Journalize the following independent transactions:
a) Casey Company sells 300 shares of $20 par-value common stock at $20.
b) Jacob Corporation sells 100 shares of $20 par-value common stock at $30.
c) Moss Inc. sells 40 shares of no-par common stock with a $20 stated value for $30 per
share.
Bill’s Bikes discounts a customer’s 90-day, 8%, $4,000 note at a bank at 12%. The
discount period is 50 days. It records the proceeds as:
A) debit Cash $4,012; credit Notes Receivable $4,000; credit Interest Income $12.
B) debit Cash $4,160; credit Notes Receivable $4,080; credit Interest Income $80.
C) debit Cash $4,068, credit Notes Receivable $4,000; credit Interest Income $68.
D) debit Cash $4,012; credit Notes Receivable $4,000, credit Interest Expense $12.
Owner’s Capital would be found on the worksheet in the:
A) income statement debit column.
B) income statement credit column.
C) balance sheet debit column.
D) balance sheet credit column.
Which of the following statements is true when appropriating retained earnings?
A) Appropriating retained earnings will increase the number of shares of stock
available.
B) Appropriating retained earnings will allow the corporation to use its assets for
dividends.
C) Appropriating retained earnings will increase cash and other assets.
D) Appropriating retained earnings will divide the retained earnings into two categories.
Using the gross method, record the payment of the following transaction in time to take
the discount. Connect Company bought $5,000 of merchandise, terms 2/10, n/30, and
uses the periodic inventory system:
A) debit Cash $5,000; credit Vouchers Payable $5,000.
B) debit Vouchers Payable $5,000; credit Cash $4,900; credit Purchases Discount $100.
C) debit Vouchers Payable $4,900; credit Cash $4,900.
D) debit Vouchers Payable $5,000; credit Cash $5,000.
The estimated value of an item at the end of its useful life is:
A) depreciation expense.
B) residual value.
C) accumulated depreciation.
D) book value.
Since all partners are bound together in the agreement and each acts on the behalf of the
partnership, ________ has been established.
A) limited life
B) limited risk
C) mutual agency
D) unlimited liability
The proceeds from discounting a note receivable are the:
A) principal + bank discount.
B) maturity value – bank discount.
C) principal – bank discount.
D) maturity value minus principal.
Cash Payroll Checking is a(n):
A) contra-asset.
B) liability.
C) asset.
D) expense.
An entry to record the payment to a vendor was not recorded and posted to the general
ledger but was posted to the subsidiary ledger. This error would cause:
A) the period end assets to be understated.
B) the period end liabilities to be understated.
C) the Accounts Payable will be larger than the subsidiary ledger.
D) the Accounts Payable will be less than the subsidiary ledger.
Sales $2,000 Beginning Inventory $
500Sales Discount 50 Net purchases
1,200Sales Returns & Ending
Inventory 700Allowances 80
Operating Expenses 300
The maturity date for a three-month note dated March 31 is:
A) July 1.
B) June 30.
C) May 31.
D) June 29.
Preemptive rights allow a stockholder to:
A) share in profits first.
B) maintain a proportionate ownership interest in the corporation.
C) vote their shares at the annual meeting
D) dispose or sell their stock without notice.
In the voucher system, the purchases journal is replaced by the:
A) check register.
B) sales register.
C) invoice register.
D) voucher register.
The photography department in a department store experienced the following revenue
and expenses during October:
The photography departmental gross profit is:
A) $7,100.
B) $5,100.
C) $6,100.
D) $8,100.
The income statement debit column of the worksheet showed the following expenses:
The journal entry to close the expense accounts is:
A)
B)
C)
D)
Returned merchandise paid for within the discount period for cash. The perpetual
inventory system is in use. This will be recorded with:
A) a debit to a liability and a credit to purchases.
B) a debit to an asset and a credit to an asset.
C) a debit to an expense and a credit to a liability.
D) a debit to an expense and a credit to an asset.
A debit to the Capital account was posted to a revenue account. This would cause:
A) assets to be understated.
B) liabilities to be overstated.
C) assets to be overstated.
D) revenue to be understated.
Indicate the effect that each of the following transactions has on the cash balance. Use
(I) for increase, (D) for decrease, and (N) for no change.
a) ________ Issued common stock for cash
b) ________ Acquired land for cash
c) ________ Purchase equipment on account
d) ________ Paid a cash dividend
e) ________ Purchased supplies on account
f) ________ Received payment on account
g) ________ Borrowed money by issuance of a long-term debt
h) ________ Purchased equipment on account to be paid within one year
The entry to close the expense account(s) was entered in reverseIncome Summary was
credited and the expense account(s) was/were debited. This error would cause:
A) assets to be overstated.
B) liabilities to be overstated.
C) Capital account to be understated.
D) Capital account to be overstated.
Business transactions are first recorded in the:
A) ledger.
B) journal.
C) trial balance.
D) income statement.
A company has $50,000 in cash, $15,000 in accounts receivable, $25,000 in temporary
investments and $125,000 in merchandise inventory. The company has $50,000 in
current liabilities. The company’s acid test (quick) ratio is:
A) 1.30.
B) 0.526.
C) 4.30.
D) 1.80.
The entry to record the requisition of supplies from the storeroom would include a:
A) debit to Raw Materials Inventory.
B) debit to Overhead-Control.
C) debit to Supplies Inventory.
D) debit to Work in Process Inventory.
Rental Income is what type of account?
A) Asset
B) Revenue
C) Expense
D) Liability
Martin Corporation used the gross method of recording purchases, the voucher system
and the periodic inventory method. A purchase of $6,000, 2/15, n30 would be recorded
as:
A) debit Purchases $6,000; credit Accounts Payable $6,000.
B) debit Purchases $6,000; credit Vouchers Payable $6,000.
C) debit Purchases $5,880; credit Accounts Payable $5,880.
D) debit Purchases $5,880; credit Vouchers Payable $5,880.
When treasury stock was sold at cost, Cash was debited and Common Stock was
credited. This error would cause:
A) the period end assets to be overstated.
B) the period end liabilities to be overstated.
C) the total period end stockholders’ equity to be overstated.
D) None of these is correct.
Articles of incorporation contain all of the following except:
A) the purpose of the business.
B) the types of stock to be offered.
C) the name of the president.
D) organizational structure.
Riley’s Book Review billed customers $550. The journal entry to record this transaction
is:
A) Accounts Receivable, debit $550; Editing Fees, credit $550
B) Editing Fees, debit $550; Riley, Capital, credit $550
C) Accounts Payable, debit $550; Editing Fees, credit $550
D) Cash, debit $550; Riley, Accounts Receivable, credit $550
XYZ Company has direct labor for the month of $40,000. XYZ’s annual overhead is
$600,000 and annual direct labor cost is $1,000,000. Overhead is applied based on
direct labor. What is the entry to charge direct labor to production?
A) Debit Work-in-Process Inventory $40,000; credit Payroll Payable $40,000
B) Debit Manufacturing Overhead-Applied $40,000; credit Work-in-Process Inventory
$40,000
C) Debit Work-in-Process Inventory $24,000; credit Manufacturing Overhead-Applied
$24,000
D) Debit Work-in-Process Inventory $66,000; credit Manufacturing Overhead-Applied
$66,000
A company uses the allowance method and has determined a customer’s bill for $2,000
must be written off. The journal entry to record the write off is:
A)
B)
C)
D)
The ratios that measure a company’s ability to earn profits are known as.
A) Liquidity Ratios.
B) Debt Management Ratios.
C) Profitability Ratios.
D) None of the above
Form SS-4 is:
A) completed to obtain an EIN.
B) submitted to summarize the W-2 forms to the Social Security Administration.
C) submitted quarterly to pay FIT and FICA taxes.
D) submitted annually to pay unemployment taxes.
Determine the amount to be paid within the discount period for purchase with an
invoice price of $10,000 and credit terms of 2/10, n/30 when $500 has already been
returned for credit.
$ ________
Determine the amount of credit to be earned on a full return of merchandise purchased
with an invoice price of $5,000 and credit terms of 2/10, n/30 when full payment was
made within the discount period.
$ ________
Determine the estimated cost of the ending inventory for Hawkeye Tack as of
September 30 by the retail method from the following data (use four decimal places):
Cost Retail
Sep. 1 Beginning inventory $500 $800
September purchases 3,750 6,000
September sales 5,500
Put the 7 main steps of the accounting process in order (from 1 -7) below:
________ Interpreting
________ Analyzing
________ Recording
________ Classifying
________ Reporting
________ Communication
________ Summarizing
Nicki’s Pet Supply needs to estimate its ending inventory. Using the data below,
compute Nicki’s estimated cost of ending inventory for the month of April.
Beginning inventory April 1 $ 6,000
Purchases for April 10,000
Retail sales during April 15,000
Normal gross profit average 30%
Tack Room Clothing uses the retail method to estimate cost of ending inventory for its
interim reports. From the following facts, estimate Tack Room’s ending inventory at
cost at August 31.
August 1 inventory at cost $900
August 1 inventory at retail 1,200
Net purchases at cost 9,000
Net purchases at retail 12,000
Net sales at retail 12,500
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 account’s
nature (permanent/temporary).
Given the following payroll items you are to identify whether they are the responsibility
of the employer and/or the employee by placing an X in the appropriate column.
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 $270,000. Profits and losses are shared equally.
Record the sale of the noncash items.
Hawkeye Golf is considering dropping the clothing department because it is not
generating a profit as disclosed by the following data:
Sales $1,800
Cost of Goods Sold 800
Gross Profit $1,000
Direct Expenses 700
Contribution Margin 300
Indirect Expenses (500)
Net Loss $(200)
Note: None of the indirect expenses can be avoided by dropping the department.
Should Hawkeye drop the department? Show your computations.
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 account’s
nature (permanent/temporary).
What is the purpose of internal control?
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).
Determine the cash shortage given the following:
The balance per the Petty Cash account $100
The count of coin and currency amounts to $52
There are receipts: for gas of $9, for office supplies of $18, for first aid supplies $14
$ ________
Explain why the account Sales Tax Payable is credited when a sale is made subject to a
sales tax?
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, and in Column 3 the financial
statement that the account in which the account balance is reported.