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Math Problem Example

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Summary
Prepare the income and owner's equity statements for the year and the balance sheet at August 31. (List multiple entries in descending order of amounts. For the balance sheet, list assets in order of liquidity and liabilities in descending order of amounts.)
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MATH Math Problem
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Answers for multiple choice questions are highlighted in yellow Exam Part II Start 29 Oct 2008 at 11:00 PM Due Nov 2008 at 01:00 AM
Student Access after Due Date: No
Graded: Yes
E3-6
Affleck Company accumulates the following adjustment data at December 31.
Instructions
For each of the items indicate the following.
(a) The type of adjustment (prepaid expense, unearned revenue, accrued revenue, or accrued expense).
(b) The accounts before adjustment (overstatement or understatement).
1. Services provided but not recorded total $750.
2. Store supplies of $300 have been used.
3. Utility expenses of $225 are unpaid.
4. Unearned revenue of $260 has been earned.
5. Salaries of $900 are unpaid.
6. Prepaid insurance totaling $350 has expired.
(a)
(b)
Item
Type of Adjustment
Accounts before Adjustment
1.
Accrued revenue
Understated
2.
Prepaid expense
Overstated
3.
Accrued expense
Understated
4.
Unearned revenue
Overstated
5.
Accrued expense
Understated
6.
Prepaid Expense
Overstated
AE3-8
Andy Wright,D.D.S., opened a dental practice on January 1, 2008. During the first month of operations the following transactions occurred.
1. Performed services for patients who had dental plan insurance. At January 31, $780 of such services was earned but not yet recorded.
2. Utility expenses incurred but not paid prior to January 31 totaled $530.
3. Purchased dental equipment on January 1 for $80,000, paying $20,000 in cash and signing a $60,000, 3-year note payable. The equipment depreciates $380 per month. Interest is $540 per month.
4. Purchased a one-year malpractice insurance policy on January 1 for $15,000.
5. Purchased $1,700 of dental supplies. On January 31, determined that $410 of supplies were on hand.
Instructions
Prepare the adjusting entries on January 31.
Date
Account
Debit
Credit
1
January 31, 2008
Accounts receivable
780
Service revenue
780
(to adjust revenue rendered service)
2
January 31, 2008
Utilities expense
530
Accounts payable
530
(To record incurred utilities)
3
January 31, 2008
Depreciation expense
380
Accumulated depreciation
380
(To record depreciation expense)
Interest expense
540
Interest payable
540
(To record interest expense)
4
January 31, 2008
Insurance expense
1250
Prepaid insurance
1250
(To record used insurance)
5
January 31, 2008
Supplies expense
1290
Supplies
1290
(To record used supplies)
AE3-14
The trial balances before and after adjustment for Garcia Company at the end of its fiscal year are presented below.
GARCIA COMPANY
Trial Balance
August 31, 2008
Before Adjustment
After Adjustment
Dr.
Cr.
Dr.
Cr.
Cash
$10,400
$10,400
Accounts Receivable
8,800
12,800
Office Supplies
2,300
740
Prepaid Insurance
4,000
2,540
Office Equipment
14,000
14,000
Accumulated Depreciation-Office Equipment
$3,600
$4,540
Accounts Payable
5,800
5,800
Salaries Payable
-0-
4,100
Unearned Rent
1,500
640
T.Garcia, Capital
15,600
15,600
Service Revenue
34,000
38,000
Rent Revenue
11,000
11,860
Salaries Expense
17,000
21,100
Office Supplies Expense
-0-
1,560
Rent Expense
15,000
15,000
Insurance Expense
-0-
1,460
Depreciation Expense
-0-
940
$71,500
$71,500
$80,540
$80,540
Instructions
Prepare the income and owner's equity statements for the year and the balance sheet at August 31. (List multiple entries in descending order of amounts. For the balance sheet, list assets in order of liquidity and liabilities in descending order of amounts.)
GARCIA COMPANY
Income Statement
August 31, 2008
Revenues
Service Revenue
$34,000
Rent Revenue
11,000
Total revenues
$45,000
Expenses
Salaries expense
$21,100
Rent expense
15,000
Office supplies expense
1,560
Insurance expense
1,460
Depreciation expense
940
Total expenses
40,060
Net income
$4,940
GARCIA COMPANY
Owner's Equity Statement
For the Year Ended August 31, 2008
T. Garcia Capital, Beginning balance
$15,600
Add: Net income
4,940
T. Garcia Capital, Ending balance
$20,540
GARCIA COMPANY
Balance Sheet
August 31, 2008
Assets
Cash
$10,400
Accounts Receivable
12,800
Office Supplies
740
Prepaid Insurance
2,540
Office equipment
$14,000
Less: Accumulated Depreciation
3,600
10,400
Total assets
$36,880
Liabilities and Owner's Equity
Liabilities
Accounts Payable
5,800
Unearned Rent
1,500
Salaries Payable
-0-
Total liabilities
7,300
Owner's Equity
T. Garcia, Capital
20,540
Total liabilities and owner's equity
$27,840
AE4-8
Apachi Company ended its fiscal year on July 31, 2008. The company's adjusted trial balance as of the end of its fiscal year is as shown below.
APACHI COMPANY
Adjusted Trial Balance
July 31, 2008
No.
Account Titles
Debits
Credits
101
Cash
$15,640
112
Accounts Receivable
9,580
157
Equipment
16,700
167
Accumulated Depreciation
$8,200
201
Accounts Payable
5,020
208
Unearned Rent Revenue
2,600
301
B. J. Apachi, Capital
46,000
306
B. J. Apachi, Drawing
16,800
404
Commission Revenue
65,800
429
Rent Revenue
7,300
711
Depreciation Expense
4,000
720
Salaries Expense
56,500
732
Utilities Expense
15,700
$134,920
$134,920
Instructions
(a) Prepare the closing entries. (List multiple debit/credit entries in descending order of amount.)
General Journal
Date
Account
Debit
Credit
1
July 31, 2008
Commission Revenue
65,800
Rent Revenue
7,300
Income Summary
73,100
(To close revenue)
2
July 31, 2008
Income Summary
76,200
Salaries Expense
56,500
Utilities Expense
15,700
Depreciation Expense
4,000
(To close expenses)
3
July 31, 2008
B.J. Apachi, Capital
3,100
Income Summary
3,100
(To close net loss to capital)
4
July 31, 2008
B.J. Apachi, Capital
16,800
B.J. Apachi, Drawing
16,800
(To close drawing to capital)
(b) Post to B.J. Apachi, Capital and No. 350 Income Summary accounts. (If answer is zero, please enter 0, do not leave any fields blank. If balance is negative please enclose amount in parenthesis.)
(c) Prepare a post-closing trial balance at July 31. (If answer is zero, please enter 0, do not leave any fields blank.)
AE4-11
Selected accounts for Nina's Salon are presented below. All June 30 postings are from closing entries.
Salaries Expense
Service Revenue
6/10
3,790
6/30
9,690
6/30
15,620
6/15
6,800
6/28
5,900
6/24
8,820
Nina Cole, Capital
Supplies Expense
6/30
3,300
6/1
12,500
6/12
660
6/30
1,450
6/30
1,080
6/24
790
Bal.
11,660
Rent Expense
Nina Cole, Drawing
6/1
3,400
6/30
3,400
6/13
1,020
6/30
3,300
6/25
2,280
Instructions
(a) Prepare the closing entries that were made. (List multiple debit/credit entries in descending order of magnitude.)
(b) Post the closing entries to Income Summary.
AE4-12
Max Weinberg Company discovered the following errors made in January 2008.
1. A payment of Salaries Expense of $810 was debited to Equipment and credited to Cash, both for $810.
2. A collection of $1,200 from a client on account was debited to Cash $170 and credited to Service Revenue $170.
3. The purchase of equipment on account for $970 was debited to Equipment $790 and credited to Accounts Payable $790.
Instructions
(a) Correct the errors by reversing the incorrect entry and preparing the correct entry.
(b) Correct the errors without reversing the incorrect entry. (List multiple debit/credit entries in descending order of amounts.)
AE4-13
Mason Company has an inexperienced accountant. During the first 2 weeks on the job, the accountant made the following errors in journalizing transactions. All entries were posted as made.
1. A payment on account of $540 to a creditor was debited to Accounts Payable $450 and credited to Cash $450.
2. The purchase of supplies on account for $590 was debited to Equipment $59 and credited to Accounts Payable $59.
3. A $440 withdrawal of cash for M. Mason's personal use was debited to Salaries Expense $440 and credited to Cash $440.
Instructions
Prepare the correcting entries. (List multiple debit/credit entries in descending order of amounts.)
AE4-17
These financial statement items are for B. Snyder at year-end, July 31, 2008.
Salaries payable
$2,380
Note payable (long-term)
$1,800
Salaries expense
51,400
Cash
24,500
Utilities expense
22,900
Accounts receivable
10,300
Equipment
18,800
Accumulated depreciation
6,000
Accounts payable
4,620
B. Snyder, Drawing
3,700
Commission revenue
60,800
Depreciation expense
4,300
Rent revenue
8,800
B. Snyder, Capital (beginning of the year)
51,500
Instructions
(a) Prepare an income statement and an owner's equity statement for the year. The owner did not make any new investments during the year. (If there is a loss, put amount in parenthesis in the income statement. If there is a loss, enter the amount as a positive number on the owner's equity statement. List multiple items in descending order of amount.)
(b) Prepare a classified balance sheet at July 31. (List assets in order of liquidity. List current liabilities with in descending order of amount.)
Multiple Choice, Question 78
Accrued expenses are
paid and recorded in an asset account after they are used or consumed.
incurred but not yet paid or recorded.
incurred and already paid or recorded.
paid and recorded in an asset account before they are used or consumed.
Multiple Choice, Question 83
Quirk Company purchased office supplies costing 6,000 and debited Office Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed 2,400 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be
Debit Office Supplies Expense, 2,400; Credit Office Supplies, 2,400.
Debit Office Supplies Expense, 3,600; Credit Office Supplies, 3,600.
Debit Office Supplies, 3,600; Credit Office Supplies Expense, 3,600.
Debit Office Supplies, 2,400; Credit Office Supplies Expense, 2,400.
Multiple Choice, Question 84
If an adjustment is needed for unearned revenues, the
liability is overstated and the related revenue is understated before adjustment.
liability and related revenue are overstated before adjustment.
liability is understated and the related revenue is overstated before adjustment.
liability and related revenue are understated before adjustment.
Multiple Choice, Question 89
Baden Realty Company received a check for 18,000 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client. Unearned Rent was credited for the full 18,000. Financial statements will be prepared on July 31. Baden Realty should make the following adjusting entry on July 31:
Debit Unearned Rent, 18,000; Credit Rental Revenue, 18,000.
Debit Unearned Rent, 3,000; Credit Rental Revenue, 3,000.
Debit Cash, 18,000; Credit Rental Revenue, 18,000.
Debit Rental Revenue, 3,000; Credit Unearned Rent, 3,000.
Multiple Choice, Question 91
A company usually determines the amount of supplies used during a period by
adding the supplies on hand to the balance of the Supplies account.
taking the difference between the balance of the Supplies account and the cost of supplies on hand.
summing the amount of supplies purchased during the period.
taking the difference between the supplies purchased and the supplies paid for during the period.
Multiple Choice, Question 102
Which of the following would not result in unearned revenue
Sale of two-year magazine subscriptions
Services performed on account
Rent collected in advance from tenants
Sale of season tickets to football games
Multiple Choice, Question 107
On July 1, Dexter Shoe Store paid 8,000 to Ace Realty for 4 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by Dexter Shoe Store is
Debit Prepaid Rent, 2,000; Credit Rent Expense, 2,000.
Debit Rent Expense, 2,000; Credit Prepaid Rent, 2,000.
Debit Rent Expense, 8,000; Credit Prepaid Rent, 8,000.
Debit Rent Expense, 8,000; Credit Prepaid Rent, 2,000.
Multiple Choice, Question 109
Southeastern Louisiana University sold season tickets for the 2008 football season for 160,000. A total of 8 games will be played during September, October and November. In September, two games were played. In October, three games were played. The balance in Unearned Revenue at October 31 is
40,000.
0.
100,000.
60,000.
Multiple Choice, Question 110
Southeastern Louisiana University sold season tickets for the 2008 football season for 160,000. A total of 8 games will be played during September, October and November. Assuming all the games are played, the Unearned Revenue balance that will be reported on the December 31 balance sheet will be
0.
60,000.
100,000.
160,000.
Multiple Choice, Question 111
At March 1, 2008, Candy Inc. had supplies on hand of 500. During the month, Candy purchased supplies of 1,200 and used supplies of 1,500. The March 31 adjusting journal entry should include a
debit to the supplies account for 1,500.
credit to the supplies account for 500.
credit to the supplies account for 1,500.
debit to the supplies account for 1,200.
Multiple Choice, Question 114
Ogletree Enterprises purchased an 18-month insurance policy on May 31, 2008 for 3,600. The December 31, 2008 balance sheet would report Prepaid Insurance of
1,400.
3,600.
2,200.
0 because Prepaid Insurance is reported on the Income Statement.
Multiple Choice, Question 120
Lawton Company collected 8,400 in May of 2008 for 4 months of service which would take place from October of 2008 through January of 2009. The revenue reported from this transaction during 2008 would be
0.
6,300.
8,400.
2,010.
Multiple Choice, Question 83
The income statement for the year 2008 of Nova Co. contains the following information:
The entry to close Income Summary to Nova, Capital includes
a credit to Nova, Capital for 3,500.
a credit to Income Summary for 3,500.
a debit to Revenue for 70,000.
credits to Expenses totalling 73,500.
Multiple Choice, Question 96
The heading for a post-closing trial balance has a date line that is similar to the one found on
an income statement.
the worksheet.
an owner's equity statement.
a balance sheet.
Multiple Choice, Question 99
Which one of the following is an optional step in the accounting cycle of a business enterprise
Prepare a worksheet
Prepare a trial balance
Post to the ledger accounts
Analyze business transactions
Multiple Choice, Question 100
The final step in the accounting cycle is to prepare
a post-closing trial balance.
adjusting entries.
closing entries.
financial statements.
Multiple Choice, Question 101
Which of the following steps in the accounting cycle would not generally be performed daily
Post to ledger accounts
Prepare adjusting entries
Journalize transactions
Analyze business transactions
Multiple Choice, Question 121
Which of the following liabilities are not related to the operating cycle
Bonds payable
Utilities payable
Wages payable
Accounts payable
Multiple Choice, Question 123
It is not true that current assets are assets that a company expects to
sell within one year.
use up within one year.
acquire within one year.
realize in cash within one year.
Multiple Choice, Question 127
The relationship between current assets and current liabilities is important in evaluating a company's
accounting cycle.
liquidity.
market value.
profitability.
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