Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Tyler Corporation was organized in 2015. Its corporate charter authorized the issuance
of 50,000 shares of common stock, par value $5 per share, and 10,000 shares of 8%
preferred stock, par value $25 per share. The following transactions took place during
2015:
Required:
Part a. Prepare journal entries for each of the following transactions:
Part b. Compute the number of shares of common stock issued and outstanding at
December 31, 2015.
Which of the following could indicate bad news?
A) An increase in fixed asset turnover ratio
B) A decrease in days to sell
C) A decrease in EPS
D) A decrease in the debt-to-assets ratio
Nancy O'Rode, doing business as O'Rode Consulting, performs consulting services for
companies that create online learning games for children. On January 1, 2015, she
started a sole proprietorship by placing $15,000 cash in a bank account opened for the
business. Each month during the year, O'Rode withdrew $500 cash from the business
for personal use. At December 31, 2015, after the last withdrawal, the Drawings
account reflected a debit balance of $6,000. During the year, the usual journal entries
for the year, including adjusting and closing entries for the revenue and expense
accounts, resulted in total revenue of $60,000, total expenses of $12,000, and net
income of $48,000. (For purposes of the related journal entry, use the accounts
€Consulting Revenue€ and €Operating Expenses.€)
Part a. Prepare the journal entry to record the initial capital contribution.
Part b. Prepare the journal entry to record one of the monthly withdrawals.
Part c. Prepare the journal entry to close the net income to the N. O'Rode, Capital
account.
Part d. Prepare the journal entry to close the N. O'Rode, Drawings accounts at the end
of the year.
Part e. Prepare a Statement of Owner's Equity for the year ending December 31, 2015.
If a company capitalizes costs that should be expensed, how is its income statement for
the current period impacted?
A) Net income is understated.
B) Revenues are understated.
C) Expenses are understated.
D) Assets are understated.
On July 1, Darin Company sold inventory costing $4,500 to Dee Company for $6,000,
terms 2/10, n/30. Both companies use a periodic inventory system. What journal entry
will be recorded by Dee Company on July 1?
A) Debit Purchases and credit Accounts Payable for $6,000
B) Debit Inventory and credit Accounts Receivable for $6,000
C) Debit Inventory and credit Accounts Payable for $6,000
D) Debit Cost of Goods Sold and credit Inventory for $4,500
Use the information above to answer the following question. What was the amount of
retained earnings at the end of Year 1?
A) $20,000.
B) $8,000.
C) $150,000.
D) $155,000.
Trudy's Caf© paid employees $1,700 in September for work performed that month.
What journal entry will Trudy's prepare to record that transaction?
A) Debit Cash and credit Wages Revenue for $1,700.
B) Debit Cash and credit Salaries and Wages Payable for $1,700.
C) Debit Salaries and Wages Revenue and credit Cash for $1,700.
D) Debit Salaries and Wages Expense and credit Cash for $1,700.
When the indirect method is used, if a prepaid expense account decreases during the
accounting period, the change in the prepaid expense account is:
A) added to the change in the cash account.
B) subtracted from net income.
C) added to net income.
D) subtracted from the change in the cash account.
Use the information above to answer the following question. Which of the following is
the journal entry that will be used to record activity #1?
The following account balances are taken from the December 31, 2015, financial
statements of ABZ Advertising Company. The company uses accrual basis accounting.
The following activities occurred in 2016:
1) Performed advertising services on account, $55,000.
2) Received cash payments on account, $10,400.
3) Received deposits from customers for advertising services to be performed in 2017,
$2,500.
4) Made payments to suppliers on account, $5,000.
5) Incurred $45,000 of operating expenses; $39,000 was paid in cash and $6,000 was on
account and unpaid as of the end of the year.
A) Debit Advertising Revenue and credit Accounts Receivable for $55,000
B) Debit Accounts Receivable and credit Cash for $55,000
C) Debit Accounts Receivable and credit Advertising Revenue for $55,000
D) Debit Cash and credit Advertising Revenue for $55,000
Which of the following statements about the end of an asset's life is not correct?
A) At the end of an asset's life, its book value should equal its residual value.
B) At the end of an asset's life, the Accumulated Depreciation should equal the
depreciable cost.
C) At the end of an assets life, the book value would equal zero if there is no residual
value.
D) Assets are not to be depreciated below residual value unless the double-declining
balance method is used.
The repayment of the principal of a loan which had been used to finance the purchase
of equipment should be reported on the statement of cash flows as a:
A) cash outflow from investing activities.
B) cash outflow from operating activities.
C) cash outflow from financing activities.
D) noncash investing and financing activities in a supplemental disclosure.
