1) The following accounts appear in the adjusted trial balance columns of a worksheet.
State the column that each account balance is extended to, choosing from the following
columns:
1> income statement debit
2> balance sheet debit
3> income statement credit
4> balance sheet credit
a) _________ service revenue
b) _________ unearned service revenue
c) _________ land
d) _________ rent expense
e) _________ supplies expense
f) _________ supplies
g) _________ accumulated amortization
h) _________ equipment
i) _________ owner’s capital
j) _________ owner’s withdrawals
2) Recording service revenue on account as a cash transaction will cause:
A) accounts receivable to be overstated
B) owner’s equity to be understated
C) cash to be overstated
D) service revenue to be understated
3) Table 9-12 Adirondac Marine Supplies
On September 1, 2013, Adirondac Marine Supplies made a loan to one of its customers.
The customer signed a 6-month note for $1,500 at 10%.
Refer to Table 9-12. How much interest revenue did Adirondac record in the year 2013?
A) $150
B) $125
C) $100
D) $50
4) For Ace Builders, how much was the net income or net loss in June?
A) $6,500 net income
B) $3,500 net income
C) $5,300 net income
D) $2,500 net loss
5) All of the following are purposes of internal control except to:
A) safeguard assets
B) promote operational inefficiency
C) prevent and detect error and fraud
D) ensure accurate and reliable accounting records
6) If the balance on the bank statement does not equal the balance in the company’s
cash account:
A) the bookkeeper made a mistake
B) the bank made a mistake
C) both the bank and the bookkeeper made a mistake
D) it is perfectly normal for the two balances to be different
7) Underwater Adventures has the following account balances on August 31, 2014:
Accounts payable$8,800
Accounts receivable9,600
Accumulated amortization – equipment30,300
Cash2,200
Cost of goods sold341,500
Jacobson, capital190,700
Jacobson, withdrawals44,000
Equipment88,000
Interest earned2,000
Inventory71,500
Operating expenses175,500
Sales discounts3,100
Sales returns and allowances14,400
Sales revenue520,600
Supplies7,100
Unearned sales revenue4,500
The following information as at August 31, 2014 was also available:
a.A physical count of items showed $1,200 of supplies on hand.
b.An inventory count showed inventory on hand of $66,400.
c.The equipment has an estimated useful life of eight years and is expected to have no
salvage value.
d.Unearned sales revenue of $1,000 was earned.
Required:
1>Prepare the necessary adjusting journal entries at August 31, 2014. For simplicity all
operating expenses are combined into a single operating expense account for financial
statement purposes. Use the normal account name for the adjusting journal entries.
2>Prepare a classified balance sheet based on adjusted account balances.
8) A jeweller selling unique, high-priced items of jewellery would most likely use
which method of inventory costing?
A) FIFO
B) average cost
C) specific-unit-cost
D) weighted-average cost
9) Incurring an expense in the current accounting period, which is paid in the current
accounting period, will require:
A) a debit to an expense and a credit to a liability
B) a debit to a liability and a credit to an expense
C) a debit to an expense and a credit to cash
D) a debit to an expense and a credit to capital
10) Table 9-2
The Maderite Furniture Company has an allowance for doubtful accounts account with
a $300 debit balance. Net credit sales for the period were $160,000. An aging process
shows that $5,400 of the accounts receivable probably will be uncollectible. In addition,
Maderite Furniture believes that 4% of all net credit sales are uncollectible. The
percent-of-sales method is used to account for uncollectibles.
Referring to Table 9-2, what is the amount of the adjusting entry to record bad-debt
expense and what is the balance in allowance for doubtful accounts after the adjusting
entry is made?
A) $6,400 and $6,700, respectively
B) $6,700 and $6,400, respectively
C) $6,400 and $6,100, respectively
D) $6,700 and $6,200, respectively
11) Table 6-6 Sam’s Wholesale Bikes
Refer to Table 6-6. What is the value of the February ending inventory assuming that
Sam’s uses the perpetual FIFO inventory method?
A) $7,500
B) $17,500
C) $14,175
D) $15,875
12) One method of achieving confidentiality in e-commerce is:
A) using an anti-computer-virus device
B) deleting firewalls
C) encryption
D) using passwords
13) Which of the following would not be included in the building account?
A) cost of repairing roof that was damaged prior to the purchase of the building
B) cost of demolishing an old building to make room for construction
C) architect fees
D) building permits
14) Given the following transactions for the The Warren Candle Company, prepare a
trial balance as of August 31, 2013 .
a) Owner, Wendy Warren invested $16,000 cash and equipment with a value of $7,500
into the business.
b) Purchased supplies on account, $350.
c) Rented office space paying one month’s rent, $950.
d) Performed a service on account, $1,500.
e) Purchased a truck by paying $2,000 down and signing a note for the balance of
$19,900.
f) Performed a service and immediately collected $900 cash.
g) Owner, Wendy Warren withdrew $900 for personal use.
15) Posting the entries in the sales journal to the accounts receivable subsidiary ledger
should be done:
A) on a weekly basis
B) only at the end of the accounting period
C) on a daily basis
D) at the end of each month
16) Table 10-8 Zane Manufacturing
On January 1, 2013, Zane Manufacturing Company purchased a machine for $40,000.
The company expects to use the machine a total of 24,000 hours over the next 6 years.
The estimated sales price of the machine at the end of 6 years is $4,000. The company
used the machine 8,000 hours in 2013 and 12,000 in 2014 .
Refer to Table 10-8. What is the straight-line amortization expense for 2014 if Zane
Manufacturing changes the estimate of useful life from 6 years to 8 years at the
beginning of 2014?
A) $4,286
B) $4,857
C) $4,500
D) $5,142
17) Revenues total $20,200, expenses total $17,300, and the owner’s withdrawals
account has a balance of $2,600. What is the balance in the income summary account
after all closing entries are completed?
A) $2,600 credit
B) $2,900 debit
C) $2,900 credit
D) $0
18) A company borrows $5,000 on November 1, 2013, giving a 10%, 180-day note
payable. The adjusting entry on December 31, 2013, would include a:
A) credit to Interest Payable for $82.19
B) credit to Interest Payable for $123.29
C) debit to Interest Expense for $82.19
D) credit to Cash for $82.19
19) Match the following.
A) balance-sheet approach
B) matching objective
C) realization principle
D) aging-of-accounts method
E) income-statement approach
F) allowance for doubtful accounts
G) allowance method
1> A method of recording collection losses based on estimates made before
identification of specific uncollectible accounts
2> A way to estimate bad debts by analyzing individual accounts receivable according
to the length of time they have been due
3> A contra account to accounts receivable that holds the estimated amount of
collection losses
4> The accounting concept upon which the allowance method to measure bad debts is
based
5> The approach relating to the percent-of-sales method for estimating bad debts
20) Jackson Construction Company Ltd. paid $42,000 for equipment with a fair market
value of $46,000. Jackson Construction Company Ltd. will record equipment at:
A) $42,000
B) $46,000
C) either $42,000 or $46,000
D) $44,000 (average)
21) Table 9-1
Ringo Company had the following information relating to net credit sales for 2014:
Referring to Table 9-1, if uncollectible accounts are determined by the percent-of-sales
method to be 3% of net credit sales, the bad-debt expense for 2014 would be:
A) $2,850
B) $3,450
C) $2,250
D) $600
22) Table 10-1
On January 1, 2013, Bark Manufacturing Company Ltd. purchased a machine for
$27,500, and expects to use the machine a total of 32,000 hours over the next four
years. Bark set the residual value on the machine at $3,500. Bark used the machine
6,000 hours in 2013 and 7,200 hours in 2014 .
Referring to Table 10-1, what is the amortization expense in 2014 if Bark uses
units-of-production amortization?
A) $5,400
B) $4,500
C) $6,192
D) $5,156
23) For each of the following events, indicate the amount by which total assets
increased or decreased.
a) Purchased $400 of supplies on account.
b) Earned $800 of revenue by performing a service for cash.
c) Received utilities bill for $500, to be paid in the following period.
d) Paid salaries to employees of $5,000.
e) Purchased equipment for $1,600 on account.
f) Purchased equipment for $5,000 cash.
g) Collected $475 from a customer on an account receivable.
h) Performed $3,000 of services on account.
24) Which amortization method generally results in the greatest amortization expense in
the first full year of an asset’s life?
A) straight-line
B) units-of-production
C) double-declining-balance
D) either straight-line or double-declining-balance
25) Following is a list of errors made during the posting process. Indicate the exact
dollar impact each error would have on (1) total revenue, (2) total expenses, and (3) net
income.
a) A $100 debit to rent expense was posted as a $300 debit to rent expense.
b) A $700 credit to service revenue was credited at $70 instead
c) A $2,000 debit to the withdrawals account was posted as a $2,000 debit to revenue.
d) A $1,500 debit to the salary expense account was debited to rent expense account.
e) A $3,000 debit to the equipment account was debited to an expense account instead.
Error Revenue Expenses Net Income
a)
b)
c)
d)
e)
26) The withdrawal of cash by the owner for personal use would include a:
A) debit to the owner’s capital account
B) credit to the owner’s withdrawals account
C) credit to the owner’s capital account
D) debit to the owner’s withdrawals account
27) The amount owed by an entity when it makes a purchase on account is termed a(n):
A) accounts receivable
B) accounts payable
C) note receivable
D) note payable
28) Net loss is entered onto which column(s) of a worksheet?
A) income statement credit and balance sheet debit
B) income statement credit and balance sheet credit
C) adjusted trial balance credit and income statement credit
D) income statement debit and balance sheet credit
29) Table 9-11 Mark’s Sales
At the beginning of 2014, Mark’s sales had the following ledger balances:
During the year there were $450,000 of credit sales, $460,000 of collections, and
$3,700 of write-offs.
Refer to Table 9-11. At the end of the year, Mark’s adjusted for uncollectible account
expense using the aging method, and calculated an amount of $1,600 as their estimate
of uncollectible accounts. At the end of the year, what was the balance in the allowance
account?
A) $1,600
B) $1,700
C) $6,400
D) $2,700
30) Table 10-7
On January 1, 2013, Brazeau Transport purchased a $165,000 truck for hauling cattle
across the border. Brazeau plans on driving the truck for four years or 450,000
kilometres. Expected residual value for the truck is $35,000. On June 30, 2016, after
having driven the truck 44,000 kilometres, the truck had an accident on the highway
and was totalled. The insurance proceeds for the truck was $42,000 cash.
Refer to Table 10-7. Record the disposal of the truck on June 30, 2016 assuming the
amortization expense for the truck to the date of the disposal has already been recorded
using the straight-line method.
31) Long-lived tangible assets used in the operation of the business
32) Explain the rules for debits and credits. Use the accounting equation as a basis for
your explanation and indicate the specific rules for debits and credits as they apply to
the various accounts. Your answer should include the rules for all types of accounts
affecting owner’s equity.
33) Table 5-6
The following are transactions for Latest Fashions for the month of June.
June 2Purchased $2,000 of inventory under terms 1/10, n/60 and FOB shipping point
from Trendy Manufacturing. The merchandise had cost Trendy $1,800
June 7Returned defective merchandise to Trendy Manufacturing with invoice price of
$400.
June 8Paid the freight charges on the purchase from Trendy Manufacturing in cash for
$100.
June 9Sold merchandise to New Miss Store on account for $5,000 with terms 2/15, n/60
FOB
shipping point. Cost of the merchandise sold was $4,000.
June 10Paid Trendy Manufacturing the balance on account.
June 12Granted sales allowance of $300 to New Miss Store for defective merchandise.
June 23Collected balance owing from New Miss Store.
Refer to table 5-6. Prepare the journal entries for Latest Fashions for the transactions
listed, assuming that Latest Fashions uses a perpetual inventory system.
34) Johnston Construction created a petty cash fund on July 1, 2014 with an imprest
balance of $400. During July, Sandy Bellamy, the fund custodian, signed the following
petty cash tickets:
Ticket #ItemAmount
1Office supplies$29.42
2Postage 19.00
3Courier charges72.00
4Entertainment lunches147.33
5Office supplies123.24
On July 31, prior to the replenishment, the fund contained these tickets plus $8.01.
Required:
Prepare journal entries to create the fund, replenish the fund, and increase the fund to
$450.
General Journal
