Acct Final Exam

Melon-Cauli Grocers, Inc. had a $10,000 balance in Accounts Payable at the beginning of the month. During the month, it made $60,000 of purchases on account due within one month and paid $40,000 of the amounts owed. The Accounts Payable balance at the end of the month has a ______ balance.

$30,000 credit

Identify whether each item is an expense, a capital expenditure (an asset), or neither. Novel Tea, Inc., paid ______.

$5,000 to have its new equipment delivered to its factory- Capital Expenditure (assets) $3,000 to have the equipment installed- Capital Expenditure (assets) $1,000 for the electricity during the year to run its equipment- Expense

Eel Electronics paid $4,000 of the $5,000 its employees had earned during the period. Eel Electronics should report Wages Expense of ______ on the income statement and Wages Payable of ______ on the balance sheet prepared in accordance with generally accepted accounting principles.

$5,000; $1,000

Kincaid Company's Retained Earnings balance on January 1 was $6,000. During the current year, Kincaid earned $6,400 in revenues and incurred $4,200 in expenses. Kincaid paid $2,500 in dividends, all in cash. After the closing entries are made, Kincaid's Retained Earnings balance on December 31 will be ______.

$5,700

Using the following information for Morris Lest Co. for the year ended December 31, Year 2 and assuming no new stock was issued during the year, Total Assets at December 31, Year 2 equals _______.

$765

Calculate the missing Cost of Goods Sold in this multi-step income statement:

1,400

Given the Accounts Receivable T-account, match the correct description with each number. For the beginning (1. or 2.) and ending balances (5. or 6.), select "Blank" for the side that is opposite the account's normal balance.

1. Beg Balance 2. Blank 3. Sales on Account 4. Collections from customers 5. Ending Balance 6. Blank

Given the Deferred Revenue T-account, match the correct description with each number. For the beginning (1. or 2.) and ending (5. or 6.) balances, select "Blank" for the side that is opposite the account's normal balance.

1. Blank 2. Beg Balance 3. Revenues Earned 4. Collections in Advance From Customers 5. Blank 6. End Balance

Given the Accounts Payable T-account, match the correct description with each number. For the beginning (1. or 2.) and ending balances (5. or 6.), select "Blank" for the side that is opposite the account's normal balance.

1. Blank 2. Beg Balance 3. Payments to merchandisers 4. Purchases on Account 5. Blank 6. Ending Balance

List the steps in the accounting cycle in chronological order.

1. Record Journal Entry 2. Post Journal entries to ledger 3. Prepare an unadjusted trial balance 4. Record and post the adjusting entries 5. Prepare an unadjusted trial balance 6. Prepare financial statements 7. Record and post the closing entries 8. Prepare a post-closing trial balance

During the year, A Salt & Buttery, Inc., had revenue of $95,000 of which $11,000 was collected from customers. It also had expenses of $28,000 of which $3,000 was paid. The owners were paid $20,000 in dividends. Net income for the year equals ______.

67,000

During the year, Rob M. Clean Company recorded $400 of delivery costs for its new machine as an expense. Determine whether this is the appropriate accounting treatment by showing the effect of this accounting treatment on the accounting equation.

Assets- Too Low SE- Too Low

Miss Take, the company bookkeeper, recorded the $1,000 purchase of inventory by decreasing Cash and decreasing Shareholders' Equity. What is the effect of this error on the accounting equation?

Assets- Too Low Shareholders Equity- Too Low

Match the definition with each element of the accounting equation.

Assets- economic resources that will provide future benefit Liabilities- creditors' claims to economic resources Shareholder's Equity- Owners' claims to economic resources Revenues- amounts earned by selling goods and services Expenses- Amounts used to generate profits

Land is reported on the balance sheet at its original purchase price. From the list of assumptions and principles, which one best supports this accounting treatment?

Historical Cost Principle

A company's bookkeeper forgot to make the adjusting entry to accrue Interest Expense at the end of September. As a result, there will be an error(s) on September's ________.

Income Statement and Balance Sheet

The journal entry to record the purchase of supplies on account is debit ______.

Supplies and credit Supplies Payable

The statement of shareholders' equity reports the ______.

changes that occurred in shareholders' equity during the accounting period

Closing entries require the Expense accounts to be ______.

credited

There were 10,000 shares issued and outstanding before T-ball, Inc., decided to buy back some of its own stock to have on hand for end-of-year bonuses. It buys 200 shares at $50 per share. The entry to record the purchase of these 200 shares includes a ______. (Select all that apply.)

debit Treasury Stock $10,000

On January 1, Year 1, Squid Roe, Inc., purchased equipment for $25,000 and depreciated the equipment using straight-line and an estimated useful life of 5 years and $0 salvage value. On January 1, Year 4, Squid Roe, Inc., sold the equipment for $11,000 cash. The journal entry to record the sale of this equipment includes a ______. (Select all that apply.)

debit to Cash for $11,000 credit to Equipment for $25,000 debit to Accumulated Depreciation for $15,000 credit to Gain (Loss) on Sale of Equipment for $1,000

On November 1, Year 1, Bondage, Inc., issued $30,000 of 10-year, 6% bonds at 100.000. The bonds pay interest annually on November 1. Which of the following will appear on Bondages balance sheet at December 31, Year 1?

Interest Payable, $300

If a company incorrectly records cash received for services to be provided in the future by increasing Cash and increasing Sales Revenue, how will this error affect the current period?

Liabilities will be too low.

On January 1, Year 1, Faux Sure, Inc., borrowed $40,000 on a five-year, 7% note. The loan will be repaid in 5 equal installments of $9,756 each year, beginning on December 31, Year 1. Interest Expense for the year ended December 31, Year 2, will be _____ Interest Expense for Year 1.

Lower than

If a company incorrectly records cash received from customers by increasing Cash and Service Revenue for services that were previously recorded as sales on account, how will this error affect net income for the current period?

Net income will be too high.

When does a cash dividend become a legal liability?

On date of declaration.

Indicate the financial statement where you would expect to find each line item:

Prepaid Insurance- Balance Sheet Insurance expense- Income statement Cash paid- Cash Flows

On January 1, Year 1, Wok of Fame, Inc., borrowed $700,000 at 5%. The loan will be repaid with equal annualinstallment payments of $50,000 made on the last day of each year, which is the company's yearend. The second installment payment journal entry will include a larger ______ than in the first installment payment journal entry.

debit to Notes Payable

The adjusting entry to record the estimated doubtful accounts causes a(n) ______. (Select all that apply.)

decrease in SE decrease in assets

The line item Repurchase of Treasury Stock is reported in the ______.

financing activites section of the statement of cash flows

Paying a cash dividend to shareholders is a(n) ______.

financing activity

Shares outstanding equals shares ____________ shares.

issued minus treasury

Dividends Payable is a ______ account with a normal ______ balance and is recorded on the ______ date.

liability; credit; declaration

Thistle Do Nicely had $200 of supplies on May 1. During May, it purchased $500 of supplies on account. It paid $250 of the $500 it owed for its supplies. At May 31, Thistle Do Nicely only had $35 of supplies left. Supplies Expense on the income statement equals ______.

665

FILLO, Inc.'s inventory activity in May was as follows:

Assets- 150 inventory Liabilities- 150 accounts payable

FILLO, Inc.'s inventory activity in May was as follows:

Assets- 180 inventory Liabilities- 180 accounts payable

Assume Year 1 is the company's first year of business and there were $100 dividends in Year 1 and $100 dividends in Year 2. After determining the missing amounts ($______) in the above financial statements, calculate and type in the December 31, Year 2 Retained Earnings 1.$_________.

12,100

Lox, Stock & Bagel, Inc.'s, balance sheet reported the following amounts on its year-end balance sheet:

125,000

The Merchant of Tennis, Inc., had $10,000 of inventory at the beginning of the period. During the period it purchased $10,000. Based on a physical count of inventory at the end of the accounting period, it had $5,000 in inventory. Based on this information, calculate Cost of Goods Sold for the period.

15,000

Bank, Rupp & Baroque, Inc., has 856,000 shares of stock authorized, 774,000 shares issued and 610,000 shares outstanding. How many shares are held by the company as Treasury Stock?

164,000

Prior to writing off a specific account, Lettuce Eat, Inc. had the following balances:

19,000

In its first year of business, Scents for Cents' earned Revenues of $20,000, incurred Expenses of $16,000 and paid a $2,000 Dividend to its shareholders. Given Scents for Cents' incomplete balance sheet at year-end, determine the missing Retained Earnings balance.

2,000

On January 1, Year 1, Scores or Oars, Inc., borrowed $700,000 at 7%. The loan will be repaid with equal annual installment payments of $70,000 made on the last day of each year, which is the company's yearend. The first payment will include a debit to Notes Payable of $______.

21,000

Prior to writing off a specific account, Lettuce Eat, Inc. had the following balances:

22,000

The invoice price of goods purchased is $25,000 with purchase terms of 2/7, n/30 and FOB destination. The invoice is paid within the week of receipt and the shipping costs are $200. By what amount should the purchaser's Inventory be increased?

24,500

On September 1, Sea the World Cruises, Inc., lent $8,000 on a 9-month, 9% note with interest and principal due at maturity. Calculate the amount of interest in the adjusting entry for the year ended December 31.

240

Purses, Inc., sold 4 purse(s) that cost $40 each to its customers for a price of $110 each. The Gross Profit amount on the income statement will equal $______.

280

How many of the following accounts have a normal credit balance?

3

Lox, Stock & Bagel, Inc.'s, balance sheet reported the following amounts on its year-end balance sheet:

300,000

During December, Acme, Inc., performed and billed its customers $31,000 for services on account of which it collected $5,000. How much revenue should Acme record in December?

31,000

Shareholders' Equity:

450,000

Nim Com Soup, Inc., purchased land at a cost of $5,000 five years ago. Currently, the land is estimated to be worth $50,000. At what amount should the land be reported on Nim Com Soups' balance sheet at year end? DO NOT INCLUDE $ IN ANSWER

5,000

Wok On Water, Inc.'s employees had worked during its first month of May and earned $5,000. Wok on Water had paid $3,000 of the amount owed. How much will be reported as Wages Expense on its May income statement?

5,000

The following data was extracted from the records of Shear-Lock Combs, Inc.:

6,600

At December 31, Year 1, Lord of the Fries, Inc.'s assets were $50,000 and liabilities were $40,000. At December 31, Year 2, its assets are $120,000 and liabilities are $50,000. During the year, it did not issue new stock and did not declare or pay dividends. Calculate net income for Year 2.

60,000

The ending inventory of Papa Razzi Co. is $57,000. If the beginning inventory was $54,000 and the goods available for sale totaled $122,000, the Cost of Goods Sold equals ______.

65,000

If a company credited Revenues, the debit may have been to ______. (Select all that apply.)

Accounts Receivable Cash Deferred Revenue

When a company is owed for sales made to customers on credit, the asset called ______.

Accounts Receivable will be reported on the balance sheet

The adjusting entry to record the estimated doubtful accounts includes a credit to ______.

Allowance for Doubtful Accounts

Yacht Doc, Inc., had the following balances at December 31, before recording any adjustments:

Assets- (120) Allowance for Doubtful Accounts Shareholder's Equity- (120) Doubtful Accounts Expense

Drain Surgeons, Inc., needed some long-term financing and arranged for a 10-year, $100,000, 7% mortgage loan on January 1, Year 1. Annual payments of $14,238 will be made on December 31 each year. Show the effect on the accounting equation of the first annual payment. Round to the nearest dollar.

Assets- (14,238) Cash Liabilities- (7,238) Notes Payable SE- (7,000) Interest Expense

Stockit, Inc., uses the FIFO method and had the following inventory activity for June:

Assets- 1,260,000 Accounts Receivable; (605,000) Inventory Shareholders Equity- 1,260,000 sales; (605,000) Cost of Goods Sold

Record the effect of each of the following sales of long-term assets on the accounting equation:

Assets- Debit Cash 40,000; Debit Accumulated Depreciation 54,000; Credit Equipment 100,000 SE- Debit Gain (Loss) on Sale of Equipment 6,000

Which of the following have normal debit balances? (Select all that apply.)

Cash Supplies Equipment

Which of these would be reported as cash flows from investing activities? (Select all that apply.)

Cash paid to build a new corporate headquarters Cash paid to buy equipment

Using a perpetual inventory system, which of the following entries would record the sale of merchandise on account?

Debit Accounts Receivable and Cost of Goods Sold; Credit Sales Revenue and Inventory

Doolittle & Dalley, Inc., collected $400 owed from customers for services previously recorded.

Debit Cash Credit Accounts Receivable

Squid Roe, Inc., collected $900 owed from customers for services previously recorded.

Debit Cash Credit Accounts Receivable

On January 1, Year 1, Eatie Gourmet, Inc., borrowed $10,000 at 6% due in four years. Record the January 1, Year 1, journal entry.

Debit Cash 10,000 Credit Notes Payable 10,000

On May 1, Faux Sure, Inc., collected $900 in advance from a customer for services to be performed over three months starting in May. Record the May 1 entry. DO NOT INCLUDE $ SIGNS IN YOUR ANSWER.

Debit Cash for 900 Credit Deferred Revenue for 900

On January 1, Year 1, Vicious Cycle, Inc., purchased a $600,000 machine with an estimated useful life of 10 years or 500,000 bicycle frames and a $100,000 salvage value. The machine actually produced 150,000 bicycle frames in Year 1 and 120,000 bicycle frames in Year 2.

Debit Depreciation Expense 50,000 Credit Accumulated Depreciation 50,000

On January 1, Year 1, Daily Kneads, Inc., purchased a $360,000 machine with an estimated useful life of 5 years or 50,000 units and a $10,000 salvage value. The machine actually produced 15,000 units in Year 1 and 12,000 units in Year 2.

Debit Depreciation Expense 70,000 Credit Accumulated Depreciation 70,000

On August 1, Year 1, Luna Sea Sushi, Inc., issued an 8-month, 9%, $100,000 note. Record the adjusting journal entry for the interest incurred and owed as of the year ended December 31, Year 1.

Debit Interest Expense $3,750 Credit Interest Payable $3,750

On October 1, Deja Brew, Inc., lent $900 on a 9-month, 12% note with interest and principal due on July 1. Record the adjusting entry for interest earned for the year ended December 31.

Debit Interest Receivable 27 Credit Interest Income 27

Squid Roe, Inc., purchased $500 of supplies with cash.

Debit Supplies Credit Cash

Using the accounts receivable method, Thistle Do Nicely, Inc. estimates that $4,000 of its receivables will be uncollectible. Prior to adjustment, the Allowance for Doubtful Accounts has a $400 debit balance. Determine the amount and on which year-end financial statement the line items appear.

Doubtful Accounts Expense of $4,400 on the Income Statement and Allowance for Doubtful Accounts of $4,000 on the Balance Sheet

Common stock's par value is ______.

a minimal amount specified in the corporate charter

The issuance of common stock in exchange for cash will ______.

affect the financing activities section of the statement of cash flows

Additional Paid-in Capital of $1,000,000 is found in the ______ section of the ______.

shareholders' equity; balance sheet

On May 1, Lord of the Fries, Inc., issued a $10,000, 3-month, 12% note. It also issued another $10,000 6-month, 12% note on the same day. On May 31, the adjusting entry to record the interest owed will be ______.

the same amount for both notes