W&L ACCT 231 Reid HW 1 Accounting Cycle Review

Journal Entry: Services performed but unbilled total $1,277.

Debit: Accounts Receivable 1,277 Credit: Service Revenue 1,277

Journal Entry: Bills Noble Corp. $480 for welding work done.

Debit: Accounts Receivable 480 Credit: Service Revenue 480

Adjusting Entry: Performed services for patients who had dental plan insurance. At January 31, $729 of such services was performed but not yet billed to the insurance companies.

Debit: Accounts Receivable 729 Credit: Service Revenue 729

Journal Entry: Bad debt expense for year is $894.

Debit: Bad Debt Expense 894 Credit: Allowance for Doubtful Accounts 894

Journal Entry: Performed services for clients, for which $1,231 was collected in cash and $701 was billed to the clients.

Debit: Cash 1,231 Accounts Receivable 701 Credit: Service Revenue 1,932

Journal Entry: Invested $11,510 cash and $2,570 of equipment in the business.

Debit: Cash 11,510 Equipment 2,570 Credit: Owner's Capital 14,080

Journal Entry: B.D. Sunland invests $3,970 cash in exchange for common stock in Sunland Company, a small welding corporation.

Debit: Cash 3,970 Credit: Common Stock 3,970

Journal Entry: Buys equipment on account for $1,135.

Debit: Equipment 1,135 Credit: Accounts Payable 1,135

Closing Entry: Splish has year-end account balances of Sales Revenue $810,933, Interest Revenue $13,540, Cost of Goods Sold $541,343, Administrative Expenses $190,160, Income Tax Expense $35,147, and Dividends $19,016. Prepare the year-end closing entries to close income/loss.

Debit: Income Summary 57,823 Credit: Retained Earnings 57,823

Closing Entry: Splish has year-end account balances of Sales Revenue $810,933, Interest Revenue $13,540, Cost of Goods Sold $541,343, Administrative Expenses $190,160, Income Tax Expense $35,147, and Dividends $19,016. Prepare the year-end closing entries to close expense accounts.

Debit: Income Summary 766,650 Credit: Cost of Goods Sold 541,343 Administrative Expenses 190,160 Income Tax Expense 35,147

Adjusting Entry: Purchased a one-year malpractice insurance policy on January 1 for $12,480.

Debit: Insurance Expense 1,040 Credit: Prepaid Insurance 1,040

Adjusting Entry: On August 1, Roddick borrowed $28,800 from a local bank on a 15-year mortgage. The annual interest rate is 8%. Prepare adjusting journal entry as August 31, 2025.

Debit: Interest Expense 192 Credit: Interest Payable 192

Journal Entry: Interest on notes payable of $302 is accrued.

Debit: Interest Expense 302 Credit: Interest Payable 302

Journal Entry: Pays $365 to landlord for May rent.

Debit: Rent Expense 365 Credit: Cash 365

Journal Entry: Paid August rent $568.

Debit: Rent Expense 568 Credit: Cash 568

Closing Entry: Splish has year-end account balances of Sales Revenue $810,933, Interest Revenue $13,540, Cost of Goods Sold $541,343, Administrative Expenses $190,160, Income Tax Expense $35,147, and Dividends $19,016. Prepare the year-end closing entries to close dividends.

Debit: Retained Earnings 19,016 Credit: Dividends 19,016

Adjusting Entry: At August 31, Roddick owed his employees $2,087 in wages that will be paid on September 1. Prepare adjusting journal entry as August 31, 2025.

Debit: Salaries & Wages Expense 2,087 Credit: Salaries & Wages Payable 2,087

Journal Entry: Salaries and wages earned by employees of $699 have not been recorded.

Debit: Salaries & Wages Expense 699 Credit: Salaries & Wages Payable 699

Closing Entry: Splish has year-end account balances of Sales Revenue $810,933, Interest Revenue $13,540, Cost of Goods Sold $541,343, Administrative Expenses $190,160, Income Tax Expense $35,147, and Dividends $19,016. Prepare the year-end closing entries to close revenue accounts.

Debit: Sales Revenue 810,933 Interest Revenue 13,540 Credit: Income Summary 824,473

Journal Entry: Purchased supplies on account for $460. (Debit asset account.)

Debit: Supplies 460 Credit: Accounts Payable 460

Adjusting Entry: Purchased $1,566 of dental supplies. On January 31, determined that $520 of supplies were on hand.

Debit: Supplies Expense 1,046 Credit: Supplies 1,046

Journal Entry: Counted supplies and determined that only $268 of the supplies purchased on August 7 are still on hand.

Debit: Supplies Expense 192 Credit: Supplies 192

Adjusting Entry: A telephone bill in the amount of $128 covering August charges is unpaid at August 31. Prepare adjusting journal entry as August 31, 2025.

Debit: Telephone & Internet Expense 128 Credit: Accounts Payable 128

Adjusting Entry: At the end of the month, he had not yet received the month's utility bill. Based on past experience, he estimated the bill would be approximately $549. Prepare adjusting journal entry as August 31, 2025.

Debit: Utilities Expense 549 Credit: Accounts Payable 549

Adjusting Entry: Utility expenses incurred but not paid prior to January 31 totaled $556.

Debit: Utilities Expenses 556 Credit: Accounts Payable 556

Journal Entry: On July 1, 2025, Sheffield Co. pays $13,860 to Tamarisk Insurance Co. for a 3-year insurance policy. Both companies have fiscal years ending December 31. Journalize the entry on July 1 and the adjusting entry on December 31 for Tamarisk Insurance Co. Tamarisk uses the accounts Unearned Service Revenue and Service Revenue.

On July 1st: Debit: Cash 13,860 Credit: Unearned Service Revenue 13,860 On Dec. 31st: Debit: Unearned Service Revenue 2,310 Credit: Service Revenue 2,310

Journal Entry: On July 1, 2025, Tamarisk Co. pays $14,292 to Vaughn Insurance Co. for a 3-year insurance policy. Both companies have fiscal years ending December 31. For Tamarisk Co., journalize the entry on July 1 and the adjusting entry on December 31.

On July 1st: Debit: Prepaid Insurance 14,292 Credit: Cash 14,292 On Dec. 31st: Debit: Insurance Expense 2,382 Credit: Prepaid Insurance 2,383

Adjusting Entry: Purchased dental equipment on January 1 for $74,000, paying $22,000 in cash and signing a $52,000, 3-year note payable. (a) The equipment depreciates $379 per month. (b) Interest is $510 per month.

a. Debit: Depreciation Expense 379 Credit: Accumulated Depreciation-Equipment 379 b. Debit: Interest Expense 510 Credit: Interest Payable 510

A company that uses accrual-basis accounting purchased equipment on July 1 of the current year for $20,000. The company expects to use the equipment consistently for four years. Depreciation on the equipment is $5,000 per year. The company will record ________ depreciation in its December 31 financial statements. a. $2,500 b. $0 c. $5,000 d. $20,000

a. $2,500 Under the accrual basis of accounting, depreciation expense is recorded at the end of each period. Because the company purchased the asset on July 1, it should record half a year's depreciation.

Based on the following account balances, what would be the balance in retained earnings transferred to the post-closing trial balance: Cash $28,300 Accounts Payable $11,600 Notes Payable $10,000 Service Revenue $37,250 Salaries and Wages Expense $7,000 Supplies Expense $1,500 Insurance Expense $750 Depreciation Expense $500 Dividends $0 a. $27,500 b. $65,550 c. $37,250 d. $55,800

a. $27,500 Companies close temporary accounts (revenues, expenses, dividends) to total net income or loss, and transfer the balance to retained earnings. Revenues - expenses $37,250 - 7,000 - 1,500 - 750 - 500 = $27,500

____________ accounts usually do not have a zero balance after closing entries have been journalized and posted. a. Real/Permanent b. Temporary

a. Real/Permanent Permanent accounts, such as assets or liabilities, are not closed and their balances are carried over to the next accounting period.

________ will increase when services are performed on account. a. Stockholders' equity b. The cost of doing business c. Accounts payable d. Liabilities

a. Stockholders' equity Revenue is part of retained earnings, when a company recognizes revenue, it increases Stockholders' Equity. Accounts payable and liabilities are not affected by services performed on account.

Geyer Company has the following account balances: Accounts Receivable: $40, Accounts Payable: $45, Cash: $70. The Notes Payable balance is listed as $56 in the trial balance while its correct balance is $65. What impact will this have on the accounts? a. The total credit balance will be $9 less than the total debit balance. b. There will be no impact on the accounts. c. The total debit balance will be $9 less than the total credit balance. d. The total credit balance will be $9 more than the total debit balance.

a. The total credit balance will be $9 less than the total debit balance. The correct balance for notes payable is $65. If it is listed as $56 in the trial balance, this will cause a difference of $9 with the total credit balance being $9 lower than the total debit balance.

After the ________ is completed, ________ can then be prepared. a. adjusted trial balance; financial statements b. set of adjusting entries; the balance sheet c. balance sheet; an income statement d. trial balance; financial statements

a. adjusted trial balance; financial statements Financial statements are prepared based off the adjusted trial balance. The trial balance wouldn't have updated balances without adjusting entries. The balance sheet and the income statement are part of the financial statements.

The dividend account is closed to retained earnings by ____________ the retained earnings account. a. debiting b. crediting c. closing out

a. debiting Retained earnings is net income that is retained in the business; when a company pays dividends, it decreases its retained earnings and the transaction is recorded with a debit.

The gain or loss from disposal of a component of a business is shown as a (an): a. part of discontinued operations. b. unusual gain or loss. c. prior period adjustment. d. expense recovery.

a. part of discontinued operations.

When is revenue recognized in a service-type business? a. when service is performed b. at the end of the month c. at the end of the year d. when cash is received

a. when service is performed The revenue recognition principle requires companies to recognize revenue when the service is performed, regardless of whether cash has been received or not.

QT Incorporated uses the accrual basis of accounting. QT purchases a piece of equipment on July 1 of the current year for $40,000. If the company expects to use the equipment consistently for four years and depreciation on the equipment is $10,000 per year, how much depreciation expense will QT record in its December 31 financial statements? a. $10,000 b. $5,000 c. $40,000 d. $0

b. $5,000 Under the accrual basis of accounting, depreciation expense is recorded at the end of each period. Because the company purchased the asset on July 1st, it should record half a year's depreciation.

A typical ledger would have the following accounts in which order? a. Accounts Payable, Accounts Receivable, Interest Expense, Retained Earnings. b. Accounts Receivable, Accounts Payable, Retained Earnings, Interest Expense. c. Interest Expense, Accounts Payable, Accounts Receivable, Retained Earnings. d. Interest Expense, Retained Earnings, Accounts Payable, Accounts Receivable.

b. Accounts Receivable, Accounts Payable, Retained Earnings, Interest Expense. Assets will always be listed first in a typical ledger. Accounts receivable is the only asset listed first in the options above. The typical ledger will contain assets, liabilities, stockholder's equity, revenue, and expense accounts in that order.

When are the amounts transferred to the ledger? a. After the accounts have been totaled. b. After transactions have been entered in the journal. c. As evidence that source documents exist. d. After financial statements are prepared.

b. After transactions have been entered in the journal. The recording process includes analyzing transactions, entering them in a journal and then transferring them to the ledger. Financial statements are the last step in the accounting cycle.

Crum Enterprises produces financial statements at the end of each month. Which of the following statements or schedules will be the third to be prepared? a. Income Statement b. Balance Sheet c. Retained Earnings Statement d. Adjusted Trial Balance

b. Balance Sheet Financial statements are interrelated, there is information needed in one to be passed down to the next. The basis of financial statements is the adjusted trial balance; the income statement is prepared first with the data from the adjusted trial balance, followed by the retained earnings statement, and then the balance sheet.

Jennifer's Dress Boutique custom makes wedding gowns, and requires customers to pay in advance for the work performed. Which of the entries below would most accurately portray a customer paying $6,000 for future services to be rendered? a. Debit Cash $6,000 and Debit Unearned Service Revenue $6,000 b. Debit Cash $6,000 and Credit Unearned Service Revenue $6,000 c. Credit Cash $6,000 and Debit Service Revenue $6,000 d. Credit Cash $6,000 and Credit Unearned Service Revenue $6,000

b. Debit Cash $6,000 and Credit Unearned Service Revenue $6,000 Payment for services will be posted as a debit to Cash. The credit would be posted to Unearned Service Revenue because the service has not yet been performed and is a liability to the company.

Which of the following accounts will have a zero balance after closing entries have been journalized and posted? a. Prepaid Rent b. Dividends c. Unearned Rent Revenue d. Accumulated Depreciation

b. Dividends Closing entries include revenue, expense, and dividends accounts. Accumulated depreciation, unearned rent revenue, and prepaid rent are permanent accounts which are not closed, but carried forward to the next period.

On March 3, Mauer Moving buys $7,500 of supplies from General Products. Mauer does not provide any payment at the time of purchase but agrees to pay General in full within 30 days. When posting the journal entries related to this transaction, Mauer credits Supplies for $7,500 and debits Accounts Payable for $7,500. Which of the following statements best describes the results of this posting? a. In Mauer's general ledger, the ending balance for the Supplies account will be too low, while the ending balance for the Accounts Payable account will be too high. b. In Mauer's general ledger, the ending balances for both the Supplies account and the Accounts Payable account will be too low. c. In Mauer's general ledger, the ending balance for the Supplies account will be too high, while the ending balance for the Accounts Payable account will be too low. d. In Mauer's general ledger, the ending balances for both the Supplies account and the Accounts Payable account will be too high.

b. In Mauer's general ledger, the ending balances for both the Supplies account and the Accounts Payable account will be too low. By purchasing supplies, Mauer is increasing an asset account. Because debits increase assets, Mauer should debit Supplies for $7,500. Incorrectly crediting this account means that the ending balance in the general ledger will be too low. Similarly, by purchasing the supplies on credit, Mauer is increasing a liability account. Because credits increase liabilities, Mauer should credit Accounts Payable for $7,500. Incorrectly debiting this account means that the ending balance in the general ledger will be too low.

Which of the following describes an expense? a. Inflows or other enhancements of assets of an entity or settlements of its liabilities during a period from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations. b. Outflows or other using-up of assets or incurrences of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major or central operations. c. Decreases in equity (net assets) from peripheral or incidental transactions of an entity except those that result from expenses or distributions to owners. d. Increases in equity (net assets) from peripheral or incidental transactions of an entity except those that result from revenues or investments by owners.

b. Outflows or other using-up of assets or incurrences of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major or central operations.

During the month of August, Jackson Products recognizes $15,000 in revenues. Jackson's accounting staff records these revenues by entering a $15,000 debit in the firm's Revenues account and a $15,000 credit in the Accounts Receivable account. What, if any, effect will this entry have on Jackson's financial statements? a. This entry will not have any effect on Jackson's financial statements because a firm's revenues are not reflected in its income statement, its retained earnings statement, or its balance sheet. b. This entry will inappropriately decrease Jackson's revenues, thus making the firm's net income too low on its income statement, ending retained earnings too low on its retained earnings statement, and both its assets and its stockholders' equity too low on its balance sheet. c. This entry will inappropriately decrease Jackson's revenues, thus making the firm's net income too low on its income statement, ending retained earnings too high on its retained earnings statement, and both its assets and its stockholders' equity too high on its balance sheet. d. This entry will inappropriately increase Jackson's revenues, thus making the firm's net income too high on its income statement, ending retained earnings too high on its retained earnings statement, and both its assets and its assets and its stockholders' equity too high on its balance sheet.

b. This entry will inappropriately decrease Jackson's revenues, thus making the firm's net income too low on its income statement, ending retained earnings too low on its retained earnings statement, and both its assets and its stockholders' equity too low on its balance sheet. When a company recognizes revenue, it should record this amount as a credit to its Revenue account and a debit to an asset account such as Cash or Accounts Receivable. This, in turn, will lead to an increase in the firm's net income, ending retained earnings, and stockholders' equity, as well as its assets (since the increase in stockholders' equity must be matched by an increase in assets). Here, Jackson incorrectly recorded its revenues as a debit instead of a credit, thus causing all of the related financial statement values to be too low.

The adjusted trial balance includes the _____________ and the balance sheet reports the _____________. a. end-of-the year balance for Retained Earnings; beginning-of-the year balance for Retained Earnings. b. beginning-of-the year balance for Retained Earnings; end-of-the year balance for Retained Earnings. c. end-of-the year balance for Cash; beginning-of-the year balance for Cash. d. beginning-of-the year balance for Cash; end-of-the year balance for Cash.

b. beginning-of-the year balance for Retained Earnings; end-of-the year balance for Retained Earnings. The adjusted trial balance lists the beginning-of-the year balance for retained earnings; then, the balance sheet uses the end-of-the year balance that comes from the retained earnings statement. The statement of cash flows would have information on beginning-of-the year and end-of-the year balances for cash.

Which of the following would be reported as "other comprehensive income"? a. gain from the sale of available-for-sale securities. b. unrealized holding gain on available-for-sale securities. c. loss on impairment of an intangible asset. d. correction for understatement of net income in a prior period.

b. unrealized holding gain on available-for-sale securities.

For September 30th, Cathy's Catering's trial balance has a debit column totaling $110. The credit column totals $128, which of the following would explain this difference? a. Notes payable balance of $25 listed in the trial balance $52. b. Cash balance of $51 listed in the trial balance $15. c. Accounts receivable balance of $75 listed in the trial balance as $57. d. Accounts payable balance of $18 listed in the trial balance as $81.

c. Accounts receivable balance of $75 listed in the trial balance as $57. The difference between the total debit and total credit columns is $18. If the correct accounts receivable balance is $75 and it was listed in the trial balance as $57, this would case the total debit column to be lower than the total credit column by $18.

On July 1, Cooper Corporation received $20,000 from Smith Industries in exchange for services performed. What accounting entries should Cooper make to record this event, and why? a. Cooper should record a $20,000 increase in revenue along with a $20,000 increase in cash, because this way the firm's liabilities will increase by the same amount as its assets. b. Cooper should record a $20,000 increase in unearned service revenue along with a $20,000 increase in cash, because this way the firm's retained earnings will increase by the same amount as its assets. c. Cooper should record a $20,000 increase in revenue along with a $20,000 increase in cash, because this way the firm's retained earnings will increase by the same amount as its assets. d. Cooper should record a $20,000 increase in unearned service revenue along with a $20,000 increase in cash, because this way the firm's liabilities will increase by the same amount as its assets.

c. Cooper should record a $20,000 increase in revenue along with a $20,000 increase in cash, because this way the firm's retained earnings will increase by the same amount as its assets. Because the services were already performed, Cooper should record the $20,000 as an increase in revenue. Accordingly, the firm must also record a $20,000 increase in cash so that its assets increase by the same amount as its liabilities and stockholders' equity combined.

Which of the entries below would most accurately reflect the posting required, assuming the cash is received at the time of billing? a. Debit Cash $100,000 and Debit Unearned Service Revenue b. Credit Cash $100,000 and Debit Unearned Service Revenue $100,000 c. Debit Cash $100,000 and Credit Unearned Service Revenue $100,000 d. Credit Cash $100,000 and Credit Unearned Service Revenue $100,000

c. Debit Cash $100,000 and Credit Unearned Service Revenue $100,000 Payment for services will be posted as a debit to Cash. The credit would be posted to Unearned Service Revenue because the service has not yet been performed and is a liability to the company.

Which of the following would be reported in a separate income statement category, separately from continuing operations, on the income statement? a. Unusual losses. b. Income tax expense. c. Discontinued operations. d. Unusual gains.

c. Discontinued operations.

Which limitation of an income statement occurs when one company uses an accelerated depreciation method while another company uses straight-line depreciation? a. Companies omit from the income statement items they cannot measure reliably. b. Income measurement involves judgment. c. Income numbers are affected by the accounting methods employed. d. All of these answer choices are correct.

c. Income numbers are affected by the accounting methods employed.

Which account title might appear on an adjusted trial balance, but not on the unadjusted trial balance? a. Supplies b. Service Revenue c. Interest Payable d. Accounts Payable

c. Interest Payable Interest payable might not appear on the unadjusted trial balance if no interest had been accrued prior. Interest payable is an accrual that has to be adjusted at the end of the period through the preparation of an adjusting entry.

Which of the following events would lead to a decrease in a firm's retained earnings, and why? a. Issuance of a $10,000 note payable in exchange for cash, because notes payable are considered an expense, and an increase in expenses will reduce a firm's retained earnings b. Payment of $10,000 in employee salaries, because salaries are considered a liability, and an increase in liabilities will reduce a firm's retained earnings c. Payment of $10,000 in employee salaries, because salaries are considered an expense, and an increase in expenses will reduce a firm's retained earnings d. Issuance of a $10,000 note payable in exchange for cash, because notes payable are considered a liability, and an increase in liabilities will reduce a firm's retained earnings

c. Payment of $10,000 in employee salaries, because salaries are considered an expense, and an increase in expenses will reduce a firm's retained earnings Retained earnings is affected whenever a company recognizes revenue, incurs expenses, or pays dividends; it is not affected by changes in a firm's liabilities. Here, payment of employee salaries increases the firm's expenses, while issuance of the note payable increases the firm's liabilities. The salary-related increase in expenses is what causes the decrease in the firm's retained earnings.

After preparing its financial statements for June, Pinnacle Corporation realizes that its income statement shows total revenues that are $500 too high and total expenses that are $500 too low. What effect will these errors have on Pinnacle's balance sheet for the month, assuming all other account balances listed on that sheet are correct? a. These errors mean that the firm's balance sheet will show a total liabilities and stockholders' equity amount that is $1,000 lower than its total assets amount. b. These errors mean that the firm's balance sheet will show a total liabilities and stockholders' equity amount that is $500 higher than its total assets amount. c. These errors mean that the firm's balance sheet will show a total liabilities and stockholders' equity amount that is $1,000 higher than its total assets amount. d. These errors mean that the firm's balance sheet will show a total liabilities and stockholders' equity amount that is $500 lower than its total assets amount.

c. These errors mean that the firm's balance sheet will show a total liabilities and stockholders' equity amount that is $1,000 higher than its total assets amount. A firm's income statement calculates net income by subtracting total expenses from total revenues. Here, Pinnacle's net income calculation will be $1,000 too high because the firm will have used a total revenue amount that is $500 too high and a total expense amount that is $500 too low. This, in turn, means that when Pinnacle compiles its retained earnings statement, it will add in a net income amount that is $1,000 too high. As a result, the firm's retained earnings statement will show a month-end amount that is $1,000 higher than the correct amount.

A(n) ________ is prepared ________ adjusting entries are journalized and posted. a. company's financial statements; after b. trial balance; after c. adjusted trial balance; after d. adjusted trial balance; before

c. adjusted trial balance; after Adjusting entries affect the adjusted trial balance directly. The company's financial statements are prepared after the adjusted trial balance is produced.

In order to prepare GAAP-compliant financial statements, Goss Bags Co. will need to prove the equality of ________ using a(n) ________. a. revenues and expenses; balance sheet. b. assets and liabilities; adjusted trial balance. c. debits and credits; adjusted trial balance. d. payables and receivables; balances sheet.

c. debits and credits; adjusted trial balance. The adjusted trial balance shows the balances of all accounts after adjustments have been journalized. The purpose of the adjusted trial balance is to prove the equality of the debits and credits. Assets and liabilities, revenues and expenses, and payables and receivables cannot be proven to be equal.

Assets and liabilities increase when a business a. receives cash investments from stockholders. b. purchases equipment for cash. c. receives cash in advance from a customer. d. performs services for cash.

c. receives cash in advance from a customer. An advance payment from a customer creates an obligation for the company to perform a service in the future, this is referred to as a liability. Because the company has received cash, there will also be an increase in assets.

What does a trial balance prove? a. that all transactions have been recorded correctly b. that all transactions have been posted c. the mathematical equality of debits and credits after the posting process d. that the ledger is posted correctly

c. the mathematical equality of debits and credits after the posting process A trial balance shows that the debit and credit columns are equal after the posting process. It does not show that the ledger is posted correctly or that all transactions have been posted correctly.

Pierson Industries has a beginning retained earnings balance of $42,500. An adjusted trial balance shows total expenses of $97,300 and revenue of $104,800. If dividends for the year were $3,500, determine the ending retained earnings balance for the year. a. $4,000 b. $39,000 c. $7,500 d. $46,500

d. $46,500 The retained earnings balance is affected by net income (revenues - expenses) and dividends. Net income is $7,500 ($104,800 - $97,300). By adding net income and subtracting dividends from the beginning retained earnings balance, Pierson Industries will report ending retained earnings of $46,500 ($42,500 + $7,500 - $3,500) on the retained earnings statement and balance sheet.

From among the following errors, each considered individually, choose the one that would cause the trial balance to be out of balance. a. A payment of $59 for supplies was posted as a debit of $95 to Supplies and a credit of $95 to Cash. b. Cash of $530 received from a customer on account was posted as a debit of $350 to Cash and as a credit of $350 to Accounts Payable. c. A transaction was not posted. d. A payment to a creditor was posted as a $148 debit to Accounts Payable and a debit of $148 to Cash.

d. A payment to a creditor was posted as a $148 debit to Accounts Payable and a debit of $148 to Cash. The trial balance will be out of balance if the debits and credits sums do not match. A payment to a creditor posted with two $148 debit entries in error, would cause the trial balance to not balance. If an amount is entered incorrectly, but as the same amount in both the debit and the credit side, those columns would still balance.

McCann Manufacturing borrows $45,000 at 9% annual interest for eight months on February 1st, 2016. If McCann uses June 30th, 2016 as its year-end for financial reporting, which of the following adjusting entries is correct? In the choices below, as per convention, debits are listed first followed by credits. a. Interest Expense $4,050Interest Payable $4,050 b. Interest Expense $2,700Interest Payable $2,700 c. Interest Expense $337.50Interest Payable $337.50 d. Interest Expense $1,687.50Interest Payable $1,687.50

d. Interest Expense $1,687.50Interest Payable $1,687.50 Interest payable is calculated by multiplying the face amount of the note times the interest rate times the time (in years). $45,000 × .09 × 5/12 = $1,687.50.

Joe Smith examined the sales slip related to a customer sale. Which part of the recording process is this action? a. The preparation of the financial statements. b. Entering the transaction in the journal. c. The transfer of the transaction to the appropriate accounts in the ledger. d. The analysis of each transaction.

d. The analysis of each transaction. The recording process includes analyzing transactions, entering them in a journal and transferring them to the ledger. A sales slip is a source document that would be evidence of an accounting transaction, this evidence is analyzed to determine the effect of the transaction on specific accounts.

What effect may result if account titles are not used in journalizing? a. The general ledger will not balance. b. The journal entry will not balance. c. The contents of the account will differ from the name of the account. d. The financial statements may not be accurate.

d. The financial statements may not be accurate. Erroneous account titles can lead to incorrect financial statements because the accounts to which the amounts are posted are the basis of the financial statements amounts.