WVU Accounting 201 Final Review
Indiana Bones, Inc., has the following account balances at the end of the year before adjustments: Accounts Receivable $60,000 Allowance for Doubtful Accounts $700 credit balance Sales $900,000 Doubtful Accounts Expense 0 Management estimates that 3% of accounts receivable will be uncollectible. After the correct adjusting entry has been made, Doubtful Accounts Expense on the income statement for the year equals:
- $1,100
Eel Electronics bought equipment for $4,000. Normally the equipment would have cost $4,500, but the supplier gave Eel a special discount. Eel's balance sheet should report equipment of ______.
- $4,000
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
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
Using the aging-of-receivables method to estimate uncollectibles, Brewed Awakenings, Inc., estimates that $8,500 of its accounts receivable will be uncollectible. Prior to adjustment, the Allowance for Doubtful Accounts has a debit balance of $500. After all necessary adjusting entries are made, the credit balance in Allowance for Doubtful Accounts will be ______.
- $8,500
Squid Roe, Inc., sold its $19,000 equipment with accumulated depreciation of $13,000 for $3,000. What is the amount of the gain or loss on this sale Squid Roe would record? DO NOT INCLUDE $ IN YOUR ANSWER.
- -3,000
On September 30, Year 1, Yapoo Plumbing, Inc., issued $60,000 of 15-year, 7% bonds at par value. Interest is paid annually on September 30. At year end, December 31, Year 1, when the adjusting entry is recorded, the debit to Interest Expense equals $_______.
- 1,050
Calculate the missing Cost of Goods Sold in this multi-step income statement: Sales Revenue $1,500 Cost of Goods Sold ____ Gross Profit 400 Operating Expenses 100 Operating Income ____ Interest Expense 10 Net Income ____
- 1,100
Calculate the cost of the inventory purchased for the purchasing company: Invoice price of goods is $2,000. Purchase terms are 2/10, n/30 and the invoice is paid one week after it was received. The shipping terms are FOB destination and the shipping costs are $300.
- 1,960
The company is authorized to sell 100,000 shares. The entry to record the issuance of 15,000 shares of $5 par value common stock at $12 per share would include a credit to Additional Paid-in Capital of what amount? If the amount should be a debit, enter 0.
- 105,000
Whistler Company had retained earnings of $449,000 at the end of Year 1. During Year 2, Whistler had net income of $107,000. Retained earnings were $418,000 at December 31, Year 2. The amount of dividends for Year 2 must have been:
- 138,000
On November 1, Sofa So Good, Inc., lent $2,000 on a 4-month, 6% note with interest and principal due at maturity. Calculate the amount of interest in the adjusting entry for the year ended December 31.
- 20
Thistle Do Nicely had $200 of supplies on May 1. During May, it purchased $400 of supplies on account. It paid $250 of the $400 it owed for its supplies. At May 31, Thistle Do Nicely only had $25 of supplies left. Supplies on the balance sheet equals ______.
- 25
Shareholders' Equity: Common Stock, $2 par value, 1,000,000 authorized, ___ issued $ 60,000 Additional Paid-in Capital 110,000 Retained Earnings 100,000 The number of shares of common stock issued equals ___________ shares.
- 30,000
Determine the missing Land balance. Cash $13,000 Supplies 10,000 Inventory 13,000 Land ____ Buildings, Net of Accumulated Depreciation 20,000 Total Assets ____ Notes Payable $28,000 Stock 47,000 Retained Earnings 15,000 Total Liabilities & Shareholders' Equity $90,000
- 34000
Shareholders' Equity: Common Stock, $1 par value, 1,000,000 authorized, 150,000 shares issued $? Additional Paid-in Capital 220,000 Retained Earnings 130,000 Treasury Stock (10,000 shares at $4 each) ? Shareholders' Equity $___?___ Shareholders' Equity equals $_______.
- 460,000
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 $110,000 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.
- 50,000
On January 1, Year 1, Florist Gump, Inc., bought machinery at a cost of $3,000 with a salvage value of $400 and useful life of 5 years. Calculate Depreciation Expense on the income statement for December 31, Year 2, assuming the straight-line method is used.
- 520
Z Best, Inc.'s, corporate charter allows it to issue 6,000,000 shares of common stock. In its first year of business, the company sold 600,000 shares of common stock. During the year, the company bought back 5,000 shares to be held as treasury stock. The number of shares of common stock that are outstanding equals ______ shares.
- 595,000
On September 1, Sea the World Cruises, Inc., lent $2,000 on a 6-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.
- 60
During the year, A Salt & Buttery, Inc., had revenue of $90,000 of which $16,000 was collected from customers. It also had expenses of $29,000 of which $3,000 was paid. The owners were paid $20,000 in dividends. Net income for the year equals ______.
- 61,000
Squid Roe, Inc., collected $900 owed from customers for services previously recorded. Record the entry. DO NOT INCLUDE $ SIGNS IN YOUR ANSWER. Account Title Debit Credit [a] 900 [c] 900
- A - Cash - C - Accounts receivable
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. Record the depreciation adjusting entry for Year 2 using the straight-line method: DO NOT INCLUDE $ SIGNS IN YOUR ANSWER. Account Title Debit Credit [a] [b] [c] [d]
- A - Depreciation Expense - B - 70,000 - C - Accumulated Depreciation - D - 70,000
Identify the normal balance of each account below. - Accounts Receivable - Accounts Payable - Salary Payable - Sales Revenue - Accumulated Depreciation - Depreciation Expense - Salary Expense - Deferred Revenue - Stock - Supplies
- Accounts Receivable - debit - Accounts Payable - credit - Salary Payable - credit - Sales Revenue - credit - Accumulated Depreciation - credit - Depreciation Expense - debit - Salary Expense - debit - Deferred Revenue - credit - Stock - credit - Supplies - debit
When a company is owed for sales made to customers on credit, the asset called ______.
- Accounts Receivable will be reported on the balance sheet
Which of the following accounts are closed at the end of the accounting period? - Allowance for Doubtful Accounts - Accumulated Depreciation - Depreciation Expense - Doubtful Accounts Expense - Gain (Loss) on Sale of Equipment
- All of these are closed except for Allowance for Doubtful Accounts and Accumulated Depreciation.
Miss Take, the company bookkeeper, recorded the $5,000 issuance of stock as an increase to Cash and Notes Payable. What is the effect of this error on the accounting equation?
- Assets - Correct - Liabilities - Too high - Shareholders' Equity - Too low
Florist Gump, Inc., uses the FIFO method and had the following inventory activity for June: Beginning Inventory, June 1 5,000 units @ $300 each Purchase, June 15 15,000 units @ $350 each Sale, June 25 18,000 units @ $700 each Record the entry for the purchase of inventory on account for June 15.
- Assets - Debit Inventory 5,250,000 - Liabilities - Credit Accounts Payable 5,250,000 - Shareholders' Equity - 0 no effect
If a company debited an expense, the credit may have been to ______. (Select all that apply.)
- Cash - a payable account such as Supplies Payable, Utilities Payable, Interest Payable - an asset such as Prepaid Insurance, Supplies, Inventory, or Accumulated Depreciation
On January 1, Year 1, Pasta Disasta, Inc., issued a $400,000, 11%, 4-year installment note. On December 31, Year 2, Pasta Disasta made its second annual installment payment of $163,686. The journal entry to record the second installment payment includes:
- Cash - credit $163,686 - Interest Expense - debit $30,835 - Notes Payable - debit $132,851
Which of these would be reported in the financing activities section of the Statement of Cash Flows? (Select all that apply.)
- Cash dividends paid to shareholders - Cash paid to reduce the principal borrowed from banks - Cash borrowed from the bank
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
When Pizza Company sells three $100 gift cards at the beginning of the month, it should record a $300 debit to ______ and a $300 credit to ______.
- Cash; Deferred Revenue
Canton, Inc. issued 10,000 shares of $1 par value common stock at $10 per share. Mr. Smart, the bookkeeper, recorded this transaction with a $100,000 debit to Cash and a $100,000 credit to Common stock. As a result of this entry ______. (Select all that apply.)
- Common Stock will be overstated - Additional Paid-in Capital will be understated
Match each of the items below with the most appropriate description. - Current Assets - Noncurrent Assets - Expenses - Revenues
- Current Assets - Resources expected to be used or turned into cash within a year reported on the balance sheet - Noncurrent Assets - Resources expected to be used over more than one year reported on the balance sheet - Expenses - Goods or services consumed during the accounting period reported on the income statement - Revenues - Goods delivered or services performed during the accounting period reported on the income statement
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 November 1, Year 1, The Yacht Doc, Inc., borrowed $10,000 at 6% due in eight months. Record the adjusting journal entry for the interest incurred for the year ended December 31, Year 1.
- Debit - Interest Expense $100 - Credit - Interest Payable $100
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
The debit side of the Retained Earnings T-Account will include which of the following after recording the closing entries? (Select all that apply.)
- Dividends - Net Loss when revenues < expenses
The adjusting entry to record the estimated doubtful accounts includes a debit to ______.
- Doubtful Accounts Expense
Match each item below with the appropriate description using each one only once. - Income Statement - Statement of Shareholders' Equity - Statement of cash flows - Balance Sheet - Notes (or footnotes)
- Income Statement - Reports a summary of all revenues minus all expenses during a period - Statement of Shareholders' Equity - Reports the changes that took place in the amount of the owners' investment during a period - Statement of Cash Flows - Reports a summary of cash collected and cash paid during a period - Balance Sheet - Reports the assets, liabilities, and shareholders' equity of a company at a specific point in time - Notes (or footnotes) - Reports additional information needed to better understand the financial statements
On January 1, Year 1, Needham, Inc., borrowed $10,000 at 6% for four years. The note requires annual payments of $2,886 on December 31 of each year. For each item, select the amount as of or for the Year Ended December 31, Year 1, in the column of the one financial statement where the amount is found.
- Interest Expense - (600); Income Statement - Notes Payable - 7,714; Balance Sheet - Cash paid for interest - (600); Statement of Cash Flows: Operating Activities - Payment of note payable principal - (2,286); Statement of Cash Flows: Financing Activities
When a company pays for advertising in advance, it will record a debit to ______ and a credit to ______.
- Prepaid Advertising; Cash
Which of the following is the proper chronological order of the steps in the accounting cycle?
- Record entries in the journal and post them to the ledger, prepare the unadjusted trial balance, record and post adjusting entries, prepare the adjusted trial balance, prepare the financial statements, close the temporary accounts into Retained Earnings and prepare a post-closing trial balance.
Sea the World Cruises, Inc. received $400,000 from its ticket sales to customers during its first month of business. Sea the World Cruises earned $300,000 of the amount collected. Match the amounts that will be reported on each of the first month's financial statements listed below.
- Revenue on the income statement - 300,000 - Cash Collected from Customers on the Statement of Cash Flows - 400,000 - Deferred Revenue on the Balance Sheet - 100,000
Indicate the financial statement where you would expect to find each line item: - Salaries Expense - Salaries paid to employees - Salaries Payable
- Salaries Expense - Income Statement - Salaries paid to employees - Statement of cash flows - Salaries payable - Balance sheet
Identify the normal balance of each account below. - Service revenue - Notes Payable - Interest Expense - Dividends - Inventory - Accumulated Depreciation - Deferred Revenue
- Service Revenue - credit - Notes Payable - credit - Interest Expense - debit - Dividends - debit - Inventory - debit - Accumulated Depreciation - credit - Deferred Revenue - credit
The issuance of common stock in exchange for cash will ______.
- affect the financing activities section of the statement of cash flows
When closing Net Income, expense accounts are ______ in the closing entry.
- credited
On July 1, the board of directors of Dive Inn, Inc., declared a cash dividend of $0.10 per share on its $1 par value, 1,000,000 common shares outstanding. The date of record is the close of business on July 12, payable August 31. The entry to record the payment of dividends on August 31 includes a ______. (Select all that apply.)
- debit Dividends Payable $100,000 - credit Cash $100,000
The purchase of treasury stock ______.
- decreases total assets and decreases shareholders' equity
Accounts Receivable, Net is also referred to as the net realizable value and ______. (Select all that apply.)
- equals Accounts Receivable less Allowance for Doubtful Accounts - remains the same before and after a write off of a specific customer's accounts receivable
The date of record is the date on which the corporation ______.
- finalizes its list of shareholders who will receive dividends
Thistle Do Nicely had $200 of supplies on May 1. During May, it purchased $400 of supplies on account. It paid $350 of the $400 it owed for its supplies. At May 31, Thistle Do Nicely only had $150 of supplies left. Supplies Expense on the ______.
- income statement will equal $450
Treating a capital expenditure as an immediate expense ______.
- overstates expenses and understates net income
Additional Paid-in Capital of $1,000,000 is found in the ______ section of the ______.
- shareholders' equity; balance sheet
On August 1, Year 1, Luna Sea Motel, Inc., issued a 9%, 8-month, $10,000 note and a 9%, 10-month, $10,000 note. The interest payable on the 9%, 8-month note will be _____ the interest on the 10-month note as of December 31.
- the same as
Loco for Cocoa, Inc.'s inventory activity in May was as follows: Inventory, May 1 10 units @ $4 each Purchase, May 7 20 units @ $5 each Sale, May 18 25 units @ $10 each Show the activity in Loco for Cocoa's inventory T account using the above information and assuming the company uses FIFO. Select "Blank" for the side opposite the beginning and ending inventory balances
1. $40 2. Blank 3. $100 4. $115 5. $25 6. Blank
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. Beginning Balance 3. Payments to Merchandisers 4. Purchases on account 5. Blank 6. Ending Balance
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. Beginning Balance 3. Revenues Earned 4. Collections in advance from customers 5. Blank 6. Ending Balance
