1. During the month of March, Cooley Computer Services made purchases on account totaling $47,500. Also during the month of March, Cooley was paid $12,000 by a customer for services to be provided in the future and paid $38,900 of cash on its accounts payable balance. If the balance in the accounts payable account at the beginning of March was $81,300, what is the balance in accounts payable at the end of March?
2. Hal Smith opened Smith’s Repairs on March 1 of the current year. During March, the following transactions occurred and were recorded in the company’s books:
· Smith invested $25,500 cash in the business.
· Smith contributed $101,000 of equipment to the business.
· The company paid $2,100 cash to rent office space for the month.
· The company received $16,500 cash for repair services provided during March.
· The company paid $6,300 for salaries for the month.
· The company provided $3,100 of services to customers on account.
· The company paid cash of $510 for monthly utilities.
· The company received $3,200 cash in advance of providing repair services to a customer.
· Smith withdrew $5,100 for his personal use from the company.
Based on this information, net income for March would be:
$10,690. $13,890. $5,590. $8,790. $13,990.
3. A $140 credit to Office Equipment was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?
Office Equipment, overstated $140; Fees Earned, understated $140.
Office Equipment, overstated $140; Fees Earned, overstated $140.
Office Equipment, overstated $280; Fees Earned, understated $140.
Office Equipment, understated $140; Fees Earned, overstated $140.
Office Equipment, understated $280; Fees Earned, overstated $140
4. On March 31, Phoenix, Inc. paid Melanie Publishing Company $20,520 for a 3-year subscription for five different magazines. The subscriptions started immediately. What is the amount of revenue that should be recorded by Melanie Publishing Company for each year of the subscription assuming Melanie uses a calendar reporting period?
$20,520; $0; $0; $0.
$6,840; $6,840; $5,160.
$5,130; $6,840; $6,840; $1,710.
$0; $0; $0; $20,520.
The answer cannot be determined based on the information given.
5. Alex Company has 10 employees, who earn a total of $2,100 in salaries each working day. They are paid on Monday for the five-day workweek ending on the previous Friday. Assume that year ended December 31, is a Wednesday and all employees will be paid salaries for five full days on the following Monday. The adjusting entry needed on December 31 is:
Debit Salaries Expense, $6,300; credit Salaries Payable, $6,300.
Debit Salaries Expense, $4,200; credit Salaries Payable, $4,200.
Debit Salaries Expense, $10,500; credit Salaries Payable, $10,500.
Debit Salaries Payable, $6,300; credit Salaries Expense, $6,300.
Debit Salaries Expense, $6,300; credit Cash, $6,300.
6. On December 1, Miller Company borrowed $900,000, at 8% annual interest, from the Nomo Bank. Miller has 90 days before the first payment is required. What is the adjusting entry that Miller would need to make on December 31, the calendar year-end? (Use 360 days in a year.)
Debit Interest Payable, $6,000; credit Interest Expense, $6,000.
Debit Interest Expense, $6,000; credit Interest Payable, $6,000.
Debit Interest Expense, $6,000; credit Cash, $6,000.
Debit Interest Expense, $18,000; credit Interest Payable, $18,000.
Debit Interest Expense, $72,000; credit Interest Payable, $72,000.
7. A $45 credit to Sales was posted as a $180 credit. By what amount is Sales in error?
9. On March 31, Phoenix, Inc. paid Melanie Publishing Company $21,240 for a 3-year subscription for five different magazines. The subscriptions started immediately. What amount should appear in the Prepaid Subscription account for Phoenix Company after adjustments on December 31 each year assuming Phoenix using a calendar reporting period?
$21,240; $15,930; $8,850; $1,770.
$5,310; $7,080; $7,080; $1,770.
$7,080; $7,080; $7,080.
$15,930; $8,850; $1,770; $0.
The answer cannot be determined based on the information given.
10. The following transactions occurred during July:
· Received $940 cash for services provided to a customer during July.
· Received $2,600 cash investment from Barbara Hanson, the owner of the business.
· Received $790 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 $6,400 from the bank by signing a promissory note.
· Received $1,290 cash from a customer for services to be rendered next year.
What was the amount of revenue for July?
11. A company normally sells its product for $25 per unit. However, the selling price has fallen to $20 per unit. This company’s current inventory consists of 250 units purchased at $21 per unit. Replacement cost has now fallen to $18 per unit. Calculate the value of this company’s inventory at the lower of cost or market.
12. A company purchases merchandise with a catalog price of $36,000. The company receives a 31% trade discount from the seller. The seller also offers credit terms of 1/10, n/30. Assuming no returns were made and that payment was made within the discount period, what is the net cost of the merchandise? (Round your answer to the nearest dollar amount.)
13. Brig Company had $850,000 in sales, sales discounts of $13,000, sales returns and allowances of $19,000, cost of goods sold of $420,000, and $280,000 in operating expenses. Gross profit equals:
14. Use the information in the adjusted trial balance presented below to calculate current assets for Jones Company:
Account Title Dr. Cr.
Accounts receivable 17,400
Prepaid insurance 8,000
Accumulated Depreciation – Equipment 57,000
Accounts payable 18,400
Interest payable 3,100
Unearned revenue 6,400
Long-term notes payable 26,000
J. Jones, Capital 161,900
Totals 272,800 272,800
15. Gotham Company reported a December 31 ending inventory balance of $412,500. The following additional information is also available:
· The ending inventory balance of $412,500 included $73,300 of consigned inventory for which Gotham was the consignor.
· The ending inventory balance of $412,500 included $24,600 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.
· The ending inventory balance of $412,500 did not include goods costing $49,300 that were purchased by Gotham on December 28 and shipped FOB destination on that date. Gotham did not receive the goods until January 2 of the following year.
· The ending inventory balance of $412,500 included damaged goods at their original cost of $40,600. The net realizable value of the damaged goods was $11,300.
· The ending inventory balance of $412,500 included $44,300 of consigned inventory for which Gotham was the consignee.
Based on this information, the correct balance for ending inventory on December 31 is:
16. Jackson Company has sales of $317,000 and cost of goods available for sale of $271,700. If the gross profit ratio is typically 30%, the estimated cost of the ending inventory under the gross profit method would be:
Impossible to determine from the information provided.
17. Pettis needs to determine its year-end inventory. The warehouse contains 25,000 units, of which 3,500 were damaged by flood and cannot be sold. Another 2,500 units were purchased and shipped FOB shipping point and are in transit. The company also consigns goods and has 4,500 units at a consignee’s location. How many units should Pettis include in its year-end inventory?
18. A company purchased $4,400 worth of merchandise. Transportation costs were an additional $400. The company later returned $325 worth of merchandise and paid the invoice within the 1% cash discount period. The total amount paid for this merchandise is:
19. A company had sales of $380,500 and its gross profit was $148,700. Its cost of goods sold equals:
20. A company has revenues of $197,000 and expenses of $118,000 for the accounting period. The owner withdrew $42,000 during the year. Which of the following entries is not a closing entry?
Debit Income Summary $79,000; credit Owner’s Capital $79,000.
Debit Owner’s Capital $42,000; credit Owner’s Withdrawals $42,000.
Debit Revenues $197,000; credit Income Summary $197,000.
Debit Income Summary $118,000, credit Expenses $118,000.
Debit Income Summary $197,000; credit Revenues $197,000.
21. The amount due on the maturity date of a $10,500, 120-day 6%, note receivable is (Use 360 days a year. Do not round intermediate calculations):
22. On November 19, Hayes Company receives a $22,800, 60-day, 5% note from a customer as payment on his account. What adjusting entry should be made on the December 31 year-end? (Use 360 days a year. Do not round intermediate calculations.)
Debit Interest Revenue $133; credit Interest Receivable $133.
Debit Interest Receivable $190; credit Interest Revenue $190.
Debit Interest Receivable $133; credit Interest Revenue $133.
Debit Interest Receivable $57; credit Interest Revenue $57.
Debit Interest Revenue $190; credit Interest Receivable $190.
23. A company that uses the net method of recording invoices made a purchase of $1,500 with terms of 3/10, n/30. The entry to record the purchase would include:
A debit to Merchandise Inventory for $1,455.
A debit to Cash for $1,455.
A credit to Cash for $1,455.
A credit to Discounts Lost for $45.
A debit to Discounts Lost for $45.
24. A company uses the percent of receivables method to determine its bad debts expense. At the end of the current year, the company’s unadjusted trial balance reported the following selected amounts:
Accounts receivable $ 429,000 Debit
Allowance for Doubtful Accounts 1,410 Debit
Net Sales 2,260,000 Credit
All sales are made on credit. Based on past experience, the company estimates 3.5% of its outstanding receivables are uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?
Debit Bad Debts Expense $13,605; credit Allowance for Doubtful Accounts $13,605.
Debit Bad Debts Expense $15,015; credit Allowance for Doubtful Accounts $15,015.
Debit Bad Debts Expense $7,910; credit Allowance for Doubtful Accounts $7,910.
Debit Bad Debts Expense $16,425; credit Allowance for Doubtful Accounts $16,425.
Debit Bad Debts Expense $1,7910; credit Allowance for Doubtful Accounts $1,7910.
25. MixRecording Studios purchased $10,900 in electronic components from TechCom. MixRecording Studios signed a 60-day, 6% promissory note for $10,900. If the note is dishonored, what is the amount due on the MixRecording Studios? (Use 360 days a year. Do not round intermediate calculations.)
26. Teller purchased merchandise from TechCom on October 17 of the current year and TechCom accepted Teller’s $11,600, 90-day, 6% note. What entry should TechCom make on December 31, to record the accrued interest on the note? (Use 360 days a year. Do not round intermediate calculations.)
Debit Cash $174; credit Interest Revenue $145; credit Interest Receivable $29.
Debit Interest Receivable $29; credit Interest Revenue $29.
Debit Interest Receivable $145; credit Interest Revenue $145.
Debit Cash $29; credit Notes Receivable $29.
Debit Cash $145; credit Notes Receivable $145.
27. A company had net sales of $590,000, total sales of $740,000, and an average accounts receivable of $80,500. Its accounts receivable turnover equals (Round your final answer to two decimal places):
28. The following information is available for Johnson Manufacturing Company at June 30:
Cash in bank account $ 7,655
Inventory of postage stamps 86
Money market fund balance 13,600
Petty cash balance 470
NSF checks from customers returned by bank 987
Postdated checks received from customers 691
Money orders 1,457
A nine-month certificate of deposit maturing on
December 31 of current year 9,200
Based on this information, Johnson Manufacturing Company should report Cash and Cash Equivalents on June 30 of:
29. Hankco accepts all major bank credit cards, including Omni Bank’s, which assesses a 2% charge on sales for using its card. On June 28, Hankco had $4,300 in Omni Card credit sales. What entry should Hankco make on June 28 to record the deposit?
Debit Cash $4,300; credit Sales $4,300.
Debit Accounts Receivable $4,214; debit Credit Card Expense $86; credit Sales $4,300.
Debit Cash $4,386; credit Credit Card Expense $86; credit Sales $4,300.
Debit Cash $4,214; debit Credit Card Expense $86; credit Sales $4,300.
Debit Accounts Receivable $4,300; credit Sales $4,300.
30. A company has $91,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 5% of outstanding receivables are uncollectible. The current debit balance (before adjustments) in the allowance for doubtful accounts is $810. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:
None of these