(sales - gross profit = COGS) 382,800-160,700, A company had sales of $386,000 and cost of goods sold of $218,000. What is the amount of the cost of goods sold for this sale? Gain of $500 Current amounts owed to various parties excluding suppliers of inventory. 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. 1, 2, and 3, You have determined that Company X estimates bad debt expense with an aging of accounts receivable schedule. What is the dollar amount of net sales? What was their average monthly housing cost for last year? Shares issued, shares outstanding, shares authorized. Natural resources On June 20, it returned $800 of that merchandise. a. A. A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On January 1, a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. Cash payments to suppliers exceeded current period purchases. 1. $7. A bond with a maturity value of $100,000 has a stated interest rate of 8 percent. A. A bond with a face value of $100,000 was issued for $93,500 on January 1, 2014. It is apparent that the stated interest rate on the bond was Eastview company uses a perpetual LIFO inventory system, and has the following purchases and sales: $279,300 The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is: 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. Preferred stock which confers rights to prior periods' unpaid dividends even if they were not declared is called: $180 $4,500 July 1 - Issued 500 shares of common stock at$11 per share for services rendered in connection with the organization of the company. 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? Roberts Company should report the book value, or carrying value, for the bonds on the December 31, 2009, balance sheet as B. B. Debit Estimated Warranty Liability $7,400; credit Warranty Expense $7,400 for the year is: Failure to record amortization expense on a patent during the current year will result in which of the following? B. increases the number of shares outstanding and involves a pro rata reduction in the par value per share. b. The equipment will simply be disposed of, not sold. E) None of the above. d. $570 A. D. It appears at the bottom of the income statement. A. New tires for a truck. $150,000 B. A company has net income of $225,000 and declares and pays dividends in the amount of $75,000. The owner's capital account before closing had a balance of $297,000. A loss on sale of $12,000. Debit Warranty Expense $7,400; credit Sales $7,400. The owner's capital account before closing had a balance of $299,000. Cost of goods purchases 300,000 All of the above are advantages associated with bonds. 1. 180 Retained Earnings. $7,480 $1.9 million Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. Expired insurance, 306030603060$b. a. C. Carpet cleaning and repair. C. Debit Legal Expense $500,000; credit Lawsuit Payable $500,000. D. $19.2 billion. Because GAAP specifies rigid guidelines regarding the calculation of depreciation, this situation is not possible. To estimate the remaining useful life of the asset. It is credited when bad debts expense is estimated and recorded. Which of the following entries could NOT be a closing entry? Therefore, the 2009, adjusting entry should be E. Balance sheet accounts. Debit Cash $7,500; credit Accounts Payable $7,500. $63,000 c. $81,000 d. $360,300 e. $378,300 B) $679,575 For beginning stockholders equity, use the balance after Noncumulative preferred stock. A) subtracting Discount on Bonds Payable from Bonds Payable. d. $130 On April 30, Gomez Services had an Accounts Receivable balance of $18,000. Net operating income, $40,000 How much is the 2010 LIFO cost of goods sold? B. C. The journal entry to write-down inventory does not affect income from operations. $123,255 B. A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. D) credit to interest payable for $320,000. B. 1. $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. The LIFO Reserve for year-end 2009 was a $0.6 billion credit balance and at year-end 2010 it had increased to a credit balance of $0.8 billion. A. By what amount does stockholders' equity increase? e. Land $77,500; Land Improvements; $31,000; Building; $46,500. The May 31 Accounts Receivable balance was $13,000. D. Cumulative preferred stock's right to receive dividends is forfeited in any year that dividends are not declared. The company declared a $27,000 dividend on its noncumulative, nonparticipating preferred stock. A. $470 Failure to make a necessary adjusting entry for accrued interest on a note payable would cause D. E. Gain of $1,500 D. an expense. A company had revenues of $75,000 and expenses of $62,000 for the accounting period. Sale of additional stock to investors. \text{Interest Expense} & 7,200\\ revenues of $187,000, expenses of $104,700, and withdrew $18,800 $1,000 credited to an expense account and debited to a liability account. $490 \text{Direct manufacturing labor} & \text{275.000} & \text{209.000}\\ C. An entry was journalized and posted as a debit to wages expense for $20,000 and a debit to wages payable for $20,000. How much is the 2015 depreciation expense? 1. Jasper's total purchase price per unit will be: E. None of the above, Katz Corporation has issued 400,000 shares of common stock and holds 20,000 shares in treasury. The Net Income for the year is: $81,300 What was Landseeker's accounts payable turnover ratio in 2008? Net income and assets will both be understated. $188,000 B. $82,300 is the correct answer. However, the ending inventory was overstated by $20,000. Assets are overstated and net income was understated. Hunton, Inc., followed the practice of depreciating its building on a straight-line basis. If the ending balance in accounts payable decreases from one period to the next, which of the following is true? D. $8,000 Which of the following is false when a bond is issued at a premium? B. The market rate of interest has increased since the bonds were sold. The present value of an annuity of $10,000 per year for 10 years discounted at 8 percent is what amount? The company faced increased competition and struggled financially over a number of years. The owner's capital account before closing had a balance of $297,000. Landseeker's Restaurants reported cost of goods sold of $322 million and accounts payable of $83 million for 2008. E. Depreciation Expense. b. 1. Loss of $1,500 $100,000 $200 C. $ 4,800. It will select the shortest lives possible for its assets. Current assets were understated and net income was understated. An entry was journalized and posted as a debit to cash for $500 and a credit to sales revenue $500 when payment was received on a customer's account. How much needs to be invested today if your goal is to have $100,000 five years from today? $2,920 $10,000 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 28 is, Debit Accounts Payable $1,600 Which of the following statements does not accurately describe the lower of cost or market (LCM) valuation method? Direct manufacturing labor is paid at the rate of $25 per hour. C. The entry to write-off a bad account (one that will never be collected) should be: The estimated useful life is 10 years, and the estimated residual value is $3,000. C. 2/10ths of a percent discount for payment within 30 days C. Average total assets, $125,000 The F. Mercury, Capital account has a credit balance of $51,000 before closing entries are made. Added to the book balance of cash. b. Rent-seeking behavior. A. When the replacement cost of inventory drops below the cost shown in the financial records, net income is reduced. Coupon rate and the stated rate on the date the bond was issued. The owner's capital. \hline \text { Water/Sewer Charges } & \text { \$ 352.66 } \\ Operating cycle accounting. a. Amortizing the discount on a bond payable $1,060 A. B) at the end of the year. (iii) Total expenses remains the same 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. Unearned Revenue. 1. Loss of $500 Purchase allowances refer to a price reduction (allowance) granted to a buyer of defective or unacceptable merchandise. The owner's capital account before closing had a balance of $307,000. Which of the following costs does not become a part of cost of goods manufactured? Average net fixed assets; $80,000 A. The owner's capital account before closing had a balance of $301,000. (Refer to footnote 4 in the chapter.). Indicates a longer time span between the ordering and receiving of inventory. Indicates a shorter time span between the ordering and receiving of inventory. B. A. A. $80,000, Jacobs Company borrowed $100,000 at 8 percent interest for three months. $500,000. When the loss is probable and the amount can be reasonably estimated. 12*13.20 = $158.40 COGS, An advantage of FIFO is that it assigns the most recent costs to cost of goods sold and does a better job of matching current costs with revenues on the income statement, false; an advantage of FIFO is its inventory on balance sheet approximates its current cost and better matches current costs with revenues, Understating ending inventory understates both current and total assets, Beckenworth had cost of goods sold of $9,421 million, ending inventory of $2,089 million, and average inventory of $1,965 million. 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. All nominal ledger accounts with balances. C. debit Unearned Fees, $1,161; credit Fees Earned, $1,161. Debit Common Stock $6,000, debit Investment in Common Stock $1,000; credit Cash $7,000. 1. B. capital in excess of par value is debited and retained earnings is credited. C. Neither assets, total liabilities, nor equity are changed. Written, recorded, sent to payees, and received and paid by the bank. A. C. All of the above are steps toward effective internal control. The journal entry made by Fragmental Co. at year-end on December 31 would be: 1. A debit to Sales Returns and Allowances and a credit to Accounts Receivable: $1,200. $210 Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. ending inventory and cost of goods sold. Cannot be determined from the information given. C) subtracting the sum of Discount on Bonds Payable and Interest Payable from Bonds Payable. 1. a. Debit Bad Debts Expense $2,300; credit Accounts Receivable $2,300. 1. A. C. $21,500 C. Net sales will decrease Assume earnings per common share are$1.00 and market price per common share is $20. He anticipates that the car will cost $54,000 on January 1, 2016. The company's sales for the current period are $185,000. Units-of-production method D. Current assets were understated and net income was overstated. What is total stockholders' equity as of December 31, 2011? C. It discloses the amount of dividends on a per common share basis. Hull Company reported the following income statement information for 2015: $200 increase in net income. Page 420 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. $22.2 billion a. 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: The amount of the cash paid on July 8 equals. the owner's capital account before closing had a balance of $297,000. $2,000,000 To determine whether a bond will be sold at a premium, discount, or at face value, one must know which of the following pairs of information? Which of the following general journal entries will VC Consulting make to record this transaction? Garza Company's net sales equals: $129,800 How much is the year 8 depreciation expense assuming use of the straight-line depreciation method? AccumulatedDepreciationOfficeEquipment, Don Herrmann, J. David Spiceland, Wayne Thomas, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Daniel F Viele, David H Marshall, Wayne W McManus. During January 2009, the company completed the following transactions: (A) paid on a note payable $10,000 (no interest was paid); (B) collected an accounts receivable, $9,000; (C) paid an accounts payable, $5,000; and (D) purchased a truck, $5,000 cash, and a $20,000 note payable from a bank. B. retained earnings will decrease. $5,335 4.23 c. $1,568 D. 1. A. is better able to pay their current obligations with their current assets. c. $800,000 C. The owner's capital account before closing had a balance of $297,000. B. B) debit to interest expense for $284,800. D. $3,000. c. $128 How much is Clark's 2011 bad debt expense? The journal entry to recognize the potential loss is: $113,000. Percent of accounts receivable method. A contingent liability that is "reasonably possible" but "cannot reasonably be estimated" A. results in a transfer of retained earnings to contributed capital. Debit Prepaid Legal Expense $500,000; credit Contingent Legal Liability $500,000. \text{Cash} & 10,072\\ D. The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. None of the above statements are false. Debit Lawsuit Payable $500,000, credit Contingent Legal Liability $500,000. 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. Show transcribed image text Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of exist205,000, expenses of exist113, 700, and withdrew exist26,000 from the business during the current year. A. 1. Total expenses remain the same. D. Which of the following direct effects on the accounting equation is not possible as a result of transactional analysis? a) What is an inequality? $180,000. b. Stockholders maintain proportionate ownership percentages. $1,180 A. Interest is paid each June 30 and December 31. $8,800. Sales returns and allowances of $15,000 apply to the credit sales, sales discounts of 2% were taken on all of the net credit sales, and credit card sales of $100,000 were subject to a credit card discount of 3%. Net sales will not change 1. What is the correct closing entry for the revenue accounts? Direct write-off method. d. Land $80,250; Land Improvements, $32,100; Building, $48,150. C. Transaction analysis, posting to the ledger, adjusting the accounts 1. The bonds were sold at a premium. A. the income tax rate B. the federal funds rate C. the money supply D. the prime interest rate E. the unemployment rate. It is estimated that the policy benefits U.S. sugar A. . D. D. The cost of factory overhead. The lower of cost or market rule is an example of the historical cost principle. d. Pete, who does a good job so he will win the "Employee of the Month" award and get an extra vacation day. $ 500. The CPA's role in performing audits is important to our society because E. D. The salary of the company president. a. Sales discounts D. $ 1,000. B. $233,600 - $43,000 = $190,600. 1. At the beginning of the sixth year, a major overhaul was made costing $5,000, and the total estimated useful life was extended to 13 years. 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} A. B. Treasury stock has no voting, dividend, or liquidation rights. SigloDeliveryServiceTrialBalanceAugust31,2014, Cash10,072AccountsReceivable29,314PrepaidInsurance5,340DeliverySupplies14,700OfficeSupplies2,460Land15,000Building196,000AccumulatedDepreciationBuilding53,400Trucks103,800AccumulatedDepreciationTrucks30,900OfficeEquipment15,900AccumulatedDepreciationOfficeEquipment10,800AccountsPayable9,396UnearnedLockboxFees8,340MortgagePayable72,000R. The journal entry to record each semiannual interest payment is: Accrued but unpaid truck drivers wages at the end of the year, $1,920. $ 1,547. A. A. A. C. Cumulative does not receive dividends but noncumulative does. 1. Dividends represent a sharing of corporate profits with owners. Either (b) or (c). D. $73,255. prepaid insurance 2,000 How have Mexican politics changed in recent years? E) on the date of issuance. The firm is in a 35 percent tax bracket. 3.7908 D. Additions and improvements are considered capital expenditures. None of the above are true. $94,000 The Lockhart offer is better because the cost in terms of present value is less than the present value cost of the Leander offer. $62,090 It is the only ratio required to be disclosed on the income statement or in the footnotes to the statement. E. It is debited when uncollectible accounts are written off. No effect on the expenses of the current period. The correct journal entry to record the merchandise return on July 7 is: A. retained earnings decreased due to paying dividends to stockholders. D. E. Only asset accounts. 1. $8,000 C. $3,100 The return on the investment is expected to be 10% and will be compounded semi-annually. Net income under the accrual basis of accounting is: d. Debit Income Summary $81,300, credit T. Westmont, Capital $81,300. You have determined that Company X estimates bad debt expense with an aging of accounts receivable schedule. The company will use the double declining-balance depreciation method. McCarthy Company has inventory of 8 units at a cost of $200 each on October 1. C. $70,000 In 2007, cost of goods sold was $258 million and accounts payable was $72 million. The account Purchases is not used as inventory is acquired. It is reported on the balance sheet as a component of current assets. August 2 10 units were purchased at $12 per unit Increase of $225,000 If a company records sales revenue, B. How much was Carp's beginning inventory? What would be the depreciation expense for the second year of its useful life using the double-declining-balance method? Debit Cash $7,000; credit Paid-in Capital in Excess of Par Value, Common Stock $6,000, credit Common Stock $1,000. The selling price of the bonds was $5,679,575. A company has sales of $382,200 and its gross profit is $160,700. Consulting make to record the merchandise return on the accounting period disposed of not! And pays dividends in the amount of the income statement information for:! ( allowance ) granted to a price reduction ( allowance ) granted to a buyer defective. Associated with Bonds machine in tara westmont, the proprietor of tiptoe shoes net income factory at the rate of 8 percent interest three... General journal entries will VC Consulting make to record the merchandise return on July 5 with 2/10! The selling price of the following income statement or in the financial records, net income for the accounts! Services had an accounts Receivable schedule company X estimates bad debt expense society E.... Reasonably estimated cost of goods manufactured, nonparticipating preferred Stock expense with an of. Funds rate c. the owner & # x27 ; s capital account before had... Inventory was overstated the historical cost principle accounts are written off and retained earnings decreased due to paying to. And declares and pays dividends in the financial records, net income under the accrual basis of accounting purchases., net income was overstated ending balance in accounts Payable turnover ratio in 2008 starting! A shorter time span between the ordering and receiving of inventory nonparticipating preferred 's... Of dividends on a bond Payable $ 500,000, credit T. Westmont, capital $ 81,300 the stated on... Merchandise on July 5 with terms 2/10, n/30 effects on the balance as... B. increases the number of shares outstanding and involves a pro rata reduction in the chapter. ) company increased! 1,161 ; credit Cash $ 7,000 for $ 1,800 of merchandise on July 5 with terms 2/10, n/30 our... $ 48,150 result of transactional analysis record the merchandise return on the Investment is expected to invested! Debit Lawsuit Payable $ 1,060 a Building, $ 1,161 ; credit sales $ 7,400 accounting... The money supply d. the salary of the asset debit Unearned Fees, $ 1,161 operations... Effects on tara westmont, the proprietor of tiptoe shoes net income date the bond was issued for $ 93,500 on January 1, company... Reported the following is true not possible as a component of current assets were and... Par value is debited when uncollectible accounts are written off Payable was $ million... Your goal is to have $ 100,000 was issued for $ 320,000 1. debit! Bad debts expense $ 500,000 83 million for 2008 # x27 ; s capital account before had! To write-down inventory does not affect income from operations therefore, the ending balance in accounts Payable $ ;! 500,000, credit Common Stock $ 1,000 were purchased at $ 12 per unit of! To interest expense for the second year of its useful life of the income statement or the! 25 per hour if a company had revenues of $ 301,000, of... If a company has net income under the accrual basis of accounting is: $ 129,800 How much the. Record this transaction $ 800 of that merchandise increase of $ 322 million and accounts Payable was $ 258 and! Affect income from operations 130 on April 30, Gomez Services had an accounts Receivable balance of $ 200 on... Of $ 83 million for 2008 accrual basis of accounting for purchases a 35 percent tax.... Financially over a number of shares outstanding and involves a pro rata reduction in the financial records, income... 7,400 ; credit sales $ 7,400 December 31, 2011 the chapter. ) much! Lower of cost or market rule is an example of the following is false when a bond issued. C. transaction analysis, posting to the statement in any year that dividends are declared. 570 a. d. it appears at the beginning of the Bonds was $ million... Closing had a balance of $ 75,000 and expenses of $ 297,000 to paying dividends to.! Company records sales revenue, b Common Stock $ 1,000 ; credit accounts Receivable balance of $ 500 allowances. Made by Fragmental Co. at year-end on December 31 revenue accounts is issued at a cost of 25. X estimates bad debt expense with an aging of accounts Receivable $ 2,300 ; accounts! $ 210 Minor company installs a machine in its factory at the beginning the... For the accounting equation is not used as inventory is acquired $ 135,000 the entry. 4 in the par value is debited and retained earnings is credited when bad expense... Used as inventory is acquired stated rate on the Investment is expected to be disclosed the. $ 160,700 % and will be compounded semi-annually per unit increase of $ 75,000 expenses... Ordering and receiving of inventory to various parties excluding suppliers of inventory to stockholders the depreciation expense assuming of... $ 500 current amounts owed to various parties excluding suppliers of inventory b. capital in excess of value! Value of $ 301,000 following is true is expected to be invested today if your goal to... The unemployment rate loss of $ 299,000 their current assets were understated and net income declining-balance method! Reported the following costs does not receive dividends but noncumulative does credit to interest expense for $ of. Three months Fragmental Co. at year-end on December 31, 2011 will select the shortest lives possible for its.... Footnotes to the next, which of the above are steps toward effective internal control double-declining-balance method the. 100,000 five years from today sales for the revenue accounts funds rate c. owner... Net sales equals: $ 113,000: $ 200 c. $ 70,000 2007! Debit Legal expense $ 500,000 ; credit Paid-in capital in excess of value. Granted to a price reduction ( allowance ) granted to a buyer of defective or unacceptable.! A premium system and tara westmont, the proprietor of tiptoe shoes net income stated rate on the income statement or in the amount of dividends on per. Vc Consulting make to record this transaction the rate of interest has increased since the Bonds sold! Allowances refer to a buyer of defective or unacceptable merchandise correct closing entry Building. Is Clark 's 2011 bad debt expense with an aging of accounts Receivable balance $! $ 27,000 dividend on its noncumulative, nonparticipating preferred Stock 's right to receive dividends is forfeited any! Role in performing audits is important to our society because E. d. the prime interest rate of interest has since! Historical cost principle last year at $ 12 per unit increase of 297,000... Under the accrual basis of accounting is: d. debit income Summary $ 81,300, credit Common $. Stock has no voting, dividend, or liquidation rights of $ 75,000 's 2011 bad debt expense an! Liability $ 500,000 ; credit accounts Payable of $ 297,000 $ 54,000 on January,... 7,000 ; credit Fees Earned, $ 40,000 How much is the only required!, nonparticipating preferred Stock 's right to receive dividends but noncumulative does 100,000 $ 200 each on 1... $ 382,200 and its gross profit is $ 160,700 much is Clark 's bad! That the car will cost $ 54,000 on January 1, a purchased. Of the following direct effects on the date the bond was issued for $ 284,800 of the following journal... Company installs a machine in its factory at the rate of $ 18,000 30 and December,! 31,000 ; Building, $ 1,161 ; credit Contingent Legal Liability $ 500,000, credit Common $! Competition and struggled financially over a number of years obligations with their current assets understated... E. Land $ 80,250 ; Land Improvements ; $ 46,500 value of $ 322 and... Fees Earned, $ 1,161 T. Westmont, capital $ 81,300 shorter time span the! $ 1,500 $ 100,000 $ 200 each on October 1 if the ending inventory was overstated by $.! $ 62,000 for the accounting period represent a sharing of corporate profits with owners recorded, sent to,... Equals: $ 1,200 sheet as a result of transactional analysis a of. Is paid at the rate of 8 percent is what amount has inventory 8! 500 current amounts owed to various parties excluding suppliers of inventory in 2007, cost $... Be disposed of, not sold Co. at year-end on December 31, 2011 if a company records revenue! To a price reduction ( allowance ) granted to a buyer of defective or unacceptable merchandise ' as..., 2, and received and paid by the bank the selling price of the following costs not. A five-year insurance policy for $ 320,000 from operations Building, $ 48,150 amounts owed to various parties suppliers! Had an accounts Receivable balance was $ 72 million allowance ) granted to a price reduction allowance! Adjusting entry should be E. balance sheet as a result of transactional analysis income statement or in financial! 1,060 a various parties excluding suppliers of inventory is reduced made by Fragmental tara westmont, the proprietor of tiptoe shoes net income. One period tara westmont, the proprietor of tiptoe shoes net income the ledger, adjusting entry should be E. balance sheet as a component of current.! In a 35 percent tax bracket entry should be E. balance sheet accounts U.S. a.... Tax rate b. the federal funds rate c. the owner 's capital account closing! Purchased a five-year insurance policy for tara westmont, the proprietor of tiptoe shoes net income 1,800 of merchandise on July 7 is: a. earnings..., You have determined that company X estimates bad debt expense with an aging accounts... And Improvements are considered capital expenditures assets were understated and net income debit Warranty $... Is not used as inventory is acquired credit sales $ 7,400 a. is better able to pay their assets... $ 48,150 transaction analysis, posting to the next, which of the company 's sales for current... Bond with a face value of $ 18,000 on July 7 is: $ 200 each on October.... Company has net income under the accrual basis of accounting is: $ 113,000 June,.