CHAPTER 2 MC
During the month of February, Rubio Services had cash receipts of $9,500 and cash payments of $12,600. The February 28 cash balance was $5,800. What was the February 1 beginning cash balance?
$8,900. Explanation Beginning Cash Balance + Cash Receipts − Cash Payments = Ending Cash Balance Beginning Cash Balance + $9,500 − $12,600 = $5,800 Beginning Cash Balance − $3,100 = $5,800 Beginning Cash Balance = $8,900
During the month of March, Harley's Computer Services made purchases on account totaling $45,700. Also, during the month of March, Harley was paid $11,300 by a customer for services to be provided in the future and paid $38,000 of cash on its accounts payable balance. If the balance in the accounts payable account at the beginning of March was $78,400, what is the balance in accounts payable at the end of March?
$86,100. Beginning Accounts Payable Balance + Purchases on Account − Payments on Accounts = Ending Accounts Payable Balance $78,400 + $45,700 − $38,000 = Ending Accounts Payable Balance Ending Accounts Payable = $86,100
At the beginning of the current year, Snell Company's total assets were $250,200 and its total liabilities were $173,100. During the year, the company reported total revenues of $93,000 and total expenses of $81,000. There were no other changes in total equity during the year, and total assets at the end of the year were $262,200. The company's debt ratio at the end of the current year is:
66.0%. Debt Ratio = Total Liabilities/Total Assets Debt Ratio = $173,100**/$262,200; Debt Ratio = 0.660 = 66.0%* Beginning Total Assets = Beginning Total Liabilities + Beginning Total Equity$250,200 = $173,100 + Beginning Total Equity; Beginning Total Equity = $77,100 **Ending Total Assets = Ending Total Liabilities + Ending Total Equity $262,200 = Ending Total Liabilities + (Beginning Equity + Revenues − Expenses) $262,200 = Ending Total Liabilities + ($77,100 + $93,000 − $81,000) $262,200 = Ending Total Liabilities + $89,100; Ending Total Liabilities = $173,100
At the end of the current year, James Company reported total liabilities of $309,000 and total equity of $109,000. The company's debt ratio was:
73.9% Debt Ratio = Total Liabilities/Total Assets Debt Ratio = $309,000/$418,000*; Debt Ratio = 0.739 = 73.9%* Total Assets = Total Liabilities + Total Equity Total Assets = $309,000 + $109,000; Total Assets = $418,000
Identify which error will cause the trial balance to be out of balance
A $160 cash receipt from a customer in payment of her account posted as a $160 debit to Cash and a $16 credit to Accounts Receivable.
On May 31, the Cash account of Tesla had a normal balance of $6,500. During May, the account was debited for a total of $13,700 and credited for a total of $13,000. What was the balance in the Cash account at the beginning of May?
A $5,800 debit balance. Explanation Beginning Cash Balance + Debits − Credits = Ending Cash Balance Beginning Cash Balance + $13,700 − $13,000 = $6,500 Beginning Cash Balance + $700 = $6,500; Beginning Balance = $5,800 debit balance
On January 1 of the current year, Jimmy's Sandwich Company reported total equity of $124,000. During the current year, total revenues were $98,000, while total expenses were $107,500. No other changes in equity occurred during the year. The change in total equity during the year was:
A decrease of $9,500. Beginning Total Equity + Revenues − Expenses = Ending Total Equity $124,000 + $98,000 − $107,500 = Ending Total Equity Ending Total Equity = $114,500 Change in Equity = Beginning Total Equity − Ending Total Equity Change in Equity = $124,000 − $114,500 = $9,500 Decrease
Ted Catering received $1,040 cash in advance from a customer for catering services to be provided in three months. Determine the general journal entry that Ted Catering will make to record the cash receipt.
Cash - debit $1,040 Unearned rev - credit $1,040
GreenLawn Company provides landscaping services to clients. On May 1, a customer paid GreenLawn $83,000 for 6-months services in advance. GreenLawn's general journal entry to record this transaction will include a:
Credit to Unearned Revenue for $83,000.
A law firm billed a client $3,400 for work performed in the current month. Which of the following general journal entries will the firm make to record this transaction?
Debit Accounts Receivable, $3,400; credit Services Revenue, $3,400.
Alicia Tax Services paid $610 to settle an account payable. Which of the following general journal entries will Alicia Tax Services make to record this transaction?
Debit Accounts payable, $610; credit Cash, $610.
A company receives $8,100 cash for performing landscaping services. Which of the following general journal entries will the company make to record this transaction?
Debit Cash $8,100; credit Landscaping Revenue, $8,100.
A law firm collected $2,500 on account for work performed and billed in the previous month. Which of the following general journal entries will the firm make to record this collection of cash?
Debit Cash, $2,500; credit Accounts Receivable, $2,500.
A law firm collected $3,100 in advance for work to be performed in three months. Which of the following general journal entries will the firm make to record this transaction?
Debit Cash, $3,100; credit Unearned Revenue, $3,100
Green Cleaning purchased $640 of office supplies on credit. The company's policy is to initially record prepaid and unearned items in balance sheet accounts. Which of the following general journal entries will Green Cleaning make to record this transaction?
Debit Office supplies, $640; credit Accounts payable, $640.
A company purchased $21,000 of supplies on credit. The journal entry to record this transaction consists of a:
Debit Supplies for $21,000; credit Accounts Payable for $21,000
A bookkeeper has debited an asset account for $4,300 and credited a liability account for $2,400. Which of the following would be an incorrect way to complete the recording of this transaction:
Debit another asset account for $1,900.
Edison Consulting received a $380 utilities bill and immediately paid it. Edison's general journal entry to record this transaction will include a:
Debit to Utilities Expense for $380.
Specter Consulting purchased $8,500 of supplies and paid cash immediately. Which of the following general journal entries will Specter Consulting make to record this transaction?
Supplies - debit $8,500 Cash - credit $8,500
A $150 credit to Supplies was credited to Revenue by mistake. By what amounts are the accounts under- or overstated as a result of this error?
Supplies, overstated $150; Revenue, overstated $150.
At year-end, a trial balance showed total credits exceeding total debits by $5,850. This difference could have been caused by:
The balance of $6,580 in the Office Equipment account being mistakenly entered on the trial balance as a debit of $730.
Identify the item below that would cause the trial balance to not balance?
The cash payment of a $990 account payable was posted as a debit to Accounts Payable and a debit to Cash for $990
Adriana Graphic Design receives $1,900 from a client billed in a previous month for services provided. Which of the following general journal entries will Adriana Graphic Design make to record this transaction?
cash - debit $1,900 accounts receivable - credit $1,900
Russell Company collected cash of $500 immediately after providing consulting services to a client. Which of the following general journal entries will Russell Company make to record this transaction?
cash - debit - $500 consulting rev - credit - $500
Sara's Studio provided $320 of dance instruction and rented out its dance studio to the same client for another $185. The client paid cash immediately. Identify the general journal entry below that Sara's Studio will make to record the transaction.
cash - debit - $505 Rental rev - credit - $185 instruction rev - credit $320
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A company purchased $2,400 of supplies on credit. Identify the general journal entry below that the company will make to record the transaction.
supplies - debit - $2400 accounts payable - credit $2400
A company paid $2,700 cash for this month's utilities. Identify the general journal entry below that the company will make to record the transaction.
utilities expense - debit 2700 cash - credit 2700
The following transactions occurred during July: 1. Received $1,050 cash for services provided to a customer during July. 2. Collected $5,000 cash for services previously completed in June. 3. Received $900 from a customer in partial payment of his account receivable which arose from sales in June. 4. Provided services to a customer on credit, $525. 5. Borrowed $7,500 from the bank by signing a promissory note. 6. Received $1,400 cash from a customer for services to be performed next year. What was the amount of revenue for July?
$1,575. Revenues = $1,050 (from #1) + $525 (from #4) = $1,575
A company opened on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books: 1. The company received $14,100 cash for services provided. 2. The company paid $2,700 cash for an insurance policy covering the next 24 months. 3. The company received $6,300 cash for services provided. 4. The company purchased $6,800 of office equipment on credit. 5. The company provided $3,350 of services to customers on account. 6. The company paid cash of $2,100 for monthly rent. 7. The company paid $3,700 on the office equipment purchased in transaction #5 above. 8. Paid $335 cash for January utilities. Based on this information, the balance in the cash account at the end of January would be:
$11,565. Ending Cash Balance = $14,100 (#1) − $2,700 (#2) + $6,300 (#3) − $2,100 (#6) − $3,700 (#7) − $335 (#8) = $11,565
A $24 credit to Revenue was posted as a $240 credit. By what amount is the Revenue account in error?
$216 overstated. $240 − 24 = $216
At the end of its first month of operations, a company reported Revenue of $42,400. It also reported Wages Expense, $7,800; Rent Expense, $6,800; and Utilities Expense, $1,900. Calculate net income reported on the income statement at month-end.
$25,900 Revenue $42,400 − Wages Expense $7,800 − Rent Expense $6,800 − Utilities Expense $1,900
During March, the following transactions occurred: 1. The company paid $4,000 cash to rent office space for the month of March. 2. The company received $36,000 cash for repair services provided during March. 3. The company paid $8,200 for salaries for the month of March. 4. The company provided $5,000 of services to customers on account. 5. The company paid cash of $2,500 for utilities for the month of March. 6. The company received $5,100 cash in advance from a customer for repair services to be provided in April. 7. The company purchased $7,000 of land for cash. Based on this information, net income for March would be:
$26,300. Net Income = Revenues − Expenses Net Income = $36,000 (#2) − $4,000 (#1) − $8,200 (#3) + $5,000 (#4) − $2,500 (#5) = $26,300
Marco Nelson opened a frame shop and completed these transactions: 1. Sold custom frames and immediately collected $41,700 cash for the sale. 2. Purchased $240 of office supplies on credit. 3. Paid $2,900 cash for the receptionist's salary. 4. Sold a custom frame service and collected $6,200 cash on the sale. 5. Completed framing services and billed the client $370. What was the balance of the cash account after these transactions were posted?
$45,000. Ending Cash Balance = $41,700 (#1) − $2,900 (#3) + $6,200 (#4) = $45,000
At the beginning of January of the current year, Sorrel Company's ledger reflected a normal balance of $64,000 for accounts receivable. During January, the company collected $17,200 from customers on account and provided additional services to customers on account totaling $13,700. Additionally, during January one customer paid Mikey $6,200 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be:
$60,500. Beginning Accounts Receivable Balance + Services on Account − Collections from Customers = Ending Accounts Receivable Balance $64,000 + $13,700 − $17,200 = Ending Accounts Receivable Balance Ending Accounts Receivable = $60,500
On April 30, Gomez Services had an Accounts Receivable balance of $38,900. During the month of May, total credits to Accounts Receivable were $74,800 from customer payments. The May 31 Accounts Receivable balance was $32,000. What was the amount of credit sales during May?
$67,900. Beginning Accounts Receivable Balance + Credit Sales (Debits) − Customer Payments (Credits) = Ending Accounts Receivable Balance $38,900 + Credit Sales (Debits) − $74,800 = $32,000 Credit Sales (Debits) − $35,900 = $32,000 Credit Sales (Debits) = $67,900
Jennings Company has total assets of $451 million. Its total liabilities are $123.5 million. Its equity is $327.5 million. Calculate the debt ratio. (Round your answer to 1 decimal place.)
27.4% Debt Ratio = Total Liabilities/Total Assets Debt Ratio = $123.5 million/$451 million; Debt Ratio = 0.274 = 27.4%
Sanders Company has total assets of $423 million. Its total liabilities are $119.1 million, and its equity is $303.9 million. Calculate its debt ratio. (Round your answer to 1 decimal place.)
28.2%. Debt Ratio = Total Liabilities/Total Assets Debt Ratio = $119.1 million/$423 million; Debt Ratio = 0.282 = 28.2%
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The credit purchase of a new oven for $5,200 was posted to Kitchen Equipment as a $5,200 debit and to Accounts Payable as a $5,200 debit. What effect would this error have on the trial balance?
The total of the Debit column of the trial balance will exceed the total of the Credit column by $10,400.
Jose Consulting paid $580 cash for utilities for the current month. Determine the general journal entry that Jose Consulting will make to record this transaction
Utilities Expense - debit $580 Cash - credit $580
