$18.90
ACCT 211 Quiz 2 Accounting for Merchandising, Inventories and Control of Cash solutions answers
ACCT 211 Quiz 2 Accounting for Merchandising, Inventories and Control of Cash solutions complete answers
Use the following information as of December 31 to determine equity.
Cash
$ 67,000
Buildings
185,000
Equipment
216,000
Liabilities
151,000
A company paid $2,000 cash for this month’s utilities. Identify the general journal entry below that the company will make to record the transaction.
Jose Consulting paid $680 cash for utilities for the current month. Determine the general journal entry that Jose Consulting will make to record this transaction.
Which of the following accounts is not classified as a current liability?
The net method refers to recording:
Offering discounts on credit sales benefits a seller through earlier cash receipts and reduced collection efforts.
The expenses of advertising merchandise, making sales, and delivering goods to customers are known as:
Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 26, it paid the full amount due. The amount of the cash paid on August 26 equals:
On March 12, Fret Company sold merchandise in the amount of $7,800 to Babson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Fret uses the perpetual inventory system and the gross method of accounting for sales. Babson pays the invoice on March 17 and takes the appropriate discount. The journal entry that Fret makes on March 17 is:
A company purchases merchandise for $20,000. The seller also offers credit terms of 2/10, n/30. Assuming no returns were made, and that payment was made within the discount period, what is the net cost of the merchandise?
Zenith Company's Merchandise Inventory account at year-end has a balance of $91,820, but a physical count reveals that only $90,450 of inventory exists. The adjusting entry to record this $1,370 of inventory shrinkage is:
A company had net sales of $768,400 and cost of goods sold of $551,770. Its net income was $21,150. The company's gross margin ratio equals:
A company had a gross profit of $336,000 based on net sales of $418,000. Its cost of goods sold equals $754,000.
Cushman Company had $814,000 in sales, sales discounts of $12,210, sales returns and allowances of $18,315, cost of goods sold of $386,650, and $280,015 in operating expenses. Gross profit equals:
A company purchased $3,400 of merchandise on July 5 with terms 3/10, n/30. On July 7, it returned $375 worth of merchandise. On July 8, it paid the full amount due. The amount of the cash paid on July 8 equals:
A company's quick ratio is 0.31. This ratio indicates no potential for liquidity problems.
A company had net sales of $370,000 and cost of goods sold of $210,000. Its gross profit equals $160,000.
On March 12, Fret Company sold merchandise in the amount of $10,600 to Babson Company, with credit terms of 2/10, n/30. The cost of the items sold is $5,900. Fret uses the perpetual inventory system and the net method of accounting for sales. On March 15, Babson returns some of the merchandise. The selling price of the returned merchandise is $880 and the cost of the merchandise returned is $490. The entry or entries that Fret must make on March 15 is (are):
A company has net sales of $729,000 and cost of goods sold of $292,000. Its gross profit equals:
A company purchased $3,500 of merchandise on July 5 with terms 3/10, n/30. On July 7, it returned $700 worth of merchandise. On July 12, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 12 is:
The simple rule for inventory turnover is that a low ratio is preferable.
An advantage of the weighted average inventory method is that it smooths out erratic changes in costs.
Eastview Company uses a perpetual LIFO inventory system, and has the following purchases and sales:
Date
Activities
Units Acquired at Cost
Units Sold at Retail
January 1
Purchase
150 units @ $9 = $1,350
January 17
Sales
120 units sold
January 20
Purchase
160 units @ $11 = $1,760
January 29
Sales
150 units sold
What is the value of cost of goods sold?
Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to the ending inventory using FIFO.
Date
Activities
Units Acquired at Cost
Units Sold at Retail
May 1
Beginning inventory
150 units @ $10 = $1,500
May 5
Purchase
220 units @ $12 = $2,640
May 10
Sales
140 units @ $20
May 15
Purchase
100 units @ $13 = $1,300
May 24
Sales
90 units @ $21
Salmone Company reported the following purchases and sales of its only product. Salmone uses a periodic inventory system. Determine the cost assigned to the ending inventory using FIFO.
Date
Activities
Units Acquired at Cost
Units Sold at Retail
May 1
Beginning inventory
162 units @ $10 = $1,620
May 5
Purchase
232 units @ $12 = $2,784
May 10
Sales
152 units @ $20
May 15
Purchase
112 units @ $13 = $1,456
May 24
Sales
102 units @ $21
A company has the following products in its ending inventory. Compute lower of cost or market for inventory applied separately to each product
Product
Quantity
Cost per Unit
Market per Unit
Product A
10
$ 712
$ 682
Product B
15
$ 512
$ 552
Product C
20
$ 662
$ 687
A company has the following purchases and sales during February. Using the FIFO periodic inventory method, what is the cost of the 12 units that are sold?
Date
Activities
Units Acquired at Cost
Units Sold at Retail
February 1
Beginning inventory
10 units @ $17 = $170
February 3
Purchase
20 units @ $19 = $380
February 5
Sales
12 units sold
Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to the ending inventory using FIFO.
Date
Activities
Units Acquired at Cost
Units Sold at Retail
May 1
Beginning inventory
160 units @ $10 = $1,600
May 5
Purchase
230 units @ $12 = $2,760
May 10
Sales
150 units @ $20
May 15
Purchase
110 units @ $13 = $1,430
May 24
Sales
100 units @ $21
A company has the following purchases and sales during October. Using the FIFO periodic inventory method, what is the value of the inventory on October 15 after the sale?
Date
Activities
Units Acquired at Cost
Units Sold at Retail
October 1
Beginning inventory
15 units @ $17 = $255
October 5
Purchase
10 units @ $18 = $180
October 12
Purchase
20 units @ $19 = $380
October 15
Sales
30 units sold
Grays Company has the following purchases and sales during the month of August. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 12 units that were sold?
Date
Activities
Units Acquired at Cost
Units Sold at Retail
August 1
Beginning inventory
10 units @ $12 = $120
August 3
Purchase
20 units @ $14 = $280
August 6
Sales
12 units sold
Salmone Company reported the following purchases and sales for its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using LIFO.
Date
Activities
Units Acquired at Cost
Units Sold at Retail
May 1
Beginning inventory
172 units @ $10 = $ 1,720
May 5
Purchase
242 units @ $12 = $ 2,904
May 10
Sales
162 units @ $20
May 15
Purchase
122 units @ $13 = $ 1,586
May 24
Sales
The fraud triangle shows three factors that push a person to commit fraud: Opportunity, collusion, and rationalization.
Electronic funds transfers (EFTs) are decreasingly used by companies due to their inconvenience and high cost.
Which of the following is not included on a bank statement?
Meng Company maintains a $300 petty cash fund. On January 31, the fund is replenished. The accumulated receipts on that date represent $80 for office supplies, $160 for merchandise inventory, and $20 for miscellaneous expenses. There is a cash shortage of $8. Based on this information, the amount of cash in the fund before the replenishment is:
Outstanding checks, deposits in transit, and bank service charges are added to the beginning balance of the bank statement to determine the adjusted bank balance.
Havermill Company establishes a $340 petty cash fund on September 1. On September 30, the fund is replenished. The accumulated receipts on that date represent $82 for Repairs Expense, $155 for merchandise inventory, and $31 for miscellaneous expenses. The fund has a balance of $72. On October 1, the accountant determines that the fund should be increased by $68. The journal entry to record the reimbursement of the fund on September 30 includes a:
Easton Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on June 30, its Cash account shows a debit balance of $66,209. Easton's June bank statement shows a $63,149 balance in the bank. Determine the adjusted cash balance using the following information:
Deposit in transit
$ 5,600
Outstanding checks
$ 2,525
Check printing fee, not yet recorded by company
$ 27
Interest earned, not yet recorded by the company
$ 42
The adjusted cash balance should be:
Childers Company, which uses a perpetual inventory system, has an established petty cash fund in the amount of $500. The fund was last reimbursed on November 30. At the end of December, the fund contained the following petty cash receipts:
December 4
Merchandise purchased
$ 62
December 7
Delivery expense
$ 86
December 12
Purchase of office supplies
$ 51
December 18
Miscellaneous expense
$ 70
If, in addition to these receipts, the petty cash fund contains $223.50 of cash, the journal entry to reimburse the fund on December 31 will include:
On December 31 of the current year, Plunkett Company reported an ending inventory balance of $218,000. The following additional information is also available:
Plunkett sold and shipped goods costing $38,600 to Savannah Enterprises on December 28 with shipping terms of FOB shipping point. The goods were not included in the ending inventory amount of $218,000.
Plunkett purchased goods costing $44,600 on December 29. The goods were shipped FOB destination and were received by Plunkett on January 2 of the following year. The shipment was a rush order that was supposed to arrive by December 31. These goods were included in the ending inventory balance of $218,000.
Plunkett's ending inventory balance of $218,000 included $15,600 of goods being held on consignment from Carole Company. (Plunkett Company is the consignee.)
Plunkett's ending inventory balance of $218,000 did not include goods costing $95,600 that were shipped to Plunkett on December 27 with shipping terms of FOB destination and were still in transit at year-end.
Based on the above information, the amount that Plunkett should report in ending inventory on December 31 is:
Blue Wing Corporation's quick assets are $6,158,000, its current assets are $13,650,000 and its current liabilities are $8,170,000. Its acid-test ratio equals:
The Retained earnings account has a credit balance of $22,950 before closing entries are made. If total revenues for the period are $72,700, total expenses are $53,100, and dividends are $12,150, what is the ending balance in the Retained earnings account after all closing entries are made?
Marco Nelson opened a frame shop and completed these transactions:
Sold custom frames and immediately collected $40,000 cash for the sale.
Purchased $70 of office supplies on credit.
Paid $1,200 cash for the receptionist's salary.
Sold a custom frame service and collected $1,500 cash on the sale.
Completed framing services and billed the client $200.
What was the balance of the cash account after these transactions were posted?
Prior to recording adjusting entries, the Office Supplies account had a $359 debit balance. A physical count of the supplies showed $105 of unused supplies available. The required adjusting entry is:
A company pays its employees $4,000 each Friday, which amounts to $800 per day for the five-day workweek that begins on Monday. If the monthly accounting period ends on Thursday and the employees worked through Thursday, the amount of salaries earned but unpaid at the end of the accounting period is:
Cloud Solutions had the following accounts and balances as of December 31:
Using the information in the table, calculate the total assets reported on the balance sheet for the period.
A company’s inventory records report the following:
On August 15, it sold 62 units. Using the FIFO perpetual inventory method, what is the value of the inventory at August 15 after the sale?
A buyer of $8,300 in merchandise inventory failed to take advantage of the vendor's credit terms of 3/15, n/45, and instead paid the invoice in full at the end of 45 days. By not taking advantage of the cash discount, the buyer lost the discount of:
A company has sales of $725,600 and cost of goods sold of $290,600. Its gross profit equals:
A company's current assets are $18,660, its quick assets are $10,170 and its current liabilities are $12,400. Its quick ratio equals:
A company's current ratio is 1.8 and its quick ratio is 0.24. This company is probably an excellent credit risk because the ratios reveal no indication of liquidity problems.
A company's net sales were $749,600, its cost of goods sold was $247,370 and its net income was $74,750. Its gross margin ratio equals:
A company's gross profit (or gross margin) was $88,890 and its net sales were $366,100. Its gross margin ratio is:
A company purchased $4,800 worth of merchandise. Transportation costs were an additional $420. The company returned $330 worth of merchandise and then paid the invoice within the 3% cash discount period. The total cost of this merchandise is:
Cushman Company had $812,000 in sales, sales discounts of $12,180, sales returns and allowances of $18,270, cost of goods sold of $385,700, and $279,330 in operating expenses. Gross profit equals:
Sandoval needs to determine its year-end inventory. The warehouse contains 33,000 units, of which 4,300 were damaged by flood and are not sellable. Another 3,300 units were purchased from Markor Company, FOB shipping point, and are currently in transit. The company also consigns goods and has 5,300 units at a consignee's location. How many units should Sandoval include in its year-end inventory?
Grays Company has inventory of 24 units at a cost of $12 each on August 1. On August 3, it purchased 34 units at $10 each. 26 units are sold on August 6. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 26 units that were sold?
The following information is available for Fenton Manufacturing Company at June 30:
Cash in bank account
Inventory of postage stamps
Money market fund balance
Petty cash balance
NSF checks from customers returned by bank
Postdated checks received from customers
Money orders
A nine-month certificate of deposit maturing on December 31 of current year
Based on this information, Fenton Manufacturing Company should report Cash and Cash Equivalents on June 30 of:
If the assets of a company increase by $55,000 during the year and its liabilities increase by $25,000 during the same year, then the change in equity of the company during the year must have been:
Determine the net income of a company for which the following information is available for the month of July.
Employee salaries expense
Interest expense
Rent expense
Consulting revenue
Sanders Co. has total assets of $385 million. Its total liabilities are $100.1 million and its equity is $284.9 million. Calculate its debt ratio.
At the beginning of the current year, Snell Co. total assets were $248,000 and its total liabilities were $174,200. During the year, the company reported total revenues of $93,000, total expenses of $76,000 and dividends of $5,000. There were no other changes in equity during the year and total assets at the end of the year were $260,000. The company’s debt ratio at the end of the current year is:
The Unadjusted Trial Balance columns of a work sheet total $84,000. The Adjustments columns contain entries for the following:
1. Office supplies used during the period, $1,200.
2. Expiration of prepaid rent, $700.
3. Accrued salaries expense, $500.
4. Depreciation expense, $800.
5. Accrued service fees receivable, $400.
The Adjusted Trial Balance columns total is:
A physical count of supplies on hand at the end of May for Masters, Inc. indicated $1,250 of supplies on hand. The general ledger balance before any adjustment is $2,100. What is the adjusting entry for office supplies that should be recorded on May 31?
A company purchased a new delivery van at a cost of $45,000 on July 1. The delivery van is estimated to have a useful life of 6 years and a salvage value of $3,000. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the van during the first year ended December 31?
Question 1
Using the following year-end information for Bauman, LLC, calculate the current ratio and acid-test ratio:
Question 2
A company's quick assets are $173,000 and its current liabilities are $151,000. This company's acid-test ratio is 1.15.
Question 3
Using the following year-end information for Calvin’s Clothing, calculate the current ratio and acid-test ratio for the business:
Question 4
KLM Corporation's quick assets are $5,929,000, its current assets are $12,075,000 and its current liabilities are $8,025,000. Its acid-test ratio equals:
Question 5
A company's gross profit was $121,260 and its net sales were $475,900. Its gross margin ratio equals:
Question 6
A company had net sales of $768,400 and cost of goods sold of $551,770. Its net income was $21,150. The company's gross margin ratio equals:
Question 7
A company has sales of $385,800 and its gross profit is $162,300. Its cost of goods sold equals:
Question 8
A company had net sales of $559,000 and cost of goods sold of $352,000. Its gross margin equals $911,000.
Question 9
Cushman Company had $836,000 in net sales, $365,750 in gross profit, and $209,000 in operating expenses. Cost of goods sold equals:
Question 10
A company purchased $10,200 of merchandise on June 15 with terms of 3/10, n/45, and FOB shipping point. The freight charge, $600, was added to the invoice amount. On June 20, it returned $960 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals:
Question 11
A company purchased $8,200 of merchandise on June 15 with terms of 3/10, n/45. On June 20, it returned $410 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it was entitled to. The cash paid on June 24 equals:
Question 12
A company purchases merchandise with a catalog price of $20,500. The company receives a 30% trade discount from the seller. The seller also offers credit terms of 2/10, n/30. Assuming no returns were made and that payment was made within the discount period, what is the net cost of the merchandise?
Question 13
Garza Company had sales of $146,200, sales discounts of $2,200, and sales returns of $3,510. Garza Company's net sales equals:
Question 14
Cushman Company had $842,000 in sales, sales discounts of $12,630, sales returns and allowances of $18,945, cost of goods sold of $399,950, and $289,650 in operating expenses. Net income equals:
Question 15
Prentice Company had cash sales of $95,200, credit sales of $84,000, sales returns and allowances of $2,075, and sales discounts of $3,850. Prentice’s net sales for this period equal:
Question 16
Hull Company reported the following income statement information for the current year:
The beginning inventory balance is correct. However, the ending inventory figure was overstated by $27,000. Given this information, the correct gross profit would be:
Question 17
Use the following information for Shafer Company to compute inventory turnover for year 2.
Question 18
Giorgio had cost of goods sold of $9,625 million, ending inventory of $2,293 million, and average inventory of $2,169 million. Its inventory turnover equals:
Question 19
Bedrock Company reported a December 31 ending inventory balance of $415,500. The following additional information is also available:
The ending inventory balance of $415,500 included $73,900 of consigned inventory for which Bedrock was the consignor.
The ending inventory balance of $415,500 included $25,800 of office supplies that were stored in the warehouse and were to be used by the company's supervisors and managers during the coming year.
Based on this information, the correct balance for ending inventory on December 31 is:
Question 20
Jammer Company uses a weighted average perpetual inventory system and reports the following:
What is the per-unit value of ending inventory on August 31? (Round your per unit answers to 2 decimal places.)
Question 21
A company had the following purchases during its first year of operations:
On December 31, there were 58 units remaining in ending inventory. These 58 units consisted of 10 from January, 12 from February, 14 from May, 12 from September, and 10 from November. Using the specific identification method, what is the cost of the ending inventory?
Question 22
Grays Company has inventory of 21 units at a cost of $9 each on August 1. On August 3, it purchased 31 units at $11 each. 23 units are sold on August 6. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 23 units that were sold?
Question 23
A company had beginning inventory of 12 units at a cost of $15 each on March 1. On March 2, it purchased 12 units at $24 each. On March 6 it purchased 7 units at $20 each. On March 8, it sold 28 units for $63 each. Using the FIFO perpetual inventory method, what was the cost of the 28 units sold?
Question 24
A company’s inventory records report the following in November of the current year:
On November 8, it sold 14 units for $36 each. Using the LIFO perpetual inventory method, what was the amount recorded in the cost of goods sold account for the 14 units sold?
Question 25
A company’s normal selling price for its product is $30 per unit. However, due to market competition, the selling price has fallen to $25 per unit. This company's current inventory consists of 300 units purchased at $26 per unit. Replacement cost has fallen to $23 per unit. Calculate the value of this company's inventory at the lower of cost or market.
Question 26
The following information is taken from Reagan Company's December 31 balance sheet:
If net credit sales for the current year were $612,000, the firm's days' sales uncollected for the year is: (Use 365 days a year.)
Question 27
The following information is available for Fenton Manufacturing Company at June 30:
Based on this information, Fenton Manufacturing Company should report Cash and Cash Equivalents on June 30 of:
Question 28
At the end of the day, the cash register tape shows $1,160 in cash sales but the count of cash in the register is $1,210. The proper entry to account for this excess is:
Question 29
Havermill Co. establishes a $500 petty cash fund on September 1. On September 30, the fund is replenished. The accumulated receipts on that date represent $98 for Office Supplies, $187 for merchandise inventory, and $47 for miscellaneous expenses. The fund has a balance of $168. On October 1, the accountant determines that the fund should be increased by $100. The journal entry to record the reimbursement of the fund on September 30 includes a:
Question 30
Spencer Co. has a $390 petty cash fund. At the end of the first month the accumulated receipts represent $62 for delivery expenses, $203 for merchandise inventory, and $31 for miscellaneous expenses. The fund has a balance of $94. The journal entry to record the reimbursement of the account includes a:
Question 31
Assume that the custodian of a $555 petty cash fund has $97.50 in coins and currency plus $445.50 in receipts at the end of the month. The entry to replenish the petty cash fund will include:
Question 32
A company had $54 missing from petty cash that was not accounted for by petty cash receipts. The correct procedure is to:
Question 33
If a check correctly written and paid by the bank for $322 is incorrectly recorded in the company's books for $272, how should this error be treated on the bank reconciliation?
Question 34
In the process of reconciling its bank statement for April, Donahue Enterprises' accountant compiles the following information:
Question 35
Clayborn Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on May 31, its Cash account shows a debit balance of $29,525. Clayborn's May bank statement shows $25,800 on deposit in the bank. Determine the adjusted cash balance using the following information:
Question 36
If a check correctly written and paid by the bank for $501 is incorrectly recorded in the company's books for $510, how should this error be treated on the bank reconciliation?
Question 37
The description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the:
Question 38
An exchange of value between two entities that yields a change in the accounting equation is called:
Question 39
Grandmark Printing pays $2,000 rent to the landlord of the building where its facilities are located. How does this transaction affect the accounting equation for Grandmark?
Question 40
The accounting concept that requires financial statement information to be supported by independent, unbiased evidence is:
Question 41
The statement of cash flows reports all of the following except:
Question 42
If a company uses $1,300 of its cash to purchase supplies, the effect on the accounting equation would be:
Question 43
Identify the account below that is classified as a liability in a company's chart of accounts:
Question 44
A $15 credit to Sales was posted as a $150 credit. By what amount is the Sales account in error?
Question 45
Lu Lu’s Catering has a debt ratio equal to .3 and its competitor, Able’s Bakery, has a debt ratio equal to .7. Determine the statement below that is correct.
Question 46
Identify the correct formula below used to calculate the debt ratio.
Question 47
Which of the following accounts showing a balance on the post-closing trial balance indicate an error?
Question 48
Closing entries are required:
Question 49
The Unadjusted Trial Balance columns of a company's work sheet shows the Store Supplies account with a balance of $750. The Adjustments columns shows a credit of $425 for supplies used during the period. The amount shown as Store Supplies in the Balance Sheet columns of the work sheet is:
Question 50
A company earned $3,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:
A company's current assets are $27,920, its quick assets are $15,690 and its current liabilities are $12,670. Its acid-test ratio equals:
A company's current ratio is 1.4 and its quick ratio is 0.27. This company is probably an excellent credit risk because the ratios reveal no indication of liquidity problems.
A company's quick assets are $161,000 and its current liabilities are $150,000. This company's acid-test ratio is 1.07.
Mega Skateboard Supplier had net sales of $2.4 million, its cost of goods sold was $1.2 million, and its net income was $.8 million. Its gross margin ratio equals:
A company had sales of $388,000 and cost of goods sold of $219,000. Its gross profit equals $169,000.
A company purchased $3,700 of merchandise on July 5 with terms 3/10, n/30. On July 7, it returned $410 worth of merchandise. On July 8, it paid the full amount due. The amount of the cash paid on July 8 equals:
A company purchased $12,000 of merchandise on June 15 with terms of 3/10, n/45, and FOB shipping point. The freight charge, $1,500, was added to the invoice amount. On June 20, it returned $2,400 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals:
On February 3, Smart Company sold merchandise in the amount of $2,600 to Truman Company, with credit terms of 2/10, n/30. The cost of the items sold is $1,800. Smart uses the perpetual inventory system and the gross method. Truman pays the invoice on February 8, and takes the appropriate discount. The journal entry that Smart makes on February 8 is:
A company has net sales of $766,600 and cost of goods sold of $553,600. Its net income is $21,030. The company's gross margin and operating expenses, respectively, are:
A company has net sales of $919,000 and cost of goods sold of $609,500. Its net income is $110,000. The company's gross margin and operating expenses, respectively, are:
Lucia Company reported cost of goods sold for Year 1 and Year 2 as follows:
Lucia Company made two errors: 1) ending inventory at the end of Year 1 was understated by $16,100 and 2) ending inventory at the end of Year 2 was overstated by $7,100. Given this information, the correct cost of goods sold figure for Year 2 would be:
Beckenworth had cost of goods sold of $10,621 million, ending inventory of $3,289 million, and average inventory of $2,085 million. Its days' sales in inventory equals: (Use 365 days a year.)
A company had inventory on November 1 of 5 units at a cost of $25 each. On November 2, they purchased 15 units at $27 each. On November 6 they purchased 11 units at $30 each. On November 8, 12 units were sold for $60 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale?
Given the following information, determine the cost of the inventory at June 30 using the LIFO perpetual inventory method.
The cost of the ending inventory is:
Marquis Company uses a weighted-average perpetual inventory system and has the following purchases and sales:
What is the amount of the cost of goods sold for this sale? (Round average cost per unit to 2 decimal places.)
A company had net sales of $30,300 and ending accounts receivable of $3,900 for the current period. Its days' sales uncollected equals: (Use 365 days a year.)
The following information is available for Birch Company at December 31:
Based on this information, Birch Company should report Cash and Cash Equivalents on December 31 of:
At the end of the day, the cash register's record shows $1,274, but the count of cash in the cash register is $1,257. The correct entry to record the cash sales is
A company wants to decrease its $200.00 petty cash fund to $125.00. The entry to reduce the fund is:
Havermill Co. establishes a $460 petty cash fund on September 1. On September 30, the fund is replenished. The accumulated receipts on that date represent $94 for Office Supplies, $179 for merchandise inventory, and $43 for miscellaneous expenses. The fund has a balance of $144. On October 1, the accountant determines that the fund should be increased by $92. The journal entry to record the establishment of the fund on September 1 is:
Childers Company, which uses a perpetual inventory system, has an established petty cash fund in the amount of $500. The fund was last reimbursed on November 30. At the end of December, the fund contained the following petty cash receipts:
If, in addition to these receipts, the petty cash fund contains $267.00 of cash, the journal entry to reimburse the fund on December 31 will include:
During the month of July, Clanton Industries issued a check in the amount of $945 to a supplier on account. The check did not clear the bank during July. In preparing the July 31 bank reconciliation, the company should:
Easton Co. deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on June 30, its Cash account shows a debit balance of $70,209. Easton's June bank statement shows $66,349 on deposit in the bank. Determine the adjusted cash balance using the following information:
If assets are $300,000 and liabilities are $192,000, then equity equals:
The International Accounting Standards Board (IASB):
At year-end, a trial balance showed total credits exceeding total debits by $4,950. This difference could have been caused by:
Identify the account below that is classified as an asset account:
Identify the item below that would cause the trial balance to not balance.
Unearned revenue is reported in the financial statements as:
The accounting principle that requires revenue to be recorded when earned is the:
Adjusting entries:
If a company is considering the purchase of a parcel of land that was acquired by the seller for $91,000 is offered for sale at $162,000, is assessed for tax purposes at $101,000, is considered by the purchaser as easily being worth $152,000, and is purchased for $149,000, the land should be recorded in the purchaser's books at:
If a company uses $1,500 of its cash to purchase supplies, the effect on the accounting equation would be:
If a company receives $10,800 from a stockholder, the effect on the accounting equation would be:
If a company purchases equipment costing $3,100 on credit, the effect on the accounting equation would be:
If equity is $350,000 and liabilities are $196,000, then assets equal:
If assets are $348,000 and liabilities are $188,000, then equity equals:
If assets are $96,000 and liabilities are $31,300, then equity equals:
The assets of a company total $732,000; the liabilities, $216,000. What is the amount of equity?
On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $19,300; Accounts Receivable, $7,200; Supplies, $600; Equipment, $11,950; Accounts Payable, $9,250. What is the amount of stockholders' equity as of May 31 of the current year?
On August 31 of the current year, the assets and liabilities of Gladstone, Inc. are as follows: Cash $29,700; Supplies, $770; Equipment, $9,800; Accounts Payable, $8,400. What is the amount of stockholders' equity as of August 31 of the current year?
Saddleback Company paid off $34,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?
If Houston Company billed a client for $14,000 of consulting work completed, the accounts receivable asset increases by $14,000 and:
Alpha Company has assets of $608,000, liabilities of $254,000, and equity of $354,000. It buys office equipment on credit for $79,000. What would be the effects of this transaction on the accounting equation?
If the liabilities of a business increased $113,000 during a period of time and the stockholders' equity in the business decreased $49,000 during the same period, the assets of the business must have:
If the assets of a business increased $113,000 during a period of time and its liabilities increased $79,000 during the same period, equity in the business must have:
If the liabilities of a company increased $114,000 during a period of time and equity in the company decreased $39,000 during the same period, what was the effect on the assets?
If assets are $385,000 and equity is $130,000, then liabilities are:
Rushing had income of $189 million and average total assets of $1,940 million. Its return on assets is:
Cage Company had income of $353 million and average total assets of $2,010 million. Its return on assets (ROA) is:
Speedy has net income of $32,955, and assets at the beginning of the year of $214,000. Assets at the end of the year total $260,000. Compute its return on assets.
Chou Company has a net income of $57,000, assets at the beginning of the year are $264,000 and assets at the end of the year are $314,000. Compute its return on assets.
Use the following information as of December 31 to determine equity.
Use the following information for Meeker Corp. to determine the amount of equity to report.
Determine the net income of a company for which the following information is available for the month of July.
Zippy had cash inflows from operations of $73,500; cash outflows from investing activities of $58,000; and cash inflows from financing of $36,000. The net change in cash was:
Zapper has beginning equity of $289,000, net income of $67,000, dividends paid of $56,000 and stockholder investments of $22,000. Its ending equity is:
A company's balance sheet shows: cash $28,000, accounts receivable $19,000, office equipment $53,000, and accounts payable $20,000. What is the amount of stockholders' equity?
A company reported total equity of $185,000 at the beginning of the year. The company reported $250,000 in revenues and $185,000 in expenses for the year. Liabilities at the end of the year totaled $112,000. What are the total assets of the company at the end of the year?
Flitter reported net income of $22,000 for the past year. At the beginning of the year the company had $209,000 in assets and $59,000 in liabilities. By the end of the year, assets had increased to $309,000 and liabilities were $84,000. Calculate its return on assets:
Dawson Electronic Services had revenues of $112,000 and expenses of $66,000 for the year. Its assets at the beginning of the year were $416,000. At the end of the year assets were worth $466,000. Calculate its return on assets.
Rico's Taqueria had cash inflows from operating activities of $45,000; cash outflows from investing activities of $40,000, and cash outflows from financing activities of $30,000. Calculate the net increase or decrease in cash.
Charlie's Chocolates' had stock issuances of $72,000 and dividends of $31,000. The company has revenues of $105,000 and expenses of $75,000. Calculate its net income.
Savvy Sightseeing had beginning equity of $85,000; revenues of $129,000, expenses of $78,000, and dividends to stockholders of $10,300; there were no stock issuances. Calculate the ending equity.
A company's balance sheet shows: cash $42,000, accounts receivable $48,000, equipment $86,000, and equity $90,000. What is the amount of liabilities?
Edison Consulting received a $410 utilities bill and immediately paid it. Edison's general journal entry to record this transaction will include a:
GreenLawn Company provides landscaping services to clients. On May 1, a customer paid GreenLawn $61,000 for 6-months services in advance. GreenLawn's general journal entry to record this transaction will include a:
Victor Cruz contributed $88,000 in cash and land worth $166,000 to open a new business, VC Consulting, in exchange for common stock. Which of the following general journal entries will VC Consulting make to record this transaction?
Green Cleaning purchased $630 of office supplies on credit. The company's policy is to initially record prepaid and unearned items in balance sheet accounts. Which of the following general journal entries will Green Cleaning make to record this transaction?
Alicia Tax Services paid $520 to settle an account payable. Which of the following general journal entries will Alicia Tax Services make to record this transaction?
A law firm billed a client $2,100 for work performed in the current month. Which of the following general journal entries will the firm make to record this transaction?
A law firm collected $3,800 on account for work performed in the previous month. Which of the following general journal entries will the firm make to record this collection of cash?
A law firm collected $2,900 in advance for work to be performed in three months. Which of the following general journal entries will the firm make to record this transaction?
Specter Consulting purchased $7,800 of supplies and paid cash immediately. Which of the following general journal entries will Specter Consulting make to record this transaction? Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.
Jose Consulting paid $780 cash for utilities for the current month. Determine the general journal entry that Jose Consulting will make to record this transaction.
Ted Catering received $1,300 cash in advance from a customer for catering services to be provided in three months. Determine the general journal entry that Ted Catering will make to record the cash receipt. Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.
Adriana Graphic Design receives $2,500 from a client billed in a previous month for services provided. Which of the following general journal entries will Adriana Graphic Design make to record this transaction?
Russell Company received a $680 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Russell Company make to record the receipt of the bill?
Silvia's Studio provided $390 of dance instruction and rented out its dance studio to the same client for another $220. The client paid cash immediately. Identify the general journal entry below that Silvia's Studio will make to record the transaction.
Matthew Martin, the sole stockholder of Innovation Consulting, started the business by investing $58,000 cash in exchange for common stock. Identify the general journal entry below that Innovation Consulting will make to record the transaction.
On May 31, the Cash account of Tesla had a normal balance of $5,100. During May, the account was debited for a total of $12,300 and credited for a total of $11,600. What was the balance in the Cash account at the beginning of May?
On April 30, Gomez Services had an Accounts Receivable balance of $24,600. During the month of May, total credits to Accounts Receivable were $59,200 from customer payments. The May 31 Accounts Receivable balance was $19,000. What was the amount of credit sales during May?
During the month of February, Rubio Services had cash receipts of $9,300 and cash disbursements of $12,200. The February 28 cash balance was $5,400. What was the February 1 beginning cash balance?
The following transactions occurred during July:
Issued common stock for $2,400 cash.
Received $770 from a customer in partial payment of his account receivable which arose from sales in June.
Provided services to a customer on credit, $395.
Borrowed $6,200 from the bank by signing a promissory note.
Received $1,270 cash from a customer for services to be performed next year.
What was the amount of revenue for July?
Marco Nelson opened a frame shop and completed these transactions:
Marco started the shop by investing $41,400 cash and equipment valued at $19,400 in exchange for common stock.
Purchased $210 of office supplies on credit.
Paid $2,600 cash for the receptionist's salary.
Sold a custom frame service and collected $5,900 cash on the sale.
Completed framing services and billed the client $340.
What was the balance of the cash account after these transactions were posted?
At the beginning of January of the current year, Sorrel Co.'s ledger reflected a normal balance of $72,000 for accounts receivable. During January, the company collected $18,800 from customers on account and provided additional services to customers on account totaling $14,500. Additionally, during January one customer paid Mikey $7,000 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be:
During the month of March, Harley's Computer Services made purchases on account totaling $47,300. Also during the month of March, Harley was paid $13,700 by a customer for services to be provided in the future and paid $38,800 of cash on its accounts payable balance. If the balance in the accounts payable account at the beginning of March was $79,200, what is the balance in accounts payable at the end of March?
On January 1 of the current year, Jimmy's Sandwich Company reported total stockholders' equity of $124,000. During the current year, total revenues were $98,000 while total expenses were $87,500. Also, during the current year the company paid $22,000 in dividends. No other changes in equity occurred during the year. The change in total equity during the year was:
Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books:
Andrea invested $14,100 cash in the business in exchange for common stock.
Andrea contributed $26,000 of photography equipment to the business.
The company paid $2,700 cash for an insurance policy covering the next 24 months.
The company received $6,300 cash for services provided during January.
The company purchased $6,800 of office equipment on credit.
The company provided $3,350 of services to customers on account.
The company paid cash of $2,100 for monthly rent.
The company paid $3,700 on the office equipment purchased in transaction #5 above.
Paid $335 cash for January utilities.
Based on this information, the balance in the cash account at the end of January would be:
Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books:
Andrea invested $13,900 cash in the business in exchange for common stock.
Andrea contributed $24,000 of photography equipment to the business in exchange for common stock.
The company paid $2,500 cash for office furniture.
The company received $6,100 cash for services provided during January.
The company purchased $6,600 of office equipment on credit.
The company provided $3,150 of services to customers on account.
The company paid cash of $1,900 for monthly rent.
The company paid $3,500 on the office equipment purchased in transaction #5 above.
Paid $315 cash for January utilities.
Based on this information, the amount reported as total stockholders' equity on the balance sheet at month-end would be:
ennings Company has total assets of $429.0 million. Its total liabilities are $112.5 million. Its equity is $316 million. Calculate the debt ratio. (Round your answer to 1 decimal place.)
Sanders Company has total assets of $387.0 million. Its total liabilities are $101.1 million and its equity is $286 million. Calculate its debt ratio. (Round your answer to 1 decimal place.)
At the end of the current year, James Company reported total liabilities of $304,000 and total equity of $104,000. The company's debt ratio was:
At the beginning of the current year, Snell Company total assets were $266,000 and its total liabilities were $183,200. During the year, the company reported total revenues of $111,000, total expenses of $85,000 and dividends of $14,000. There were no other changes in equity during the year and total assets at the end of the year were $278,000. The company's debt ratio at the end of the current year is:
Centurion Company had the following accounts and balances at December 31:
Cash $11,400
Accounts Receivable 2,280
Prepaid Insurance 2,960
Supplies 1,280
Accounts Payable $5,700
Common Stock 5,740
Service Revenue 8,400
Salaries Expense 640
Utilities Expense 1,280
Totals $19,840 $19,840
Using the information in the table, calculate the company's reported net income for the period.
At the end of its first month of operations, JMP Consulting reported net income of $30,400. They also had account balances of: Cash, $21,600; Office Supplies, $2,900; and Accounts Receivable, $11,800. Stockholders' total investments for this first month was $5,900. There were no dividends in the first month.Calculate the amount of total stockholders' equity reported on the balance sheet at month-end.
A bookkeeper has debited an asset account for $5,500 and credited a liability account for $3,000. Which of the following would be an incorrect way to complete the recording of this transaction:
A $21 credit to Sales was posted as a $210 credit. By what amount is the Sales account in error?
At year-end, a trial balance showed total credits exceeding total debits by $6,050. This difference could have been caused by:
Identify the item below that would cause the trial balance to not balance?
The credit purchase of a new oven for $6,000 was posted to Kitchen Equipment as a $6,000 debit and to Accounts Payable as a $6,000 debit. What effect would this error have on the trial balance?
Identify which error will cause the trial balance to be out of balance.
A $270 credit to Supplies was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?
Jeff Jackson opened Jackson's Repairs on March 1 of the current year. During March, the following transactions occurred:
Jackson invested $41,000 cash in the business in exchange for common stock.
Jackson contributed $116,000 of equipment to the business.
The company paid $3,600 cash to rent office space for the month of March.
The company received $32,000 cash for repair services provided during March.
The company paid $7,800 for salaries for the month of March.
The company provided $4,600 of services to customers on account.
The company paid cash of $2,100 for utilities for the month of March.
The company received $4,700 cash in advance from a customer for repair services to be provided in April.
The company paid $6,600 in cash dividends.
Based on this information, net income for March would be:
Wiley Hill opened Hill's Repairs on March 1 of the current year. During March, the following transactions occurred:
Wiley invested $26,000 cash in the business in exchange for common stock.
Wiley contributed $101,000 of equipment to the business in exchange for common stock.
The company paid $2,100 cash to rent office space for the month of March.
The company received $17,000 cash for repair services provided during March.
The company paid $6,300 for salaries for the month of March.
The company provided $3,100 of services to customers on account.
The company paid cash of $600 for utilities for the month of March.
The company received $3,200 cash in advance from a customer for repair services to be provided in April.
The company paid $5,100 in cash dividends.
Based on this information, the total amount of stockholders' equity reported on the balance sheet at the end of March would be:
A company earned $4,500 in net income for October. Its net sales for October were $15,000. Its profit margin is:
On July 1 of the current calendar year, Olive Company paid $9,100 cash for management services to be performed over a two-year period beginning July 1. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry on December 31 of the current year for Olive would include:
Prior to recording adjusting entries, the Office Supplies account had a $378 debit balance. A physical count of the supplies showed $115 of unused supplies available. The required adjusting entry is:
On July 1, a company paid the $2,160 premium on a one-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the first year ended December 31?
A company had no office supplies available at the beginning of the year. During the year, the company purchased $270 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year?
On January 1, a company purchased a five-year insurance policy for $2,900 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:
On May 1, a two-year insurance policy was purchased for $48,000 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31?
Fragmental Company leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $1,025. Fragmental collected the entire $8,200 cash on October 1 and recorded it as unearned revenue. Assuming adjusting entries are only made at year-end, the adjusting entry made by Fragmental Company on December 31 would be:
A company pays its employees $4,500 each Friday, which amounts to $900 per day for the five-day workweek that begins on Monday. If the monthly accounting period ends on Thursday and the employees worked through Thursday, the amount of salaries earned but unpaid at the end of the accounting period is:
On January 1, Eastern College received $1,340,000 from its students for the spring semester that it recorded in Unearned Tuition and Fees. The term spans four months beginning on January 2 and the college spreads the revenue evenly over the months of the term. Assuming the college prepares adjustments monthly, what amount of tuition revenue should the college recognize on February 28?
On December 1, Orenthal Marketing Company received $4,800 from a customer for a 2-month marketing plan to be completed January 31 of the following year. The cash receipt was recorded as unearned fees. The adjusting entry for the year ended December 31 would include:
Harrod Company paid $6,600 for a 4-month insurance premium in advance on November 1, with coverage beginning on that date. The balance in the prepaid insurance account before adjustment at the end of the year is $6,600, and no adjustments had been made previously. The adjusting entry required on December 31 is:
On April 1, Garcia Publishing Company received $2,538 from Otisco, Inc. for 36-month subscriptions to several different magazines. The subscriptions started immediately. What is the amount of revenue that should be recorded by Garcia Publishing Company for the first year of the subscription assuming the company uses a calendar-year reporting period?
On April 1, Garcia Publishing Company received $26,280 from Otisco, Inc. for 36-month subscriptions to several different magazines. The company credited Unearned Fees for the amount received and the subscriptions started immediately. Assuming adjustments are only made at year-end, what is the adjusting entry that should be recorded by Garcia Publishing Company on December 31 of the first year?
On April 1, Otisco, Inc. paid Garcia Publishing Company $2,268 for 36-month subscriptions to several different magazines. Otisco debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. What amount should appear in the Prepaid Subscription account for Otisco, Inc. after adjustments on December 31 of the first year assuming the company is using a calendar-year reporting period and no previous adjustment has been made?
The correct adjusting entry for accrued and unpaid employee salaries of $8,000 on December 31 is:
A company purchased new furniture at a cost of $34,000 on September 30. The furniture is estimated to have a useful life of 4 years and a salvage value of $4,000. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the furniture for the first year ended December 31?
If Bojana Tax Services' office supplies account balance on March 1 was $1,950, the company purchased $1,000 of supplies during the month, and a physical count of supplies on hand at the end of March indicated $2,250 unused, what is the amount of the adjusting entry for office supplies on March 31?
A physical count of supplies on hand at the end of May for Masters, Inc. indicated $1,247 of supplies on hand. The general ledger balance before any adjustment is $2,070. What is the adjusting entry for office supplies that should be recorded on May 31?
On December 1, Milton Company borrowed $500,000, at 9% annual interest, from the Tennessee National Bank. Interest is paid when the loan matures one year from the issue date. What is the adjusting entry for accruing interest that Milton would need to make on December 31, the calendar year-end?
On September 1, Kennedy Company loaned $102,000, at 10% annual interest, to a customer. Interest and principal will be collected when the loan matures one year from the issue date. Assuming adjustments are only made at year-end, what is the adjusting entry for accruing interest that Kennedy would need to make on December 31, the calendar year-end?
On October 1, Vista View Company rented warehouse space to a tenant for $2,800 per month and received $14,000 for five months' rent in advance on that date, with the lease beginning immediately. The cash receipt was credited to the Unearned Rent account. The company's annual accounting period ends on December 31. The Unearned Rent account balance at the end of December, after adjustment, should be:
On November 1, Jasper Company loaned another company $250,000 at a 12.0% interest rate. The note receivable plus interest will not be collected until March 1 of the following year. The company's annual accounting period ends on December 31. The amount of interest revenue that should be reported in the first year is:
Castillo Services paid K. Castillo, the sole shareholder of Castillo Services, $5,400 in dividends during the current year. The entry to close the dividends account at the end of the year is:
High Step Shoes had annual revenues of $202,000, expenses of $112,200, and dividends of $24,800 during the current year. The retained earnings account before closing had a balance of $314,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:
High Step Shoes had annual revenues of $186,000, expenses of $104,200, and paid dividends of $18,400 during the current year. The retained earnings account before closing had a balance of $298,000. The Net Income for the year is:
High Step Shoes had annual revenues of $200,000, expenses of $111,200, and paid dividends of $24,000 during the current year. The retained earnings account before closing had a balance of $312,000. The ending retained earnings balance after closing is:
A company had revenues of $62,000 and expenses of $47,500 for the accounting period. Dividends of $6,800 were paid in cash during the same period. Which of the following entries could not be a closing entry?
The following information is available from the adjusted trial balance of the Harris Vacation Rental Agency. After closing entries are posted, what will be the balance in the Retained earnings account?
Total revenues$175,000
Total expenses 84,000
Retained earnings 112,000
Dividends 21,000
The following information is available for the Higgins Travel Agency. After closing entries are posted, what will be the balance in the Retained earnings account?
Net Income$49,500
Retained earnings 133,500
Dividends 14,800
The following information is available for the Noir Detective Agency. After closing entries are posted, what will be the balance in the Retained earnings account?
Net Loss$32,600
Retained earnings 296,500
Dividends 38,000
The Retained earnings account has a credit balance of $45,000 before closing entries are made. Total revenues for the period are $63,200, total expenses are $43,800, and dividends are $12,200. What is the correct closing entry for the revenue accounts?
The Retained earnings account has a credit balance of $54,000 before closing entries are made. Total revenues for the period are $72,200, total expenses are $48,300, and dividends are $15,800. What is the correct closing entry for the expense accounts?
After preparing and posting the closing entries for revenues and expenses, the income summary account has a debit balance of $32,000. The entry to close the income summary account will be:
The following information is available for Cubic Company before closing the accounts. After all closing entries are made, what will be the balance in the Retained earnings account?
Net income$121,900
Retained earnings 116,000
Dividends 44,000
For the year ended December 31, a company had revenues of $193,000 and expenses of $115,800. $38,600 in dividends were paid during the year. Which of the following entries could not be a closing entry?
For the year ended December 31, a company has revenues of $334,000 and expenses of $204,500. The company paid $56,800 in dividends during the year. The balance in the Retained earnings account before closing is $98,000. Which of the following entries would be used to close the dividends account?
A properly designed internal control system is a key part of systems design, analysis, and performance.
Internal control systems are subject to limitations that usually arise from either (1) human error or human fraud, or (2) the cost-benefit principle.
The Sarbanes-Oxley Act (SOX) requires managers and auditors of companies whose stock is traded on an exchange to document and verify the system of internal controls.
Cash equivalents are short-term highly liquid investment assets that are readily converted to a known cash amount, and have maturities of one year.
On a bank statement, deposits are listed as credits because the bank increases its liability to the depositor when the deposit is made.
The days' sales uncollected ratio measures the liquidity of accounts receivable.
If the Cash Over and Short account has a credit balance at the end of the period, the amount is commonly reported as miscellaneous revenue.
The Petty Cash account is a separate bank account used for small amounts.
Petty cash reimbursement requires a journal entry that involves a debit to the appropriate expenses and a credit to Cash.
A bank reconciliation explains any differences between the checking account balance on the depositor's records and the balance reported on the bank statement.
Deposits in transit are deposits made and recorded by the depositor, but not yet recorded on the bank statement.
It is generally not necessary for businesses to reconcile their checking accounts since banks keep accurate records and provide internal control support for cash.
Outstanding checks, deposits in transit, deductions for bank fees, additions for interest, and errors are all factors that can cause the bank statement balance for a checking account to be different from the company's checking account balance.
A purchase order is a document the purchasing department sends to the vendor to place an order.
The current period's ending inventory is:
Expenses that support the overall operations of a business and include the expenses relating to accounting, human resource management, and financial management are called:
Merchandise inventory:
Sales less sales discounts less sales returns and allowances equals:
The credit terms 2/10, n/30 are interpreted as:
A trade discount is:
Which of the following accounts is used in the periodic inventory system but not used in the perpetual inventory system?
KLM Corporation's quick assets are $5,888,000, its current assets are $11,700,000 and its current liabilities are $8,000,000. Its acid-test ratio equals:
Beginning inventory plus net purchases is:
An income statement that includes cost of goods sold as another expense and shows only one subtotal for total expenses is a:
Sales returns:
Quick assets are defined as:
A merchandiser:
Cost of goods sold:
A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 8, it paid the full amount due. The amount of the cash paid on July 8 equals:
A company has sales of $695,000 and cost of goods sold of $278,000. Its gross profit equals:
A company has sales of $695,000 and cost of goods sold of $278,000. Its gross profit equals:
Prentice Company had cash sales of $94,275, credit sales of $83,450, sales returns and allowances of $1,700, and sales discounts of $3,475. Prentice's net sales for this period equal:
Fragment Company is a wholesaler that sells merchandise in large quantities. Its catalog indicates a list price of $300 per unit on a particular product and a 40% trade discount is offered for quantity purchases of 50 units or more. The cost of shipping the merchandise is $7 per unit under terms FOB shipping point. If a customer purchases 100 units of this product, what is the amount of sales revenue that Fragment will record from this sale?
On May 1, Shilling Company sold merchandise in the amount of $5,800 to Anders, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Shilling uses the perpetual inventory system and the gross method. The journal entry or entries that Shilling will make on May 1 is:
A company purchased $10,000 of merchandise on June 15 with terms of 3/10, n/45. On June 20, it returned $800 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it was entitled to. The cash paid on June 24 equals:
A debit to Sales Returns and Allowances and a credit to Accounts Receivable:
All of the following statements regarding sales returns and allowances are true except:
A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the merchandise return on July 7 is:
Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due. The amount of the cash paid on August 16 equals:
The net method of recording purchases refers to recording:
The amount recorded for merchandise inventory includes all of the following except:
All of the following statements regarding inventory shrinkage are true except:
Jasper Company is a wholesaler that buys merchandise in large quantities. Its supplier's catalog indicates a list price of $500 per unit on merchandise Jasper intends to purchase, and offers a 30% trade discount for large quantity purchases. The cost of shipping for the merchandise is $7 per unit. Jasper's total purchase price per unit will be:
Multiple-step income statements:
Which of the following accounts would be closed at the end of the accounting period with a debit?
On May 1, Anders Company purchased merchandise in the amount of $5,800 from Shilling, with credit terms of 2/10, n/30. Anders uses the perpetual inventory system and the gross method. The journal entry or entries that Anders will make on May 1 is:
On February 3, Smart Company sold merchandise in the amount of $5,800 to Truman Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Smart uses the perpetual inventory system and the gross method. Truman pays the invoice on February 8, and takes the appropriate discount. The journal entry that Smart makes on February 8 is:
A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. The amount of the cash paid on July 28 equals:
A company purchased $4,000 worth of merchandise. Transportation costs were an additional $350. The company returned $275 worth of merchandise and then paid the invoice within the 2% cash discount period. The total cost of this merchandise is:
Garza Company had sales of $135,000, sales discounts of $2,000, and sales returns of $3,200. Garza Company's net sales equals:
A company uses the perpetual inventory system and recorded the following entry:
Cushman Company had $800,000 in net sales, $350,000 in gross profit, and $200,000 in operating expenses. Cost of goods sold equals:
A company has sales of $375,000 and its gross profit is $157,500. Its cost of goods sold equals:
The inventory valuation method that has the advantages of assigning an amount to inventory on the balance sheet that approximates its current cost, and also mimics the actual flow of goods for most businesses is:
Interim financial statements:
Generally accepted accounting principles require that the inventory of a company be reported at:
The inventory valuation method that tends to smooth out erratic changes in costs is:
In applying the lower of cost or market method to inventory valuation, market is defined as:
Damaged and obsolete goods that can be sold:
During a period of steadily rising costs, the inventory valuation method that yields the highest reported net income is:
The inventory valuation method that identifies each item in ending inventory with a specific purchase and invoice is the:
Costs included in the Merchandise Inventory account can include all of the following except:
The understatement of the ending inventory balance causes:
The consistency concept:
The full disclosure principle:
The inventory valuation method that results in the lowest taxable income in a period of inflation is:
Physical counts of inventory:
Regardless of the inventory costing system used, cost of goods available for sale must be allocated at the end of the period between
Decisions management must make in accounting for inventory cost include all of the following except:
Which of the following inventory costing methods will always result in the same values for ending inventory and cost of goods sold regardless of whether a perpetual or periodic inventory system is used?
Goods in transit are included in a purchaser's inventory:
If a period-end inventory amount is reported in error, it can cause a misstatement in all of the following except:
Merchandise inventory includes:
Internal controls that should be applied when a business takes a physical count of inventory should include all of the following except:
Sandoval needs to determine its year-end inventory. The warehouse contains 20,000 units, of which 3,000 were damaged by flood and are not sellable. Another 2,000 units were purchased from Markor Company, FOB shipping point, and are currently in transit. The company also consigns goods and has 4,000 units at a consignee's location. How many units should Sandoval include in its year-end inventory?
Avanti purchases inventory from overseas and incurs the following costs: the merchandise cost is $50,000, credit terms 2/10, n/30 that apply only to the $50,000; FOB shipping point freight charges are $1,500; insurance during transit is $500; and import duties are $1,000. Avanti paid within the discount period and incurred additional costs of $1,200 for advertising and $5,000 for sales commissions. Compute the cost that should be assigned to the inventory.
Given the following information, determine the cost of the inventory at June 30 using the LIFO perpetual inventory method.
June 1 Beginning inventory 15 units @ $20 each
June 15 Sale of 6 units @ $50 each
June 29 Purchase 8 units @ $25 each
The cost of the ending inventory is:
The itemized statement of goods prepared by a vendor listing the customer's name, items sold, sales prices, and terms of the sale is called the:
A voucher system is a set of procedures and approvals:
An income statement account that is used to record cash overages and cash shortages arising from petty cash transactions or from errors in making change is titled:
The principles of internal control include:
Cash equivalents meet all of the following criteria except:
Outstanding checks refer to checks that have been:
Cash equivalents:
The three parties involved with a check are:
Cash equivalents:
An analysis that explains differences between the checking account balance according to the depositor's records and the balance reported on the bank statement is a(n):
Which of the following procedures would weaken control over cash receipts that arrive through the mail?
Internal control policies and procedures have limitations not including:
Cash, not including cash equivalents, includes:
On a bank reconciliation, an unrecorded debit memorandum for printing checks is:
On a bank reconciliation, the amount of an unrecorded bank service charge should be:
A properly designed internal control system:
A company's internal control system:
Two clerks sharing the same cash register is a violation of which internal control principle?
Which of the following is not one of the policies and procedures that make up an internal control system?
Principles of internal control include all of the following except:
The impact of technology on internal controls includes:
If a check that was outstanding on last period's bank reconciliation was not among the cancelled checks returned by the bank this period, in preparing this period's reconciliation, the amount of this check should be:
Pelcher Company maintains a $400 petty cash fund. On January 31, the fund is replenished. The accumulated receipts on that date represent $110 for office supplies, $140 for merchandise inventory, and $70 for miscellaneous expenses. There is a cash overage of $4. Based on this information, the amount of cash in the fund before the replenishment is:
When a petty cash fund is in use:
The entry to establish a petty cash fund includes:
Havermill Company establishes a $250 petty cash fund on September 1. On September 30, the fund is replenished. The accumulated receipts on that date represent $73 for Office Supplies, $137 for merchandise inventory, and $22 for miscellaneous expenses. The fund has a balance of $18. On October 1, the accountant determines that the fund should be increased by $50. The journal entry to record the establishment of the fund on September 1 is:
Spencer Company decides to establish a petty cash fund with a beginning balance of $200. The company decides that any purchase under $25 can be processed through petty cash instead of the voucher system. The journal entry to record establishing the account is:
Meng Company maintains a $300 petty cash fund. On January 31, the fund is replenished. The accumulated receipts on that date represent $80 for office supplies, $160 for merchandise inventory, and $20 for miscellaneous expenses. There is a cash shortage of $8. Based on this information, the amount of cash in the fund before the replenishment is:
A bank statement provided by the bank includes:
Franklin Company's bank reconciliation as of August 31 is shown below.
Bank balance $14,237 Book balance $13,162
+ Deposit in transit 4,500 Bank service fees -50
- Outstanding checks -3,900 Note collected 1,725
Adjusted bank bal $14,837 Adjusted book bal $14,837
The adjusting journal entries that Clayborn must record as a result of the bank reconciliation include:
Clayborn Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on May 31, its Cash account shows a debit balance of $17,025. Clayborn's May bank statement shows $15,800 on deposit in the bank. Determine the adjusted cash balance using the following information:
Deposit in transit $ 5,200
Outstanding checks $ 4,600
Bank service fees, not yet recorded by company $ 25
A NSF check from a customer, not yet recorded by the company $ 600
The adjusted cash balance should be:
Preparing a bank reconciliation on a monthly basis is an example of:
If a company made a bank deposit on September 30 that did not appear on the bank statement dated September 30, in preparing the September 30 bank reconciliation, the company should:
At the end of the day, the cash register tape shows $1,000 in cash sales but the count of cash in the register is $1,010. The proper entry to account for this excess is:
Ryan Company deposits all cash receipts on the day they are received and makes all cash payments by check. Ryan's June bank statement shows $18,361 on deposit in the bank. Ryan's comparison of the bank statement to its cash account revealed the following:
Deposit in transit 1,450
Outstanding checks 837
Additionally, a $29 check written and recorded by the company correctly was recorded by the bank as a $92 deduction.
The adjusted cash balance per the bank records should be:
Easton Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on June 30, its Cash account shows a debit balance of $60,209. Easton's June bank statement shows $58,349 on deposit in the bank. Determine the adjusted cash balance using the following information:
Deposit in transit $ 3,800
Outstanding checks $ 1,925
Check printing fee, not yet recorded by company
$ 15
Interest earned on account, not yet recorded by the company $ 30
The adjusted cash balance should be:
Clayborn Company' bank reconciliation as of May 31 is shown below.
Bank balance $ 15,800 Book balance $ 17,025
+ Deposit in transit 5,200 Bank service fees -25
- Outstanding checks -4,600 NSF returned -600
Adjusted bank bal $16,400 Adjusted book bal $ 16,400
One of the adjusting journal entries that Clayborn must record as a result of the bank reconciliation includes:
A debit to Sales Returns and Allowances and a credit to Accounts Receivable:
On July 1, Ferguson Company sold merchandise in the amount of $5,800 to Tracey Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Ferguson uses the perpetual inventory system and the gross method. On July 5, Tracey returns some of the merchandise. The selling price of the merchandise is $500 and the cost of the merchandise returned is $350. The entry or entries that Ferguson must make on July 5 is (are):
If goods are shipped FOB destination, the seller does not record revenue from the sale until the goods arrive at their destination.
Merchandise inventory is reported in the long-term assets section of the balance sheet.
Goods in transit are automatically included in inventory regardless of whether title has passed to the buyer.
The cost of an inventory item includes its invoice cost minus any discount, plus any other costs, such as, shipping, storage, import duties, and insurance.
The selected inventory costing method impacts:
Goods on consignment are:
Internal control of cash receipts ensures that all cash received is properly recorded and deposited.
Bonding employees encourages theft because employees know the bonding company will not pursue reported theft.
Deposits in transit are deposits made and recorded in the depositor's books, but not yet listed on the bank statement.
Managers use an internal control system:
A company wants to decrease its $200.00 petty cash fund to $100.00. The entry to reduce the fund is:
Notes receivable are classified as current liabilities regardless of the time to maturity.
No attempt is made to estimate bad debts expense under the allowance method of accounting for uncollectible accounts receivable.
The aging of accounts receivable method of determining bad debts expense is based on the knowledge that the longer a receivable is past due, the more likely it is to be collected.
Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,000 uncollectible account of its customer, A. Hopkins. The entry or entries Gideon makes to record the write off of the account on May 3 is:
The maturity date of a note receivable:
Jax Recording Studio purchased $8,100 in electronic components from Music World. Jax signed a 90-day, 8% promissory note for $8,100. Music World's journal entry to record the sales transaction is:
FOB shipping point:
FOB destination
Revenue for the sale will be recorded after the goods reach their destination, if the goods are shipped FOB destination.
When the shipping costs are the responsibility of the buyer, then the Merchandise Inventory account is debited for the freight charges.
Which are the two classifications of operating expenses on a multiple-step income statement?
Which of the following equations correctly identify the cost flow of a merchandising company?
Which of the statements below are correct regarding cost of goods sold?
The cash operating cycle for a merchandiser begins with cash purchases of merchandise and ends with
Jan's Jams makes a credit sale for $300 with terms of 2/10,n/30. The cost of the merchandise is $200. The required journal entry to record the sale and the cost of the sale is:
Demonstrate how inventory costs are treated both as assets and expenses by selecting the correct statement(s)
Which of the statements below explain why LCM is used?
The cash in a cash register equaled $100, but the record of cash receipts/sales equaled $102. Determine which of the following entries is correct to record cash sales and the shortage.
The (allowance/direct write-off) method of accounting for bad debts matches the estimated loss from uncollectible accounts receivables against the sales they helped produce.
Finish Company uses the allowance method to account for bad debts. At the end of 2010, Finish Co.'s unadjusted trial balance shows an accounts receivable balance of $30,000; allowance for doubtful accounts balance of $200 (credit); and sales of $600,000. Based on history, Finish estimates that bad debts will be 1% of sales. The entry to record estimated bad debts will include a debit to Bad Debts Expense in the amount of:
Leo Company uses the allowance method to account for bad debts. At the end of the year, Leo Co.'s accounts receivable balance is $25,000; allowance for doubtful accounts balance of $100 (credit); and sales of $500,000. Based on history, Leo estimates that bad debts will be 2% of accounts receivable. The entry to record estimated bad debts will include a debit to Bad Debts Expense in the amount of:
On January 1, JC Company accepted a 60-day, 6%, note in the amount of $10,000 from a customer. On March 2, the due date of the note, the customer honors the note and pays in full. The journal entry that JC would make to record the receipt of payment of this note would include a debit to:
The ____________ method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible. No attempt is made to predict bad debts expense.
The inventory turnover ratio:
In applying the lower of cost or market method to LIFO inventory valuation, market is defined as:
When LIFO is used with the periodic inventory system, cost of goods sold is assigned costs from the most recent purchases at the point of each sale, rather than from the most recent purchases for the period.
On September 1 of the current year, Scots Company experienced a flood that destroyed the company's entire inventory. Because the company had not completed its month end reporting for August, it must estimate the amount of inventory lost using the gross profit method. At the beginning of August, the company reported beginning inventory of $215,450. Inventory purchased during August was $192,530. Sales for the month of August were $542,500. Assuming the company's typical gross profit ratio is 40%, estimate the amount of inventory destroyed in the flood.
On March 31 a company needed to estimate its ending inventory to prepare its first quarter financial statements. The following information is available:
Beginning inventory, January 1: $4,000
Net sales: $80,000
Net purchases: $78,000
The company's gross margin ratio is 25%. Using the gross profit method, the estimated ending inventory value would be:
Eastview Company uses a periodic LIFO inventory system, and has the following purchases and sales:
January 1 150 units were purchased at $9 per unit.
January 17 120 units were sold.
January 20 160 units were purchased at $11 per unit.
January 29 150 units were sold.
What is the value of ending inventory?
A company normally sells its product for $20 per unit. However, the selling price has fallen to $15 per unit. This company's current FIFO inventory consists of 200 units purchased at $16 per unit. Net realizable value has now fallen to $13 per unit. What is the amount of the lower cost of market adjustment the company must make as a result of this decline in value?
The lower of cost or market rule for inventory valuation is always applied to individual units separately rather than to major categories of inventory or to the entire inventory.
On March 31 a company needed to estimate its ending inventory to prepare its first quarter financial statements. The following information is available:
Beginning inventory, January 1: $4,000
Net sales: $80,000
Net purchases: $78,000
The company's gross margin ratio is 25%. Using the gross profit method, the cost of goods sold would be:
Interim financial statements:
Raleigh Company has the following products in its ending inventory. Compute the lower of cost or market total for inventory applied separately to each product.
Product Quantity Cost per unit Market per unit
Jelly 150 $2.00 2.15
Jam 370 $2.65 2.50
Marmalade 260 $3.10 3.05
A company had inventory on November 1 of 5 units at a cost of $20 each. On November 2, they purchased 10 units at $22 each. On November 6 they purchased 6 units at $25 each. On November 8, 8 units were sold for $55 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale?
The reliability of the gross profit method depends on a good estimate of the gross profit ratio.
Eastview Company uses a perpetual LIFO inventory system, and has the following purchases and sales:
January 1 150 units were purchased at $9 per unit.
January 17 120 units were sold.
January 20 160 units were purchased at $11 per unit.
January 29 150 units were sold.
What is the value of cost of goods sold?
Goods in transit are automatically included in inventory regardless of whether title has passed to the buyer.
An error in the ending inventory balance will cause an error in the calculation of cost of goods sold.
Bedrock Company reported a December 31 ending inventory balance of $412,000. The following additional information is also available:
The ending inventory balance of $412,000 included $72,000 of consigned inventory for which Bedrock was the consignor. The ending inventory balance of $412,000 included $22,000 of office supplies that were stored in the warehouse and were to be used by the company's supervisors and managers during the coming year. Based on this information, the correct balance for ending inventory on December 31 is:
Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to ending inventory using LIFO.
Date Activities Units Acquired at Cost Units Sold at Retail May 1 Beginning Inventory 150 units @ $10.00
5 Purchase 220 units @ $12.00
10 Sales 140 units @ $20.00
15 Purchase 100 units @ $13.00
24 Sales 90 units @ $21.00
In applying the lower of cost or market method to LIFO inventory valuation, market is defined as:
A company had the following purchases and sales during its first year of operations:
Purchases Sales
January: 10 units at $120 6 units
February: 20 units at $125 5 units
May: 15 units at $130 9 units
September: 12 units at $135 8 units
November: 10 units at $140 13 units
On December 31, there were 26 units remaining in ending inventory. Using the periodic LIFO inventory costing method, what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)
Lower of cost or market:
Eastview Company uses a periodic LIFO inventory system, and has the following purchases and sales:
January 1 150 units were purchased at $9 per unit.
January 17 120 units were sold.
January 20 160 units were purchased at $11 per unit. January 29 150 units were sold.
What is the value of cost of goods sold?
Incidental costs for acquiring merchandise inventory, such as import duties, freight, storage, and insurance, should not be added to the cost of inventory.
Perfection Company had cost of goods sold of $853,000, ending inventory of $70,500, and average inventory of $71,600. Its inventory turnover equals:
Internal controls that should be applied when a business takes a physical count of inventory should include all of the following except:
If a period-end inventory amount is reported in error, it can cause a misstatement in all of the following except:
Merchandise inventory includes:
Marquis Company uses a weighted-average perpetual inventory system and has the following purchases and sales:
August 2 10 units were purchased at $12 per unit.
August 18 15 units were purchased at $14 per unit.
August 29 12 units were sold.
What is the amount of the cost of goods sold for this sale? (Round average cost per unit to 2 decimal places.)
The inventory turnover ratio is calculated as:
Accounting principles require that inventory be reported at the market value (cost) of replacing inventory when cost is lower than market value.
The inventory valuation method that results in the lowest taxable income in a period of inflation is:
A company has beginning inventory of 15 units at a cost of $12 each on October 1. On October 5, it purchases 10 units at $13 per unit. On October 12 it purchases 20 units at $14 per unit. On October 15, it sells 30 units. Using the FIFO periodic inventory method, what is the value of the inventory at October 15 after the sale?
The inventory valuation method that tends to smooth out erratic changes in costs is:
A company had the following purchases and sales during its first year of operations:
PurchasesSalesJanuary:10 units at $1206 unitsFebruary:20 units at $1255 unitsMay:15 units at $1309 unitsSeptember:12 units at $1358 unitsNovember:10 units at $14013 units
On December 31, there were 26 units remaining in ending inventory. Using the periodic FIFO inventory costing method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)
A flood destroyed a company's warehouse contents on September 12. The following information was the only information that was salvaged:Inventory, beginning: $28,000 Purchases for the period: $17,000 Sales for the period: $55,000 Sales returns for the period: $700 The company's average gross profit ratio is 35%. What is the estimated cost of the lost inventory using the gross profit method?
In applying the lower of cost or market method to inventory valuation, market is defined as the current selling price.
Grays Company has inventory of 10 units at a cost of $10 each on August 1. On August 3, it purchased 20 units at $12 each. 12 units are sold on August 6. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 12 units that were sold?
Generally accepted accounting principles require that the inventory of a company be reported at:
Given the following information, determine the cost of the inventory at June 30 using the LIFO perpetual inventory method.
June 1Beginning inventory15 units at $20 eachJune 15Sale of 6 units for $50 each June 29Purchase8 units at $25 each
The cost of the ending inventory is:
A company's inventory records report the following in November of the current year:
BeginningNovember 15 units @ $20PurchaseNovember 210 units @ $22PurchaseNovember 126 units @ $25
On November 8, it sold 12 units for $54 each. Using the LIFO perpetual inventory method, what was the amount recorded in the cost of goods sold account for the 12 units sold?
A flood destroyed a company's warehouse contents on September 12. The following information was the only information that was salvaged:Inventory, beginning: $28,000 Purchases for the period: $17,000 Sales for the period: $55,000 Sales returns for the period: $700 The company's average gross profit ratio is 35%. What is the estimated cost of the lost inventory using the gross profit method?
An understatement of the ending inventory balance will overstate cost of goods sold and understate net income.
Giorgio had cost of goods sold of $9,421 million, ending inventory of $2,089 million, and average inventory of $1,965 million. Its inventory turnover equals:
All of the following statements regarding the financial statement impact of inventory costing are true except.
Eastview Company uses a periodic LIFO inventory system, and has the following purchases and sales:
January 1150 units were purchased at $9 per unit.January 17120 units were sold.January 20160 units were purchased at $11 per unit.January 29150 units were sold.
What is the value of ending inventory?
Days' sales in inventory:
A company had the following purchases and sales during its first year of operations: PurchasesSalesJanuary:10 units at $1206 unitsFebruary:20 units at $1255 unitsMay:15 units at $1309 unitsSeptember:12 units at $1358 unitsNovember:10 units at $14013 units On December 31, there were 26 units remaining in ending inventory. Using the periodic LIFO inventory costing method, what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)
Underwood had cost of goods sold of $8 million and its ending inventory was $2 million. Therefore, its days' sales in inventory equals 25 days.
Costs included in the Merchandise Inventory account can include all of the following except:
A company had the following purchases and sales during its first month of operations:
January 1Purchased 10 units at $4.00 per unitJanuary 9Sold 6 units at $12.00 per unitJanuary 17Purchased 8 units at $5.50 per unitJanuary 27Sold 7 units at $12.00 per unit
Using the perpetual weighted average method, what is the value of cost of goods sold? (Round weighted average costs per unit to 2 decimal places.)
Bedrock Company reported a December 31 ending inventory balance of $412,000. The following additional information is also available: The ending inventory balance of $412,000 included $72,000 of consigned inventory for which Bedrock was the consignor. The ending inventory balance of $412,000 included $22,000 of office supplies that were stored in the warehouse and were to be used by the company's supervisors and managers during the coming year. Based on this information, the correct balance for ending inventory on December 31 is:
The reasoning behind the retail inventory method is that if we can get a good estimate of the cost-to-retail ratio, we can multiply ending inventory at retail by this ratio to estimate ending inventory at cost.
Under FIFO, the most recent costs are assigned to ending inventory.
The inventory valuation method that results in the lowest taxable income in a period of inflation is:
A company had the following purchases and sales during its first year of operations:
PurchasesSalesJanuary:10 units at $1206 unitsFebruary:20 units at $1255 unitsMay:15 units at $1309 unitsSeptember:12 units at $1358 unitsNovember:10 units at $14013 units
On December 31, there were 26 units remaining in ending inventory. Using the perpetual FIFO inventory costing method, what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)
Merchandise inventory includes:
Companies can and often do use different costing methods for financial reporting and tax reporting. An exception to this is the:
A company had the following purchases and sales during its first year of operations: PurchasesSalesJanuary:10 units at $1206 unitsFebruary:20 units at $1255 unitsMay:15 units at $1309 unitsSeptember:12 units at $1358 unitsNovember:10 units at $14013 units On December 31, there were 26 units remaining in ending inventory. Using the periodic FIFO inventory costing method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)
A company's current LIFO inventory consists of 5,000 units purchased at $6 per unit. Replacement cost has now fallen to $5 per unit. What is the entry the company must record to adjust inventory to market?
The FIFO inventory method assumes that costs for the latest units purchased are the first to be charged to the cost of goods sold.
Jefferson Company has sales of $300,000 and cost of goods available for sale of $270,000. If the gross profit ratio is typically 30%, the estimated cost of the ending inventory under the gross profit method would be:
An error in the ending inventory balance will cause an error in the calculation of cost of goods sold.
Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to the ending inventory using FIFO.
DateActivitiesUnits Acquired at CostUnits Sold at RetailMay 1Beginning Inventory150 units @ $10.00 5Purchase220 units @ $12.00 10Sales 140 units @ $20.0015Purchase100 units @ $13.00 24Sales 90 units @ $21.00
Hull Company reported the following income statement information for the current year:
Sales$410,000 Cost of goods sold: Beginning inventory$132,000 Cost of goods purchased 273,000 Cost of goods available for sale 405,000 Ending inventory 144,000 Cost of goods sold 261,000 Gross profit$149,000
The beginning inventory balance is correct. However, the ending inventory figure was overstated by $20,000. Given this information, the correct gross profit would be:
The inventory valuation method that tends to smooth out erratic changes in costs is:
An advantage of the weighted average inventory method is that it tends to smooth out erratic changes in costs.
The inventory valuation method that identifies each item in ending inventory with a specific purchase and invoice is the:
A merchandiser's ability to pay its short-term obligations depends on many factors including how quickly it sells its merchandise inventory.
A company's inventory records report the following in November of the current year:
BeginningNovember 15 units @ $20PurchaseNovember 210 units @ $22PurchaseNovember 126 units @ $25
On November 8, it sold 12 units for $54 each. Using the LIFO perpetual inventory method, what was the amount recorded in the cost of goods sold account for the 12 units sold?
A company had inventory on November 1 of 5 units at a cost of $20 each. On November 2, they purchased 10 units at $22 each. On November 6 they purchased 6 units at $25 each. On November 8, 8 units were sold for $55 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale?
A company has the following per unit original costs and market values for its inventory. Lower of cost or market is applied to individual items.Part A: 50 units with a cost of $5, and replacement cost of $4.50Part B: 75 units with a cost of $6, and replacement cost of $6.50Part C: 160 units with a cost of $3, and replacement cost of $2.50Under the lower of cost or market method, the total value of this company's ending inventory is:
One application of internal control when taking a physical count of inventory is the use of pre-numbered inventory tickets.
A company had the following purchases and sales during its first year of operations:
PurchasesSalesJanuary:10 units at $1206 unitsFebruary:20 units at $1255 unitsMay:15 units at $1309 unitsSeptember:12 units at $1358 unitsNovember:10 units at $14013 units
On December 31, there were 26 units remaining in ending inventory. Using the perpetual LIFO inventory costing method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)
A company has beginning inventory of 10 units at a cost of $10 each on February 1. On February 3, it purchases 20 units at $12 each. 12 units are sold on February 5. Using the FIFO periodic inventory method, what is the cost of the 12 units that are sold?
Starlight Company has inventory of 8 units at a cost of $200 each on October 1. On October 2, it purchased 20 units at $205 each. 11 units are sold on October 4. Using the LIFO perpetual inventory method, what is the value of inventory after the October 4 sale?
Understating ending inventory understates both current and total assets.
Using the retail inventory method, if the cost to retail ratio is 70% and ending inventory at retail is $145,000, then estimated ending inventory at cost is $207,143.
Perfection Company had cost of goods sold of $853,000, ending inventory of $70,500, and average inventory of $71,600. Its inventory turnover equals:
The understatement of the beginning inventory balance causes:
A company's cost of inventory was $219,500. Due to phenomenal demand the market value of its inventory increased to $221,700. This company should record the inventory at its market value.
Monarch Company uses a weighted-average perpetual inventory system and has the following purchases and sales:
January 1 20 units were purchased at $10 per unit.
January 12 12 units were sold.
January 20 18 units were purchased at $11 per unit.
What is the value of cost of goods sold?
A company had the following purchases and sales during its first year of operations:
Purchases Sales
January: 10 units at $120 6 units
February: 20 units at $125 5 units
May: 15 units at $130 9 units
September: 12 units at $135 8 units
November: 10 units at $140 13 units
On December 31, there were 26 units remaining in ending inventory. Using the perpetual FIFO inventory costing method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)
In applying the lower of cost or market method to inventory valuation, market is defined as the current selling price.
A company has inventory with a selling price of $451,000, a market value of $223,000, and a cost of $241,000. According to the lower of cost or market, the inventory should be written down to $223,000.
Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using FIFO.
Date Activities Units Acquired at Cost Units Sold at Retail
May 1 Beginning Inventory 150 units @ $10.00
5 Purchase 220 units @ $12.00
10 Sales 140 units @ $20.00
15 Purchase 100 units @ $13.00
24 Sales 90 units @ $21.00
It can be expected that companies selling perishable goods have a higher inventory turnover than companies selling nonperishable goods.
Which of the following inventory costing methods will always result in the same values for ending inventory and cost of goods sold regardless of whether a perpetual or periodic inventory system is used?
A company had the following purchases and sales during its first year of operations:
Purchases Sales
January: 10 units at $120 6 units
February: 20 units at $125 5 units
May: 15 units at $130 9 units
September: 12 units at $135 8 units
November: 10 units at $140 13 units
On December 31, there were 26 units remaining in ending inventory. Using the perpetual FIFO inventory costing method, what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)
A company has the following per unit original costs and market values for its inventory. Lower of cost or market is applied to individual items.Part A: 50 units with a cost of $5, and replacement cost of $4.50Part B: 75 units with a cost of $6, and replacement cost of $6.50Part C: 160 units with a cost of $3, and replacement cost of $2.50Under the lower of cost or market method, the total value of this company's ending inventory is:
A company with an acid-test ratio of 0.1 is likely to face near-term liquidity problems.
Cost of goods sold is an expense, and is reported on the income statement.
Beginning inventory plus net purchases equals merchandise available for sale.
A perpetual inventory system updates accounting records for each purchase and each sale of inventory.
Purchases allowances refer to a price reduction (allowance) granted to a buyer of defective or unacceptable merchandise.
If goods are shipped FOB shipping point, the seller does not record revenue from the sale until the goods arrive at their destination.
Credit terms of 2/10, n/30 imply that the seller offers the purchaser a 2% cash discount if the amount is paid within 10 days of the invoice date. Otherwise, the full amount is due in 30 days.
Sales of $350,000 and net sales of $323,000 could reflect sales discounts of $27,000.
A multiple-step income statement has three main parts: (1) gross profit, (2) income from operations, and (3) net income.
Operating expenses are classified into two categories: selling expenses and cost of goods sold.
Assuming items in inventory were purchased at different prices, the inventory cost method used affects net income.
Understating ending inventory understates both current and total assets.
A low inventory turnover ratio can suggest a company is struggling to sell inventory.
Methods used to assign costs to inventory and to cost of goods sold include specific identification, first-in, first-out (FIFO), last-in, first-out (LIFO), and weighted average.
Under FIFO, the most recent costs are assigned to ending inventory.
In applying the lower of cost or market method to inventory valuation, market is defined as the current selling
When purchase costs regularly rise, FIFO reports the lowest cost of goods sold, which yields the highest gross profit and net income.
An overstatement of ending inventory will cause an overstatement of assets and an understatement of equity on the balance sheet.
Underwood had cost of goods sold of $8 million and its ending inventory was $2 million. Therefore, its days' sales in inventory equals 25 days.
The cost flow method chosen must match the actual physical flow of the goods.
The assignment of costs to the cost of goods sold and to ending inventory using FIFO is the same for both the perpetual and periodic inventory systems.
A company has inventory with a selling price of $451,000, a market value of $223,000, and a cost of $241,000. According to the lower of cost or market, the inventory should be written down to $223,000.
A company is considering purchasing a parcel of land that was originally acquired by the seller for $102,000. While the land is currently offered for sale at $184,000, it is considered by the purchaser as easily being worth $174,000, and is finally purchased for $171,000, the land should be recorded in the purchaser's books at:
If a company uses $1,560 of its cash to purchase supplies, the effect on the accounting equation would be:
If a company receives $10,800 from a client for services provided, the effect on the accounting equation would be:
If a company purchases equipment costing $5,300 on credit, the effect on the accounting equation would be:
If equity is $298,000 and liabilities are $191,000, then assets equal:
If assets are $410,000 and liabilities are $199,000, then equity equals:
If assets are $108,000 and liabilities are $37,000, then equity equals:
The assets of a company total $718,000; the liabilities, $209,000. What is the amount of equity?
On May 31 of the current year, the assets and liabilities of Riser, Incorporated are as follows: Cash $20,300; Accounts Receivable, $8,000; Supplies, $1,400; Equipment, $12,750; Accounts Payable, $10,150. What is the amount of equity as of May 31 of the current year?
On August 31 of the current year, the assets and liabilities of Gladstone, Incorporated are as follows: Cash $30,450; Supplies, $630; Equipment, $10,300; Accounts Payable, $8,900. What is the amount of equity as of August 31 of the current year?
Saddleback Company paid off $46,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?
If Dallas Company billed a client for $23,000 of consulting work completed, the accounts receivable asset increases by $23,000 and:
Echo Company has assets of $622,000, liabilities of $261,000, and equity of $361,000. It buys office equipment on credit for $86,000. What would be the effects of this transaction on the accounting equation?
If the liabilities of a business increased $85,000 during a period of time and equity in the business decreased $35,000 during the same period, the assets of the business must have:
If the assets of a business increased $113,000 during a period of time and its liabilities increased $79,000 during the same period, equity in the business must have:
If the liabilities of a company increased $86,000 during a period of time and equity in the company decreased $25,000 during the same period, what was the effect on the assets?
If assets are $399,000 and equity is $137,000, then liabilities are:
Rush Company had net income of $204 million and average total assets of $1,990 million. Its return on assets (ROA) is:
Cage Company had net income of $365 million and average total assets of $2,040 million. Its return on assets (ROA) is:
Speedy Company has net income of $25,955, and assets at the beginning of the year of $207,000. Assets at the end of the year total $253,000. Compute its return on assets.
Chou Company has a net income of $57,000, assets at the beginning of the year are $264,000 and assets at the end of the year are $314,000. Compute its return on assets.
Use the following information as of December 31 to determine equity.
Cash: $62,000
Buildings: $180,000
Equipment: $211,000
Liabilities: $146,000
Use the following information for Meeker Corporation to determine the amount of equity to report.
Cash: $66,000
Buildings: $123,000
Land: $203,500
Liabilities: $128,500
Determine the net income of a company for which the following information is available for the month of July.
Employee salaries expense: $188,000
Interest expense: $18,000
Rent expense: $28,000
Consulting revenue: $432,000
Determine the net income of a company for which the following information is available for the month of September.
Service revenue: $326,000
Rent expense: $61,000
Utilities expense: $4,500
Salaries expense: $94,000
Zippy had cash inflows from operating activities of $70,500; cash outflows from investing activities of $55,000; and cash inflows from financing activities of $33,000. The net change in cash was:
Zinc has beginning equity of $281,000, total revenues of $81,000, and total expenses of $52,000. The company has no other transactions impacting equity. Its ending equity is:
Darden has beginning equity of $295,000, total revenues of $81,000, and total expenses of $43,000. The company has no other transactions impacting equity. The company's ending equity is:
A company's balance sheet shows: Cash $46,000, Accounts receivable $28,000, Office equipment $62,000, and Accounts payable $29,000. What is the amount of total equity?
A company reported total equity of $147,000 at the beginning of the year. The company reported $212,000 in revenues and $166,000 in expenses for the year. Liabilities at the end of the year totaled $93,000. What are the total assets of the company at the end of the year?
Flitter reported net income of $26,500 for the past year. At the beginning of the year the company had $218,000 in assets and $68,000 in liabilities. By year end, assets had increased to $318,000 and liabilities were $93,000. Calculate its return on assets:
Cruz Company had revenues of $86,000 and expenses of $53,000 for the year. Its assets at the beginning of the year were $403,000. At the end of the year, assets were worth $453,000. Calculate its return on assets.
Lito Company had cash inflows from operating activities of $32,000; cash outflows from investing activities of $27,000, and cash outflows from financing activities of $17,000. Calculate the net increase or decrease in cash.
Charlie's Chocolates' has accounts receivable of $68,000 and accounts payable of $29,000. The company has revenues of $101,000 and expenses of $73,000. Calculate its net income.
Nexis had beginning equity of $86,000; revenues of $132,000, and expenses of $89,400. The company had no other transactions impacting equity. Calculate the ending equity.
Doc's Ribhouse had beginning equity of $61,000; net income of $23,000. The company has no other transactions impacting equity. Calculate the ending equity.
A company's balance sheet shows cash of $35,000, accounts receivable of $41,000, equipment of $72,000, and equity of $83,000. What is the amount of liabilities?
Edison Consulting received a $550 utilities bill and immediately paid it. Edison's general journal entry to record this transaction will include a:
GreenLawn Company provides landscaping services to clients. On May 1, a customer paid GreenLawn $81,000 for 6-months services in advance. GreenLawn's general journal entry to record this transaction will include a:
A company receives $10,500 cash for performing landscaping services. Which of the following general journal entries will the company make to record this transaction?
Green Cleaning purchased $700 of office supplies on credit. The company's policy is to initially record prepaid and unearned items in balance sheet accounts. Which of the following general journal entries will Green Cleaning make to record this transaction?
Alicia Tax Services paid $620 to settle an account payable. Which of the following general journal entries will Alicia Tax Services make to record this transaction?
A law firm billed a client $2,600 for work performed in the current month. Which of the following general journal entries will the firm make to record this transaction?
A law firm collected $2,100 on account for work performed and billed in the previous month. Which of the following general journal entries will the firm make to record this collection of cash?
A law firm collected $3,700 in advance for work to be performed in three months. Which of the following general journal entries will the firm make to record this transaction?
Specter Consulting purchased $9,200 of supplies and paid cash immediately. Which of the following general journal entries will Specter Consulting make to record this transaction?
Jose Consulting paid $800 cash for utilities for the current month. Determine the general journal entry that Jose Consulting will make to record this transaction.
Ted Catering received $1,080 cash in advance from a customer for catering services to be provided in three months. Determine the general journal entry that Ted Catering will make to record the cash receipt.
Adriana Graphic Design receives $1,550 from a client billed in a previous month for services provided. Which of the following general journal entries will Adriana Graphic Design make to record this transaction?
Russell Company collected cash of $680 immediately after providing consulting services to a client. Which of the following general journal entries will Russell Company make to record this transaction?
Sara's Studio provided $190 of dance instruction and rented out its dance studio to the same client for another $120. The client paid cash immediately. Identify the general journal entry below that Sara's Studio will make to record the transaction.
A company purchased $2,600 of supplies on credit. Identify the general journal entry below that the company will make to record the transaction.
A company paid $1,800 cash for this month's utilities. Identify the general journal entry below that the company will make to record the transaction.
On May 31, the Cash account of Tesla had a normal balance of $6,600. During May, the account was debited for a total of $13,800 and credited for a total of $13,100. What was the balance in the Cash account at the beginning of May?
On April 30, Gomez Services had an Accounts Receivable balance of $32,300. During the month of May, total credits to Accounts Receivable were $67,600 from customer payments. The May 31 Accounts Receivable balance was $26,000. What was the amount of credit sales during May?
During the month of February, Rubio Services had cash receipts of $8,400 and cash payments of $10,400. The February 28 cash balance was $3,600. What was the February 1 beginning cash balance?
The following transactions occurred during July:
Received $1,050 cash for services provided to a customer during July.
Collected $5,000 cash for services previously completed in June.
Received $900 from a customer in partial payment of his account receivable which arose from sales in June.
Provided services to a customer on credit, $525.
Borrowed $7,500 from the bank by signing a promissory note.
Received $1,400 cash from a customer for services to be performed next year.
What was the amount of revenue for July?
Marco Nelson opened a frame shop and completed these transactions:
Sold custom frames and immediately collected $40,300 cash for the sale.
Purchased $100 of office supplies on credit.
Paid $1,500 cash for the receptionist's salary.
Sold a custom frame service and collected $4,800 cash on the sale.
Completed framing services and billed the client $230.
What was the balance of the cash account after these transactions were posted?
At the beginning of January of the current year, Sorrel Company's ledger reflected a normal balance of $54,000 for accounts receivable. During January, the company collected $15,200 from customers on account and provided additional services to customers on account totaling $12,700. Additionally, during January one customer paid Mikey $5,200 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be:
During the month of March, Harley's Computer Services made purchases on account totaling $45,900. Also, during the month of March, Harley was paid $11,600 by a customer for services to be provided in the future and paid $38,100 of cash on its accounts payable balance. If the balance in the accounts payable account at the beginning of March was $78,500, what is the balance in accounts payable at the end of March?
On January 1 of the current year, Jimmy's Sandwich Company reported total equity of $132,000. During the current year, total revenues were $114,000, while total expenses were $123,500. No other changes in equity occurred during the year. The change in total equity during the year was:
A company opened on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books:
The company received $13,600 cash for services provided.
The company paid $2,200 cash for an insurance policy covering the next 24 months.
The company received $5,800 cash for services provided.
The company purchased $6,300 of office equipment on credit.
The company provided $2,850 of services to customers on account.
The company paid cash of $1,600 for monthly rent.
The company paid $3,200 on the office equipment purchased in transaction #5 above.
Paid $285 cash for January utilities.
A company purchased $21,800 of supplies on credit. The journal entry to record this transaction consists of a:
Jennings Company has total assets of $453 million. Its total liabilities are $124.5 million. Its equity is $328.5 million. Calculate the debt ratio. (Round your answer to 1 decimal place.)
Sanders Company has total assets of $391 million. Its total liabilities are $103.1 million, and its equity is $287.9 million. Calculate its debt ratio. (Round your answer to 1 decimal place.)
At the end of the current year, James Company reported total liabilities of $310,000 and total equity of $110,000. The company's debt ratio was:
At the beginning of the current year, Snell Company's total assets were $249,800 and its total liabilities were $173,300. During the year, the company reported total revenues of $93,000 and total expenses of $81,000. There were no other changes in total equity during the year, and total assets at the end of the year were $261,800. The company's debt ratio at the end of the current year is:
At the end of its first month of operations, a company reported Revenue of $43,600. It also reported Wages Expense, $8,200; Rent Expense, $7,200; and Utilities Expense, $2,100. Calculate net income reported on the income statement at month-end.
A bookkeeper has debited an asset account for $5,100 and credited a liability account for $2,800. Which of the following would be an incorrectway to complete the recording of this transaction:
A $25 credit to Revenue was posted as a $250 credit. By what amount is the Revenue account in error?
At year-end, a trial balance showed total credits exceeding total debits by $5,750. This difference could have been caused by:
Identify the item below that would cause the trial balance to notbalance?
The credit purchase of a new oven for $5,000 was posted to Kitchen Equipment as a $5,000 debit and to Accounts Payable as a $5,000 debit. What effect would this error have on the trial balance?
Identify which error will cause the trial balance to be out of balance.
A $190 credit to Supplies was credited to Revenue by mistake. By what amounts are the accounts under- or overstated as a result of this error?
During March, the following transactions occurred:
The company paid $2,900 cash to rent office space for the month of March.
The company received $25,000 cash for repair services provided during March.
The company paid $7,100 for salaries for the month of March.
The company provided $3,900 of services to customers on account.
The company paid cash of $1,400 for utilities for the month of March.
The company received $4,000 cash in advance from a customer for repair services to be provided in April.
The company purchased $5,900 of land for cash.
Based on this information, net income for March would be:
A company reported net income of $3,645 for October. Its net sales for October were $13,500. Its profit margin is:
On July 1 of the current calendar year, Olive Company paid $7,900 cash for management services to be performed over a two-year period beginning July 1. The adjusting entry on December 31 of the current year for Olive would include:
Prior to recording adjusting entries, the Office Supplies account had a $388 debit balance. A physical count of the supplies showed $98 of unused supplies available. The required adjusting entry is:
On July 1, a company paid the $2,640 premium on a one-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the first year ended December 31?
A company had no office supplies available at the beginning of the year. During the year, the company purchased $360 worth of office supplies. On December 31, $120 worth of office supplies remained. How much should the company report as office supplies expense for the year?
On January 1, a company purchased a five-year insurance policy for $2,400 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:
On May 1, a two-year insurance policy was purchased for $36,000 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31?
Fragment Company leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $950. Fragment collected the entire $7,600 cash on October 1 and recorded it as unearned revenue. Assuming adjusting entries are only made at year-end, the adjusting entry made on December 31 would be:
A company pays its employees $4,150 each Friday, which amounts to $830 per day for the five-day work week that begins on Monday. If the monthly accounting period ends on Thursday and the employees worked through Thursday, the amount of salaries earned but unpaid at the end of the accounting period is:
On January 1, Northern College received $1,280,000 from its students for the spring semester that it recorded in Unearned Revenue. The term spans four months beginning on January 1 and the college earns the revenue evenly over the months of the term. Assuming the college prepares adjustments on January 31, what amount of tuition revenue should the college recognize for the month of January?
On December 1, Oren Marketing Company received $6,600 from a customer for a 2-month marketing plan to be completed January 31 of the following year. The cash receipt was recorded as unearned revenue. The adjusting entry for the year ended December 31 would include:
Harrod Company paid $5,800 for a 4-month insurance premium in advance on November 1, with coverage beginning on that date. The balance in the prepaid insurance account before adjustment at the end of the year is $5,800, and no adjustments had been made previously. The adjusting entry required on December 31 is:
On April 1, Garcia Publishing Company received $2,268 from Otisco, Incorporated for 36-month subscriptions to several different magazines. The subscriptions started immediately. What is the amount of revenue that should be recorded by Garcia Publishing Company for the first year of the subscription assuming the company uses a calendar-year reporting period?
On April 1, Garcia Publishing Company received $32,580 from Otisco, Incorporated for 36-month subscriptions to several different magazines. The company credited Unearned Revenue for the amount received and the subscriptions started immediately. Assuming adjustments are only made at year-end, what is the adjusting entry that should be recorded by Garcia Publishing Company on December 31 of the first year?
On April 1, Otisco, Incorporated paid Garcia Publishing Company $2,880 for 36-month subscriptions to several different magazines. Otisco debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. What amount should appear in the Prepaid Subscription account for Otisco, Incorporated after adjustments on December 31 of the first year assuming the company is using a calendar-year reporting period and no previous adjustment has been made?
The correct adjusting entry for accrued and unpaid employee salaries of $9,400 on December 31 is:
On January 1, a company purchased new furniture at a cost of $27,000. The furniture is estimated to have a useful life of 5 years and a salvage value of $3,300. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the furniture for the first year ended December 31?
If Bojana Tax Services' office supplies account balance on March 1 was $500, the company purchased $250 of supplies during the month, and a physical count of supplies on hand at the end of March indicated $400 unused, what is the amount of the adjusting entry for office supplies on March 31?
A physical count of supplies on hand at the end of May for Masters, Incorporated indicated $1,247 of supplies available. The general ledger balance before any adjustment is $2,070. What is the adjusting entry for supplies that should be recorded on May 31?
On December 1, Milton Company borrowed $420,000, at 10% annual interest, from the Tennessee National Bank. Interest is paid when the loan matures one year from the issue date. What is the adjusting entry for accruing interest that Milton would need to make on December 31, the calendar year-end?
On September 1, Kennedy Company loaned $120,000, at 10% annual interest, to a customer. Interest and principal will be collected when the loan matures one year from the issue date. Assuming adjustments are only made at year-end, what is the adjusting entry for accruing interest that Kennedy would need to make on December 31, the calendar year-end?
On October 1, Vista View Company rented warehouse space to a tenant for $2,600 per month and received $13,000 for five months' rent in advance on that date, with the lease beginning immediately. The cash receipt was credited to the Unearned Revenue account. The company's annual accounting period ends on December 31. The Unearned Revenue account balance at the end of December, after adjustment, should be:
On November 1, Jasper Company loaned another company $240,000 at a 9% interest rate. The note receivable plus interest will not be collected until March 1 of the following year. The company's annual accounting period ends on December 31. The amount of interest revenue that should be reported in the first year is:
Castillo Services paid K. Castillo, the sole shareholder of Castillo Services, $6,800 in dividends during the current year. The entry to close the dividends account at the end of the year is:
High Step Shoes had annual revenues of $202,000, expenses of $112,200, and dividends of $24,800 during the current year. The retained earnings account before closing had a balance of $314,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:
High Step Shoes had annual revenues of $187,000, expenses of $104,700, and paid dividends of $18,800 during the current year. The retained earnings account before closing had a balance of $299,000. The Net Income for the year is:
High Step Shoes had annual revenues of $198,000, expenses of $110,200, and paid dividends of $23,200 during the current year. The retained earnings account before closing had a balance of $310,000. The ending retained earnings balance after closing is:
A company had services revenues of $60,000 and expenses of $46,250 for the accounting period. Dividends of $6,600 were paid in cash during the same period. Which of the following entries could not be a closing entry?
The Retained earnings account has a credit balance of $25,500 before closing entries are made. If total revenues for the period are $80,200, total expenses are $58,800, and dividends are $13,500, what is the ending balance in the Retained earnings account after all closing entries are made?
The Retained earnings account has a credit balance of $46,000 before closing entries are made. Services revenue for the period is $64,200, wages expense is $44,300, and dividends are $12,600. What is the correct closing entry for the revenue accounts?
The Retained earnings account has a credit balance of $39,000 before closing entries are made. Services revenue for the period is $57,200, wages expense is $40,800, and dividends are $9,800. What is the correct closing entry for the expense accounts?
After preparing and posting the closing entries for revenues and expenses, the income summary account has a debit balance of $25,000. The entry to close the income summary account will be:
For the year ended December 31, a company had services revenue of $197,000 and wages expense of $118,200. Dividends of $39,400 were paid during the year. Which of the following entries could not be a closing entry?
For the year ended December 31, a company has revenues of $327,000 and expenses of $201,000. The company paid $54,000 in dividends during the year. The balance in the Retained earnings account before closing is $91,000. Which of the following entries would be used to close the dividends account?
