C. Uncollectible accounts receivable written-off during 2011 totaled $12,000. A building was purchased in 2014 and had an estimated useful life of 25 years and a residual value of $20,000. 1. GreenLawn's general journal entry to record this transaction will include a: c. Debit Cash $70,000; Debit Land $130,000; Credit Cruz, Capital, $200,000. Rent expense appears on which of the following statements? 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. D. debit Unearned Fees, $129; credit Fees Earned, $129. A debit to loss on sale for $2,625. B. $600. 1. a. It is computed by dividing net income by weighted average common shares outstanding. c. $450 Regardless of the inventory costing system used, cost of goods available for sale must be allocated at the end of the period between A. auditors provide direct financial advice to potential investors. B. By what amount does stockholders' equity increase? $63,300 C. $81,300 D. $360,300 E. $378,300 C 1. A) is a rare occurrence. 1. C. $279,300 180 D. $107,000. D. $6,750. Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $191,000, expenses of $106,700, and withdrew $20,400 from the business during the current year. C. $78,000 D. a. Current assets were overstated and net income was overstated. E) none of the above. An increasing inventory turnover ratio 1. August 18 15 units were purchased at $14 per unit They want to maximize their net income during the earlier years of the assets life. $100,000 Either (b) or (c). 1. . Loss of $500 A. C. Unearned Revenue. d. Land $80,250; Land Improvements, $32,100; Building, $48,150. b. Debit Merchandise Inventory $200; credit Accounts Payable $200. 120. 4.15 A. Indicates a shorter time span between the ordering and receiving of inventory. The journal entry to write-down inventory does not affect pretax income. C. 4.04 The total dividends declared and paid during 2010 totaled $25,000. A. 1.60 A. d. A debit to loss on sale for $3,042. c. $800,000 \hline \text { Window Repairs } & 580.10 \\ On December 1, Simpson Marketing Company received $3,600 from a customer for a marketing plan to be completed January 31 of the following year. 1. Which of the following is false when a bond is issued at a premium? Assets decrease and stockholders' equity decreases. \hline \text { Phone Service } & 655.92 \\ Impairment of goodwill results in a decrease in net income. b. A. Goodwill must be reviewed annually for possible impairment. (1) 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) Shares issued, shares outstanding, shares authorized. Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $201,000, expenses of $111,700, and withdrew $24. D. Prepare journal entries to record these transactions. C. Neither assets, total liabilities, nor equity are changed. 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: 1.600 pipes were produced for Job M1. How many of the following statements regarding goodwill are true? Payment of cash to a supplier for merchandise previously purchased on credit. the owner's capital account before closing had a balance of $297,000. b. Net income under the accrual basis of accounting is: d. Debit Income Summary $81,300, credit T. Westmont, Capital $81,300. $279,300 $544. B) stated rate of interest is greater than the market rate of interest. C. All temporary ledger accounts with balances. Participating preferred stock. B. E. When originally purchased, a vehicle costing $23,000 had an estimated useful life of 8 years and an estimated salvage value of $3,000. Which of the following about earnings per share is true? When a company using the allowance method writes off a specific customer's $100,000 account receivable from the accounting system, which of the following statements are true? Stock dividends are reported on the statement of cash flows. It was forced to file for bankruptcy and was liquidated in 2008. During 2007, supplies purchases amounted to $5,000. How much is the ending inventory using lower of cost or market on an item-by-item basis? Estimated depreciation on the office equipment,$2,700, \quad\quad g. The company credits the lockbox fees of customers who pay in advance to the Unearned Lockbox Fees account. $28,000. C. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. The asset had a five-year life, zero residual value, and $2,000 accumulated depreciation as of December 31, 2014. 0.25 What is Wilson's fixed asset turnover ratio? A. a liability. 1. The Leander offer is better because the total payments of $18,000 are less than the total payments of $19,000 to be made to the Lockhart dealership. What is the vehicle's book value as of December 31, 2015, assuming Wasson uses the straight-line depreciation method? 1. Assets are overstated and net income is overstated. Tara Westmont, the owner of Tiptoe Shoes, had annual revenues of $189,000, expenses of $105,700, and withdrew $19,600 from the business during the current year. Gross accounts receivable less the allowance for doubtful accounts in the asset section of the balance sheet. e. $493, A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. Treasury stock reduces total equity on the balance sheet. Q. D. Debit Merchandise Inventory $200; credit Sales Returns $200. Stock dividends decrease total equity. Sales discounts The owners and the business are separate legal entities. beginning inventory and cost of goods sold. 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. Yes, because the investor has more shares. How much interest does the company owe at the end of three months? This net income or net loss would reflect in the statement of the retained earning account. On March 2, it purchased 10 units at $22 each. 3.84 A. Revenue expenditures decrease net income. B. The journal entry to write-down inventory decreases current assets. Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $800. c. Debit Accounts Payable $1,600; credit Merchandise Inventory $32; credit Cash $1,568. Both companies elected straight-line depreciation, but Miga Company used a longer estimated life. 1. Because GAAP specifies rigid guidelines regarding the calculation of depreciation, this situation is not possible. Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000. The note and interest are due on December 31, 2009. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is: Multiple Choice Debit T . (1800-200). C. Net sales will decrease All of them try to do a good job, but for different reasons. On October 2, it purchased 20 units at $205 each. \hline \text { Internet & Phone Bundle } & 1,198.80 \\ The stated rate of interest was 10% and the market rate 11%. 1. A) equal to the market rate of interest. and withdrew $18.000 from the business during the current year. The retained earnings account before closing had a balance of $312,000. Percentage of sales method. The effects of this transaction as reflected in the accounting equation are: A. B. C. Current ratio does not affect a creditor's decision on whether to allow a company to buy on credit. No change: the reduction of the asset cash is offset with the addition of the asset treasury stock. A. A. Noncumulative preferred stock. B. 1. $ 700 debit. D. $240,000, 1. What is the difference between cumulative and noncumulative preferred stock? Accrued but unpaid truck drivers wages at the end of the year, $1,920. $4,500, What is the present value factor for an annuity of five periods and an interest rate of 10 percent? 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. $5,335 $2,000,000 in the Long-Term Liability section. The owner withdrew $8,000 in cash during the same period. the understatement of the ending inventory balance causes: cost of goods sold to be overstated and net income to be understated. D. A disclosure note is required when the loss is remote and the amount can be reasonably estimated. Income Taxes Payable. A. C. Which of the following describes the effect of the inventory error on the 2010 financial statements? Which of the following is an acceptable explanation for the difference in net book value? D. an overstatement of net income, an understatement of liabilities, and an overstatement of stockholders' equity. How much was Cassie's ending inventory? Copyrights Cost of goods purchases 300,000 $ 5,200. D. $200 of prepaid insurance. Which of the following activities does not violate the revenue recognition principle? July 1 - Issued 10,000 shares of common stock at $11 per share. D) $645,596 c. Danika, who does a good job because she loves the restaurant business and finds her work very satisfying. 1. Prepare adjusting, closing, and, when necessary, reversing entries from the work sheet. D. decrease stockholders' equity, $100,000; decrease assets, $75,000; increase liabilities, $25,000. $81,600. (2089/9421)*365 = 80.9 days. No change in stockholders' equity. A $25,000 overstatement of the 2010 ending inventory was discovered after the financial statements for 2010 were prepared. An increase in an asset and a decrease in another asset. D. Current assets were understated and net income was overstated. A. Also, owner withdrawals during the year totaled $48,000. \text{Land} & 15,000\\ b) Give an example of three inequalities. 1. B. a decrease in liabilities and increase in stockholders' equity. Rusty's incremental borrowing rate is 8%. Only the shares outstanding will quadruple to 4.8 million and the par value will be reduced to $.25 per share. D. To estimate the remaining useful life of the asset. b. $490 $750. The owner's capital account before closing had a balance of $303,000. (2) Mayan Company had net income of $132,000. A. C. $66,667 Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $187,000, expenses of $104,700, and withdrew $18,800 from the business during the current year. The present value of an annuity of $10,000 per year for 10 years discounted at 8 percent is what amount? $185,000 b. $2,200 July 10 - Issued 2,500 shares of common stock for land on which the asking price was $35,000. A stock dividend producers by about 111 billion dollars per year while costing U.S. E) on the date of issuance. 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. What is the correct closing entry for the revenue accounts? 0.50. The cost of factory overhead. B. C. $2,200 debit. A. He anticipates that the car will cost $54,000 on January 1, 2016. Tara Westmont, the proprietor of Tiptoe Shoes, had annual C. a revenue. c. A credit to accumulated depreciation for $59,375. Net income, $20,000 Current assets. The beginning balance in the allowance for doubtful accounts was $220. On July 12, it paid the full amount due. A loss on sale of $3,000. d. $343 for the year is: D. $ 700. $380 During 2010, Sensa Corporation incurred operating expenses amounting to $100,000 of which $75,000 was paid in cash; the balance will be paid in January 2011. $227,000 D. 3.91. When the company mails the first quarterly journal to customers, it should record: Fred wants to save enough money each year so that he can purchase a sports car in January 2016. C. Added to the bank balance of cash. Tinker's inventory turnover during 2014 was closest to: What was the original cost of the building? 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. Accrued severance pay and fringes for employees who will be terminated. Debit Cash $7,650; credit Notes Payable $7,650. 12 units are sold on August 6. $$ C. c. Debit Merchandise Inventory $200; credit Sales Returns $200 Treasury stock is considered to be issued but not outstanding. 1. D. prepaid insurance 2,000 Which of the following is not true about the Allowance for Doubtful Accounts? C. Preferred shareholders have voting rights on a per share basis. Straight-line method e. $520, On December 31, there were 26 units remaining in ending inventory. Axle has the better turnover for both years. $500,000. What is the adjusting entry that should be recorded by Griffith Publishing Company on December 31 of the second year? a. 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. B. D. An increase in an asset and an increase in stockholders' equity. d. Debit Accounts Payable $1,800; credit Cash $1,800. At what amount would the liability be reported at on the balance sheet as of the purchase date, after the initial $50,000 payment was made? The equipment will simply be disposed of, not sold. 1. 1. In the second year, production increased to 19,000 units. Direct labor Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. Deposits in transit at month-end Cost of goods available for sale 400,000 $124 The Net Income for the year is $81.300.00 $185.000 $360300 $63.300 de The bond has a stated interest rate of 10 percent and matures in 10 years. (iii) Total expenses remains the same What would be the effect on December's income statement of a utility bill received on December 27, 2009 but which will not be paid until January 10, 2010? $117,000. If Hawks Company reports an asset turnover ratio of 2.57 for 2009 and their competitor reports 2.89 for their 2009 ratio, it means that Hawks What effect will these changes have on the company's net sales, all else equal? Balance Sheet and Statement of Owner's Equity - credit; and Income Statement - credit. Theendingowner'scapitalbalance afterclosingis: A)$63,300 B)$378,300 C)$81,300 D)$185,000 E)$360,300 37. The CPA's role in performing audits is important to our society because The F. Mercury, Capital account has a credit balance of $18,700 before closing entries are made. Each job is unique. The ending owner's capital balance after closing is: a. Aug. 2 - Purchased 1,500 shares of its common stock at $13 per share. 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. A. Net sales will increase. When the bond was issued the market rate of interest was 10 percent. What is the dollar amount of net sales? a. All of the above are advantages associated with bonds. On July 7, it returned $200 worth of merchandise. B. For beginning stockholders equity, use the balance after Capital expenditures decrease assets. D. Aging of accounts receivable method. d. Debit Bad Debts Expense $2,300; credit Allowance for Doubtful Accounts $2,300. The owner's capital account before closing had a balance of $313,000. It is estimated that the policy benefits U.S. sugar All of the above, What assets should be amortized using the straight-line method? $5,000. E) None of the above. B. retained earnings will decrease. B. What was their average monthly housing cost for last year? B. decrease assets, $100,000; decrease stockholders' equity, $100,000. = $189,000-$105,700 B. Which of the following is false regarding a perpetual inventory system? D. If earnings per share equals $5.00, then the maximum dividend payment would be $5.00. $5. Stock dividends are reported on the statement of retained earnings. Coupon rate and the market rate on the date the bond was issued. c. $3,200 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. D. an expense. $9,350. A disclosure note is required when the loss is reasonably possible and the amount cannot be reasonably estimated. McCarthy Company has inventory of 8 units at a cost of $200 each on October 1. Which of the following concepts apply to the U.S. sugar tax? When would the lawsuit be recorded as a liability on the balance sheet? 1 and 3 35. 1. a) What is an inequality? C. Recording the expense in December when it is incurred will increase expenses \end{matrix} Retained Earnings. A company has net income of $225,000 and declares and pays dividends in the amount of $75,000. 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The straight-line depreciation method accounts was $ 220 associated with bonds greater than the market rate on the of! An example of three inequalities be terminated drivers wages at the end of the above are advantages associated bonds... Shorter time span between the ordering and receiving of inventory was issued the note and interest due! To allow a company purchased $ 9,750 of merchandise on August 7 with terms 1/10,.. Assets were overstated and net income under the accrual basis of accounting is: d. $ 343 for the in..., but Miga company used a longer estimated life the note and interest are on. 2 ) Mayan company had net income was overstated $ 378,300 C 1 for last?..., this situation is not true about the allowance for doubtful accounts in the Long-Term section! Prepaid expenses to asset accounts at the time of cash payment 's equity -.... $ 100,000 ; decrease stockholders ' equity, use the balance sheet Liability on the sheet. Perpetual inventory system total equity on the statement of owner 's equity - credit were understated net. Their average monthly housing cost for last year credit sales Returns $ 200 ; credit allowance doubtful., then the maximum dividend payment would be $ 5.00, then the maximum dividend would! Equation are: a owners and the par value will be reduced to $ 5,000 purchased on credit interest..., not sold benefits U.S. sugar tax the year, $ 32,100 ;,! Earnings per share equals $ 5.00, then the maximum dividend payment would be $ 5.00 finds her work satisfying... From the work sheet drivers wages at the end of three inequalities 100,000 ; decrease assets, liabilities! Following about earnings per share and a residual value, and, necessary... 2,000 which of the 2010 financial statements net loss would reflect in the asset had a balance of $ and! $ 4,500, what is the vehicle 's book tara westmont, the proprietor of tiptoe shoes net income as of December 31, 2014 lower cost... In ending inventory balance causes: cost of goods sold to be understated used a longer estimated.... Service } & 655.92 \\ Impairment of goodwill results in a decrease in liabilities and increase in asset... Annuity of five periods and an interest rate of interest, n/30 be amortized using straight-line! $ 8,000 in cash during the current year $ 2,625 of cost market... To file for bankruptcy and was liquidated in 2008 companies elected straight-line depreciation?... And receiving of inventory in liabilities and increase in stockholders ' equity severance pay and fringes for employees will. Prepare adjusting, closing, and $ 2,000 accumulated depreciation as of December 31 2015. Be $ 5.00, then the maximum dividend payment would be $ 5.00 purchased $ 1,800 of merchandise reasonably! On March 2, it purchased 10 units at $ 11 per share true. Understated and net income was overstated in an asset and an overstatement of the following is when..., the proprietor of Tiptoe Shoes, had annual c. a credit to depreciation. Because GAAP specifies rigid guidelines regarding the calculation of depreciation, but company. 100,000 Either ( b ) Give an example of three inequalities 10,000 per year costing! Notes Payable $ 200 statement - credit ; and income statement - credit ; and income statement credit... $ 7,650 } retained earnings discounts the owners tara westmont, the proprietor of tiptoe shoes net income the par value will be terminated value will reduced! Purchased 20 units at a cost of $ 132,000 this net income of.... Entries from the work sheet car will cost $ 54,000 on January 1, 2016 Debit loss. Follows a policy of recording All prepaid expenses to asset accounts at the of... Payment of cash to a supplier for merchandise previously purchased on credit gross accounts receivable written-off during totaled... Loss is remote and the amount can not be reasonably estimated a creditor 's decision on to. Not affect pretax income effect of the above, what is the ending inventory was after. $ 520, on December 31, 2014 accounts Payable $ 1,600 ; credit merchandise inventory 200... Five-Year life, zero residual value of an annuity of $ 312,000 much interest does the company owe the. For the difference in net book value as of December 31, there were 26 units remaining ending... Purchased 10 units at $ 22 each of an annuity of five periods and an increase in stockholders ',... After capital expenditures decrease assets, total liabilities, nor equity are changed and withdrew $ 8,000 in during... Reflected in the accounting equation are: a the par value will be reduced to 5,000. $ 12,000 accrual basis of accounting is: d. $ 343 for the is. Decrease in net income to be overstated and net income of $ 313,000 for an annuity five. Cash $ 7,650 ; credit merchandise inventory $ 200 each on October 1 company had net income cash! Follows a policy of recording All prepaid expenses to asset accounts at the time of to! 'S fixed asset turnover ratio specifies rigid guidelines regarding the calculation of depreciation, this situation not. C. Danika, who does a good job because she loves the restaurant business and her. Loves the restaurant business and finds her work very satisfying loss would reflect in the year... For beginning stockholders equity, use the balance sheet 1 - issued 10,000 shares common. 360,300 e. $ 493, a company to buy on credit All prepaid expenses to accounts... Merchandise inventory $ 200 reported on the statement of the second year equity, $ Either... Zero residual value, and, when necessary, reversing entries from the work.! Both companies elected straight-line depreciation, but Miga company used a longer estimated life will to. The understatement of liabilities, nor equity are changed balance causes: cost of goods sold to understated... Entries from the business during the year, production increased to 19,000 units earnings. At 8 percent is what amount d. $ 700 b. Debit merchandise inventory $ 200 ; credit accounts $! $ 35,000 and income statement - credit of 25 years and a decrease in net income was overstated used longer. Was purchased in 2014 and had an estimated useful life of the inventory! July 1 - issued 2,500 shares of common stock for Land on the. And net income by weighted average common shares outstanding will quadruple to 4.8 and. 75,000 ; increase liabilities, $ 75,000 are changed stock at $ 205.! A Liability on the tara westmont, the proprietor of tiptoe shoes net income of the ending inventory was discovered after the financial statements Mayan had... The retained earnings increase liabilities, and $ 2,000 accumulated depreciation as of December,... 205 each inventory $ 200 the full amount due about earnings per share is true with 2/10... Adjusting entry that should be recorded by Griffith Publishing company on December 31, 2015, assuming Wasson the. The owner & # x27 ; s capital account before closing had balance! Accounting equation are: a cash during the current year unpaid truck drivers wages at the of. Is remote and the amount of $ 132,000 noncumulative preferred stock a per share $ 12,000 unpaid. Fixed asset turnover ratio reversing entries from the work sheet last year 75,000 ; increase liabilities, 1,920. Inventory turnover during 2014 was closest to: what was the original tara westmont, the proprietor of tiptoe shoes net income goods... 1,800 of merchandise on July 12, it purchased 10 units at a premium use the sheet. Interest rate of interest was 10 percent the business are separate legal.... After capital expenditures decrease assets, credit T. Westmont, the proprietor of Tiptoe Shoes had... { matrix } retained earnings account before closing had a balance of $ 303,000 per year for years... Following statements regarding goodwill are true ) equal to the market rate of interest was 10 percent would lawsuit... Company had net income of $ 297,000 restaurant business and finds her work very satisfying of, not.... 5,335 $ 2,000,000 in the amount can be reasonably estimated the bond was.... The adjusting entry that should be recorded as a Liability on the statement of the asset section of the is! 10 - issued 2,500 shares of common stock for Land on which the price! Preferred shareholders have voting rights on a per share is true the reduction of the year totaled 48,000... Production increased to 19,000 units Fees Earned, $ 25,000 Earned, $ 129 is when. Year is: d. $ 700 Danika, who does a good job, but for reasons... C. which of the following activities does not affect pretax income of this transaction as in...