124.
For each of the following accounts, indicate whether the account is an asset (A), liability (L),
or stockholders’ equity (SE) and whether the account has a normal debit (Dr) or normal credit
(Cr) balance.
1. Retained Earnings
2. Supplies
3. Additional paid-in capital
4. Accounts payable
5. Accounts receivable
6. Property and equipment
7. Wages payable
8. Prepaid expenses
125.
For each of the accounts listed below, indicate whether the typical or normal balance is a
debit or credit.
A. Supplies
B. Notes payable
C. Retained earnings
D. Equipment
E. Prepaid insurance expense
F. Accounts receivable
G. Land
H. Additional paid-in capital
I. Accounts payable
J. Unearned revenue
126.
The ABC Corporation was formed on January 1, 2016. The three initial owners each invested
$100,000 cash and each received 10,000 shares of $1 par value common stock. Below are
selected transactions that were completed during January, 2016.
1. Issue shares of common stock to the owners.
2. Borrowed $80,000 on a one-year note payable.
3. Purchased land by signing a $70,000 note payable.
4. Paid $10,000 of accounts payable.
5. Purchased two service vehicles for cash at a cost of $24,000 each.
6. Purchased $2,000 of supplies on credit.
Requirement:
Prepare the journal entry on ABC’s books for each transaction. Include a brief explanation for
each entry.
127.
The accounts with identification letters for Ward Company are listed below.
Letter
A
B
C
D
E
F
G
H
I
J
During 2016, the company completed the transactions given below. You are to indicate the
appropriate journal entry for each transaction by giving the account letter and amount. Some
entries may need three letters. The first transaction is provided as an example.
Transaction
Debit
Credit
Letter
Amount
Letter
Amount
1.
Borrowed
$50,000 and
signed a note.
A
$50,000
G
$50,000
2.
Purchased
equipment for
$50,000. Paid
$10,000 cash,
signed $40,000
note payable.
3.
Collected
$15,000 of
accounts
receivable.
4.
Paid $12,000 of
accounts
payable.
5.
Issued 10,000
shares of $10
par value
common stock
in exchange for
$160,000 cash.
6.
Purchased
$5,000 office
supplies on
credit.
7.
Paid for the
office supplies
in (6).
signed a note.
$50,000. Paid
signed $40,000
G
accounts
128.
Describe the general journal and the general ledger.
129.
On January 1, 2016, Dr. Beth Hill started a new professional corporation, Beth Hill, P. C., to
practice medicine with an initial investment of $100,000 in exchange for 20,000 shares of $2
par value common stock. On June 30, 2016, the accounting records showed the following
amounts:
Accounts Payable
$2,000
Accounts Receivable
$6,200
Cash
$48,100
Common stock
$?
Additional paid-in capital
$?
Office Equipment
$60,000
Office Supplies
$3,500
Retained Earnings
$5,800
Notes Payable
$10,000
Requirement:
1. Calculate the amounts for common stock and additional paid-in capital.
2. Prepare a balance sheet as of June 30, 2016.
Cash
Accounts receivable
130.
For each of the transactions listed below, indicate whether it is an investing (I) or financing
(F) activity on the statement of cash flows. Also, indicate if the transaction increases (+) or
decreases (–) cash.
Transaction
Type of
Activity
Effect
on
Cash
Ex.
Paid dividends to the
owners
F
–
A.
Purchased equipment to
use in the business.
B.
Issued stock for cash.
C.
Borrowed money at the
bank.
D.
Sold a piece of land
adjacent to the plant.
E.
Paid the principal balance
of a note payable.
Purchased equipment to
use in the business.
B.
Issued stock for cash.
Borrowed money at the
bank.
D.
Sold a piece of land
adjacent to the plant.
Paid the principal balance
of a note payable.
131.
The Alex Company, a consulting firm, recorded the following selected business transactions
during May, 2016. Indicate whether each transaction would increase, decrease, or have no
effect on the total assets of the company.
1. Issued capital stock in exchange for cash
contributed by owners.
2. Purchased office supplies for cash.
3. Purchased office supplies on credit.
4. Paid cash on accounts payable to a supplier.
5. Collected cash on accounts receivable.
6. Borrowed money from the bank on a promissory
note payable.
7. Loaned money to an employee in exchange for a
note.
8. Purchased a building by using cash and signing
a mortgage loan payable for the balance.
132.
Classify the following balance sheet accounts as current assets, noncurrent assets, current
liabilities, noncurrent liabilities, or stockholders’ equity.
1. Building
2. Retained earnings
3. Notes payable due in 3 months
4. Land
5. Prepaid expenses
6. Supplies inventory
7. Common stock
8. Notes payable due in 5 years
9. Income taxes payable
10. Accounts receivable
133.
The following journal entries with the amounts omitted were taken from the records of Lena
Company:
1.
Cash
Common stock
Additional paid in capital
2.
Supplies
Accounts Payable
3.
Accounts Payable
Cash
4.
Buildings
Cash
Mortgage Payable
5.
Retained Earnings
Dividends Payable
6.
Cash
Notes Payable
Requirement:
Write a brief explanation for each of the above transactions.
134.
What is the primary objective of financial reporting?
135.
How is the current ratio calculated and what does it measure?
136.
The Lake Company has provided the following account balances:
Cash $76,000;
Short-term investments $8,000;
Accounts receivable $96,000;
Supplies $12,000;
Long-term notes receivable $4,000;
Equipment $192,000;
Factory Building $360,000;
Intangible assets $12,000;
Accounts payable $90,000;
Accrued liabilities payable $12,000;
Short-term notes payable $42,000;
Long-term notes payable $184,000.
Requirement:
What is Lake’s current ratio?
137.
The Superior Company has provided the following account balances:
Cash $152,000;
Short-term investments $18,000;
Accounts receivable $36,000;
Inventory $116,000;
Long-term notes receivable $44,000;
Equipment $174,000;
Factory Building $270,000;
Intangible assets $33,000;
Accounts payable $130,000;
Accrued liabilities payable $19,000;
Short-term notes payable $84,000;
Long-term notes payable $169,000.
Requirement:
What is Superior’s stockholders’ equity?
138.
The Smith Corporation has provided the following information:
Cash dividend payments were $25,000.
Long-term investments were sold for $79,000 cash.
A building costing $198,000 was purchased using $19,800 cash, and the balance was
financed with a mortgage note payable.
Stock was issued to stockholders in exchange for $110,000 cash.
A $44,000 loan was made to a local inventory supplier; the loan will be repaid in twelve
months.
Equipment used in operations was sold for $37,000.
Repaid a long-term note payable for $92,000 cash.
Cash received from short-term bank loans totaled $71,000.
Land costing $57,000 was purchased in exchange for a long-term note payable.
Requirement:
Determine Smith’s cash flows to be reported on the statement of cash flows for
1. investing activities, and 2. financing activities
139.
Describe both the investing activities and financing activities section of the statement of cash
flows. Provide some examples of each activity.