1. Liabilities of a company would not include
2. According the matching principle, the cost of inventory becomes an expense
3. If total liabilities decreased by $15,000 and stockholders’ equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period?
4. Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjusting entry:
5. Walker Clothing Store had a balance in the Accounts Receivable account of $780,000 at the beginning of the year and a balance of $820,000 at the end of the year. Net credit sales during the year amounted to $8,000,000. The average collection period of the receivables in terms of days was
6. Zendejas Company purchased a ruler for $2.00. The ruler is expected to last for ten years. Tony, the accountant, expensed the cost of the ruler in the year of the purchase. Which constraint has Tony taken into account when making his accounting decision?
7. A debit to an asset account indicates
8. What effect did the borrowing transaction have on the amount of Risen Company’s working capital?
9. The current assets of Kile Company are $150,000. The current liabilities are $120,000. The current ratio expressed as a proportion is
10. If a corporation distributes cash to its stockholders, then
Problem # 1: Instructions Prepare a correct income statement: Hint: you will need to adjust the numbers in the income statement below, with the additional data below the problem (Try some journal entries, and post them to the proper account), and then do the income statement. Your choice on whether you show the entries, although it may help, and show me how you got the numbers! Total Points: 8 Todd Insurance Agency prepares monthly financial statements. Presented below is an income statement for the month of June that is correct on the basis of information considered. Additional Data: When the income statement was prepared, the company accountant neglected to take into consideration the following information:
1. A utility bill for $2,000 was received on the last day of the month for electric and gas service for the month of June.
2. A company insurance salesman sold a life insurance policy to a client for a premium of $35,000. The agency billed the client for the policy and is entitled to a commission of 20%.
3. Supplies on hand at the beginning of the month were $3,000. The agency purchased additional supplies during the month for $3,500 in cash and $2,200 of supplies were on hand at June 30.
4. The agency purchased a new car at the beginning of the month for $19,200 cash. The car will depreciate $4,800 per year.
5. Salaries owed to employees at the end of the month total $5,300. The salaries will be paid on July 5. Journal Entries
Problem # 2 Instructions: Please read the information below, the instructions, and then follow the instructions. First do the entries, and make sure you adjust any accounts that are necessary. Please show all calculations that you want to, as it will help. Total Points 4: (a) Journalize the entries required to complete the closing of the accounts. (b) Prepare an retained earnings statement for the year ended December 31, 2008. All revenue and expense accounts have been closed at the end of the calendar year for the Staley Bears Company. The Income Summary account has total debits of $520,000 and total credits of $600,000. As of the same date, Retained Earnings has a balance of $115,000, and Dividends has a balance of $48,000.
Problem # 3 Instructions: (a) Calculate the balance of Retained Earnings that would appear on a balance sheet at December 31, 2008. (For this, just do a basic retained earnings calculation, but no formal statement is required)! (b) Prepare a classified balance sheet for Ken’s Concepts at December 31, 2008 assuming the note payable is a long-term liability. Total Points: 8 The financial statement columns of the worksheet for Ken’s Concepts at December 31, 2008 are as follows:
