1) Input devices are the means to make accounting information available to users.
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2) Since pledged accounts receivables only serve as collateral for a loan and are not sold, it is not necessary to disclose the pledging.
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3) Revenues are increases in equity from a company’s earning activities.
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4) A company borrowed $6,000 by signing a 4-month promissory note at 12%. The total interest on the note is $720.
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5) Interest is the payment to the owner of an asset for its use by a borrower.
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6) An advantage of the weighted average inventory method is that it tends to smooth out erratic changes in costs.
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7) The following unadjusted and adjusted trial balances were taken from the current year’s accounting system for High Point.
High Point
Trial Balances
For Year Ended December 31
| Cash. Accounts receivable …… Office supplies … Prepaid advertising. Building.. |
Unadjusted Trial Balance |
Adjusted Trial Balance |
||
| Debit
11,300 |
Credit |
Debit 11,300 |
Credit |
|
| Accumulated depreciationBuilding | 1,300 | 6,300 | ||
| Accounts payable … | 3,320 | 3,500 | ||
| Unearned services revenue | 4,410 | 3,010 | ||
| D. Ruiz, Capital . | 17,905 | 17,905 | ||
| Services revenue…… . | 72,400 | 74,600 | ||
| Salaries expense . | 34,500 | 34,500 | ||
| Utilities expense………. .. | 5,450 | 5,630 | ||
| Advertising expense .. | 2,900 | 3,550 | ||
| Supplies expense .. | 400 | |||
| Depreciation expense building. | 5,000 | |||
| Totals…………………….. . | 99,335 | 99,335 | 105,315 | 105,315 |
In general journal form, present the six adjusting entries that explain the changes in the account balances from the unadjusted to the adjusted trial balance.
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8) A voucher system is a set of procedures and approvals designed to control cash disbursements and the acceptance of obligations.
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9) The Woodview Company uses a sales journal, purchases journal, cash receipts journal, cash disbursements journal, and general journal. They use the perpetual method. The following transactions occurred during the current month of December:
| Dec | 4 | Sold merchandise on credit for $3,300 to the A&B Co., Invoice No. 313. The cost of the goods sold is $2,145. |
| 8 | Purchased merchandise on credit for $1,800 from the Dexter Co., terms 2/10, n/30. Invoice dated December 8 . | |
| 10 | Sold merchandise for $500 cash to RAC Corp., Invoice No. 314. The cost of the good sold is $320. | |
| 13 | Collected $3,300 cash from the A & B Co. for merchandise sold on December 4 . | |
| 17 | Paid amount owed to Dexter Co. from December 8 purchase, Check No. 1011. | |
| 24 | Sold merchandise on credit for $4,500 to Dunn Corp., Invoice No. 315. The cost of goods sold is $2,925. | |
| 27 | Paid $400 cash for monthly rent to Dayton Properties, Check No. 1012 . | |
| 31 | Purchased equipment for $3,055 from Fort Corp., Check No. 1013 . |
Record the above transactions into the appropriate journals shown below.
| Sales Journal Page 15 | |||||
| Date | Account Debited | Invoice Number | PR | Accounts Receivable Dr. Sales Cr. | Cost of Goods Sold Dr. Inventory Cr. |
| Purchases Journal Page 16 |
||||||||
| Date | Account | Date of Invoice | Terms | PR | Accounts Payable Cr. | Inventory Dr. | Office Supplies Dr. | Other Accounts Dr. |
| Cash Receipts Journal Page 17 | |||||||||
| Date | Account Credited | Explanation | PR | Cash Dr. | Sales Discount Dr. | Accounts Receivable Cr. | Sales Cr. | Other Accounts Cr. | Cost of Goods sold Dr. Inventory Cr. |
| Cash Disbursements Journal Page 22 | ||||||||
| Date | Ck No. | Payee | Account Debited | PR | Cash Cr. | Inventory Cr. | Other Accounts Dr. | Accounts Payable Dr. |
| Sales Journal Page15 | |||||
| Date | Account Debited | Invoice Number | PR | Accounts Receivable Dr. Sales Cr. | Cost of Goods Sold Dr. Inventory Cr. |
| 12/4 | A&B Co. | 313 | 3,300 | 2,145 | |
| 12/24 | Dunn Corp. | 315 | 4,500 | 2,925 | |
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10) In accrual accounting, accrued revenues are recorded as liabilities.
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11) The direct write-off method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible.
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12) The accounts receivable turnover is calculated by dividing net sales by average accounts receivable.
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13) A salary owed to employees is an example of an accrued expense.
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14) A schedule of accounts receivable is a listing of all creditor accounts and account balances.
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15) How is a classified balance sheet different from an unclassified balance sheet? List the order of the usual classifications on a classified balance sheet.
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16) A company performs 20 days work on a 30-day contract before the end of the year. The total contract is valued at $6,000 and payment is not due until the contract is fully completed. The adjusting entry includes a $4,000 credit to unearned revenue.
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17) Account balances in the general ledger and the subsidiary ledgers should be proved for accuracy after posting is complete.
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18) Identify and describe the four inventory valuation methods.
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19) Costs incurred during an accounting period but unpaid and unrecorded are accrued expenses.
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