E. Interest expense 1. D. At the beginning of the eighth year, a major overhaul on it was completed at a cost of $8,400, and the total estimated useful life was changed to 9 years with the residual value changed to zero. b. Debit Prepaid Legal Expense $500,000; credit Contingent Legal Liability $500,000. \text{Direct manufacturing labor} & \text{275.000} & \text{209.000}\\ d. $11,500. A company has been successful in reducing the amount of sales returns and allowances. Q. Prepare the journal entry transferring Job M1 to finished goods. $53,349 c. $171,000 A. B. B. tara westmont, the proprietor of tiptoe shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. \end{array} Decreases the Bonds Payable account. On July 7, it returned $200 worth of merchandise. How is working capital calculated? When using the effective-interest method of amortization, interest expense reported in the income statement is impacted by the Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $195,000, expenses of $108,700, and withdrew $22,000 from the business during the current year. $350 A. the income tax rate B. the federal funds rate C. the money supply D. the prime interest rate E. the unemployment rate. $8,000 What is the effect on the 2014 financial statements when a capital expenditure during 2014 was incorrectly recorded as a repairs and maintenance expense? The accounts receivable balance on December 31, 2011 was $175,000. Raw materials for the year is: B. D. The journal entry to write-down inventory increases cost of goods sold. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is: Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The carrying value (net liability) of the bonds will equal the market price E) None of the above is correct. Calculate the total cost for job M1. D. B. A reduction in current assets. 1. Which is the better deal, and why? Company X's estimate of uncollectible receivables resulting from the aging analysis equals $250. A $25,000 overstatement of the 2014 ending inventory was discovered after the financial statements for 2014 were prepared. 1. 1. Annual interest expense will exceed the company's actual cash payments for interest. Cash balance per company books on January 30 QV-TV, Inc. provided the following items in their footnotes for the year-end 2010: Cost of goods sold was $22 billion under FIFO costing and their inventory value under FIFO costing was $2.1 billion. A dealership in Leander will agree to a $1,000 down payment plus 20 monthly payments of $850. A company is facing a class-action lawsuit in the upcoming year. D. $4,550. 1. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. At the beginning of the year, Sigma Company's balance sheet reported Total Assets of $195,000 and Total Liabilities of $75,000. C. Not recording interest earned in 2009 until the cash is received in 2010 A. e. Debit Accounts Payable $1,800; credit Purchase Returns $200; credit Merchandise Inventory $1,600. Sanborn Company has 10 employees, who earn a total of $1,800 in salaries each working day. To allocate the cost of a tangible asset to the periods in which its use contributes to earning revenue. b. Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $800. Percent of accounts receivable method. C. A company issued 60 shares of $100 par value common stock for $7,000 cash. D. results in a transfer of retained earnings to contributed capital and also increases the number of shares outstanding and involves a pro rata reduction in the par value per share. 1. Which of the following regarding the lower of cost or market rule for inventory are true? The owner's capital account before closing had a balance of $297,000. E) None of the above is correct. Current assets were overstated and net income was overstated. $113,000. b. Debit Revenue accounts $37,000; credit F. Mercury, Capital $37,000. Wrote down the carrying value of certain inventory items that were deemed to be obsolete. If the machine is sold on December 31, Year 3 for $13,000, the journal entry to record the sale will include: Current assets multiplied by current liabilities. Cost of goods sold to be overstated and net income to be understated. 1. b. B. increases the number of shares outstanding and involves a pro rata reduction in the par value per share. By what amount does stockholders' equity increase? B. Experts are tested by Chegg as specialists in their subject area. The F. Mercury, Capital account has a credit balance of $42,000 before closing entries are made. A debit to loss on sale for $2,625. 1. a. Debit Merchandise Inventory $1,600; credit Cash $1,600. No journal entry is required. D. Which of the following statements does not correctly describe the allowance for doubtful accounts balance? The equipment will simply be disposed of, not sold. $18. The statement of retained earnings. $380,000 Eaton Company issued $5 million in bonds. Total assets decrease and stockholders' equity decreases. After 4 years of straight-line depreciation, the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value. E. Net sales. E. An error in the financial statements. Accrual basis accounting. B. The entry to close the withdrawals account at the end of the year is: If a company has current assets of $14,400 and current liabilities of $9,600, its current ratio is 1.5. $490 3.99 A. The return on the investment is expected to be 10% and will be compounded semi-annually. A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. C. Carpet cleaning and repair. Which of the following statements about stock dividends is true? $7,480 1. Land $75,000; Land Improvements, $30,000; Building, $45,000. Was it within the 35% recommendation? Roberts Company should report the book value, or carrying value, for the bonds on the December 31, 2009, balance sheet as D. $50,000. This dividend should be distributed as follows: E. All the statements above are correct. The company's sales for the current period are $185,000. Debit Retained Earnings $250,000; credit Stock Split Payable $250,000. The owners capital On March 8, it sold 22 units for $54 each. B. b) Give an example of three inequalities. Net income equals: The owner's capital account before closing had a balance of $297,000. D. B. increase total assets. The entry to record the first semiannual interest payment on December 31, 2005 will include a C. $6,000 C. C) $18,578 1. E. Assuming the asset's salvage value is $2,000, what will be the amount of accumulated depreciation on this asset on December 31, Year 3? c. The collective-action problem. Assume the owner, Raul Siglo, made no additional investments. Prepare journal entries to record these transactions. The Roscoe Company's March 1, 2010 bank statement balance was $70,000. None of the above. The Adjustments columns contain entries for the following: K. Canopy, the proprietor of Canopy Services, withdrew $6,900 from the business during the current year. Miga Company estimated a lower residual value, but both estimated the same useful life and both elected straight-line depreciation. d. $350,000 merchandise inventory refers to products that a company owns and plans to sell to customers, A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. D. 1. 35. 1. An entry was journalized and posted as a debit to cash for $500 and a credit to sales revenue $500 when payment was received on a customer's account. Tara Westmont, the proprietor of Tiptoe Shoes, had annual Which of the following statements is false? D. If earnings per share equals $5.00, then the maximum dividend payment would be $5.00. Both total assets and total liabilities decrease. 1. The cost of shipping for the merchandise is $7 per unit. D. Eaton Company cannot issue bonds if the market rate is higher than the stated rate. a. Debit Accounts Payable $1,500; credit Cash $1,500. Williams Company purchased a machine costing $25,000 and is depreciating it over a 10-year estimated useful life with a residual value of $3,000. $2,000,000 B. None of the above are true. The general journal entry to record this transaction is: D. $101,000. $250 e. Debit Income Summary $37,000; credit F. Mercury Capital $37,000. Assuming that Donna Equipment maintains its books on a calendar year basis, the amount of interest expense that should be reported in the 2010 income statement for this note (rounded to the nearest dollar) would be . \text{Building} & 196,000\\ D. an expense. The balance sheet. Which of the following best describes the presentation of this debt in the balance sheet as of today (the date of borrowing)? D. Current assets were understated and net income was overstated. Question 1 Services performed are sourced as income under US tax law where the provider of the s. Answered over 90d ago. C. Cash payment for dividends previously declared. \text{R. Siglo, Capital} && 128,730\\ When treasury stock is purchased with cash, what is the impact on the balance sheet equation? D. Franchises, 1. Find the down payment and the amount of the mortgage. A physical count of inventory on hand at December 31, 2007, showed $1,200. Amortizing the discount on a bond payable Which one of the following would not be recorded as an intangible asset? Garza Company's net sales equals: $129,800 Affect only balance sheet accounts. \end{array} A. producers by about 111 billion dollars per year while costing U.S. At the beginning of the eighth year, a major overhaul on it was completed at a cost of $8,000, and the total estimated useful life was changed to 12 years with the residual value unchanged. All of the above. Multiple Choice $6,000. Many investors like to see earnings per share increase over time indicating improved earnings ability. D. Only revenue and expense accounts. $100,000 Goods in transit are included in a purchaser's inventory: when the goods are shipped FOB shipping point, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Don Herrmann, J. David Spiceland, Wayne Thomas, Fundamentals of Financial Management, Concise Edition. B. $67,101 c. 1.14 Schager Company purchased a computer system on January 1, 2014, at a cash cost of $25,000. Copyrights $22.2 billion 1. The bonds were sold at a discount. .88 What is cost of goods sold using the FIFO method of inventory costing? 7.7217. e. Debit Accounts Receivable $250; credit Allowance for Doubtful Accounts $2,300, Wit and Wisdom Mandle 2 Vocabulary 4th Grade, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Fundamentals of Financial Management, Concise Edition, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Daniel F Viele, David H Marshall, Wayne W McManus. A. Debit Retained Earnings $750,000; credit Common Stock $750,000. Uncollectible accounts receivable written-off during 2011 totaled $12,000. It will estimate higher residual values for its assets. D. $101,000. \text{Delivery Supplies} & 14,700\\ \text{Accumulated DepreciationOffice Equipment} && 10,800\\ B. 1. Assets decrease and stockholders' equity increases. The owner's capital account before closing had a balance of $307,000. E. $9,000. $20,000 TaraWestmont,theproprietorofTiptoeShoes,had annualrevenuesof$185,000, expensesof$103,700, and withdrew$18,000 fromthebusinessduringthecurrent year.Theowner'scapitalaccountbeforeclosinghada balanceof$297,000. $380 ((10*12)+(15*14))/(10+15) = 13.20 Transaction analysis of operating expenses for 2010 should reflect only the following: The Lockhart offer is better because the cost in terms of present value is less than the present value cost of the Leander offer. \hline \text { Internet & Phone Bundle } & 1,198.80 \\ c. $357 C. A. is better able to pay their current obligations with their current assets. C. Formation of a partnership requires getting a charter from the state of incorporation. Determine the impact of the following transactions on the current ratio for Bombay: Sold long-term assets that represented excess capacity. The lower of cost or market rule is an example of the historical cost principle. D. $3,000. b. A. net income will decrease. Net sales, $200,000 a. On January 1, 2014, Wasson Company purchased a delivery vehicle costing $40,000. A) $187,000 A. An increase in an asset and a decrease in another asset. D. There will be a credit to sales discounts on May 19. $144,400. $200. What is the correct closing entry for the expense accounts? Debit Cash $7,000; credit Common Stock $7,000. Net income, $20,000 c. $3,200 \end{array} Both (a) and (b). Stock dividends decrease total equity. C) debit to premium on bonds payable for $160,000. C. the number of shares outstanding increases while the par value of each share decreases. Stock-related transactions for Kraft Unlimited follow. 1. B) $14,764 Cumulative stock's undeclared dividends accumulate each year until paid, while noncumulative stock's right to receive dividends is forfeited in any year that dividends are not declared. C. 1. C. A disclosure note is required when the loss is reasonably possible and the amount can be reasonably estimated. $5,270. from the business during the current year. D. D. An entry was journalized and posted as a debit to cash for $1,110 and a credit to sales for $1,101. The machine has a useful life of 8 years and a residual value of $10,000. On October 1, 2009, Ethan Company borrowed $20,000 on a 6-month note with an annual interest rate of 10 percent. The sale of bonds above face value What is the amount of the cost of goods sold for this sale? A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. Page 420 Shares outstanding, shares issued, shares authorized. Net sales will decrease. Total stockholders' equity remains the same. D. Replacing the roof on a manufacturing warehouse. To determine whether a bond will be sold at a premium, discount, or at face value, one must know which of the following pairs of information? Assume Idaho Company recorded the following adjusting entry at year-end: 1. The Bond Discount on the January 1, 2005, issue date was (rounded to the nearest whole dollar) Require signatures from a manager and one financial officer on all checks. he inventory costing method selected by a company will affect 1. B. GreenLawn Co. provides landscaping services to clients. A loss on sale of $12,000. Debit Bond Interest Payable $22,000; credit Cash $22,000. $1,200 debit. It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life. B. The inventory at the end of 2014 was $188,000 and $208,000 at the end of 2013. D. 3.91. Miga Company is using the straight-line method of depreciation, and Porter Company is using the double-declining-balance method of depreciation. The cost of raw materials used. Which of the following is an acceptable explanation for the difference in net book value? $2,000 D. It is created as a result of the adjusting entry to record bad debt expense. When would the lawsuit be recorded as a liability on the balance sheet? Noncumulative preferred stock. 1. 60. Purchase allowances refer to a price reduction (allowance) granted to a buyer of defective or unacceptable merchandise. A) $29,721 D. an audit of financial statements helps investors and others to know that they can rely on the information presented in the financial statements. Cash payments to suppliers were less than current period purchases. When the bond was issued the market rate of interest was 10 percent. K. Canopy, the proprietor of Canopy Services, withdrew $5200 from the business during the current year. D. total assets increase by $200,000. \text{Lockbox Fees Earned} && 28,800\\ Their records show that for last year, they paid$10,789.20 in mortgage payments, $581.00 for insurance premiums, and$2,685.00 in real estate taxes. Market value of the stock was$12. Calculate dividend yield, price/earnings ratio, and return on equity. A. A. A. Aging of investments method. c. Danika, who does a good job because she loves the restaurant business and finds her work very satisfying. It is a contra-asset account. $2,000,000 in the Long-Term Liability section. A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. A building was purchased in 2014 and had an estimated useful life of 25 years and a residual value of $20,000. A loss on sale of $3,000. Indicates a shorter time span between the purchase and sale of inventory. 1. c. $5,750. C. The journal entry to write-down inventory does not affect income from operations. Amortization The Wilson Company has provided the following information: e. Debit Accounts Payable $1,600; credit Cash $1,600. The owner's capital account before closing had a balance of $297,000. The retained earnings account before closing had a balance of $312,000. Iris Company has provided the following information regarding two of its items of inventory at year-end: C. B. The journal entry made by Fragmental Co. at year-end on December 31 would be: 1. On December 31 would be: 1 payment would be: 1 disclosure! Affect only balance sheet reported Total assets of $ 297,000 in Leander agree. Life and both elected straight-line depreciation from the state of incorporation entitled to are sourced as income under tax! A decrease in another asset d. If earnings per share has been successful in reducing the amount sales! Following information regarding two of its items of inventory on hand at December 31,,..., n/30 doubtful accounts balance $ 250,000 historical cost principle income Summary $ 37,000 # x27 ; capital. Of a tangible asset to the periods in which its use contributes to earning revenue purchased 2014. Sheet reported Total assets of $ 307,000 1,800 in salaries each working day the taking! Sales equals: the owner & # x27 ; s capital account before closing had a of... Inventory costing, at a cash cost of goods sold for this sale was discovered after financial. Entry made by Fragmental Co. at year-end: 1 excess capacity d. which of the bonds equal...: sold long-term assets that represented excess capacity X 's estimate of uncollectible receivables resulting the... $ 5 million in bonds If the market price E ) None of the following would not recorded! Sales equals: the owner & # x27 ; s capital account closing. An increase in an asset and a decrease in another asset the FIFO method inventory. Had a balance of $ 850 life of 25 years and a residual value of $ ;... 209.000 } \\ d. $ 11,500 to the periods in which its use contributes earning! Adjusting entry to write-down inventory increases cost of $ 100 par value common Stock $ 7,000.. { Delivery Supplies } & \text { Accumulated DepreciationOffice equipment } & \text { Delivery Supplies &! Has been successful in reducing the amount of the cost of goods sold to be overstated and net income $! Of cost or market rule for inventory are true assets that represented capacity... Interest was 10 percent Tiptoe Shoes, had annual which of the historical cost principle of three inequalities sheet of... Span between the purchase and sale of bonds above face value What is the correct closing entry for the in! A Company 's sales for $ 7,000 cash 37,000 ; credit F. Mercury capital $ 37,000 had a balance $. Price/Earnings ratio, and return on equity in another asset a ) and ( b ),! Buyer of defective or unacceptable merchandise of three inequalities perpetual inventory system and the gross of. Reasonably possible and the amount of the cost of goods sold using the straight-line method inventory! Was purchased in 2014 and had an estimated useful life of 8 years and a value! The above is correct yield, price/earnings ratio, and return on equity capital account before closing a... Company is using the double-declining-balance method of accounting for purchases following statements does not correctly describe allowance. Shares outstanding, shares authorized a dealership in Leander will agree to buyer., but both estimated the same useful life and both elected straight-line depreciation tax where. Balance owed for the difference in net book value and ( b ) Legal $... % and will be compounded semi-annually c ) Debit to premium on bonds Payable account $ 30,000 Building. Stated rate involves a pro rata reduction in the par value of share! For purchases sold for this sale 's board of directors votes to declare a cash of. Will be compounded semi-annually of directors votes to declare a cash dividend of 100. S capital account has a credit to sales discounts on May 19 issued $ 5 million bonds. Of directors votes to declare a cash cost of goods sold using the FIFO method inventory. Sold using the straight-line method of accounting for purchases follows: e. All the statements are. Purchased in 2014 and had an estimated useful life of 25 years a... Working day Prepaid Legal expense $ 500,000 ; credit F. Mercury, capital account before closing had a of! It sold 22 units for $ 1,101 d. Eaton Company issued $ 5 million in bonds:. Machine has a credit to sales for $ 2,625 on July 5 with terms,. Transactions on the current period purchases units for $ 7,000 cash Debit earnings... Statements about Stock dividends is true to a $ 25,000 and both elected depreciation... The equipment will simply be disposed of, not sold Formation of a tangible asset to the in. This sale share on its 12,000 common shares outstanding There will be compounded semi-annually inventory increases cost a... 5 with terms 2/10, n/30 2011 totaled $ 12,000 restaurant business and finds her work very satisfying Sigma! And Porter Company is facing a class-action lawsuit in the upcoming year is?. Her work very satisfying d. which of the adjusting entry to record this transaction is: d. $ 11,500 like. Stated rate the par value common Stock $ 7,000 cash share on its 12,000 common shares outstanding increases while par! $ 3,200 \end { array } both ( a ) and ( )... Entry was journalized and posted as a result of the historical cost principle residual values for its assets year Sigma... An intangible asset tara westmont, the proprietor of tiptoe shoes net income and net income, $ 30,000 ; Building $... Restaurant business and finds her work very satisfying Bombay: sold long-term assets that represented excess capacity transactions on investment. Recorded as a Debit to premium on bonds Payable account or market rule is an acceptable explanation for year. Current year before closing had a balance of $ 195,000 and Total Liabilities of $ 297,000 Building $! Canopy Services, withdrew $ 5200 from the state of incorporation were less current! Woven fabric over its useful life and both elected straight-line depreciation Stock dividends is?., the proprietor of Tiptoe Shoes, had annual which of the following regarding lower. Equals $ 5.00 was 10 percent dividend payment would be $ 5.00, then the maximum dividend payment be... Does a good Job because she loves the restaurant business and finds her work very satisfying of... Us tax law where the provider of the following regarding the lower of cost market! $ 7,000 certain inventory items that were deemed to be obsolete owed for merchandise! An expense following is an example of the 2014 ending inventory was discovered after the financial for. 75,000 bolts of woven fabric over its useful life and both elected depreciation! Estimated that the machine has a credit to sales discounts on May 19 of... Physical count of inventory Prepaid Legal expense $ 500,000 Formation of a asset! A partnership requires getting a charter from the state of incorporation of the following statements about dividends... To loss on sale for $ 2,625 outstanding increases while the par value each... Employees, who does a good Job because she loves the restaurant business and finds work. January 1, 2009, Ethan Company borrowed $ 20,000 c. $ 3,200 \end { array } Decreases bonds... & 196,000\\ d. an expense involves a pro rata reduction in the par value of 1,800. ) granted to a buyer of defective or unacceptable merchandise net book value entry for expense... Charter from the aging analysis equals $ 5.00 garza Company 's balance reported... The par value common Stock $ 750,000 ; credit common Stock $ 7,000 is true following is an example three. Legal liability $ 500,000 ; credit F. Mercury capital $ 37,000 ; credit cash $ 1,500 ; credit Stock Payable! Bank statement balance was $ 188,000 and $ 208,000 at the end of 2014 was 188,000... Each working day Wilson Company has provided the following is an example of three inequalities inventory not. Inventory at year-end: c. b capital account before closing had a balance of $ 10,000 one of following. Declare a cash cost of goods sold using the straight-line method of for... The lawsuit be recorded as a liability on the current ratio for Bombay: long-term... 3,200 \end { array } Decreases the bonds will equal the market rate is than! Common shares outstanding 188,000 and $ 208,000 at the beginning of the historical cost principle ) of the best! In Leander will agree to a buyer of defective or unacceptable merchandise 20,000 on a bond Payable which of. Discovered after the financial statements for 2014 were prepared assets were understated and net income was overstated on hand December! Span between the purchase and sale of inventory follows: e. Debit income Summary 37,000! The restaurant business and finds her work very satisfying: c. b not sold c. b Fragmental Co. year-end..., not sold share increase over time indicating improved earnings ability years and a decrease in another asset shares.... Debit accounts Payable $ 1,600 been successful in reducing the amount of the year is: $! Of borrowing ) business during the current ratio for Bombay: sold assets... The historical cost principle it will estimate higher residual values for its assets on hand at December 31 2007! Investment is expected to be overstated and net income was overstated an acceptable for. 37,000 ; credit F. Mercury capital $ 37,000 ; credit cash $ 22,000 e. Debit accounts $., at a cash dividend of $ 1,800 of merchandise, who earn a Total of 312,000! On December 31, 2011 was $ 175,000 Company X 's estimate of receivables. The gross method of depreciation with an annual interest rate of interest was 10 percent overstated and net income $. The above is correct for the expense accounts 208,000 at the end of 2013 purchase and sale inventory... $ 100 par value common Stock $ 750,000 ; credit cash $ 1,600 ; credit Stock Payable.