Principals Of Accounting Exam (Answered)

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1. Ralph Pine Consulting received its telephone bill in the amount of $490, and immediately paid it. Pine's general journal entry to record this transaction will include a: 2. Golddigger Services Inc... . provides services to clients. On May 1, a client prepaid Golddigger Services $69,000 for 6-months services in advance. Golddigger Services' general journal entry to record this transaction will include a: 3. Richard Redden contributed $85,000 in cash and land worth $160,000 to open a new business, RR Consulting. Which of the following general journal entries will RR Consulting make to record this transaction? 4. Paul’s Landscaping purchased $580 of office supplies on credit. The company’s policy is to initially record prepaid and unearned items in balance sheet accounts. Which of the following general journal entries will Paul’s Landscaping make to record this transaction? 5. Paul’s Landscaping paid $580 on account for supplies purchased in the prior month. Which of the following general journal entries will Paul’s Landscaping make to record this transaction?Term 6. A law firm billed a client $3,400 for work performed in the current month. Which of the following general journal entries will the firm make to record this transaction?Term 7. A law firm collected $2,700 on account for work performed in the previous month. Which of the following general journal entries will the firm make to record this transaction?Term 8. A law firm collected $2,400 for work to be performed in the following month. Which of the following general journal entries will the firm make to record this transaction?Term 9. Wiley Consulting purchased $7,300 worth of supplies and paid cash immediately. Which of the following general journal entries will Wiley Consulting make to record this transaction? Assume the company’s policy is to initially record prepaid and unearned items in balance sheet accountsTerm 10. J. Brown Consulting immediately paid $640 cash for utilities for the current month. Given the choices below, determine the general journal entry that J. Brown Consulting will make to record this transaction. 11. ABC Catering received $1,000 cash from a customer for catering services to be provided next month. Given the choices below, determine the general journal entry that ABC Catering will make to record the cash receipt. Assume the company’s policy is to initially record prepaid and unearned items in balance sheet accounts. 12. Trimble Graphic Design receives $2,300 from a client billed in a previous month for services provided. Which of the following general journal entries will Trimble Graphic Design make to record this transaction? 13. Able Graphics received a $760 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Able Graphics make to record this transaction? 14. Gi Gi's Dance Studio provided $380 of dance instruction and rented out its dance studio to the same client for another $215. The client paid immediately. Identify the general journal entry below that Gi Gi's will make to record the transaction. 15. Mary Martin, the owner of Martin Consulting, started the business by investing $55,000 cash. Identify the general journal entry below that Martin Consulting will make to record the transaction. 16. On May 31, the Cash account of Bottle's R US had a normal balance of $6,500. During May, the account was debited for a total of $13,700 and credited for a total of $13,000. What was the balance in the Cash account at the beginning of May? 17. During the month of February, Victor Services had cash receipts of $9,200 and cash disbursements of $12,000. The February 28 cash balance was $5,200. What was the February 1 beginning cash balance? 18. The following transactions occurred during July: Received $970 cash for services provided to a customer during July. Received $3,400 cash investment from Bob Johnson, the owner of the business Received $820 from a customer in partial payment of his account receivable which arose from sales in June. Provided services to a customer on credit, $445. Borrowed $6,700 from the bank by signing a promissory note. Received $1,320 cash from a customer for services to be rendered next year. What was the amount of revenue for July? 19. Larry Bar opened a frame shop and completed these transactions: Larry started the shop by investing $40,800 cash and equipment valued at $18,800. Purchased $150 of office supplies on credit. Paid $2,000 cash for the receptionist's salary. Sold a custom frame service and collected $5,300 cash on the sale. Completed framing services and billed the client $280. What was the balance of the cash account after these transactions were posted? 20. At the beginning of January of the current year, Little Mikey's Catering ledger reflected a normal balance of $65,000 for accounts receivable. During January, the company collected $17,400 from customers on account and provided additional services to customers on account totaling $13,800. Additionally, during January one customer paid Mikey $6,300 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be: 21. During the month of March, Harley's Computer Services made purchases on account totaling $45,900. Also during the month of March, Harley was paid $11,600 by a customer for services to be provided in the future and paid $38,100 of cash on its accounts payable balance. If the balance in the accounts payable account at the beginning of March was $78,500, what is the balance in accounts payable at the end of March? 22. On January 1 of the current year, Jimmy's Sandwich Company reported owner's capital totaling $132,000. During the current year, total revenues were $114,000 while total expenses were $103,500. Also, during the current year Jimmy withdrew $38,000 from the company. No other changes in equity occurred during the year. If, on December 31 of the current year, total assets are $214,000, the change in owner's capital during the year was: 23. Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books: Andrea invested $14,300 cash in the business. Andrea contributed $28,000 of photography equipment to the business. The company paid $2,900 cash for an insurance policy covering the next 24 months. The company received $6,500 cash for services provided during January. The company purchased $7,000 of office equipment on credit. The company provided $3,550 of services to customers on account. The company paid cash of $2,300 for monthly rent. The company paid $3,900 on the office equipment purchased in transaction #5 above. Paid $355 cash for January utilities. Based on this information, the balance in the cash account at the end of January would be: 24. Given the following errors, identify the one by itself that will cause the trial balance to be out of balance. Multiple Choice A $430 cash salary payment posted as a $430 debit to Cash and a $430 credit to Salaries Expense. A $330 cash receipt from a customer in payment of her account posted as a $330 debit to Cash and a $33 credit to Accounts Receivable. A $190 cash receipt from a customer in payment of her account posted as a $190 debit to Cash and a $190 credit to Cash. A $119 cash purchase of office supplies posted as a $119 debit to Office Equipment and a $119 credit to Cash. An $1,950 prepayment from a customer for services to be rendered in the future was posted as an $1,950 debit to Unearned Revenue and an $1,950 credit to Cash. 25. A $170 credit to Supplies was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error? 26. Joe Jackson opened Jackson's Repairs on March 1 of the current year. During March, the following transactions occurred and were recorded in the company's books: Jackson invested $42,000 cash in the business. Jackson contributed $117,000 of equipment to the business. The company paid $3,700 cash to rent office space for the month of March. The company received $33,000 cash for repair services provided during March. The company paid $7,900 for salaries for the month of March. The company provided $4,700 of services to customers on account. The company paid cash of $2,200 for utilities for the month of March. The company received $4,800 cash in advance from a customer for repair services to be provided in April. Jackson withdrew $6,700 for his personal use from the company. Based on this information, net income for March would be: 27. Wiley Hill opened Hill's Repairs on March 1 of the current year. During March, the following transactions occurred and were recorded in the company's books: Wiley invested $45,000 cash in the business. Wiley contributed $120,000 of equipment to the business. The company paid $4,000 cash to rent office space for the month of March. The company received $36,000 cash for repair services provided during March. The company paid $8,200 for salaries for the month of March. The company provided $5,000 of services to customers on account. The company paid cash of $2,500 for utilities for the month of March. The company received $5,100 cash in advance from a customer for repair services to be provided in April. Wiley withdrew $7,000 for his personal use from the company. Based on this information, the balance in Wiley Hill, Capital reported on the Statement of Owner's Equity at the end of March would be 28. A company earned $3,380 in net income for October. Its net sales for October were $13,000. Its profit margin is: 29. A company had $6,990,000 in net income for the year. Its net sales were $15,100,000 for the same period. Calculate its profit margin. 30. Prior to recording adjusting entries, the Office Supplies account had a $363 debit balance. A physical count of the supplies showed $107 of unused supplies available. The required adjusting entry is: 31. On April 1, a company paid the $2,250 premium on a three-year insurance policy with benefits beginning on that date. What amount of the insurance expense will be reported on the annual income statement for the year ended December 31? 32. On July 1, a company paid the $2,280 premium on a one-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the first year ended December 31? 33. A company had no office supplies available at the beginning of the year. During the year, the company purchased $390 worth of office supplies. On December 31, $135 worth of office supplies remained. How much should the company report as office supplies expense for the year? 34. On January 1, a company purchased a five-year insurance policy for $3,100 with coverage starting immediately. 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: 35. On May 1, a two-year insurance policy was purchased for $38,400 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31? 36. Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $950. Fragmental collected the entire $7,600 cash on October 1 and recorded it as unearned revenue. Assuming adjusting entries are only made at year-end, the adjusting entry made by Fragmental Co. on December 31 would be: 37. A company pays each of its two office employees each Friday at the rate of $230 per day for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is 38. A company pays its employees $1,550 each Friday, which amounts to $310 per day for the five-day workweek that begins on Monday. If the monthly accounting period ends on Thursday and the employees worked through Thursday, the amount of salaries earned but unpaid at the end of the accounting period is: 39. An adjusting entry was made on year-end December 31 to accrue salary expense of $3,100. Assuming the company does not prepare reversing entries, which of the following entries would be prepared to record the $6,800 payment of salaries in January of the following year? 40. A company's Office Supplies account shows a beginning balance of $760 and an ending balance of $720. If office supplies expense for the year is $3,900, what amount of office supplies was purchased during the period? 41. A company recorded 2 days of accrued salaries of $2,400 for its employees on January 31. On February 9, it paid its employees $9,000 for these accrued salaries and for other salaries earned through February 9. Assuming the company does not prepare reversing entries, the January 31 and February 9 journal entries are: 42. On December 1, Simpson Marketing Company received $8,400 from a customer for a 2-month marketing plan to be completed January 31 of the following year. The cash receipt was recorded as unearned fees. The adjusting entry for the year ended December 31 would include: 43. Wilson Company paid $5,900 for a 4-month insurance premium in advance on November 1, with coverage beginning on that date The balance in the prepaid insurance account before adjustment at the end of the year is $5,900, and no adjustments had been made previously. The adjusting entry required on December 31 is: 44. What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $9,750 before adjustment, and the unexpired amount per analysis of policies is, $4,250? 45. On April 1, Griffith Publishing Company received $3,348 from Santa Fe, Inc. for 36-month subscriptions to several different magazines. The subscriptions started immediately. What is the amount of revenue that should be recorded by Griffith Publishing Company for the first year of the subscription assuming the company uses a calendar-year reporting period? 46. On April 1, Griffith Publishing Company received $28,080 from Santa Fe, Inc. for 36-month subscriptions to several different magazines. The company credited Unearned Fees for the amount received and the subscriptions started immediately. Assuming adjustments are only made at year-end, what is the adjusting entry that should be recorded by Griffith Publishing Company on December 31 of the first year? 47. On April 1, Santa Fe, Inc. paid Griffith Publishing Company $3,348 for a 36-month subscriptions to several different magazines. Santa Fe debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. What amount should appear in the Prepaid Subscription account for Santa Fe, Inc. after adjustments on December 31 of the first year assuming the company is using a calendar-year reporting period and no previous adjustment has been made? 48. A company made no adjusting entry for accrued and unpaid employee salaries of $8,200 on December 31. Which of the following statements is true? 49. The correct adjusting entry for accrued and unpaid employee salaries of $7,800 on December 31. 50. A company purchased new furniture at a cost of $33,000 on September 30. The furniture is estimated to have a useful life of 5 years and a salvage value of $3,900. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the furniture for the first year ended December 31? 51. The balances in Sanchez Accounting Services' office supplies account on February 1 and February 28 were $1,850 and $450, respectively. If the office supplies expense for the month is $1,950, what amount of office supplies was purchased during February? 52. If Regent Tax Services' office supplies account balance on March 1 was $700, the company purchased $550 of supplies during the month, and a physical count of supplies on hand at the end of March indicated $500 unused, what is the amount of the adjusting entry for office supplies on March 31? 53. A physical count of supplies on hand at the end of May for Masters, Inc. indicated $1,260 of supplies on hand. The general ledger balance before any adjustment is $2,200. What is the adjusting entry for office supplies that should be recorded on May 31? 54. On December 1, Milton Company borrowed $460,000, at 9% annual interest, from the Tennessee National Bank. Interest is paid when the loan matures one year from the issue date. What is the adjusting entry for accruing interest that Milton would need to make on December 31, the calendar year-end? 55. On September 1, Kennedy Company loaned $104,000, at 12% annual interest, to a customer. Interest and principal will be collected when the loan matures one year from the issue date. Assuming adjustments are only made at year-end, what is the adjusting entry for accruing interest that Kennedy would need to make on December 31, the calendar year-end? 56. A roofing company collects fees when jobs are complete. The work for one customer, whose job was bid at $4,200, has been completed as of December 31, but the customer has not yet been billed. Assuming adjustments are only made at year-end, what is the adjusting entry the company would need to make on December 31, the calendar year-end? 57. On October 1, Goodwell Company rented warehouse space to a tenant for $3,600 per month. The tenant paid five months' rent in advance on that date, with the lease beginning immediately. The cash receipt was credited to the Unearned Rent account. The company's annual accounting period ends on December 31. The adjusting entry needed on December 31 is: 58. On October 1, Goodwell Company rented warehouse space to a tenant for $3,900 per month and received $19,500 for five months’ rent in advance on that date, with the lease beginning immediately. The cash receipt was credited to the Unearned Rent account. The company’s annual accounting period ends on December 31. The Unearned Rent account balance at the end of December, after adjustment, should be: 59. Sanborn Company rents space to a tenant for $3,600 per month. The tenant currently owes rent for November and December. The tenant has agreed to pay the November, December, and January rents in full on January 15 and has agreed not to fall behind again. The adjusting entry needed on December 31 is 60. Sanborn Company has 10 employees, who earn a total of $3,100 in salaries each working day. They are paid on Monday for the five-day workweek ending on the previous Friday. Assume that year ended December 31, is a Wednesday and all employees will be paid salaries for five full days on the following Monday. The adjusting entry needed on December 31 is: 61. On November 1, Jovel Company loaned another company $200,000 at a 9.0% interest rate. The note receivable plus interest will not be collected until March 1 of the following year. The company's annual accounting period ends on December 31. The amount of interest revenue that should be reported in the first year is: 62. The Unadjusted Trial Balance columns of a company's work sheet shows the Store Supplies account with a balance of $475. The Adjustments columns shows a credit of $265 for supplies used during the period. The amount shown as Store Supplies in the Balance Sheet columns of the work sheet is: 63. A company shows a $780 balance in Prepaid Rent in the Unadjusted Trial Balance columns of the work sheet. The Adjustments columns show expired rent of $290. This adjusting entry results in: 64. Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $196,000, expenses of $109,200, and withdrew $22,400 from the business during the current year. The owner’s capital account before closing had a balance of $308,000. The ending owner’s capital balance after closing is: 65. A company had revenues of $59,000 and expenses of $46,000 for the accounting period. The owner withdrew $6,500 in cash during the same period. Which of the following entries could not be a closing entry? 66. The following information is available from the adjusted trial balance of the Harris Vacation Rental Agency. After closing entries are posted, what will be the balance in the Sue Harris, Capital account? Total revenues $ 115,000 Total expenses 55,200 Sue Harris, Capital 73,600 Sue Harris, Withdrawals 13,800 67. 68. The following information is available for the Higgins Travel Agency. After closing entries are posted, what will be the balance in the C. Higgins, Capital account? Net Income $ 57,500 C. Higgins, Capital 137,500 C. Higgins, Withdrawals 18,000 69. The F. Mercury, Capital account has a credit balance of $24,650 before closing entries are made. If total revenues for the period are $77,700, total expenses are $56,900, and withdrawals are $13,050, what is the ending balance in the F. Mercury, Capital account after all closing entries are made? 70. The F. Mercury, Capital account has a credit balance of $49,000 before closing entries are made. Total revenues for the period are $67,200, total expenses are $45,800, and withdrawals are $13,800. What is the correct closing entry for the revenue accounts? 71. Jen Rogers withdrew a total of $19,000 from her business during the current year. The entry needed to close the withdrawals a 72. At the beginning of the year, a company's balance sheet reported the following balances: Total Assets = $140,000; Total Liabilities = $77,250; and Owner's Capital = $62,750. During the year, the company reported revenues of $47,350 and expenses of $30,900. In addition, owner's withdrawals for the year totaled $20,600. Assuming no other changes to owner's capital, the balance in the owner's capital account at the end of the year would be: 73. After preparing and posting the closing entries for revenues and expenses, the income summary account has a debit balance of $28,000. The entry to close the income summary account will be: [Show More]

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