2023 1 A company earned 5 510 in net income for October Its net sales for | Assignments Online

1.  A company earned $5,510 in net income for October. Its net sales for October were $19,000. Its profit margin is:

 

2.9%.  

29%.  

290%.  

345%.  

$13,490. 

 

2.  Prior to recording adjusting entries, the Office Supplies account had a $354 debit balance. A physical count of the supplies showed $110 of unused supplies available. The required adjusting entry is:

 

Debit Office Supplies $110 and credit Office Supplies Expense $110.  

Debit Office Supplies Expense $110 and credit Office Supplies $110.  

Debit Office Supplies Expense $244 and credit Office Supplies $244.  

Debit Office Supplies $244 and credit Office Supplies Expense $244.  

Debit Office Supplies $110 and credit Supplies Expense $244.

 

3.  On January 1 of the current year, Bob’s Lawn Care Service reported owner’s capital totaling $123,400. During the current year, total revenues were $96,900 while total expenses were $84,600. Also, during the current year Bob withdrew $20,900 from the company. No other changes in equity occurred during the year. If, on December 31 of the current year, total assets are $196,000, the change in owner’s capital during the year was:

 

An increase of $8,600.  

An decrease of $33,200.  

A increase of $33,200.  

A decrease of $8,600.  

Impossible to determine from the information provided. 

 

4.  The balance in the prepaid insurance account before adjustment at the end of the year is $6,100, which represents the insurance premiums for four months. The premiums were paid on November 1. The adjusting entry required on December 31 is:

 

Debit Insurance Expense, $3,050; credit Prepaid Insurance, $3,050.  

Debit Prepaid Insurance, $3,050; credit Insurance Expense, $3,050.  

Debit Insurance Expense, $1,525; credit Prepaid Insurance, $1,525.  

Debit Prepaid Insurance, $1,525; credit Insurance Expense, $1,525.  

Debit Cash, $6,100; Credit Prepaid Insurance, $6,100. 

 

 

5.  An adjusting entry was made on year-end December 31 to accrue salary expense of $3,200. Which of the following entries would be prepared to record the $7,000 payment of salaries in January of the following year?

 

A.Salaries Expense7,000

Cash7,000 

B.Salaries Payable7,000

Cash7,000 

C.Salaries Payable3,200

Cash3,200 

D.Salaries Expense3,200

Salaries Payable3,200 

E.Salaries Payable3,200

Salaries Expense3,800

Cash         7,000 

 

Choice A  

Choice B  

Choice C  

Choice D  

Choice E    

 

6.  A $170 credit to Office Equipment was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?

 

Office Equipment, overstated $340; Fees Earned, understated $170.  

Office Equipment, overstated $170; Fees Earned, overstated $170.  

Office Equipment, overstated $170; Fees Earned, understated $170.  

Office Equipment, understated $340; Fees Earned, overstated $170.  

Office Equipment, understated $170; Fees Earned, overstated $170. 

 

7.  Hal Smith opened Smith’s Repairs on March 1 of the current year. During March, the following transactions occurred and were recorded in the company’s books:

 

1.Smith invested $31,500 cash in the business.

2.Smith contributed $113,000 of equipment to the business.

3.The company paid $3,300 cash to rent office space for the month.

4.The company received $22,500 cash for repair services provided during March.

5.The company paid $7,500 for salaries for the month.

6.The company provided $4,300 of services to customers on account.

7.The company paid cash of $630 for monthly utilities.

8.The company received $4,400 cash in advance of providing repair services to a customer.

9.Smith withdrew $6,300 for his personal use from the company.

 

Based on this information, the balance in Hal Smith, Capital reported on the Statement of Owner’s Equity at the end of March would be:

 

$157,970.  

$153,570.  

$147,270.  

$13,470.  

$19,870. 

 

8.  At the beginning of January of the current year, Thomas Law Center’s ledger reflected a normal balance of $55,800 for accounts receivable. During January, the company collected $18,600 from customers on account and provided additional services to customers on account totaling $14,400. Additionally, during January one customer paid Thomas $6,900 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be:

 

$53,100.  

$58,500.  

$51,600.  

$4,200.  

$60,000. 

 

9.  During the month of February, Hoffer Company had cash receipts of $7,700 and cash disbursements of $8,800. The February 28 cash balance was $2,000. What was the January 31 beginning cash balance?

 

$900.  

$0.  

$4,400.  

$1,100.  

$3,100. 

 

10.  On April 30, a three-year insurance policy was purchased for $20,700 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company’s income statement for the year ended December 31?

 

$575.  

$4,600.  

$6,900.  

$16,100.  

$20,700. 

 

11.  A company had sales of $384,000 and its gross profit was $143,100. Its cost of goods sold equals: 

 

$384,000.  

$240,900.  

$527,100.  

$143,100.  

$(240,900). 

 

12.  Use the information in the adjusted trial balance presented below to calculate current assets for Jones Company:

 

Account Title            Dr.Cr.

Cash                     23,900

Accounts receivable16,900

Prepaid insurance      7,500

Equipment 109,000

Accumulated Depreciation – Equipment54,500 

Land                         104,000

Accounts payable                17,900 

Interest payable                  2,850 

Unearned revenue         5,900 

Long-term notes payable39,000 

J. Jones, Capital       141,150 

_        ________________           ________________________

Totals         261,300                             261,300 

 

$21,650.  

$48,300.  

$26,650.  

$102,800.  

$43,900. 

 

13.  A company purchased $4,600 worth of merchandise. Transportation costs were an additional $425. The company later returned $350 worth of merchandise and paid the invoice within the 2% cash discount period. The total amount paid for this merchandise is:

 

$4,583.00.  

$4590.00.  

$4,250.00.  

$4,675.00.  

$4,508.00. 

 

14.  A company has net sales and cost of goods sold of $771,000 and $558,200, respectively. Its net income is $19,430. The company’s gross margin and operating expenses are ________ and ___________, respectively.

 

$751,570; $193,370  

$193,370; $212,800  

$538,770; $232,230  

$232,230; $538,770  

$212,800; $193,370 

 

15.  The following information is available for Crandall Company before closing the accounts. What will be the amount in the Income Summary account that should be closed to Crandall, Capital?

 

J.Bones, Capital           121,500 

J.Bones, Withdrawals 33,900 

Fees earned          196,500 

Depreciation Expense-Equipment13,900 

Wages expense           73,300 

Interest expense4,250 

Insurance expense         13,600 

Rent expense         26,100 

 

$87,600.  

$65,350.  

$50,600.  

$31,450.  

$41,450.

 

16. Thelma Company reported cost of goods sold for Year 1 and Year 2 as follows:

 

                        Year 1      Year 2

Beginning inventory$ 127,000   $ 131,400 

Cost of goods purchased251,400 282,000 

Cost of goods available for sale   378,400 413,400 

Ending inventory              131,400 136,400 

Cost of goods sold$ 247,000      $ 277,000 

 

Thelma Company made two errors: 1) ending inventory at the end of Year 1 was understated by $16,400 and 2) ending inventory at the end of Year 2 was overstated by $7,400. Given this information, the correct cost of goods sold figure for Year 2 would be:

 

$269,600  

$300,800     

$293,400  

$256,000  

$284,400 

 

17.  Tops had cost of goods sold of $9,421 million, ending inventory of $2,089 million, and average inventory turnover of $1,965 million. Its days’ sales in inventory equals (Use 365 days a year. Do not round intermediate calculations. Round your final answer to one decimal place.):

 

80.9 days.   

0.2 days.  

76.1 days.  

4.5 days.  

4.8 days. 

 

18.  On October 1, Courtland Company sold merchandise in the amount of $7,800 to Carter Company, with credit terms of 3/10, n/30. The cost of the items sold is $5,000. Courtland uses the periodic inventory system. On October 4, Carter returns some of the merchandise. The selling price of the merchandise is $1,500 and the cost of the merchandise returned is $850. Carter pays the invoice on October 8, and takes the appropriate discount. The journal entry that Courtland makes on October 8 is:

 

Cash      7,800

Accounts receivable7,800 

 

Cash         5,000

Accounts receivable5,000 

 

Cash 6,111

Sales discounts   189

Accounts receivable6,300 

 

Cash           7,566

Accounts receivable7,566 

 

Cash              7,566

Sales discounts   234

Accounts receivable7,800 

 

19.  A company purchased $4,200 of merchandise on December 5. On December 7, it returned $1,400 worth of merchandise. On December 8, it paid the balance in full, taking a 2% discount. The amount of the cash paid on December 8 equals:

 

$1,400.  

$4,116.  

$2,744.  

$2,800.  

$4,200. 

 

20.  A company that has operated with a 30% average gross profit ratio for a number of years had $102,000 in sales during the first quarter of this year. If it began the quarter with $18,200 of inventory at cost and purchased $72,200 of inventory during the quarter, its estimated ending inventory by the gross profit method is:

 

$21,420.  

$30,600.  

$18,200. 

 $27,600.  

$19,000. 

 

21.  A company used the percent of sales method to determine its bad debts expense. At the end of the current year, the company’s unadjusted trial balance reported the following selected amounts:

 

Accounts receivable$ 441,000     Debit 

Allowance for Doubtful Accounts1,310     Debit 

Net Sales2,160,000      Credit 

 

All sales are made on credit. Based on past experience, the company estimates 1.0% its outstanding receivables are uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

 

Debit Bad Debts Expense $22,910; credit Allowance for Doubtful Accounts $22,910.  

Debit Bad Debts Expense $21,600; credit Allowance for Doubtful Accounts $21,600.  

Debit Bad Debts Expense $20,290; credit Allowance for Doubtful Accounts $20,290.  

Debit Bad Debts Expense $4,410; credit Allowance for Doubtful Accounts $4,410.  

Debit Bad Debts Expense $5,720; credit Allowance for Doubtful Accounts $5,720.

 

22. A company that uses the net method of recording invoices made a purchase of $1,800 with terms of 3/10, n/30. The entry to record the purchase would include:

 

A credit to Cash for $1,746.  

A debit to Discounts Lost for $54.  

A debit to Cash for $1,746.  

A debit to Merchandise Inventory for $1,746.   

A credit to Discounts Lost for $54. 

 

23.  On November 19, Hayes Company receives a $27,000, 60-day, 10% note from a customer as payment on his account. What adjusting entry should be made on the December 31 year-end? (Use 360 days a year. Do not round intermediate calculations.)

 

Debit Interest Revenue $315; credit Interest Receivable $315.  

Debit Interest Revenue $450; credit Interest Receivable $450. 

Debit Interest Receivable $315; credit Interest Revenue $315.  

Debit Interest Receivable $135; credit Interest Revenue $135.  

Debit Interest Receivable $450; credit Interest Revenue $450. 

 

24.  Teller purchased merchandise from TechCom on October 17 of the current year and TechCom accepted Teller’s $8,800, 90-day, 9% note. What entry should TechCom make on December 31, to record the accrued interest on the note? (Use 360 days a year. Do not round intermediate calculations.)

 

Debit Cash $33; credit Notes Receivable $33.  

Debit Cash $165; credit Notes Receivable $165.  

Debit Interest Receivable $33; credit Interest Revenue $33.  

Debit Interest Receivable $165; credit Interest Revenue $165.  

Debit Cash $198; credit Interest Revenue $165; credit Interest Receivable $33. 

 

25.  A company factored $48,000 of its accounts receivable and was charged a 3% factoring fee. The journal entry to record this transaction would include a:

 

Debit to Cash of $48,000 and a credit to Accounts Receivable of $48,000.  

Debit to Cash of $48,000 and a credit to Notes Payable of $48,000.  

Debit to Cash of $49,440 and a credit to Accounts Receivable of $49,440.  

Debit to Cash of $46,560, a debit to Factoring Fee Expense of $1,440, and a credit to Accounts Receivable of $48,000.  

Debit to Cash of $48,000, a credit to Factoring Fee Expense of $1,440, and credit to Accounts Receivable of $46,560