5,400 b. Debit Salaries Expense, $3,600; credit Salaries Payable, $3,600 c. Debit Salaries Expense, $9,000; credit Salaries Payable, $9,000 d. Debit Salaries Payable, $5,400; credit Salaries Expense, $5,400 e. Debit Salaries Expense, $5,400; credit Cash, $5,400

d. $360,300 (Beginning Owner's Capital + Revenues − Expenses − Owner Withdrawals = Ending Owner's Capital)

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The owner's capital account before closing had a balance of $297,000. The ending owner's capital balance after closing is: a. $185,000 b. $63,000 c. $81,000 d. $360,300 e. $378,300

d. Debit Income Summary $81,300, credit T. Westmont, Capital $81,300

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The owner's capital account before closing had a balance of $297,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is: a. Debit T. Westmont, Capital $297,000; credit Income Summary $297,000 b. Debit T. Westmont, Capital $63,300; credit Income Summary $63,300 c. Debit Income Summary $63,300; credit T. Westmont, Capital $63,300 d. Debit Income Summary $81,300, credit T. Westmont, Capital $81,300 e. Debit T. Westmont, Capital $81,300; credit Income Summary $81,300

d. Debit Revenue accounts $55,200; credit Income Summary $55,200.

The F. Mercury, Capital account has a credit balance of $37,000 before closing entries are made. Total revenues for the period are $55,200, total expenses are $39,800, and withdrawals are $9,000. What is the correct closing entry for the revenue accounts? a. Debit Income Summary $55,200; credit Revenue accounts $55,200. b. Debit Revenue accounts $37,000; credit F. Mercury, Capital $37,000. c. Debit Revenue accounts $55,200; credit F. Mercury, Capital $37,000. d. Debit Revenue accounts $55,200; credit Income Summary $55,200. e. Debit Income Summary $37,000; credit F. Mercury Capital $37,000.

c. Debit Cash $70,000; Debit Land $130,000; Credit Cruz, Capital, $200,000

Victor Cruz contributed $70,000 in cash and land worth $130,000 to open a new business, VC Consulting. Which of the following general journal entries will VC Consulting make to record this transaction? a. Debit Accounts Payable $200,000; Credit Cruz, Capital, $200,000 b. Credit Cash and Land, $200,000; Credit Cruz, Capital, $200,000 c. Debit Cash $70,000; Debit Land $130,000; Credit Cruz, Capital, $200,000 d. Debit Cruz, Capital, $200,000; Credit Cash $70,000, Credit Land, $130,000 e. Debit Cruz, Capital, $200,000; Credit Assets, $200,000

a. $5,000.

When originally purchased, a vehicle costing $23,000 had an estimated useful life of 8 years and an estimated salvage value of $3,000. After 4 years of straight-line depreciation, the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value. The depreciation expense in year 5 equals: a. $5,000. b. $2,875. c. $5,750. d. $11,500. e. $2,500.