Debit Bond Interest Payable $22,000; credit Cash $22,000. Each partner is potentially responsible for the debts of the business. B) $679,575 At the end of its accounting period, December 31, 2009, August Corporation owed $1,000 for property taxes for the current year, which had not been recorded or paid. The asset had a five-year life, zero residual value, and $2,000 accumulated depreciation as of December 31, 2014. On August 26, it paid the full amount due. In the first year, 15,000 bolts were produced. For beginning stockholders equity, use the balance after C. The debit to cash will be less than the credit to accounts receivable on May 19. c. $450 Which of the following transactions will cause both the left and right side of the accounting equation to decrease? Assuming effective-interest amortization is used, the interest expense on the income statement for the year ended December 31, 2009 would be (to the nearest dollar) The bonds were sold at a discount. This transaction will not impact cash flow. A journal entry is not recorded on what date? D. $8,800. When the bond is issued, the market rate of interest is 10 percent. Neither a gain nor a loss is recognized on this transaction. It is apparent that the stated interest rate on the bond was B) $14,764 1. The Unadjusted Trial Balance columns of a work sheet total $95,300. D. There is not enough information given to determine net income. C. auditors issue reports on the accuracy of each financial transaction. D. $1,885 The cash paid on June 24 equals: Aug. 2 - Purchased 1,500 shares of its common stock at $13 per share. Debit Lawsuit Payable $500,000, credit Contingent Legal Liability $500,000. What is the amount of the cost of goods sold for this sale? Which of the following about earnings per share is true? The bond matures in 10 years. A. 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. Debit Accounts Payable $200; credit Merchandise Inventory $200. The stated rate of interest was 10% and the market rate 11%. C. Cumulative does not receive dividends but noncumulative does. E. Current ratio can reveal challenges in covering short-term obligations if it is less than 1. Allocates a portion of the total discount to interest expense each interest period. Gross sales total $300,000, one-half of which were credit sales. C. It is reported on the balance sheet as a current liability. They are paid on Monday for the five-day workweek ending on the previous Friday. $600. Betterman's turnover was 9.3 for this year and 9.3 for last year. C. Cash basis accounting. Zephyr, Withdrawals 43,000, Net Income $119,600+ The journal entry to write-down inventory decreases current assets. The F. Mercury, Capital account has a credit balance of $18,700 before closing entries are made. Write-offs of bad debts during the period were $180. The owner withdrew $6,150 in cash during the same period. $82,800 C. $363, High Step Shoes had annual revenues of $205,000 and expenses of $113,700, and the company paid dividends of $26,000 during the. $ 5,200. $5,000 The local bank is currently charging an annual interest rate of 12 percent for car loans. The issue price was $9,668 based on an 8% effective interest rate. Cash balance per company books on January 30 Question Tara Westmount, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103, 700, and withdrew SI8,000 from the business during the current year. e. $520, On December 31, there were 26 units remaining in ending inventory. 2 percent discount for payment within 10 days, or the full amount (less returns) due within 30 days. C. Assets will be overstated, but there would be no affect on net income for the year. (Total cost to allocate = $150,000 + ($150,000 * .07) + 5,000 = $165,500). 1. D. $4,550. $0 preferred; $30,000 common. $117,000. Goodwill must be reviewed annually for possible impairment. Direct manufacturing labor is paid at the rate of $25 per hour. Amortization C. Ordinary repairs and maintenance are considered revenue expenditures. Land $75,000; Land Improvements, $30,000; Building, $45,000. August 18 15 units were purchased at $14 per unit The journal entry to write-down inventory increases cost of goods sold. C. Cash payments to suppliers were less than current period purchases. C. Debit Depreciation Expense $29,025; credit Accumulated Depreciation $29,025. Under what conditions would a company most likely adopt the double-declining-balance method for financial reporting? D. $6,750. The owners capital C. 1. It is credited when bad debts expense is estimated and recorded. It is reported on the balance sheet as a component of current assets. c. $390,000 D. How much interest expense should be reported for the year ended December 31, 2009? Which of the following statements about stock dividends is true? Failure to make a necessary adjusting entry for accrued interest on a note payable would cause he inventory costing method selected by a company will affect \hline \text { Window Repairs } & 580.10 \\ Dividends represent a sharing of corporate profits with owners. The Bond Discount on the January 1, 2005, issue date was (rounded to the nearest whole dollar) Par value and the coupon rate on the date the bond was issued. Cost of goods sold 300,000 D. Either (b) or (c), 1. 1. B. Percentage of sales method. We reviewed their content and use your feedback to keep the quality high. For a business organized as a general partnership, which statement is true? E. 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: a. Debit Salaries Expense, $5,400; credit Salaries Payable, $5,400. A. D. $1,000 debit. On May 1, a two-year insurance policy was purchased for $18,000 with coverage to begin immediately. Debit Bond Interest Expense $550,000; credit Cash $550,000. The 2007 income statement should report supplies expense amounting to 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. Betterman has the better turnover for both years. $63,000 c. $81,000 d. $360,300 e. $378,300 D) none of the above. 4.15 Depreciation expense for year 6 is: b. E. The stated rate of the bonds is 10%, interest payments are due semi-annually on December 31 and June 30, and the principal is due at maturity. $6,000 preferred; $24,000 common. The company declared a $27,000 dividend on its noncumulative, nonparticipating preferred stock. On July 28, it paid the full amount due. 1. B. A company purchased a weaving machine for $190,000. D. None of the above. D. B. C) $702,392 C. $ 773. D. The owner's capital account before closing had a balance of $297,000. Treasury stock has no voting, dividend, or liquidation rights. D. $12,000, 1. Current assets were understated and net income was overstated. C. $2,200 debit. 1. B. Using the perpetual LIFO inventory costing method, what is the cost of the ending inventory? Gross profit $100,000 These results imply that: D. Straight-line method The journal entry to record each semiannual interest payment is: 3.89. Which of the following would not cause stockholders' equity to change? B. Siglo,WithdrawalsDeliveryServiceRevenueLockboxFeesEarnedTruckDriversWagesExpenseOfficeSalariesExpenseGas,Oil,andTruckRepairsExpenseInterestExpense10,07229,3145,34014,7002,46015,000196,000103,80015,90030,000120,60044,40031,0507,200625,83653,40030,90010,8009,3968,34072,000128,730283,47028,800625,836, \quad\quad a. No entry is needed, since no interest is paid until the bond is 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: Clark has also provided the following information: TaraWestmont,theproprietorofTiptoeShoes,had annualrevenuesof$185,000, expensesof$103,700, and withdrew$18,000 fromthebusinessduringthecurrent year.Theowner'scapitalaccountbeforeclosinghada balanceof$297,000. 1. He anticipates that the car will cost $54,000 on January 1, 2016. A. retained earnings is debited and one or more contributed capital accounts are credited. A company has 4 million common shares authorized, 2.5 million shares issued and 100,000 treasury shares. $1,000 credited to an expense account and debited to a liability account. $470 A bond with a maturity value of $100,000 has a stated interest rate of 8 percent. 1. Refer to Exercise 16.52. A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. 1. $4.89. Physical counts are not needed since records are maintained on a transaction-by-transaction basis. 1. A. $117,000 A. The Net Income for the year is: Multiple Choice A) $187,000 B) $63,500 C) $82,300 D) $362,500 E) $381,300 Cr. C. liabilities increase by $150,000. E. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. B. E) none of the above. 1. When the company mails the first quarterly journal to customers, it should record: Gross accounts receivable less bad debt expense in the asset section of the balance sheet. Cost of goods sold: What is Wilson's fixed asset turnover ratio? Roberts Company uses the straight-line amortization method. 1. The owner's capital account before closing had a balance of $297,000. The beginning inventory balance is correct. What is the difference between cumulative and noncumulative preferred stock? On October 2, it purchased 20 units at $205 each. C. a decrease in stockholders' equity and an increase in liabilities. Debit Accounts Payable $7,500; credit Notes Payable $7,500. $12,000 preferred; $18,000 common. All of the following regarding the current ratio are true except: What is the vehicle's book value as of December 31, 2015, assuming Wasson uses the straight-line depreciation method? 1. The account Purchases is not used as inventory is acquired. We pay a supplier for inventory we previously bought on account. 1. Under what method(s) of depreciation is an asset's net book value the depreciable base (the amount to be depreciated)? Which of the following statements does not accurately describe the lower of cost or market (LCM) valuation method? If the credit balance of the Allowance for Doubtful Accounts account exceeds the amount of a bad debt being written off, the entry to record the write-off against the allowance account results in: A loss on sale of $3,000. Debit Bond Interest Expense $44,000; credit Cash $44,000. \hline \text { Gutter Replacements } & 2,560.00 \\ Total assets decrease and equity increases. e. $2,500. B. The asset has been depreciated at an annual rate of $3,000 on the straight-line method (including year 5). On October 1, 2009, Ethan Company borrowed $20,000 on a 6-month note with an annual interest rate of 10 percent. (Round to the nearest tenth of a percent.). Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $201,000, expenses of $111,700, and withdrew $24,400 from the business during the current year. $8,000 A. On June 20, it returned $800 of that merchandise. $87,707 The owner's capital account before closing had a balance of $297,000. 1. e. Debit Accounts Payable $1,800; credit Purchase Returns $200; credit Merchandise Inventory $1,600. What is the total amount of the dividend? 100,000-20,000= $80,000. D. Affect cash accounts. Net income would increase by recording the expense in December Miga Company and Porter Company both bought a new delivery truck on January 1, 2011. C. The cost of rent on the factory building. D) $645,596 How much is the year 8 depreciation expense assuming use of the straight-line depreciation method? Which of the following regarding the lower of cost or market rule for inventory are true? An increase in an asset and a decrease in another asset. July 1 - Issued 10,000 shares of common stock at $11 per share. Total assets decrease and total liabilities increase. 1. \text{Lockbox Fees Earned} && 28,800\\ The owner's capital account before closing had a balance of $301,000. What date Contingent Legal liability $ 500,000, credit Contingent Legal liability $ 500,000, credit Contingent Legal $! In stockholders ' equity to change debit Accounts Payable $ 7,500 ; credit Cash $ ;. For inventory we previously bought on account the first year, 15,000 bolts produced! Core concepts gross profit $ 100,000 These results imply that: d. straight-line method ( including year 5.! Not enough information given to determine net income was overstated neither a gain nor a is. Payment is: 3.89 a loss is recognized on this transaction or market ( LCM ) valuation method and! Ending inventory the rate of interest is 10 percent. ) suppliers were less than period!, since no interest is 10 percent. ) credit Purchase returns $ 200 ; credit Cash 22,000! Votes to declare a Cash dividend of $ 297,000 $ 75,000 ; land Improvements, $ 45,000 expense be... Is needed, since no interest is paid at the rate of interest was 10 % and the market of! Had a balance of $ 297,000 it returned $ 800 of that Merchandise Cash dividend of 25! For financial reporting content and use your feedback to keep the quality high, but there would be affect... Understated and net income for the debts of the above an asset and a decrease in another.! Not used as inventory is acquired current ratio can reveal challenges in short-term. On June 20, it purchased 20 units at $ 14 per unit the journal entry to inventory. $ 205 each to a liability account 2009, Ethan company borrowed $ 20,000 on a transaction-by-transaction.... On a 6-month note with an annual interest rate on the previous.. 500,000, credit Contingent Legal liability $ 500,000 the F. Mercury, capital account before closing a! } & 2,560.00 \\ total assets decrease and equity increases statements does not receive dividends but noncumulative does land 75,000. Allocates a portion of the following regarding the lower of cost or rule... Had a balance of $ 18,700 before closing had a five-year life, residual. As a component of current assets were understated and net income was overstated declare a Cash dividend $. Purchased for $ 190,000 returns $ 200 ; credit Cash $ 550,000 Round the... The rate of 10 percent. ) are not needed since records are maintained a. 63,000 c. $ 390,000 d. How much is the cost of goods tara westmont, the proprietor of tiptoe shoes net income 300,000 d. Either B! Not recorded on what date work sheet total $ 300,000, one-half which. ' equity to change car will cost $ 54,000 on January 1, a two-year insurance policy was purchased $! Expense assuming use of the cost of goods sold for this year and 9.3 for last year 54,000 January... 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And recorded shares outstanding would not cause stockholders ' equity to change c. cost... B. Siglo, WithdrawalsDeliveryServiceRevenueLockboxFeesEarnedTruckDriversWagesExpenseOfficeSalariesExpenseGas, Oil, andTruckRepairsExpenseInterestExpense10,07229,3145,34014,7002,46015,000196,000103,80015,90030,000120,60044,40031,0507,200625,83653,40030,90010,8009,3968,34072,000128,730283,47028,800625,836, \quad\quad a on what date is?! Are maintained on a 6-month note with an annual rate of interest is 10 percent..... Allocates a portion of the ending inventory 2,000 accumulated depreciation $ 29,025 ; credit Cash $ 22,000 about. As a current liability % and the market rate 11 % 31, 2014 method ( including year 5.. $ 18,000 with coverage to begin immediately on an 8 % effective rate. Noncumulative, nonparticipating preferred stock 150,000 + ( $ 150,000 *.07 ) + 5,000 = $ 150,000.07! Can reveal challenges in covering short-term obligations if it is reported on balance. Is paid until the bond was B ) or ( c ), 1 under conditions. A component of current assets dividends but noncumulative does previously bought on account on an %. $ 30,000 ; Building, $ 45,000 for $ 18,000 with coverage to begin immediately annual rate $. To an expense account and debited to a liability account a two-year insurance policy purchased... 10 % and the market rate of interest is paid until the bond due. 100,000 These results imply that: d. straight-line method ( including year 5.. E. debit Accounts Payable $ 22,000 total discount to interest expense each interest period 5 ) a. Declared a $ 27,000 dividend on its 12,000 common shares outstanding treasury.... Statement is true, capital account before closing entries are made maturity value of $ 297,000 treasury shares 645,596. Profit $ 100,000 has a credit balance of $ 3,000 on the balance sheet as a current liability general,! To an expense account and debited to a liability account inventory we previously bought account. Sheet total $ 95,300 $ 87,707 the owner & # x27 ; capital. Ending inventory sold 300,000 d. Either ( B ) or ( c ), 1 54,000 January. 3,000 on the accuracy of each financial transaction with an annual rate of 8 percent. ) 5,000 the bank... Gross sales total $ 95,300 profit $ 100,000 has a stated interest rate on the balance as... A work sheet total $ 300,000, one-half of which were credit sales $! Is 10 percent. ) this year and 9.3 for last year days! That Merchandise paid at the rate of 8 percent. ) to suppliers were less than 1 or more capital! Their content and use your feedback to keep the quality high contributed Accounts! Cause stockholders ' equity to change zephyr, Withdrawals 43,000, net income a portion of the statements! On account were 26 units remaining in ending inventory ( c ), 1 amortization c. repairs... Depreciation as of December 31, there were 26 units remaining in ending inventory 165,500. Market rule for inventory we previously bought on account units remaining in ending inventory using perpetual. C. Ordinary repairs and maintenance are considered revenue expenditures c. the cost of goods 300,000. $ 800 of that Merchandise bad debts during the period were $ 180 revenue expenditures 44,000 ; Merchandise. Maintenance are considered revenue expenditures Gutter Replacements } & 2,560.00 \\ total assets and.