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College Accounting A Contemporary Approach 6th International Edition M. David Haddock, John Price, Michael Farina - Solutions
9. What is the purpose of the postclosing trial balance?
8. What account balances or other amounts are included on two different financial statements for the period? Which statements are involved?
7. What information is provided by the statement of owner’s equity?
6. How do current liabilities and long-term liabilities differ?
5. Give examples of some current assets that usually are classified as Current Assets on the balance sheet.
4. What is the purpose of the balance sheet?
3. What are operating expenses? Are financing expenses included in operating expenses?
2. Which section of the income statement contains information about the purchases made during the period and the beginning and ending inventories?
1. Give an example of an expense that is classified as Other Expense in the income statement.
7. Give the sequence in which the following journal entries are posted to the accounts.a. adjusting entriesb. entries to close expense accountsc. entries to close revenue accountsd. reversing entries
6. Describe the entry that would be made to close the Income Summary account in each of the following cases. The owner of the firm is Jan Hanson.a. There is net income of $58,000.b. There is a net loss of $8,000.
5. Which of the following should have a debit balance in the adjusted trial balance?a. Sales Returns and Allowancesb. Purchases Discountsc. Salaries Payabled. Unearned Rental Income
4. Immediately after closing entries are posted, which of the following types of accounts will have zero balances? Select all that apply.a. asset accountsb. expense accountsc. liability accountsd. owner’s drawing accounte. Income Summary accountf. owner’s capital account g. revenue accounts
3. Why would a photocopy machine used in the office not be considered a current asset?
2. What journal entry(ies) is (are) made in the adjustment column for beginning and ending inventories?
1. Explain the difference between a single-step income statement and a multiple-step income statement. Which is normally favored?
6. Marco Company reported net credit sales of $1,500,000, cost of goods sold of $800,000, and gross profit of$700,000. Accounts Receivable were $175,000 and$225,000 at the beginning and end of the period, respectively.What is the accounts receivable turnover, rounded to two decimal places?a. 6.67
5. Vanessa Company reported net sales of $1,000,000, cost of goods sold of $600,000, and gross profit of$400,000. Merchandise Inventory was $50,000 and$70,000 at the beginning and end of the period, respectively. What is the inventory turnover, rounded to two decimal places?a. 6.67 timesb. 8.57
4. A reversing entry is made for an end-of-period adjustment that recorded:a. estimated bad debts for the period.b. an accrued expense that involves future cash payments.c. a transfer of an amount from a prepaid expense account to an expense account.d. the change in merchandise inventory.
3. The Office Warehouse had the following account balances: Cash, $25,000; Accounts Receivable, $75,000; Merchandise Inventory, $85,000; Equipment,$225,000; Accumulated Depreciation—Equipment,$45,000; Accounts Payable, $50,000; Salaries Payable, $15,000; and Notes Payable—Long-Term,$70,000.
2. The purpose of the second closing entry is to:a. closing sales accounts with debit balances, expense accounts, and cost of goods sold accounts with debit balances.b. close expense accounts and cost of goods sold accounts with credit balances.c. close revenue accounts and cost of goods sold
1. Which of the following accounts would not appear on the postclosing trial balance?a. Cashb. Accumulated Depreciation—Office Equipmentc. Suppliesd. Supplies Expense
8. Which of the following would not be classified as Plant and Equipment on a balance sheet?a. prepaid insuranceb. autosc. store equipmentd. office equipment
7. The balance of James Wilson, Capital at the beginning of the period was $50,000. During the period, his company had net income of $40,000, and he withdrew $35,000 from the business for personal use. What is the amount of the James Wilson, Capital account at the end of the accounting period?a.
6. Which of these is not a general and administrative expense?a. rent expenseb. salaries expense—officec. advertising expensed. uncollectible accounts expense
5. How should purchases returns and allowances be shown on the income statement?a. as Other Incomeb. as an addition to the delivered cost of purchasesc. as a deduction from the delivered cost of purchasesd. as Other Expenses
4. Which of the following is not a current asset?a. merchandise inventoryb. a note receivable due in 11 monthsc. prepaid insurance covering the next eight monthsd. a note receivable due in 13 months
3. Chen Company has net sales of $500,000, cost of goods sold of $300,000, and interest expense of $10,000. What is the amount of gross profit on sales?a. $200,000b. $198,000c. $202,000d. none of these
2. Kelley Company has beginning inventory of $125,000, purchases of $950,000, purchases returns and allowances of $25,000, freight-in of $10,000, and ending inventory of $118,000. What is the amount of the cost of goods sold?a. $922,000b. $928,000c. $992,000d. $942,000
1. Roberto Company has sales of $1,000,000, sales returns and allowances of $10,000, sales discounts of $2,000, and salary expense—sales of $120,000. What is the amount of net sales?a. $1,012,000b. $988,000c. $1,132,000d. $868,000
16. McCormick and Company, Inc., reported the following in its annual report for the fiscal year ended November 30, 2021:Analyze:1. Based on the information presented above, which categories might require adjusting entries at the end of an operating period?2. List the potential adjusting entries.
15. The president of Tower Copper Company has told you to go out to the factory and count merchandise inventory. He said the stockholders were coming for a meeting next week and he wanted to put on a good show. He asked you to make the inventory a bit heavier by counting the first and last rows
14.When Tara Sullivan’s father took seriously ill suddenly, Tara had just completed the semester in college, so she stepped in to run the family business, Sonic Couriers, until it could be sold. Under her father’s direction, the company was a successful operation and provided ample money to
13. The unadjusted trial balance of Ben’s Jewelers on December 31, 20X1, the end of its fiscal year, appears below.INSTRUCTIONS 1. Copy the unadjusted trial balance onto a worksheet and complete the worksheet using the following information:a.–b. Ending merchandise inventory, $98,700.c.
12. Gamer’s World, owned by Matt Huffman, is a retail store that sells computer games. On December 31, 20X1, the firm’s general ledger contained the accounts and balances below. All account balances are normal.Cash $ 38,465 Accounts Receivable 2,669 Prepaid Advertising 3,000 Supplies 425
11. Whatnots is a retail seller of cards, novelty items, and business products. On December 31, 20X1, the firm’s general ledger contained the following accounts and balances.INSTRUCTIONS 1. Prepare the Trial Balance section of a 10-column worksheet. The worksheet covers the year ended December
10. Fun Depot is a retail store that sells toys, games, and bicycles. On December 31, 20X1, the firm’s general ledger contained the following accounts and balances.INSTRUCTIONS 1. Prepare the Trial Balance section of a 10-column worksheet. The worksheet covers the year ended December 31, 20X1.2.
9. On September 30, 20X1, after one month of operation, the general ledger of American Travels contained the accounts and balances shown below.INSTRUCTIONS 1. Prepare a partial worksheet with the following sections: Trial Balance, Adjustments, and Adjusted Trial Balance. Use the data about the
8. On June 1, 20X1, East Coast Consulting began operations. Selected transactions for the first few days of June follow.INSTRUCTIONS:1. Record the transactions on page 1 of the general journal. Omit descriptions. Assume that the firm initially records prepaid expenses as assets and unearned income
7. Based on the information below, record the adjusting journal entries that must be made for Supernatural Supplements on December 31, 20X1. The company has a December 31 fiscal yearend.Use 18 as the page number for the general journal.a.–b. Merchandise Inventory, before adjustment, has a balance
6. Vintage Wines is a retail store selling fine wines. On December 31, 20X1, the firm’s general ledger contained the accounts and balances below. All account balances are normal.Cash $ 28,886 Accounts Receivable 1,500 Prepaid Advertising 480 Supplies 300 Merchandise Inventory 45,000 Store
5. Healthy Eating Foods Company is a distributor of nutritious snack foods such as granola bars. On December 31, 20X1, the firm’s general ledger contained the accounts and balances that follow.INSTRUCTIONS 1. Prepare the Trial Balance section of a 10-column worksheet. The worksheet covers the
4. The Green Thumb Gardener is a retail store that sells plants, soil, and decorative pots. On December 31, 20X1, the firm’s general ledger contained the accounts and balances that appear below.INSTRUCTIONS 1. Prepare the Trial Balance section of a 10-column worksheet. The worksheet covers the
3. On July 31, 20X1, after one month of operation, the general ledger of Michael Lee, CPA, contained the accounts and balances given below.INSTRUCTIONS 1. Prepare a partial worksheet with the following sections: Trial Balance, Adjustments, and Adjusted Trial Balance. Use the data about the firm’s
2. On July 1, 20X1, Arthur Kordts established A. Kordts Financial Services. Selected transactions for the first few days of July follow.INSTRUCTIONS 1. Record the transactions on page 1 of the general journal. Omit descriptions. Assume that the firm initially records prepaid expenses as assets and
1. Based on the information below, record the adjusting journal entries that must be made for Ambriz Distributors on June 30, 20X1. The company has a June 30 fiscal year-end. Use 18 as the page number for the general journal.a.–b. Merchandise Inventory, before adjustment, has a balance of $8,800.
31. For each of the following independent situations, prepare the adjusting entry that must be made at December 31, 20X1. Omit descriptions.a. On December 31, 20X1, the Notes Receivable account at Eliassen Materials Corporation had a balance of $15,000, which represented a six-month, 5 percent note
30. On December 31, 20X1, the Notes Payable account at Summer’s Boutique Shop had a balance of$66,000. This amount represented funds borrowed on a six-month, 5 percent note from the firm’s bank on December 1. Prepare the adjusting journal entry for interest expense on this note that should be
29. On December 1, 20X1, Jack’s Juice Joint borrowed $50,000 from its bank in order to expand its operations.The firm issued a four-month, 6 percent note for $50,000 to the bank and received $49,000 in cash because the bank deducted the interest for the entire period in advance. Prepare the
28. For each of the following independent situations, prepare the adjusting entry that must be made on December 31, 20X1. Omit descriptions.a. On December 31, 20X1, the Notes Payable account at Wang Manufacturing Company had a balance of $20,000. This balance represented a three-month, 4.5 percent
27. For each of the following independent situations, prepare the adjusting entry that must be made at December 31, 20X1. Omit descriptions.a. During the year 20X1, Aeryn Company had net credit sales of $2,220,000. Past experience shows that 1.5 percent of the firm’s net credit sales result in
27. The Income Statement section of the Johnson Company worksheet for the year ended December 31, 20X1, has $211,000 recorded in the Debit column and $226,250 in the Credit column on the line for the Income Summary account. What were the beginning and ending balances for Merchandise Inventory?
27. The beginning inventory of Eastern Wholesalers was $131,000, and the ending inventory is$126,500. What entries are needed at the end of the fiscal period to adjust Merchandise Inventory?
21. How does the worksheet help the accountant to prepare financial statements more efficiently?
20. Unearned Fees Income is classified as which type of account?
19. What is the alternative method of handling unearned income?
18. What adjustment is made to record income earned during a period?
17. How is unearned income recorded when it is received?
16. What is unearned income? Give two examples of items that would be classified as unearned income.
15. What adjustment is made for accrued interest on a note receivable?
14. What is accrued income? Give an example of an item that might produce accrued income.
13. What is the alternative method of handling prepaid expenses?
12. What adjustment is made to record expired insurance?
11. How is the cost of an insurance policy recorded when the policy is purchased?
10. What is a prepaid expense? Give three examples of prepaid expense items.
9. What adjustment is made to record accrued salaries?
8. What is an accrued expense? Give three examples of items that often become accrued expenses.
7. What adjustment is made for depreciation on office equipment?
6. Explain the meaning of the following terms that relate to depreciation:a. Salvage valueb. Depreciable basec. Useful lifed. Straight-line method
5. What types of assets are subject to depreciation? Give three examples of such assets.
4. Why is depreciation recorded?
3. Income Summary amounts are extended to which statement columns on the worksheet?
2. When a specific account receivable is deemed uncollectible, it is written off by debiting _____ and crediting _____.
1. What adjustment is made to record the estimated expense for uncollectible accounts?
6. On July 1, 20X1, a landlord received $36,000 cash from a tenant, covering rent from that date through June 30, 20X2. The payment was credited to Rent Income. Assuming no entry has been made in the income account since receipt of the payment, what would be the adjusting entry on December 31, 20X1?
5. On July 1, 20X1, a landlord received $36,000 cash from a tenant, covering rent from July 1, 20X1, through June 30, 20X2. The payment received was credited to Unearned Rent Income.Assuming no entry has been made in the Unearned Rent Income account since the payment was received, what would be the
4. A completed worksheet for Holiday Company on December 31, 20X1, showed a total of$930,000 in the Debit column of the Income Statement section and a total credit of $902,000 in the Credit column. Does this represent a profit or a loss for the year? How much?
3. How, if at all, does “accrued income” differ from “unearned income”?
2. What is meant by the term “accrued income”?
1. Why is the accrual basis of accounting usually preferred?
7. The Unearned Fees account appears on the worksheet in the:a. credit column of the Balance Sheet section.b. debit column of the Balance Sheet section.c. credit column of the Income Statement section.d. debit column of the Income Statement section.
6. The Merchandise Inventory account name appears on the worksheet in the:a. credit column of the Balance Sheet section.b. debit column of the Balance Sheet section.c. credit column of the Income Statement section.d. debit column of the Income Statement section.
5. The Notes Payable account appears on the worksheet in the:a. credit column of the Balance Sheet section.b. debit column of the Balance Sheet section.c. credit column of the Income Statement section.d. debit column of the Income Statement section.
4. The amount of net income appears on the worksheet in the:a. credit column of the Adjusted Trial Balance section.b. debit column of the Balance Sheet section.c. credit column of the Income Statement section.d. debit column of the Income Statement section.
3. The Sales account will appear in which of the following in the worksheet?a. Income Statement Debit columnb. Balance Sheet Debit columnc. Income Statement Credit columnd. Balance Sheet Credit column
2. A company failed to record depreciation expense. Which of the following is not true?a. The company’s net income will be overstated.b. The company’s total assets will be overstated.c. The owner’s equity will be overstated.d. The company’s total liabilities will be overstated.
1. Which of the following best describes the Accumulated Depreciation account?a. A contra asset account with a normal debit balanceb. A contra asset account with a normal credit balancec. An expense account with a normal debit balanced. An expense account with a normal credit balance
7. Debtor Company borrowed $10,000 on a six-month note payable on November 1 of the current year. The note bears interest at an annual interest rate of 9 percent.What is the amount of accrued interest payable at December 31 of the current year?a. $900b. $75c. $750d. $150
6. Calderone Company purchased office equipment for$9,000 on October 1 of the current year. The office equipment has a useful life of six years and salvage value of$360. What is the amount of depreciation expense for the current year ending December 31?a. $120b. $360c. $1,440d. $1,080
5. In Naranjo Company’s December 31 trial balance, a debit balance of $18,000 is found in the Prepaid Rent account.A payment of $18,000 for prepayment of six months’rent was made on September 1. Which of the following would be used to adjust the Prepaid Rent account on December 31?a. Debit Rent
4. In Caymus Company’s December 31 trial balance, a credit balance of $31,500 appears in Unearned Fee Income.This amount represents cash received from a customer on November 1 covering work to be performed by Caymus in November through January. At December 31, Caymus had earned $10,500 of the
3. MJF Company has net credit sales of $2,500,000 and estimates bad debts at 0.5 percent of net credit sales. Which of the following journal entries would be used to record estimated uncollectible accounts receivable?a. Debit Uncollectible Accounts Expense for $12,500, and credit Allowance for
2. A company has merchandise inventory at the beginning of the year of $14,000 and merchandise inventory at the end of the year of $18,000. Which of the following would be included in the adjusting entry to place the ending inventory on the books?a. Debit Income Summary for $14,000b. Credit Income
1. Which of the following is not true concerning the accrual basis of accounting?a. Revenues are recognized when earned.b. Expenses are recognized when incurred.c. Cash received for services to be performed in future months is recognized as revenue when the cash is received.d. Cash received for
26. Nicky Norton owns a boutique dress shop that has been very successful. He employs three sales associates.He decides to open up another dress shop on the other side of town. He hires three more sales associates with the same pay arrangements. After three months, Norton notices the new store is
25. 1. Carolina Creations recently discovered that a payroll clerk had issued checks to nonexistent employees for several years and cashed the checks himself. The company does not have any internal control procedures for its payroll operations. What specific controls might have led to the discovery
24. The People’s Press is a local newspaper that is published Monday through Friday. It sells 90,000 copies daily. The paper is currently in a profit squeeze, and the publisher, Tom Turkey, is looking for ways to reduce expenses.A review of current distribution procedures reveals that the
23. For each of the following independent situations, decide whether the business organization should:(a) treat the person being paid as an employee and should withhold social security, Medicare, and employee income taxes from the payment made OR (b) treat the person as an independent contractor
22. The following information is for Union Express Delivery Service’s workers’ compensation insurance premiums. On January 15, 20X1, the company estimated its premium for workers’ compensation insurance for the year on the basis of the following data:Work Classification Amount of Estimated
21. 1. Complete Form 940, the Employer’s Annual Federal Unemployment Tax Return. Assume that all wages have been paid and that all quarterly payments have been submitted to the state as required. The payroll information for 20X1 appears below. The firm’s FUTA tax liability by quarter follows:
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