Acct 2300: Exam 2
An accrued asset could also be called
an accrued revenue.
A doctor performed surgery in March and did not receive cash from the patient until July. Under accrual accounting, the doctor recognizes revenue:
in March
Which account is credited in the adjusting entry to allocate the cost of equipment?
Accumulated Depreciation -Equipment
Which of the following accounts would have balances on a post closing trial balance?
Accumulated depreciation
In preparing a bank reconciliation, all of the following would be used to adjust the balance per books, EXCEPT:
Deposits in transit
Which of the following accounts would not have have a balance on the Post Closing Trial Balance?
Dividends
Which one of the following is an example of an deferred expense?
Equipment that has a useful life of ten years has been purchased.
Which of the following would be items that would be subtracted from balance per bank in a bank reconciliation:
Outstanding checks and a deposit of $1,100 that was recorded as $11,000 by the bank.
In preparing a bank reconciliation, all of the following would be used to adjust the balance per books, EXCEPT:
Outstanding checks.
Wolverine, Inc. has the following account balances related to its 2016 operations: Repair Revenues $840,000 Insurance Expense $85,000 Wages and Salaries 240,000 Advertising 1,500 Depreciation Expense 13,000 Unearned Revenue 120,000 Equipment Rentals Revenues 56,000 Accum. Depreciation 25,000 Which of these accounts would be debited in the closing entries?
Repair Revenues and Equipment Rental Revenues only
The closing entry for the Salaries Expense account includes a debit to:
Retained Earnings and a credit to Salaries Expense
Interest payable, income tax payable and salary payable are all examples of:
accrued liabilities
Adjusting entries:
adjust Unearned Revenue
A deferred expense could also be called
an Asset
An accrued liability could also be called
an accrued expense.
The Marjan Company's bank statement showed a balance of $14,087 on March 31, 2017. In searching its records and the bank statement, Marjan found the following: Outstanding checks $ 856 Bank service charges. 80 Non-sufficient funds checks. 907 Deposits in transit. 1,640 Customer note collected by the bank 1,020 Based on this financial information, what should be the adjusted bank balance on the bank reconciliation?
$14,871 Bank side * Balance - Outstanding checks + Deposits in Transit
On October 31, 2016, Siri Studios, Inc. had a balance per their records of $15,015. In reconciling their October 31, 2016 bank statement, Siri found outstanding checks of $4,500, a deposit in transit of $8,300, NSF checks of $1,400, and bank service charges of $88. Additionally, the October 23rd deposit of $8,100 was incorrectly recorded as $1,800 in the records of Siri. The adjusted cash balance should be? (Do Not enter dollar signs.)
$19,827 Balance - NSF - Service Charge = 13527 error: was supposed to be entered as 8,100 but was put in as 1800 therefore there is a debt of 6300 that needs to be added back 13527 + difference in error = answer *Per their records tells us its on the book side*
Movie 16 Theaters, Inc. has the following information for March 31, 2016: balance per the company records, $8,684; outstanding checks of $14,400, a deposit in transit of $5,220, bank service charge of $310, and NSF checks of $4,225. What is the adjusted cash balance? (Do Not enter dollar signs.)
$4,149 Unadjusted Book Balance - NSF checks - bank Service charge = Adjusted Cash Balance
The following balance sheet items, listed in alphabetical order, are available from the records of Breaking Bad Company as of December 31, 2015. Accounts payable 300,000 Accum. Depreciation-buildings 50,000 Accounts receivable 200,000 Interest payable 100,000 Accum. Depreciation-equipment 25,000 Marketable securities 250,000 Capital stock 10,000 Notes Payable due Mar. 1, 2019 300,000 Cash 100,000 Patents 200,000 Equipment 100,000 Retained earnings 315,000 Buildings 200,000 Income taxes payable 50,000 Office Supplies 100,000 Total total non-current assets is $[b].
$425,000 Equipment + Buildings + Patents - Accum Depriciation- buildings - Accum Depreciation- equipment = Total non-current assets
The following balance sheet items, listed in alphabetical order, are available from the records of Breaking Bad Company as of December 31, 2015. Accounts payable 300,000 Accum. Depreciation-buildings 50,000 Accounts receivable 200,000 Interest payable 100,000 Accum. Depreciation-equipment 25,000 Marketable securities 250,000 Capital stock 10,000 Notes Payable due Mar. 1, 2019. 300,000 Cash 100,000 Patents 200,000 Equipment 100,000 Retained earnings 315,000 Buildings 200,000 Income taxes payable 50,000 Office Supplies 100,000 Total total current liabilities is $[b].
$450,000 Accounts Payable + Interest Payable + Income Taxes Payable = Total Current Liabilities
Using the following information determine the amount that Pearson will report as Cash and Cash Equivalents on the Balance Sheet at the end of December. Item. Amount Cash is checking account. $10,000 Petty cash. 580 Postage Stamps. 654 Check from customer dated Jan 20, next year. 321 3-month certificate of deposit. 35,000 12- month certificate of deposit. 35,000 Check from customer dated Dec 15, this year. 175 Undeposited Cashier's Checks from customer. 729 IOU from customer. 500 6-month U.S. Treasury bill purchased 4 months ago. 2,500 2-month high-grade Canada government security purchased 1 month ago. 1,000 Cash in savings account. 100 Accounts Receivable. 3,700 1-month U.S. Treasury bill purchased 2 weeks ago. 2,000 Time Deposits. 1,600
$51,184 Cash in checking acct + petty cash + 3 month certificate + Check from customer + undeposited cashiers check + 2 month canada government security + cash in savings account + 1 month US treasurey + time deposit = cash and cash equivelents Checks** cannot have a future date of next year **** postage stamps nothing over 3 months is valid **** IOU's Accounts receivable is long term
Black and Red Corp. has the following accounts and balances as of December 31, 2017. Accounts payable 23,000 Inventory 50,000 Accounts receivable 25,000 Interest payable 10,000 Accum. Depreciation 17,000 Marketable securities 30,000 Capital stock 90,000 Notes Payable due Mar. 4, 2022 60,000 Cash 32,000 Patents 25,000 Customer deposits 19,000 Prepaid insurance 6,000 Equipment 80,000 Retained earnings 29,000 The total current liability amount is $[a].
$52,000 Accounts Payable + Customer Deposits + Interest Payable= Total Current Liability
The following balance sheet items, listed in alphabetical order, are available from the records of Breaking Bad Company as of December 31, 2015. Accounts payable. 300,000 Accum. Depreciation-buildings 50,000 Accounts receivable 200,000 Interest payable 100,000 Accum. Depreciation-equipment 25,000 Marketable securities 250,000 Capital stock 10,000 Notes Payable due Mar. 1, 2019, 300,000 Cash 100,000 Patents 200,000 Equipment 100,000 Retained earnings 315,000 Buildings 200,000I income taxes payable 50,000 Office Supplies 100,000 Total current assets is $[a].
$650,000 Accounts Receivable + Marketable Securities + Cash + Office Supplies = Total Current Assets
Use the following data to answer the question presented below for Linda Company's preparation of a bank reconciliation on October 31, 2015: Bank Statement balance $12,800 Outstanding checks 8,400 NSF checks 5,200 Service charges 400 Deposits in transit 3,500 Interest earned on checking account 100 What is the adjusted cash balance on October 31, 2015?
$7,900 Balance - Outstanding Checks + Deposit in Transit gives hint in heading that tells us its on the bank side
During the month of October, Labrador, Inc. provided $300,000 of services for cash and $500,000 of services on account. Also during October, Labrador's customer paid $400,000 on their accounts. How much should Labrador report as revenues for October?
$800,000 300,000 + 500,000 = REVENUES does not matter what people paid ignore that number
Given the following activity for Caprock Company during the month of February, how much total expense would Caprock Company recognize on the February income statement using accrual accounting? Feb. 1 Caprock paid a total of $3,000 for 3 months of automobile insurance. The coverage on the insurance policy included the months of February, March, and April. Feb. 5 Caprock paid $5,000 to its landlord for February rent. Feb. 10 Caprock paid $4,000 on an accounts payable that had been recorded in January. Feb. 27 Caprock received the bill for the February utilities, and recorded $5,000 in accounts payable on that date. The bill will be paid in March.
11,000 Feb 1, only recognize the rent for that month (3000/3= 1000) feb 5, rents an expense (5000) feb 10, they recorded it in January therefore it does not matter, it should be stated in january feb 27, they recorded it that month, accrual accounting will show the 5000 in febuary when it was recorded (5000) 1,000 + 5,000 + 5,000 = 11,000
Andy, Inc. was in the process of reconciling its bank balance with the company records and found an unadjusted book balance of $17,120, outstanding checks of $2,065, non-sufficient funds (NSF) checks of $508, deposits in transit of $1,650, bank service charges of $75, a customer note collected by the bank of $3,000 and interest on the note collected of $40. The adjusted book balance on the bank reconciliation should be? (Do not enter dollar signs.)
19,577 Unadjusted Book Balance + interest note + Customer Note - NSF checks - service charge = adjusted book balance
On September 1, Tucker Inc. received $30,000 from a customer who would like Tucker to provide services evenly over the next five months. Using the revenue recognition principle, how much would Tucker record as revenue for the year from this job?
24,000 30,000 / 5 = 6000 (monthly expense) keep in mind its september so you tab out at years end (December) and record the left over next year Sep. (1), Oct. (2), Nov. (3), Dec. (4) 6000 x 4 = 24,000
On September 1, 2017, Kian Co. recorded an Unearned Revenues account, a liability, for $66,000. This amount represents an amount that a customer paid in advance and the amount will be recognized in Service Fees evenly over a six-month period. The adjusting entry needed on December 31, 2017, would be: Use the following abbreviations for accounts to fill in the blanks: CA = Cash AR = Accounts Receivable SF = Service Fees AP = Accounts Payable UR = Unearned Revenue A Debit to [a] and a Credit to [b] for $[c].
A Debit to [UR] and a Credit to [SF] for $44,000.
What type of account is Dividends and on which financial statement is it reported? Use the following abbreviations to fill in the blanks: For Account type For Financial Statements A = Asset IS = Income Statement XA = Contra Asset SRE = Statement of Retained Earnings L=Liability BS = Balance Sheet OE = Owners' Equity CF = Statement of Cash Flows XOE = Contra Equity R = Revenue E = Expense
Account Type = XOE Report on = SRE
What type of account is Accounts Receivable and on which financial statement is it reported? Use the following abbreviations to fill in the blanks: For Account type : For Financial Statements A = Asset IS = Income Statement XA = Contra Asset SRE = Statement of Retained Earnings L=Liability BS = Balance Sheet OE = Owners' Equity CF = Statement of Cash Flows XOE = Contra Equity R = Revenue E = Expense
Account type = A. Report on = BS
Prepaid expenses will become ________ when their future benefits expire.
expenses
On September 19, Beagle Corp. received payment of $40,000 for services provided to a customer in August. The September 19 journal entry would be: Use the following abbreviations for accounts to fill in the blanks: CA = Cash AR = Accounts Receivable AP = Accounts Payable SR = Service Revenue UR = Unearned Revenue Debit [a] and Credit [b].
Debit CA Credit AR Debit cash because YOU WERE PAID CREDIT TOO ACCOUNTS RECEIVABLE
On November 1, NASA rented some office space in Houston for twelve months paying $30,000 in advance for the 12-month rental. NASA adjusts accounts annually on December 31st for its financial report. The appropriate adjusting entry for NASA's office rent on December 31st would be: Use the following abbreviations for accounts to fill in the blanks: PR = PrePaid Rent CA = Cash AR = Accounts Receivable RE = Rent Expense Debit [a] and Credit [b] for $[c].
Debit RE, Credit PR, for $5,000 30,000 / 12 = 2500 2500 x 2= 5000 credit PR because its prepaid (prepaid = credit) Debit Rent expense bc its paid
Big Daddy Auto Parts, Inc. has an office supplies account that had a January 1st balance of $13,450. During the year, Big Daddy Auto purchased $24,360 in office supplies. On December 31st, a count of the office supplies revealed that there were $7,500 remaining. On December 31st, Big Daddy's adjusting entry for office supplies should be: Use the following abbreviations for accounts to fill in the blanks: AR = Accounts Receivable AP = Accounts Payable OS = Office Supplies Inventory OE = Office Supplies Expense Debit [a] and Credit [b] for $[c].
Debit [OE] and Credit [OS] for $30310
Which of the following accounts are considered permanent accounts?
Land and Accounts Receivable
On a classified balance sheet:
Notes Payable due in one year is a current liability
will be increased when a company receives cash before performing the services.
Unearned Service Revenue
Badger, Inc. has the following account balances related to its 2016 operations: Repair Revenues $840,000 Prepaid Expenses $85,000 Wages and Salaries 240,000 Dividends 1,500 Depreciation Expense 13,000 Unearned Revenue 120,000 Interest Revenue 6,000 Accum. Depreciation 25,000 Which of these accounts would be credited in the closing entries?
Wages and Salaries, Depreciation Expense, and Dividends only
A type of liability resulting from the receipt of cash before the recognition of revenue is
a deferred revenue
The entry to close expense account(s) includes a:
credit to the expense accounts
When preparing the financial statements of a company:
current assets are the most liquid assets
Bagel Corp. billed a customer $125,000 for service performed during the month of September. The journal entry to reflect this billing would be: Use the following abbreviations for accounts to fill in the blanks: CA = Cash AR = Accounts Receivable AP = Accounts Payable SR = Service Revenue UR = Unearned Revenue Debit [a] and Credit [b].
debit AR (Accounts Receivable) Credit SR (Service Revenue you billed a customer = you are being paid 125,000 so you debit that AS ACCOUNTS RECEIVABLE Credit service revenue because: if you billed for a SERVICE it's on account which would make it a service revenue
On March 25, its first day of operations, Ladybug Inc. purchased $1,200 of office supplies on account. On March 31st, Ladybug had $800 of office supplies on hand. On April 5th Ladybug paid for the supplies it had purchased on account on March 25th. Under accrual accounting which of the following statements about recognizing supplies expense is correct?
ladybug should recognize $400 of supplies expense in March purchased $1200 in supplies in march but paid for it in April, and had $800 on hand already in march. 1200 - 800 = 400
A deferred revenue could also be called
liability
Accounts that relate to a limited period of time are called:
temporary accounts
After the closing entries are prepared and posted:
the Retained Earnings account will have the correct ending balance
With an accrual of revenue:
the cash is received after the revenue is recorded
Under accrual accounting, revenue is recorded:
when the services are performed, regardless of when the cash is received
The revenue principle deals with the following:
when to record revenue and the amount of revenue to record