Accounting 2600 - Financial Accounting

On January 21, Fenton Corporation sold merchandise with a gross price of $76,400 to a customer with terms of 3/10, n/30. How much Sales Discounts would be recorded if payment was received from the customer on January 27? Assume the company uses the Gross Method of recording receivables.

$2292

Volt Corp. reported the following information for the year ended December 31, 2016: Revenues: $ 50,000 Expenses: $20,000 Retained earnings at December 31, 2016: $100,000 Retained earnings at December 31, 2015: $105,000 How much was paid out in dividends by Volt in 2016?

$25,000

Leary Corporation's end-of-year balance sheet consisted of the following amounts: Cash: $25,000 Property, plant, and equipment: $69,000 Capital stock: $107,000 Accounts receivable: $46,000 Long-term debt: $41,000 Accounts Payable: $22,000 Inventory: $33,000 What is Leary's retained earnings balance at the end of the current year?

$3,000

A year-end review of Accounts Receivable and estimated uncollectible percentages revealed the following: 1-30 days $55,000 1.5% 31-60 days $14,000 9.0% 61-90 days $9,000 21.0% Amounts over 90 days past due are written off. The credit balance in the Allowance for Doubtful Accounts was $830. The Bad Debt Expense for the year is:

$3145

Blanton Company bought equipment on January 1, 2012, with a cost of $160,000, an estimated residual value of $40,000, and an estimated life of 15 years was depreciated by the straight-line method for 4 years. Due to obsolescence, it was determined at the beginning of 2016 that the useful life should be shortened by 3 years and the residual value changed to zero. What is the accumulated depreciation at the end of 2015?

$32,000

The treasurer for Rahm Corp. was preparing a bank reconciliation as of September 30, 2016. The following items were identified: Rahm's book balance: $32,800 Deposits in transit: $4,300 Outstanding checks: $2,200 Interest earned on checking account: $100 Customer's NSF check returned by the bank: $400 Rahm Corp.'s adjusted cash balance at September 30, 2016 is

$32,500

Las Palmas Company reported the following items on its financial statements for the year ending December 31, 2016: Sales: $560,000 Salary expense: $40,000 Dividends: $30,000 Cost of goods sold: $400,000 Interest expense: $30,000 Income tax expense: $25,000 How much will be reported as retained earnings on Las Palmas' balance sheet at December 31, 2016, if this is the first year of operations?

$35,000

The accountant for Lola Corp. was preparing a bank reconciliation as of February 28, 2016. The following items were identified: Lola's book balance $35,900 Outstanding checks 12,050 Interest earned on checking accounts 75 Customer's NSF check returned by the bank 325 There was an error in recording a customer's check as the check was recorded by Lola as $110, but the correct amount of $101 was recorded by the bank. Lola's adjusted cash balance at February 28, 2016 is

$35,641

The data presented below is for Falconi, Inc. for 2016. Credit sales during the year $2,100,000 Accounts receivable—December 31, 2016: $395,000 Allowance for doubtful accounts—December 31, 2016: $20,000 Bad debt expense for the year: $17,000 What amount will Falconi show on its year-end balance sheet for the net realizable value of its accounts receivable?

$375,000

Wolfe Inc. reports these account balances at January 1, 2016: Retained Earnings: $49,000 Accounts Receivable 20,000 Accounts Payable 24,000 Capital Stock 185,000 Land 153,000 Cash 13,000 Equipment 20,000 Notes Payable 28,000 Buildings 80,000 See the account balances for Wolfe Inc. On January 31, Wolfe collected $12,000 of its accounts receivable and paid $11,000 on its note payable. On January 31, 2016, the total liabilities are:

$41000

Birken Co. purchased a building for $850,000 in 2004. At the end of 2016, when it had a book value of $675,000, it was appraised for $2,000,000. A potential buyer offered $400,000. Birken rejected the offer. What amount should be recorded on Birken's records at the end of 2016 in the account called Buildings?

$850,000

The data below is for Music Corporation for 2016. Accounts receivable—January 1, 2016 $236,000 Credit sales during 2016: $820,000 Collections from credit customers during 2016: $590,000 Customer accounts written off as uncollectible during 2016: $8,000 Allowance for doubtful accounts—January 1, 2016: $8,700 Estimated uncollectible accounts based on an aging analysis: $9,600 Refer to the data for Music Corporation. If the aging approach is used to estimate bad debts, what amount should be recorded as bad debt expense for 2016?

$8900

The data below is for Music Corporation for 2016. Accounts receivable—January 1, 2016 $236,000 Credit sales during 2016: $820,000 Collections from credit customers during 2016: $590,000 Customer accounts written off as uncollectible during 2016: $8,000 Allowance for doubtful accounts—January 1, 2016: $8,700 Estimated uncollectible accounts based on an aging analysis: $9,600 Refer to the data for Music Corporation. If the aging approach is used to estimate bad debts, what is the balance in the Allowance for Doubtful Accounts after the bad debt expense adjustment?

$9,600

Lasiter Corp. reported net credit sales of $2,000,000 and cost of goods sold of $1,400,000 for 2016. On January 1, 2016, accounts receivable was $250,000. Amounts owed by customers increased by $20,000 during 2016. Rounding to two decimal places, what is Lasiter's accounts receivable turnover rate for 2016?

8.00

Which of the following transactions does not affect the total assets of Vertican Sailing Corp.?

A bill is received for the telephone service used by Horizon Sailing during the past month.

The purchase of office equipment at a cost of $3,600 with an immediate down payment of $1,000 and agreement to pay the balance within 60 days is recorded by:

A debit of $3,600 to Office Equipment, a credit of $1,000 to cash, and a credit of $2,600 to Accounts Payable.

Grove Corp. purchased equipment at a cost of $260,000 in January, 2012. As of January 1, 2016, depreciation of $88,000 had been recorded on this asset. Depreciation expense for 2016 is $22,000. After the adjustments are recorded and posted at December 31, 2016. What are the balances for the Depreciation Expense and Accumulated Depreciation?

Depreciation Expense: $ 22,000; Accumulated Depreciation: $110,000

Statement of Retained Earnings Formula

Net Income(NI) - Dividends(D)= Retained Earnings(RE)

The allowance method of accounting for bad debts will report accounts receivable at their

Net realizable value

When is revenue from the sale of merchandise normally recognized?

On the date the sale is made.

Net book formula

Purchase - accumulated depreciation = net book

assets go ___ with a debit and ___ with a credit

up; down

Expenses originate from

using an asset or recognizing liabilities.

On the balance sheet, the cumulative amount of plant and equipment already expensed is reported in an account called

accumulated depreciation

Liabilities go ___ with a debit and ___ with a credit

down; up

Owners equity goes ____ with a debit and ____with a credit

down; up

Dividends are best described as

payments to shareholders

Depreciation is a process by which

the cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset

Murphy Corporation's end-of-year balance sheet consisted of the following amounts: Cash: $35,000 Property, plant, and equipment: 69,000 Capital stock: $107,000 Accounts receivable: $46,000 Long-term debt: $41,000 Accounts payable: $22,000 Inventory: $33,000 What is Murphy's owners' equity balance at the end of the current year?

$120,000

Gentech Corp. prepared a bank reconciliation as of June 30, 2016. The following items were identified: Gentech's bank balance $14,300 Deposits in transit $ 1,000 Outstanding checks: $1,300 Bank service charges: $50 Customer's NSF check returned by the bank: $150 Gentech's adjusted cash balance at June 30, 2016 is

$14,000

On January 1, 2016, Grove City Corp. purchased a ship for $2,000,000. It has a ten-year useful life and a residual value of $50,000. The company uses the straight line method. What was the depreciation expense for Grove City Corp. for the year ended December 31, 2016?

$195,000

The data below is for Benton Corporation for 2016. Accounts Receivable—January 1, 201$334,000 Credit sales during 2016: $850,000 Collections from credit customers during 2016: $725,000 Customer accounts written off as uncollectible during 2016: $12,000 Allowance for Doubtful Accounts [Credit Balance](After write-off of uncollectible accounts): $1,700 Estimated uncollectible accounts based on an aging analysis: $13,200 Refer to the data for Benton Corporation. What is the balance of Accounts Receivable at December 31, 2016?

$447,000

Royal Company purchased a dump truck at the beginning of 2014 at a cost of $60,000. The truck had an estimated life of 6 years and an estimated residual value of $24,000. On January 1, 2016, the company made major repairs of $20,000 to the truck that extended the life 1 year. Thus, starting with 2016, the truck has a remaining life of 5 years and a new salvage value of $8,000. Royal uses the straight-line depreciation method. What is the book value of the truck to be reported on the balance sheet at December 31, 2016?

$56,000

Mclaren Corp. incurred the following costs to acquire and prepare land during 2016 for a new parking lot: purchase price for land, $800,000; cost to clear the land, $30,000; cost of paving, $40,000; and lighting for the parking lot, $20,000. How much should Halifax record in the Land Improvements account?

$60,000

If a company has $152,000 of revenues, declares and pays $55,000 in dividends, and has net income of $89,000, how much were expenses for the year?

$63,000

What do you need first to create a balance sheet?

1. Income Statement (IS) 2. Statement of Retained Earnings (RE)

A company has the following information: Cash: $15,400 AR: $12,200 Prepaid Rent: $4,400 P, P & E: $54,700 Accounts Payable: $14,300 Wages payable: $7,500 Utilities payable: $2,300 Notes payable: $32,500 What is the current ratio based on the information provided?

1.328

How would interest earned on a checking account be dealt with in a bank reconciliation?

Added to the company's book balance

One effect on the accounting equation when a firm borrows money is

Assets Increase

A truck is purchased on credit. For this transaction, identify the effect on the accounting equation.

Assets increase and liabilities increase.

Blake and Ryan each invest $30,000 in a business and are given shares of stock in Jones Industries as evidence of their ownership interests. For this transaction, identify the effect on the accounting equation.

Assets increase and stockholders' equity increases.

What happens to the accounting equation when the adjustment that recognizes accrued interest revenue is recorded?

Assets increase and stockholders' equity increases.

Harvest Catering is a local catering service. Conceptually, when should Harvest recognize revenue from its catering service?

At the date meals are served

Harvest Catering is a local catering service. Conceptually, when should Harvest recognize revenue from its catering service?

At the date the meals are served

Which financial statement would you refer to in order to analyze your debt and ownership within the company?

Balance Sheet

You are a potential stockholder and are concerned that a particular company you are ready to invest in might have too much debt. Which financial statement would provide you information needed in order to evaluate your concern?

Balance Sheet

Which one of the following financial statements reports an entity's financial position at a specific date?

Balance sheet

Checks presented for payment and paid by the bank are known as

Cancelled Checks

What user would require that a company prepare financial statements?

Creditor

If a company uses the direct write-off method of accounting for bad debts,

It will record bad debt expense only when an account is determined to be uncollectible.

What effect does "recognizing revenue at the end of the accounting period for rent previously received in advance" have on the accounting equation for an insurance company?

Liabilities decrease and stockholders' equity increases.

Balance Sheet

Liabilities(L) + Owners Equity(E) = Assets(A)

Income Statement Formula

Revenues(R) - Expenses(E) = Net Income(NI)

Starlight Associates, Inc. recorded salary expense of $100,000 in 2016. However, additional salaries of $5,000 had been earned, but not paid or recorded at December 31, 2016. After the adjustments are recorded and posted at December 31, 2016, the balances in the Salaries Expense and Salaries Payable accounts will be:

Salaries Expense: $105,000; Salaries Payable: $5,000

Lincoln Corp. received advance payments from customers during 2016 of $10,000. At December 31, 2016, $1,000 of the advance payments still had not been earned. After the adjustments are recorded and posted at December 31, 2016, the balances in the Unearned Service Revenue and Service Revenue accounts will be

Unearned Service Revenue: $ 1,000; Service Revenue: $ 9,000

Use the five transactions for Hennigan Company described below to answer the question(s) that follow(s). Dec 1 Hennigan purchases two new saws on credit at $375 each. The saws are added to Hennigan's rental inventory. Payment is due in 30 days. 8 Hennigan accepts advance deposits for tool Company of $75. 15 Hennigan receives a bill from Farmer's Electric Company for $150. Payment is due in 30 days. 20 Customers are charged $750 by Hennigan for tool Company. Payment is due from the customers in 30 days. 31 Hennigan receives $500 in payments from the customers that were billed for Company on December 20. Refer to the transactions for Hennigan Rentals. Based on the December 31 transaction, Hennigan will record which of the following in its accounting records?

a credit in Accounts Receivable for $500.

How would deposits in transit be dealt with in a bank reconciliation?

added to bank statement balance

Two things that go up with a debit

assets & expenses

The effect of recording depreciation for the year is a(n)

decrease in assets and a decrease in net income.

Assets classified as property, plant, and equipment are reported at

each asset's original cost less depreciation since acquisition.

Credit entries are used to

increase liability accounts.

a debit will:

increase the balance of an expense account

Depreciation formula

purchase price - residual value / expected life = yearly depreciation

What is the formula for an income statement?

revenues-expenses=net income

Which of the following best describes the term "equity"?

the amount of interest or claim that the owners have in the business

One effect on the accounting equation when a firm lends money is

total assets remain the same.