ACCTG Final

Carolina Mills purchased $260,000 in supplies this year. The supplies account increased by $11,000 during the year to an ending balance of $74,000. What was supplies expense for Carolina Mills during the year?

Supplies expense = $63,000 + $260,000 − $74,000 = $249,000

The basis used to classify assets as current or long-term is:

The determination of current versus long-term assets is based on whether the asset is expected to be converted to cash or consumed within the coming year, or within the normal operating cycle of the business if that's longer than one year.

What amount should be included in the current liabilities section of Lanson's December 31, 2021, balance sheet? Accounts payable---$25,000 Bonds payable, due 2030---22,000 Salaries payable---16,000 Notes payable, due 2022---20,000 Notes payable, due 2026---40,000

$25,000 + $16,000 + $20,000 = $61,000.

A company purchased a building for $900,000 by obtaining a 30-year mortgage payable. Assume the lending arrangement specifies that the company will pay $20,000 of the principal over the first year, $30,000 in the second year, and the remainder evenly over the final 28 years. What amount of the $900,000 would be classified as a long-term liability at the time the mortgage payable is obtained?

$880,000.

Compute the long-term assets for Bronco: Inventory---$175,000 Total assets---$1,550,000 Current ratio---3.9 Acid-test ratio---2.50 Debt to equity ratio---1.5

Total assets = Current assets + Long-term assetsCurrent assets (CA/Current Liabilities (CL)) = 3.9; therefore, CA = 3.9CLQuick assets (QA/Current Liabilities) = 2.50; therefore, QA = 2.50CLQA = CA - Inventory = CA - $175,0002.50CL = 3.9CL - $175,0001.40CL = $175,000CL = $125,000CA = 3.9CL = $487,500Total assets = $1,550,000 (given)$1,550,000 = $487,500 + Long-term assetsLong-term assets = $1,062,500

What is the amount of total assets?

Total assets: $12,000 + $4,500 + $2,000 + $65,000 = $83,500

Accounts payable---$15,000 Buildings---80,000 Cash---10,500 Accounts receivable---9,500 Salaries payable---4,500 Retained earnings---47,500 Supplies---40,000 Notes payable (due in 18 months)---35,000 Interest payable---3,000 Common stock---35,000

Total current assets: $10,500 + $9,500 + $40,000 = $60,000

Compute the shareholders' equity for Bronco: Inventory---$150,000 Total assets---$1,400,000 Current ratio---3 Acid-test ratio---2.25 Debt to equity ratio---1.5

Total debt + Total equity = Total assets = $1,400,000Debt/Equity = 1.5; therefore, Total debt = 1.5 Equity1.5 Equity + 1 Equity = $1,400,0002.5 Equity = $1,400,000; Shareholders' equity = $560,000

Compute the shareholders' equity for Bronco: Inventory----$195,000 Total assets----$2,000,000 Current ratio----3.7 Acid-test ratio----2.40 Debt to equity ratio---1.5

Total debt + Total equity = Total assets = $2,000,000 Debt/Equity = 1.5; therefore,Total debt = 1.5 Equity 1.5 Equity + 1 Equity = $2,000,000 2.5 Equity = $2,000,000; Shareholders' equity = $800,000

What would Symphony report as total shareholders' equity?

Total shareholders' equity: $478 + $12 + $318 = $808

Yummy Foods purchased a two-year fire and extended coverage insurance policy on August 1, 2021, and charged the $4,200 premium to Insurance expense. At its December 31, 2021, year-end, Yummy Foods would record which of the following adjusting entries?

Unexpired at 12/31: $4,200 × 19/24 = $3,325

Relevance requires that information possess predictive and/or:

Confirmatory value.

Compute the current assets for Bronco: Inventory---$150,000 Total assets---$1,400,000 Current ratio---3 Acid-test ratio---2.25 Debt to equity ratio---1.5

Current assets (CA/Current Liabilities (CL)) = 3; therefore, CA = 3CL Quick assets (QA/Current Liabilities) = 2.25; therefore, QA = 2.25CL QA = CA - Inventory = CA - $150,000 2.25CL = 3CL - $150,0000 .75CL = $150,000 CL = $200,000 CA = 3CL = $600,000

What is the amount of working capital for Symphony?

Current assets: $710 + $39 + $30 + $16 + $20 + $8 =$823 Current liabilities: $560 + $30 + $65 + $40 = 695 Working capital $128

The ending balance of retained earnings increased by $3.2 million from the beginning of the year. The company declared a dividend of $1.3 million during the year. What was the amount of net income during the year?

Increase in retained earnings ($3.2 million) = net income − dividends ($1.3 million). Net income = $3.2 million + $1.3 million = $4.5 million.

On December 31, 2020, Coolwear, Inc. had a balance in its prepaid insurance account of $57,400. During 2021, $95,000 was paid for insurance. At the end of 2021, after adjusting entries were recorded, the balance in the prepaid insurance account was $46,500. Insurance expense for 2021 was:

Insurance expense = $57,400 + $95,000 − $46,500 = $105,900

Temporary accounts do not include:

Salaries payable.

New Oaks Winery requires two months to make wine, two years to age it, one month to bottle it, two months to sell it, and one month to collect the receivable. Its operating cycle is:

Thirty months.

Investments consist of treasury bills that were purchased in November, 2021, and mature in January, 2022. Prepaid insurance is for two years. What amount should be included in the current assets section of Janson's December 31, 2021, balance sheet?

$13,400 + $40,000 + $30,600 + $3,350 (1/2 of prepaid insurance) = $87,350.

On December 31, 2021, the end of Larry's Used Cars' first year of operations, the accounts receivable was $53,800. The company estimates that $1,400 of the year-end receivables will not be collected. Accounts receivable in the 2021 balance sheet will be valued at:

Accounts receivable = $53,800 − $1,400 = $52,400

Mama's Pizza Shoppe borrowed $7,200 at 6% interest on May 1, 2021, with principal and interest due on October 31, 2022. The company's fiscal year ends June 30, 2021. What adjusting entry is necessary on June 30, 2021?

Accrued interest expense: $7,200 × 6% × 2/12 = $72

An example of a contra account is:

Accumulated depreciation.

The employees of Neat Clothes work Monday through Friday. Every other Friday the company issues payroll checks totaling $34,000. The current pay period ends on Friday, July 3. Neat Clothes is now preparing quarterly financial statements for the three months ended June 30. What is the adjusting entry to record accrued salaries at the end of June?

Amount accrued: $34,000 × 7/10 (7 days of 10 days to be paid) = $23,800

The underlying assumption that assumes that the life of a company can be divided into artificial time periods is:

Periodicity.

For a firm with a current ratio of 2.0, which of the following transactions would most likely cause the ratio to decrease?

The purchase of inventory on account.