1) 1>Drive-by Truckers prepares monthly financial statements. On July 1, the Supplies
account had a balance of $3,000. During July, additional supplies were purchased for
$4,800 and that amount was debited to Supplies Expense. On July 31, a physical count
of supplies revealed that there was $2,000 on hand. Prepare the adjusting journal entry
that Drive-by Truckers should make on July 31 .
2>Alesandro Rental Agency prepares monthly financial statements. On September 1, a
check for $9,000 was received from a tenant for six months rent. The full amount was
credited to Rent Revenue. Prepare the adjusting entry the company should make on
September 30 .
2) The master budget is a __________________ budget which is based on operating at
one budgeted activity level.
3) Vista, Inc. provided the following information:
July August
Projected sales$220,000$260,000
Projected merchandise purchases$150,000$180,000
Vista estimates that it will collect 40% of its sales in the month of sale, 35% in the
month after the sale, and 22% in the second month following the sale. Three percent of
all sales are estimated to be bad debts.
Vista pays 30% of merchandise purchases in the month purchased and 70% in the
following month.
General operating expenses are budgeted to be $42,000 per month of which
depreciation is $4,000 of this amount. Vista pays operating expenses in the month
incurred.
Vista makes loan payments of $6,000 per month of which $800 is interest and the
remainder is principal.
Instructions
Calculate Vistas budgeted cash disbursements for August.
4) Sinil Mustapha has just won the lottery and will receive an annual payment of
$100,000 every year for the next 20 years. If the annual interest rate is 8%, what is the
present value of the winnings?
5) Instructions: Owens Company uses the allowance method to account for
uncollectible accounts. Prepare the appropriate journal entries to record the following
transactions during 2014 . You may omit journal entry explanations.
1>April 20The account of Steven Reynolds for $100 was deemed to be uncollectible
and is written off as a bad debt.
2>Aug. 14Received a check for $100 from Steven Reynolds, whose account had
previously been written off as uncollectible.
3>Dec. 31The balance of Accounts Receivable and Allowance for Doubtful Accounts at
year end are $336,000 and $6,200, respectively. It is estimated that bad debt will be 3%
of accounts receivable. Write the year-end adjusting entry:
6) Cost of debt investments includes the price paid plus ______________
7) The ________________ is a set of interrelated budgets that constitutes a plan of
action for a specified period of time.
8) How is a gain or loss on the sale of a plant asset computed?
9) Sebastien Company earned net income of $44,000 during 2014 . The company had
owner drawings totalling $20,000 during the period. Prepare the entries to close Income
Summary and the Owners Drawings account.