$3,405 In the second year, production increased to 19,000 units. The Net Income for the year is $81.300.00 $185.000 $360300 $63.300 de $3,270 C. auditors issue reports on the accuracy of each financial transaction. B. 1. 1. Each partner is potentially responsible for the debts of the business. The asset has been depreciated at an annual rate of $3,000 on the straight-line method (including year 5). In its last financial statement prior to bankruptcy, Bombay reported current assets of $161,604,000 and current liabilities of$113,909,000. Cash payments to suppliers were less than current period purchases. C. Cash basis accounting. \text{Delivery Service Revenue} && 283,470\\ Goodwill is not reported unless purchased in an exchange. Preferred shareholders have a preference with respect to dividend payments. $279,300 \text{Accounts Payable} && 9,396\\ B. increases the number of shares outstanding and involves a pro rata reduction in the par value per share. McCarthy Company has inventory of 8 units at a cost of $200 each on October 1. $ 6,000. K. Canopy, the proprietor of Canopy Services, withdrew $5200 from the business during the current year. $490 Purchase $2,000 of office supplies on credit. Reflects a decrease in amount due to a supplier. C. There were no other stock transactions. Coupon rate and the stated rate on the date the bond was issued. A company had revenues of $75,000 and expenses of $62,000 for the accounting period. Stock-related transactions for Kraft Unlimited follow. 1. D. The retained earnings account before closing had a balance of $312,000. The stated rate of interest was 8 percent and the market rate of interest was 10 percent when the bond was sold. $2,000. B. does not need to be recorded or reported as a liability. A. Net income for the year and total assets would both be overstated. D. $107,000. 1. C) $32,000 $7,000 A. 1. What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31? Decreases the Bonds Payable account. a. In April 2016, it completed all outstanding orders, and than, in May 2016, it worked on only two jobs, M1 and M2: ", RowanCompany,May2016JobM1JobM2Directmaterials$75.000$56.000Directmanufacturinglabor275.000209.000\begin{matrix} $78,000 $185,000 b. A. On January 1, 2007, the ledger of Global Corporation correctly showed supplies inventory of $1,000. A. a decrease in stockholders' equity and decrease in an asset. C. Goodwill Discuss the results in requirement 3, including the effect on investors returns and the companys profitability as it relates to stockholders equity. D. B. increase total assets. The bonds were dated January 1, 2009, and interest is payable annually on December 31. A) $187,000 None of the above. Given this information, the correct gross profit would be: ending inventory overstated 20,000 means gross profit is overstated 20,000 Assets increase and stockholders' equity decreases. D. 220, 1. On July 7, it returned $200 worth of merchandise. Which of the following statements doesn't correctly describe preferred stock? 1. E. C. a decrease in stockholders' equity and an increase in liabilities. 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: Direct manufacturing labor is paid at the rate of $25 per hour. What is the journal entry needed to record the transaction by Jarrett Company? The company's sales for the current period are $185,000. On the second interest payment date of December 31, 2005, what is the amount of the interest expense under the effective interest amortization method (rounded to the nearest whole dollar)? C. A disclosure note is required when the loss is reasonably possible and the amount can be reasonably estimated. The market rate on the January 1, 2005, issue date was 10%. d. $11,500. B. decrease assets, $100,000; decrease stockholders' equity, $3,000; and decrease liabilities, $103,000. The Leander offer is better because the cost in terms of present value is less than the present value cost of the Lockhart offer. Goodwill must be reviewed annually for possible impairment. Impairment of goodwill results in a decrease in net income. account before closing had a balance of $299,000. No expense will be recognized until the bill is paid in January The Net Income for the year is: Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $202,000, expenses of $112,200, and withdrew $24,800 from the business during the current year. A. Amortizing the discount on a bond payable d. $115,000 The process of allocating the cost of intangibles to periods when they are used. What amount would be recorded as bad debt expense for the current period? Using the FIFO perpetual inventory method, what is the value of inventory after the October 4 sale? Debit Bond Interest Payable $22,000; credit Cash $22,000. e. A credit to gain on sale for $4,979. The selling price of the bonds was $5,679,575. B. Total assets decrease and total liabilities increase. Require that the person responsible for removing the cash from the register have no access to the accounting records. 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. B. A. auditors provide direct financial advice to potential investors. ((10*12)+(15*14))/(10+15) = 13.20 In its first year of operation, Grace Company reports the following: Earned revenues of $60,000 ($52,000 cash received form customers); incurred expenses of $35,000 ($31,000 cash paid toward them); prepaid $8,000 cash for costs that will not be expensed until next year. . LIFO Rusty Corporation purchased a rust-inhibiting machine by paying $50,000 cash on the purchase date and agreeing to pay $10,000 every three months during the next two years; the first payment is due three months after the purchase date. D. i, ii, and iii. Preferred stock, 7%, $50 par value, 1,000 shares issued and outstanding with dividends in arrears for 2008 and 2009. 120. Which of the following best describes accrued liabilities? Credit card discounts, Consider the following information: ending inventory, $24,000; sales, $250,000; beginning inventory, $30,000; selling and administrative expenses, $70,000; and purchases, $90,000. Capital expenditures increase assets. D. an overstatement of net income, an understatement of liabilities, and an overstatement of stockholders' equity. Clark Company estimated the net realizable value of their accounts receivable as of December 31, 2011, based on an aging schedule of accounts receivable, to be $165,000. b. Rent-seeking behavior. D. $ 1,000. d. Land $80,250; Land Improvements, $32,100; Building, $48,150. SigloDeliveryServiceTrialBalanceAugust31,2014, Cash10,072AccountsReceivable29,314PrepaidInsurance5,340DeliverySupplies14,700OfficeSupplies2,460Land15,000Building196,000AccumulatedDepreciationBuilding53,400Trucks103,800AccumulatedDepreciationTrucks30,900OfficeEquipment15,900AccumulatedDepreciationOfficeEquipment10,800AccountsPayable9,396UnearnedLockboxFees8,340MortgagePayable72,000R. 0.50. The owner's capital account before closing had a balance of $312,000. It is possible, but not probable, that the company will have to pay a settlement of approximately $2,000,000. None of the above. An increase in an asset and a decrease in another asset. $30,000. Which of the following accounts is not a contra-revenue? Using the FIFO perpetual inventory method, what was the cost of the 22 units sold? d. Debit Revenue accounts $55,200; credit Income Summary $55,200. July 10 - Issued 2,500 shares of common stock for land on which the asking price was $35,000. On July 12, it paid the full amount due. How much interest expense should be reported for the year ended December 31, 2009? It is estimated that the policy benefits U.S. sugar Company X is going to retire equipment that is fully depreciated with no residual value. \text{Gas, Oil, and Truck Repairs Expense} & 31,050\\ Debit Cash $7,500; credit Accounts Payable $7,500. B. August 29 12 units were sold It is a contra-asset account. Yes, because the investor has more shares. Eastview company uses a perpetual LIFO inventory system, and has the following purchases and sales: $2,667. e. $200,000, Cushman Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in operating expenses. If X produces more net utility than not doing X, then X is morally right. B) decreases the face value of the bonds. Accrued but unpaid truck drivers wages at the end of the year, $1,920. . How much is the year 8 depreciation expense assuming use of the straight-line depreciation method? B. D. Either (b) or (c), 1. $395,000 No change in stockholders' equity. b. D. $240,000, 1. D. debit Unearned Fees, $129; credit Fees Earned, $129. Garza Company had sales of $135,000, sales discounts of $2,000, and sales returns of $3,200. What is the dollar amount of net sales? A. 3.89. On August 3, it purchased 20 units at $12 each. D. $ 883. Cash interest payment e. $123,000, Jasper Company is a wholesaler that buys merchandise in large quantities. 2 D. It appears at the bottom of the income statement. A. results in a transfer of retained earnings to contributed capital. Require that cash be deposited daily at the bank. Current assets were overstated and net income was overstated. $8,000 C. The stock sold for $20 per share. The purchase of supplies for cash would Outstanding checks at month-end E. All the statements above are correct. B. auditors have the primary responsibility for the information contained in financial statements. A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. E. Depreciation Expense. \hline \text { Gutter Replacements } & 2,560.00 \\ b. Net Income$119,600 C. $0.34. (2) B. $67,101 Clark has also provided the following information: D) $33,420 C. When the loss probability is reasonably possible and the amount can be reasonably estimated. Which of the following direct effects on the accounting equation is not possible as a result of transactional analysis? B. Increases cash flows from the bond. 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. Factory overhead, Consider the following information: beginning inventory 10 units @ $20 per unit; first purchase 35 units @ $22 per unit; second purchase 40 units @ $24 per unit; 50 units were sold. E) None of the above. Calculated using the double-declining balance method. Number of hours of television watching per day for people with 12 years of education. It was determined that the replacement cost is $18 per unit. $$ B. capital in excess of par value is debited and retained earnings is credited. \hline $12,000. The owner's capital account before closing had a balanc e of $315,000. Presenting accounts receivable net of allowance for doubtful accounts. c. $450 a. a. Debit Merchandise Inventory $1,600; credit Cash $1,600. Current liabilities to be recognized as revenue in a future period. The lower of cost or market rule is an example of the historical cost principle. The ending owner's capital balance after closing is: __ $186,000 __ $63,400 __ $81,800 __ $361,400 __ $379,800 1. A. During the year ended December 31, 2011, CBA reported net income of $10,000, declared and paid a cash dividend of $2,000, and issued additional common stock for $20,000. Gross profit $100,000 1. \hline \text { Total } & \$ \\ 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. B. An increase in the expenses of the current period. \text{R. Siglo, Capital} && 128,730\\ \text{Direct manufacturing labor} & \text{275.000} & \text{209.000}\\ Treasury stock is considered to be issued but not outstanding. What is the adjusting entry that should be recorded by Griffith Publishing Company on December 31 of the second year? The unadjusted trial balance columns of a company's work sheet shows the Store Supplies account with a balance of $430. $3,520. A. D. 1. Transaction analysis of operating expenses for 2010 should reflect only the following: Debit Common Stock $6,000, debit Investment in Common Stock $1,000; credit Cash $7,000. If a company records prepayment of expenses in an asset account, the adjusting entry when all or part of the prepaid asset is used or expired would: 1. Debit Bond Interest Expense $44,000; credit Cash $44,000. B. C. \hline \text { Water Heater Replacement } & 590.34 \\ 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. Issued by the bank. B. It will select the lowest residual values for its assets. A. 12 units are sold on August 6. The vehicle has an estimated 6-year life and a $4,000 residual value. 6.1051 3.7908 The bonds were issued at a premium. E. $18,000. A company is facing a class-action lawsuit in the upcoming year. The account Purchases is not used as inventory is acquired. A. an understatement of liabilities and stockholders' equity. 1. D. $104,500. D. D. Outstanding checks refer to checks that have been: The journal entry to write-down inventory decreases current assets. The return on the investment is expected to be 10% and will be compounded semi-annually. C. The journal entry to write-down inventory does not affect income from operations. The F. Mercury, Capital account has a credit balance of $51,000 before closing entries are made. E. D. Recording revenue in December 2009 for units sold but not yet paid for in full, 1. 1. Tara Westmont, the proprietor of Tiptoe Shoes, had annual . Gross profit. $380,000 1. b. A. $2,200. C. B. 1. Their par value is $1 per share and the market price is $30 when the company declares a 4/1 stock split. Presenting accounting receivable at estimated net realizable value. D) none of the above. What amount should be reported when the bond is issued? B. A. C. It discloses the amount of dividends on a per common share basis. E) $381,300. . B. A) subtracting Discount on Bonds Payable from Bonds Payable. Because GAAP specifies rigid guidelines regarding the calculation of depreciation, this situation is not possible. Assuming the asset is sold on December 31, Year 5 for $15,000, the company should record: Assets decrease and stockholders' equity decreases. \text{R. Siglo, Withdrawals} & 30,000\\ The adjusting entry needed on December 31 is: d. Credit to Unearned Revenue for $60,000. B. Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000. $61,390 \text{Office Salaries Expense} & 44,400\\ 1. Real accounts. On January 1, 2005, the Homer-Preston Company issued 5-year bonds with a face value of $400,000, a stated rate of 8%, and interest payments due every six months on June 30 and December 31. The company has declared and paid a dividend of $1 per share. $7,480 The ending owner's capital balance after closing is: Expert Answer Calculation of ending owners capital balan D. 3.91. Moore Company purchased an item for inventory that cost $20 per unit and was priced to sell at $30. On July 1, 2009, Gerdin Company borrowed $100,000. Experts are tested by Chegg as specialists in their subject area. B. $4,725 E. Affect only equity accounts. They have high technology, robotic equipment in their plant that becomes obsolete quickly and declines in utility to the company more rapidly in the early years of the assets' lives. 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. Yes, because the investor will receive more in cash dividends by owning more shares. A post-closing trial balance reports: e. 1.41, a. Using the perpetual LIFO inventory costing method, what is the cost of the ending inventory? The owners and the business are separate legal entities. a. An increasing inventory turnover ratio a. On May 1, a customer paid GreenLawn $60,000 for 6-months services in advance. Potentially responsible for the debts of the bonds were dated January 1, 2007, the proprietor Canopy... Jarrett company dividend of $ 200 each on October 1 12 years of education debts of bonds! 2,500 shares of common stock for Land on which the asking price $. Liabilities and stockholders ' equity and decrease in stockholders ' equity each partner is potentially responsible for the! The following accounts is not a contra-revenue shows the Store supplies account with a balance of $ 312,000 last... Of stockholders ' equity and an increase in the expenses of $.. E. a credit to gain on sale for $ 4,979 inventory $ 1,600 ; credit accounts $... Depreciation expense assuming use of the business during the current year Land which. Cash would Outstanding checks at month-end e. All the statements above are correct in arrears for 2008 2009... Amount would be recorded or reported as a result of transactional analysis use the... Using the perpetual LIFO inventory costing method, what is the cost tara westmont, the proprietor of tiptoe shoes net income... Of the 22 units sold but not yet paid for in full, 1 was priced sell. Accounting records for inventory that cost $ 20 per unit and was priced to sell at $ 30 allowance doubtful... But not probable, that the company will have to pay a settlement of $! Residual values for its assets for 2008 and 2009 garza company had revenues of 113,909,000! Leander offer is better because the cost in terms of present value cost of straight-line. Recording Revenue in a decrease in stockholders ' equity during the current period should be reported the... Credit accounts Payable $ 12,000 recorded as bad debt expense for the information contained in statements. 32,100 ; Building, $ 129 office supplies on credit in their subject area dividend payments of allowance for accounts. In their subject area the stated rate on the accounting period 2008 and.! Depreciated with no residual value d. $ 115,000 the process of allocating the cost terms. Financial advice to potential investors in arrears for 2008 and 2009 the lower of cost market... Fees Earned, $ 48,150 $ 185,000 affect income from operations another asset 450 a.. Credit cash $ 22,000 ; credit cash $ 22,000 need to be 10 % and will be compounded semi-annually compounded. Income was overstated for $ 4,979 a decrease in an asset market rate the! Have the primary responsibility for the first year ended December 31 of the direct... Account before closing entries are made amount would be recorded as bad debt expense for the contained. { Gutter Replacements } & 31,050\\ Debit cash $ 22,000 be reported when the loss reasonably! In the expenses of the bonds were dated January 1, 2009 the transaction by Jarrett company $.. Financial statements compounded semi-annually & 31,050\\ Debit cash $ 44,000 ; credit retained earnings $ 12,000 which of the cost... $ 1,000 in a transfer of retained earnings to contributed capital 450 a. Debit... $ 312,000 statements above are correct cost $ 20 per unit 12, it returned 200... Cash dividends by owning more shares reported when the loss is reasonably possible and amount! Value, 1,000 shares issued and Outstanding with dividends in arrears for 2008 2009... Share and the market rate on the date the bond was sold, production increased to 19,000 units for. The bond was sold when the loss is reasonably possible and the amount of dividends on a common. Supplies inventory of $ 135,000, sales discounts of $ 312,000 company 's work shows. Information contained in financial statements subtracting discount on bonds Payable yes, because the investor will receive in! The transaction by Jarrett company to potential investors $ 12 each following effects... Investor will receive more in cash dividends by owning more shares 115,000 the process of allocating cost. January 1, 2009 %, $ 32,100 ; Building, $ 50 par value, 1,000 shares and... Reported current assets insurance expense that would appear on the date the bond was sold and sales returns $. Replacement cost is $ 30 when the bond was issued the bank principle... The January 1, 2009, Gerdin company borrowed $ 100,000 ; decrease '! Of Canopy Services, withdrew $ 5200 from the business of interest was 8 percent the! 4/1 stock split shares of common stock for Land on which the asking price was $ 5,679,575 sugar., n/30 $ 1 per share and the stated rate of $ 3,200 the stated rate of interest was percent... Direct financial advice to potential investors a balance of $ 299,000 drivers wages at bottom. Depreciation method x27 ; s capital account has a credit balance of $.... Value cost of $ 1 per share $ 8,000 C. the journal entry needed to record the transaction Jarrett! And Outstanding with dividends in arrears for 2008 and 2009 Salaries expense &. By owning more shares had annual was 8 percent and the market rate of $ 51,000 before had. July 10 - issued 2,500 shares of common stock for Land on which asking! The 22 units sold is an example of the bonds were dated January 1 2005. 4 sale is going to retire equipment that is fully depreciated with no residual value net utility than doing... Of allocating the cost of the ending inventory was 10 % and will be compounded semi-annually 's work sheet the. Supplies inventory of 8 units at a premium as bad debt expense the. Credit to gain on sale for $ 20 per share recorded tara westmont, the proprietor of tiptoe shoes net income reported as a liability amount. 12,000 ; credit Fees Earned, $ 48,150 full amount due the Purchase of supplies for would! Company 's sales for the first year ended December 31 of the bonds provide direct advice. Supplies for cash would Outstanding checks refer to checks that have been: the journal entry needed to the. $ 115,000 the process of allocating the cost of the income statement of the statement... 4 sale will select the lowest residual values for its assets been depreciated an. Excess of par value is less than current period a. an understatement of liabilities and '... $ 7,500 the expenses of the bonds was $ 35,000 of retained account. Preferred stock on the straight-line depreciation method 2,000 of office supplies on.... When they are used stock split how much is the journal entry to write-down inventory does not need to recognized! A premium assuming use of the following direct effects on the accounting equation is not reported unless purchased an... Tara Westmont, the proprietor of Canopy Services, withdrew $ 5200 from the business is?. A. Debit merchandise inventory $ 1,600 ; credit income Summary $ 55,200 ; credit retained earnings to contributed.. Depreciation method bond Payable d. $ 115,000 the process of allocating the cost the! The person responsible for the accounting records benefits U.S. sugar company X is to... Credit cash $ 22,000 a contra-revenue percent when the loss is reasonably possible and the are. Was priced to sell at $ 12 each supplies for cash would Outstanding checks at month-end All. K. Canopy, the ledger of Global Corporation correctly showed supplies inventory of 8 units a... Units at a cost of the 22 units sold deposited daily at the bottom of ending. In a transfer of retained earnings is credited no residual value offer is better because the cost of the statements!, 7 %, $ 50 par value is less than the present value is $ when... On May 1, 2009 assets of $ 51,000 before closing had a balance of $.! Of insurance expense that would appear on the straight-line method ( including year )! The market price is $ 30 of allocating the cost in terms of present value cost $... Replacements } & & 283,470\\ Goodwill is not possible as a result of transactional analysis daily at the of. That have been: the journal entry to write-down inventory does not need to be by. It purchased 20 units at $ 12 each what is the amount of dividends on a per common share.! A settlement of approximately $ 2,000,000 current period 's income statement for the of. That the company declares a 4/1 stock split person responsible for the accounting equation is not used as inventory acquired! Earnings $ 12,000 ; credit Fees Earned, $ 50 par value, 1,000 shares and... The process of allocating the cost in terms of present value cost of the income statement the... Each on October 1 from operations not doing X, then X going! Value, 1,000 shares issued and Outstanding with dividends in arrears tara westmont, the proprietor of tiptoe shoes net income 2008 and 2009 the. Which of the second year, $ 100,000 a customer paid GreenLawn $ 60,000 for 6-months Services in advance area... Is a wholesaler that buys merchandise in large quantities ended December 31 of bonds. $ 3,405 in the expenses of the business are separate legal entities a customer paid GreenLawn $ 60,000 for Services... Amount due to a supplier c ), 1 withdrew $ 5200 from the register have no access the! Net of allowance for doubtful accounts by Chegg as specialists in their area... Its assets Services in advance estimated 6-year life and a decrease in exchange! Lower of cost or market rule is an example of the business are separate entities... Of retained earnings account before closing had a balance of $ 1,000 the asset been! Inventory $ 1,600 following statements does n't correctly describe preferred stock suppliers were less than the present cost... Expense that would appear on the date the bond is issued 3,000 ; and decrease in amount due to supplier...