119. Failure to record accrued interest expense would result in which of the following?
120. Failure to record the earned portion of unearned revenue would result in which of the following?
121. Failure to record dividends paid would result in which of the following?
122. Failure to record the supplies used during the year would result in which of the following?
123. Failure to record amounts earned for services provided to customers but not yet paid results in which of the
following?
124. Failure to record depreciation expense for the period results in which of the following?
125. Which one of the following is the last step in the accounting cycle?
126. The financial statements are prepared after
127. Which one of the following steps in the accounting cycle is completed only at the end of an accounting
period?
128. Some of the steps in the accounting cycle are listed below. Select the choice that places these steps in the
correct order.
1.
Close the accounts.
2.
Post transactions to accounts in the ledger.
3.
Journalize daily transactions.
4.
Record and post adjustments.
5.
Prepare financial statements.
129. Balance sheet accounts are also known as which of the following?
130. Income statement accounts are also known as which of the following?
131. The Dividend account is known as which of the following?
132. Which of the following does not occur during the closing process?
133. Which of the following entries properly closes a temporary account?
134. Which of the following entries properly closes a temporary account?
135. The worksheet facilitates preparation of all of the following financial statements except:
136. Select the incorrect statement about worksheets.
137. Which of the following places the steps in preparing a worksheet in the correct order:
1 – Adjusted trial balance 4 – Income statement
2 – Adjustments 5 – Retained earnings
3 – Balance sheet 6 – Unadjusted trial balance
138. Chastain Park Entertainment paid salaries expense of $350,000 during 2013. However, additional salaries
of $20,000 had been earned by employees, but not paid or recorded at December 31, 2013.
A)
What adjusting entry is necessary at December 31, 2013?
B)
Under which basis, cash, accrual, or both, would the adjustment in part A be prepared? Explain.
C)
Under the accrual basis of accounting, what is the total amount of salaries expense for the year ended December 31, 2013?
D)
Under the accrual basis of accounting, what is the total amount of salaries payable to be reported at December 31, 2013?
E)
Under the cash basis of accounting, what is the total amount of salaries expense for the year ending December 31, 2013?
F)
Under the cash basis of accounting, what is the total amount of salaries payable at December 31, 2013?
A)
Salaries Expense
20,000
Salaries Payable
20,000
incurred.
C)
$350,000 + $20,000 = $370,000
D)
$20,000
E)
$350,000
F)
139. Chattahoochee Excursions, a calendar year company, purchased supplies at a cost of $12,215 during 2013.
At January 1, 2013, supplies on hand were $10,312. During the year, the company used $14,000 of supplies.
A)
What adjusting entry is prepared at December 31, 2013?
B)
Under the accrual basis of accounting, how much is Supplies Expense for 2013?
C)
How much should be reported on the December 31, 2013, balance sheet for Supplies?
D)
What type of adjustment was made in part A?
140. A company employs 10 workers in its manufacturing facility. Each employee is paid $10 per hour and
works 8 hours per day, Monday through Friday. Employees are paid every Wednesday for the previous Monday
through Friday workweek. The last payday was Wednesday, October 28.
A)
Compute the dollar amount of the company’s weekly payroll.
B)
Prepare the adjusting entry on Friday, October 30, the last day of the fiscal period.
C)
What special precautions are necessary upon recording the payment of wages to employees on the next payday, November 4?
A)
8 hours ´ $10.00 per hour ´ 5 days ´ 10 workers = $4,000
Wages Payable
(8 hours ´ $10.00 per hour ´ 5 days ´ 10 workers)
A)
Supplies Expense
14,000
Supplies
14,000
B)
$14,000
C)
$10,312 + $12,215 – $14,000 = $8,527
D)
Deferred (Prepaid) expense
141. Cherokee Hills began operations on December 1, 2013, and immediately paid $60,000 for 6 months rent in
advance for the period beginning December 1, 2013. The company’s accounting period ends on December 31,
2013. Indicate how much will be reported for each of the following accounts on the company’s financial
statements for the period ending December 31, 2013. If the amount reported is zero, indicate so by writing $0,
and explain why zero is the appropriate amount.
A)
Rent Expense
B)
Rent Payable
C)
Rent Revenue
D)
Prepaid Rent
142. A company borrowed $100,000 from Better Bank on November 1, 2013. The terms of the loan (note) is
6% interest due in 4 months.
A)
Prepare the necessary journal entry on November 1, 2013, to record the loan.
B)
Prepare the necessary adjusting entry for this loan on December 31, 2013.
A)
Cash
100,000
Notes Payable
100,000
B)
Interest Expense
1,000
Interest Payable
1,000
($100,000 ´ .06 ´ 2/12)
A)
$10,000 ($60,000 Prepaid Rent / 6 Months)
B)
C)
D)
$50,000 ($60,000 – $10,000 expense = $50,000)
143. Chicago Works employs 20 workers. Each employee is paid wages of $25 per hour and works an 8-hour
workday, Monday through Friday. Employee wages are paid every Friday for the workweek just ending.
A)
Compute the dollar amount of the weekly payroll.
B)
The last payday of the year was Friday, December 26. Prepare the adjusting entry for wages on Wednesday, December 31, the last
day of the fiscal period.
144. A marine company pays its sales personnel 6% commission of the selling price of each yacht. During
November 2013, yacht sales totaled $20,400,000. During December 2013, sales totaled $25,100,000. Because
its policy is to pay commissions only in the month after the sales, the company paid commissions during
December for November 2013. During January 2014, the company paid its sales people commissions on
December 2013 sales.
A)
If the cash basis of accounting is used, how much commission expense is reported on the income statement for December 2013?
B)
If the accrual basis of accounting is used, how much commission expense is reported on the income statement for December 2013?
$20,400,000 ´ 6% = $1,224,000 November commissions paid
$25,100,000 ´ 6% = $1,506,000 December commissions accrued
A)
8 hours ´ $25 per hour ´ 20 workers ´ 5 days = $20,000
Wages Expense
12,000
Wages Payable
12,000
(8 hours ´ $25 per hour ´ 20 workers ´ 3 days)
145. The following unadjusted amounts were taken from a company’s accounting records at December 31,
2013:
Note Payable, 6%, 4-month, dated December 1, 2013, for $500,000
Note Receivable, 12%, 6-month, dated October 1, 2013, for $400,000
A)
Prepare any adjusting entries necessary at December 31, 2013, for the notes.
B)
Fill in the partial balance sheet below by showing the notes and the effects of any adjustments related to the notes.
Current Assets
Current Liabilities
Interest Expense
2,500
Interest Payable
2,500
($500,000 ´ 6% ´ 1/12)
Interest Receivable
12,000
Interest Revenue
12,000
($400,000 ´ 12% ´ 3/12)
B)
Note receivable
$400,000
Note payable
$500,000
Interest receivable
12,000
Interest payable
2,500
146. The following unadjusted amounts were taken from the accounting records of an insurance company at
December 31, 2013:
Insurance Collected in Advance
$120,000
Office Supplies
1,200
A)
Prepare any necessary adjusting entries at
December 31, 2013, for both of the
following transactions:
1.
The insurance premiums collected cover the period December 1, 2013, thru May 31, 2014.
2.
At the end of the year, an inventory revealed that $250 of the office supplies remained on
hand.
B)
What is the effect of omitting these
adjustments on the current year’s net
income?
Insurance Collected in Advance
20,000
Insurance Revenue
2.
Office Supplies Expense
950
Office Supplies
147. The following unadjusted account balance was taken from the accounting records at December 31, 2013:
Unearned Subscription Revenue
$180,000
A)
Prepare any adjusting entries necessary at
December 31, 2013, for each of the transactions
that follow:
1.
During the year, the company sold 12-month subscriptions for its flagship
magazine. Half of the subscriptions began October 1, 2013, while the other
half began December 1, 2013.
2.
The company estimates its income taxes to be 40 percent of its estimated
income of $500,000.
B)
Prepare the current liabilities section of the
balance sheet by listing any current liabilities and
the related amounts as a result of the adjustments
in Part A.
Unearned Subscription Revenue
30,000
Subscription Revenue
30,000
= $22,500 + $7,500 = $30,000
Income Tax Expense
200,000
($500,000 ´ 40% = $200,000)
Current Liabilities:
Unearned subscription revenue
$150,000
Income taxes payable
200,000
Total Current Liabilities
$350,000
148. California Condos
California Condos uses the accrual basis of accounting, and had the following account balances on its financial
statements at December 31, 2013.
Rent Revenue
$340,000
Accounts Receivable
89,200
Utilities Payable
12,000
Rent Expense
22,000
Unearned Revenue
17,000
Depreciation Expense
12,000
Salaries Expense
45,000
Salaries Payable
4,000
Retained Earnings, January 1
60,000
Dividends
2,500
Interest Revenue
10,000
Refer to California Condos. The company reported interest receivable of $2,500 at December 31, 2013, and $0 at the beginning of 2013. How much
cash did the company collect for interest during the year?
149. California Condos
California Condos uses the accrual basis of accounting, and had the following account balances on its financial
statements at December 31, 2013.
Rent Revenue
$340,000
Accounts Receivable
89,200
Utilities Payable
12,000
Rent Expense
22,000
Unearned Revenue
17,000
Depreciation Expense
12,000
Salaries Expense
45,000
Salaries Payable
4,000
Retained Earnings, January 1
60,000
Dividends
2,500
Interest Revenue
10,000
Refer to California Condos. On January 1, the balance of Unearned Rent Revenue was $0. The company collected cash from tenants of its apartment
building totaling $600,000 during 2013. How much should be reported as unearned rent revenue as of December 31, 2013?
150. California Condos
California Condos uses the accrual basis of accounting, and had the following account balances on its financial
statements at December 31, 2013.
Rent Revenue
$340,000
Accounts Receivable
89,200
Utilities Payable
12,000
Rent Expense
22,000
Unearned Revenue
17,000
Depreciation Expense
12,000
Salaries Expense
45,000
Salaries Payable
4,000
Retained Earnings, January 1
60,000
Dividends
2,500
Interest Revenue
10,000
Refer to California Condos. On January 1, the Utilities Payable Account had a zero balance. The company paid cash for utilities totaling $50,000
during 2013. How much should be reported as utilities expense for the year ended December 31, 2013?
151. California Condos
California Condos uses the accrual basis of accounting, and had the following account balances on its financial
statements at December 31, 2013.
Rent Revenue
$340,000
Accounts Receivable
89,200
Utilities Payable
12,000
Rent Expense
22,000
Unearned Revenue
17,000
Depreciation Expense
12,000
Salaries Expense
45,000
Salaries Payable
4,000
Retained Earnings, January 1
60,000
Dividends
2,500
Interest Revenue
10,000
Refer to California Condos. On January 1, there was a $0 balance in the salaries payable account. How much cash did the company pay for salaries
during the year?
152. The following are selected data from a large company’s financial statements:
Net income
$12,400 million
Cash dividends
2,000 million
Retained earnings, December 31, 2013
8,500 million
Identify the steps in the accounting cycle that must have been completed prior to determining these amounts.
Collect and analyze information from source documents
Journalize transactions
Post transactions to accounts in the ledger
Adjust the accounts
Prepare financial statements
153. Cabana Club
The company’s consolidated statement of income is provided below:
Years Ended December 31,
(in millions of dollars)
2014
2013
Revenues
Sales by company-operated restaurant stores
$8,894.9
$8,136.5
Revenue from franchised stores
3,526.5
3,272.3
Total revenues
12,421.4
11,408.8
Operating costs and expenses
Company-operated restaurant expenses:
Food and packaging
2,997.4
2,772.6
Payroll and other employee benefits
2,220.3
2,025.1
Occupancy and other operating expenses
2,043.9
1,851.9
7,261.6
6,649.6
Franchised restaurants-occupancy expenses
678.0
613.9
General, administrative and selling expenses
1,458.5
1,450.5
Made-for-You and special charges
321.6
Other operating (income) expense
(60.2)
(113.5)
Total operating costs and expenses
9,659.5
8,600.5
Operating income
2,761.9
2,808.3
Interest expense
393.8
364.4
Other nonoperating expenses
60.7
36.6
Income before provision for income taxes
2,307.4
2,407.3
Income tax expense
757.3
764.8
Net income
$1,550.1
$1,642.5
Refer to Cabana Club. Identify three specific accounts in which the company might need to accrue additional expenses as a result of adjustments.
Indicate the effects of these adjustments on the fundamental accounting equation. Ignore amounts.
154. Cabana Club
The company’s consolidated statement of income is provided below:
Years Ended December 31,
(in millions of dollars)
2014
2013
Revenues
Sales by company-operated restaurant stores
$8,894.9
$8,136.5
Revenue from franchised stores
3,526.5
3,272.3
Total revenues
12,421.4
11,408.8
Operating costs and expenses
Company-operated restaurant expenses:
Food and packaging
2,997.4
2,772.6
Payroll and other employee benefits
2,220.3
2,025.1
Occupancy and other operating expenses
2,043.9
1,851.9
7,261.6
6,649.6
Franchised restaurants-occupancy expenses
678.0
613.9
General, administrative and selling expenses
1,458.5
1,450.5
Made-for-You and special charges
321.6
Other operating (income) expense
(60.2)
(113.5)
Total operating costs and expenses
9,659.5
8,600.5
Operating income
2,761.9
2,808.3
Interest expense
393.8
364.4
Other nonoperating expenses
60.7
36.6
Income before provision for income taxes
2,307.4
2,407.3
Income tax expense
757.3
764.8
Net income
$1,550.1
$1,642.5
Refer to Cabana Club. What impact will an adjustment to the Income Tax Expense account on December 31, 2013 have on the accounting
equation?
155. Cabana Club
The company’s consolidated statement of income is provided below:
Years Ended December 31,
(in millions of dollars)
2014
2013
Revenues
Sales by company-operated restaurant stores
$8,894.9
$8,136.5
Revenue from franchised stores
3,526.5
3,272.3
Total revenues
12,421.4
11,408.8
Operating costs and expenses
Company-operated restaurant expenses:
Food and packaging
2,997.4
2,772.6
Payroll and other employee benefits
2,220.3
2,025.1
Occupancy and other operating expenses
2,043.9
1,851.9
7,261.6
6,649.6
Franchised restaurants-occupancy expenses
678.0
613.9
General, administrative and selling expenses
1,458.5
1,450.5
Made-for-You and special charges
321.6
Other operating (income) expense
(60.2)
(113.5)
Total operating costs and expenses
9,659.5
8,600.5
Operating income
2,761.9
2,808.3
Interest expense
393.8
364.4
Other nonoperating expenses
60.7
36.6
Income before provision for income taxes
2,307.4
2,407.3
Income tax expense
757.3
764.8
Net income
$1,550.1
$1,642.5
Refer to Cabana Club. The company reported $210,000,000 and $120,000,000 of accrued interest payable in the liability section of its balance
sheet at December 31, 2014 and 2013, respectively. How much cash did it pay during 2014 for interest?