From the following data, make the following adjustments, and complete the worksheet
for the month.
a. Depreciation Expense is $350.
b. Supplies remaining at end of period $75.
c. Prepaid Insurance balance $400, $100 has expired.
d. Wages for the 5 day work-week are $500, the month ended on a Wednesday.
Account Trial Balance Adjustments Adj. Trial Balance Income Stmt Balance Sheet
Selected data for Stick’s Design are given as of December 31, Year 1 and Year 2:
Year 2 Year 1
Net Credit Sales $25,000 $30,000
Cost of Goods Sold 16,000 18,000
Net Income 2,000 2,800
Cash 5,000 900
Accounts Receivable 3,000 2,000
Inventory 2,000 3,600
Current Liabilities 6,000 5,000
Required: Compute the following:
a. ________ Current ratio for Year 2.
b. ________ Acid-test ratio for Year 2.
c. ________ Accounts receivable turnover for Year 2.
d. ________ Average collection period for Year 2.
e. ________ Inventory turnover for Year 2.
The collection on account within the 1/10 n/30 discount period was recorded using a
10% discount rather than a 1% discount in both the controlling and subsidiary accounts.
This error will cause:
A) the net income for the period to be understated.
B) the net income for the period to be overstated.
C) the control account to not agree with the subsidiary ledger.
D) the assets to be overstated.
Receiving cash from a lender would result in:
A) an increase of cash flow from investing activities.
B) a decrease of cash flow from investing activities.
C) an increase of cash flow from financing activities.
D) a decrease of cash flow from financing activities.
Which of the following accounts is used for recording merchandise for resale?
A) Purchases
B) Purchase Discounts
C) Purchase Discounts Lost
D) Sales
Determine the adjusted cash balance per bank for Sam’s Packaging on November 30,
from the following information:
A) $1,250
B) $1,100
C) $1,550
D) $1,350
Sold Merchandise for Cash subject to a sales tax accepting cash. This will be recorded
with:
A) a credit to an asset account.
B) a debit to a liability account.
C) a debit to Capital.
D) None of these is correct.
Partners Brian, Josh, and Chad have capital balances of $8,000, $6,000, and $80,000,
respectively. The losses for the year are $10,000. What will Josh’s capital balance be if
the three partners share profits and losses at a 2:2:6 ratio for Brian, Josh, and Chad,
respectively?
A) $4,000 debit balance
B) $1,000 debit balance
C) $2,400 debit balance
D) $4,000 credit balance
When a partnership is dissolved:
A) it is implied that the business cannot form a different ownership structure.
B) it is implied that the business cannot continue with a new group of partners.
C) it is implied that it must be dissolved with any change in partnership structure.
D) it is implied that the business will halt operations.
When services are rendered but payment is not made, which account would be
increased?
A) Service revenue
B) Accounts Payable
C) Cash
D) Withdrawal
A debit memorandum increases which account on the buyer’s books?
A) Accounts Payable
B) Purchases Returns and Allowances
C) Sales Discount
D) Accounts Receivable
Which of the following accounts would be credited in a proper journal entry?
A) Cash when it is increased
B) Accounts Receivable when it is increased
C) Capital when it is decreased
D) Accounts Payable when it is increased
If total assets are $10,000, what is the vertical analysis for Cash when it has a balance
of $6,000?
A) 40%
B) 60%
C) 250%
D) 25%
A clock card is:
A) the basis for payroll.
B) the basis for charging cost of goods sold.
C) a document to show movement of materials.
D) a document used to order materials.
Purchases discounts:
A) decrease net income.
B) increase net income.
C) increase accounts payable.
D) Not enough information provided.
When paying off a note payable, last year’s accrual was ignored and the total interest
was recorded as an expense. This error would cause:
A) the period end assets to be understated.
B) the period end liabilities to be understated.
C) the period’s net income to be understated.
D) the period’s net income to be overstated.
This inventory method produces the lowest income tax during a period of inflation.
A) FIFO
B) LIFO
C) Weighted-average
D) All would have the same tax effect.
A calendar year is:
A) any 12-month period.
B) a 12-month period beginning January 1 and ending on December 31.
C) always the same as the company’s fiscal year.
D) None of the above answers are correct.
The inventory method that matches most recently acquired costs with current selling
prices is:
A) LIFO.
B) FIFO.
C) weighted-average.
D) specific invoice.
Samantha purchased a two-year insurance policy for $7,200. The adjusting entry for
one month would include a:
A) debit to Insurance Expense, $300.
B) credit to Cash, $300.
C) debit to Prepaid Insurance, $300.
D) credit to Insurance expense, $300.
On May 1, Garcia Corporation bought $10,000 of merchandise from Morris
Corporation, terms 4/10, n/30. Garcia paid the invoice on May 6. The company uses the
periodic and voucher systems. The journal entry to record the payment under the net
method would be to:
A) debit Vouchers Payable $10,000; credit Cash $10,000.
B) debit Vouchers Payable $10,000; credit Discounts Lost $400; credit Cash $9,600.
C) debit Vouchers Payable $9,600; credit Cash $9,600.
D) debit Vouchers Payable $9,600; debit Discounts Lost $400; credit Cash $10,000.
Hawkeye Tack uses a periodic inventory system. Hawkeye Tack sold 80 sweaters
during September. Other data for September includes:
Cost of goods sold under the FIFO method is:
A) $2,081.
B) $2,273.
C) $2,215.
D) $2,182.
If Prepaid Rent has been debited, it is likely that:
A) the rent was paid for three months in advance.
B) a bill for the past month’s rent was received.
C) this month’s rent was paid.
D) All of these are possible.
Which form is sent to the Social Security Administration along with the W-2s? It
reports total wages, FICA tax withheld, etc., for the previous year.
A) Form W-2
B) Form W-3
C) Form SS-4
D) Form 940
The posting reference column on the general journal:
A) shows which transactions have been posted to the ledger.
B) displays to which accounts the transactions have been posted.
C) allows us to cross reference to the general ledger.
D) All of the above are correct.
Ross, immediately after receiving a note from a customer, discounted it at the bank and
received the proceeds. Ross’s entry on his books would include a:
A) debit to Cash.
B) credit to Interest Income.
C) credit to Notes Receivable.
D) All of the above
Dave Brown’s cumulative earnings are $102,000, and his gross pay for the week is
$5,300. If the FICA rates are: OASDI 6.2% on a limit of $117,000 and Medicare is
1.45%, what are his FICA-OASDI and FICA-Medicare taxes for the week?
A) $297.60; $76.85
B) $0; $0
C) $31.00; $7.25
D) $328.60; $76.85
J. Oros showed a net loss of $3,500. The entry to close the Income Summary account
would include a:
A) debit to Oros, Capital, $3,500.
B) debit to Income Summary , $3,500.
C) credit to Oros, Capital, $3,500.
D) credit to Cash, $3,500.
If a trial balance is not equal, you should first:
A) re-compute the ledger balances.
B) trace all postings.
C) re-add the trial balance and calculate the difference.
D) match debits and credits.
In what category in a classified balance sheet is Store Equipment found?
A) Plant and Equipment
B) Current Liabilities
C) Current Assets
D) Long Term Liabilities
A characteristic of Sales Returns and Allowances is that:
A) it has a debit balance.
B) it tracks returns from customers.
C) it is a contra-revenue account.
D) All of these answers are correct.
If Accounts Payable has been credited, it is most likely that:
A) a payment was made on account.
B) a purchase was made on account.
C) a correcting entry was made for the overstatement of the purchase of equipment on
account.
D) a customer paid a bill on account.
If the property, plant, and equipment cannot be traced to a specific department,
depreciation expense is a(n):
A) direct expense.
B) indirect expense.
C) cash expense.
D) sales expense.
Cost of Goods Sold is calculated on the:
A) Post-Closing Trial Balance.
B) Trial Balance.
C) Income Statement.
D) Statement of Owner’s Equity.
Classify each of the following as raw materials, direct labor, or overhead:
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement on which the account balance is reported, and in Column 4 the nature of the
account (permanent/temporary).
A car is purchased for $30,000 on January 1. It has a 5-year life and a salvage value of
$2,000. Compute the annual depreciation expense using the double declining-balance
method for all 4 years.
For each of the following, identify in column 1 the category to which the account
belongs, in column 2 the normal balance for the account, in column 3 the financial
statement that the account in which the account balance is reported, and in column 4 the
account’s nature (permanent/temporary).
What is the difference between a secured bond and a debenture bond?
Equipment was purchased for $50,000, residual value is $2,000 and it is expected that
the useful life is 10 years. What is the amount in the Accumulated Depreciation account
after 3 years assuming straight-line depreciation?
$ ________
Prepare the general journal entry to record the employer’s payroll tax expense.
___________________________________________ _________ _________
___________________________________________ _________ _________
___________________________________________ _________ _________
___________________________________________ _________ _________
After several years of business, Abel, Barney, and Cole are liquidating. The following
are post-closing account balances.
Cash 18,000
Inventory 73,000
Other assets 157,000
Accounts Payable 61,000
Abel, Capital 50,000
Barney, Capital 50,000
Cole, Capital 87,000
Non-cash assets are sold for $275,000. Profits and losses are shared equally.
Record the payment of the liabilities.
From the following items in the income statement columns of the worksheet of Friend’s
Tutoring at December 31, prepare the closing entries without explanation, assuming
that a $1,000 withdrawal was made during the period.
Vouchers should be filed in the tickler file ________ rather than alphabetically.
Define and discuss a calendar year, accounting period, and fiscal year.
The Dairy Co. had the following transactions involving the sale of merchandise. You
are to prepare the necessary general journal entries. All sales are subject to a 6% sales
tax. Terms of sale were n/30.
April 13 Sold merchandise priced at $500 to Jan Ellsworth on account.
April 14 Sold merchandise priced at $350 to a cash customer.
April 15 Sold merchandise priced at $150 to Dana Carter on account.
April 16 Sold merchandise priced at $700 to a cash customer.
April 20 The customer of April 14 returned $50 worth of merchandise for a cash refund.
April 25 Received full payment from Dana Carter.
April 30 Paid the amount of sales tax to the state.
Prepare the necessary general journal entry for April 20.
__________________________________________ __________ __________
__________________________________________ __________ __________
__________________________________________ __________ __________
R. Red formed a corporation with an authorization of 20,000 shares of $50 par, 6%
non-cumulative preferred stock and 100,000 shares of $10 par common stock. The
following selected transactions were completed during the first year of operations.
Journalize the transactions omitting explanations.
Jan 10 Issued 20,000 shares of common stock at par for cash.
31 Issued 20,000 shares of common stock in exchange for land, buildings, and
equipment with fair market prices of $52,000, $125,000, and $48,000,
respectively.
Feb 24 Issued 2,000 shares of preferred stock at $54 for cash.
The following is a list of accounts and their balances for Benson Company for the
month ended June 30, 20xx. Prepare a trial balance in good form.
Given the following accounts:
[1] Cash
[2] Accounts receivable
[3] Merchandise inventory
[4] Supplies
[5] Accounts payable
[6] Sales
[7] Sales returns and allowances
[8] Sales discounts
[9] Cost of goods sold
[10] Purchases
[11] Purchase returns and allowances
[12] Purchase discounts
[13] Freight-in
Indicate the account(s) to be debited and credited to record the following transactions.
Sold merchandise on cash – Periodic
Debit ________ Credit ________
For each of the following, identify in Column 1 the category to which the account
belongs, in Column 2 the normal balance for the account, in Column 3 the financial
statement on which the account balance is reported, and in Column 4 the nature of the
account (permanent/temporary).