: David Tarvin Instructor: Ron Lentz Assignments Practc ‘Submitted: 05/29/15 3:01a Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 The two types of accounting are: bookkeeping and decision ~ oriented profit and nonprofit intemal and external . financial and managerial 2 The principle stating that assets acquired by the business should be recorded at their actual cost con the date of purchase isthe: stable dollar principle. ©. historical cost priniple. reliability principle. D. objectivity principle. 3. Liabilities are: the outflow of resources that decrease common stock. ©. future economic benefits to which a company is entitled Mc. debits payable to outsiders called creditors. a form of paid - in capital 4. The owners’ equity of any business is equal to: MA. assets minus labilies. revenues minus expenses. assets plus liabilities, paid ~ in capital plus assets. Page |: David Tarvin Instructor: Ron Lentz Assignments Practc ‘Submitted: 05/29/15 3:01a Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 5. On January 1, 2015, total assets for Wininger Technologies were $135,000; on December 31, 2015, total assets were $155,000. On January 1, 2015, total abilities were $110,000; on December 31, 2015, total abilities were $115,000. Whatis the amount of the change and the direction of the change in Wininger Technologies’ stockholders’ equity for 2015? Decrease of $15,000 ©. Increase of $15,000 Decrease of $30,000 Increase of $30,000 6. Cash dividends declared decrease operating activities on the statement of cash flows. increase expenses on the income statement. MC. decrease retained eamings on the statement of retained earings. decrease revenue on the income statement. 7 Which ofthe following transactions will increase Stockholders’ Equity? The company pays a dividend to its shareholders. ©. The company issues common stock to new shareholders. The company makes a payment on account, The company purchases equipment. 8 ‘A-company receives an utility bill and immediately pays it. With this transaction assets are increased expenses are decreased, 6c. stockholders’ equity is decreased liabil ies are increased. Page 2: David Tarvin Instructor: Ron Lentz Assignments Practc ‘Submitted: 05/29/15 3:01a Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 Which of the following statements about the rules of debits and credits is CORRECT? A liability is increased by a debit ‘An asset is increased by a credit, Mo. Revenue is increased by a crecit Dividends are decreased by debits, 10. ‘An account will have a debit balance if itis a liability account ©. the amount of the debits exceeds the amount of the credits the account has more debit entries than credit entries. the amount of the credits exceeds the amount of the debits. 11 ‘The proper order for the accounting process is: transaction occurs, posting, joumalizing, posting, transaction occurs, joumalizing, ©. transaction occurs, transaction analyzed, journalizing, and posting transaction occurs, posting, transaction analyzed, journalizing, 12, ‘A journal entry that debits Cash and credits Accounts Receivable indicates that: revenue increased. 5. payment was received on account. revenue decreased. payment was made on account. Page 314. : David Tarvin Instructor: Ron Lentz Assignments Practc ‘Submitted: 05/29/15 3:01a Course: MBA.S03-(4389-1STW4-Lentz Book: Harrison: Financial Accounting, De The trial balance is used to determine if total debits of all the accounts equal total credits ofall the accounts. total debits of the balance sheet accounts equal the total credits of the balance sheet accounts, total debits of the income statement accounts equal the total credits of the income statement accounts. total assets equal total liabilities. is the allocation ofthe cost of an asset over the asset's useful life. MA. Depreciation Expiration Accrual Deferral ‘A.company has $500 in Prepaid Advertising before any adjustments. At the end of the year, an adjusting entry is made to debit Advertising Expense for $100. The ending balance in the Prepaid Advertising account will be: $500 $100. $0. wo. $400. Which of the following accounts are considered permanent accounts? Inventory and Cost of Goods Sold Me. Land and Accounts Receivable Accounts Payable and Service Revenue ‘Common Stock and Salary Expense Page 411, 18, 19, Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 Deposits that have been recorded on the books, but have not yet been recorded by the bank are: outstanding deposits. electronic funds deposits. MO. deposits in transit, nonsuficient funds deposits. In @ bank reconciliation, items recorded by the bank, but not yet recorded by the company, include: X.\, outstanding checks. both deposits in transit and outstanding checks. deposits in transit 5, bank collections of accounts receivable. YOU ANSWERED: A ‘The most important internal control over cash is have all customers pay by check have an imprest petty cash fund Mo. separate cash ~ handling duties from cash ~ accounting duties. separate cash ~ handiing from the mailroom. Under the allowance method, the entry to write off a $2,600 uncollectible account includes a: debit to Uncollectible Account Expense for $2,600 and credit to Allowance for Uncollectible ‘Accounts for $2,600. debit to Accounts Receivable for $2,600 and credit to Allowance for Uncollectible Accounts for $2,600. Mo. debit to Allowance for Uncollectible Accounts for §2,600 and credit to Accounts Receivable for $2,600. debit to Accounts Receivable for $2,600 and credit to Uncollectible ~ Account Expense for $2,600, Page $Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 ai ‘The maturity value of a $50,000 note at 11% for 5 months is (round to nearest dollar): $50,000. Me. $52,292 $53,208, $55,500, Page 6‘Submitted: 05/29/15 3:01a : David Tarvin Instructor: Ron Lentz Assignments Practc Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 ‘Assume Hi Tech, Inc., is expanding into Australia. The company must decide where to locate and how to finance the expansion. Requirement 1. Identify the financial statement where these decision makers can find the following information about Hi Tech, Inc. In some cases, more than one statement will report the needed data. a. Revenue Income statement ». Dividends Statement of retained eamings and Statement of cash flows ©. Ending cash balance Balance sheet and Statement of cash flows 4. Total assets Balance sheet €. Selling, general, and Income statement administrative expense {Adjustments to reconcile net Statement of cash flows. income to net cash provided by operations, 9. Cash spent to acquire the Statement of cash flows building h.Current Balance sheet liabilities i. Income tax income statement expense J. Netincome income statement, Statement of retained eamings, and Statement of cash flows k.Common Balance sheet stock Ending Balance sheet and Statement of retained earings retained earnings 'm. Income tax Balance sheet payable 1. Long-term Balance sheet debt Page 7Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 ‘Assume the Island Coffee Roasters Corp. ended the month of August 2015 with these data: (© (Click the icon to view the financial data.) Requirement 1. Prepare the income statement and the statement of retained earings of Island Coffee Roasters Corp., for the month ended August 31, 2016. Prepare the income statement, Start with the heading and then complete the rest of the statement. (Leave unused cells blank.) Island Coffee Roasters Corp. Income Statement For the Month Ended August 31, 2015, Revenue: ‘Service revenue 272,600 Expenses: tities expense $ 5200 Salary expense 78,500 Rent expense 1,800 Total expenses Net income $_187,100 Propare the statement of retained earings. Start with the heading and then complete the rest of the statement. (For accounts with a $0 balance, make sure to enter "0" in the appropriate cell, Include a subtotal after the "Add! line of the statement.) Island Coffee Roasters Corp. ‘Statement of Retained Earnings For the Month Ended August 31, 2015 Retained earnings, August 1, 2015 Sai ‘Add: Net income 487,100 187,100" Less: Dividends 2,400) Retained earnings, August 31, 2015 $184,700 Page 8(cont) Instructor: Ron Lentz Course: MBA-503-Q4389-1STW4-Lentz Assignment: Practice Midterm Book: Harrison: Financial Accounting, 106 Data Table Payments of cash: Acquisition of equipment $205,000 Cash balance, August 1, 2016... Dividends. . = 2,400 Cash balance, August 31, 2015. Retained earnings Cash receipts: August 1, 2015. 0 Issuance (sale) of stock to owners... - Retained earnings Rent expense. August 31, 2015 7 Common stock. . Utilities expense . 5,200 Equipment . Adjustments to reconcile net income Office supplies tonet cash provided by operations... 1,400 Accounts payable..........000..2265 Salary expense. 78,500 _ Service revenue. Revenue: Service revenue 272600 Expenses: Uttities expense 5200 Salary expense 78500 Rent expense 1800 nothing nothing Total expenses 28500 Net income 187100 YOU ANSWERED: — Retained earnings, August 1, 2015 0 ‘Add: Netincome 187100 nothing Less: Dividends 2400 Retained earnings, August 31, 2015 184700 Page 9Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, We 23. Se Payments of cash: eae ‘Acquisition of equipment. . = $205,000 Cash balance, Aug Dividends. . 2400 Cash balance, Aug Retained earings Cash receipts: August 1, 2015. 0 Issuance (sale) 0 Retained earings Ront expense. .. August 31, 2015 2 Common stock. Utilities expense . 5.200 Equipment . Adjustments to reconcile net income Office supplies ... to net cash provided by operations... 1,400 Accounts payable. Salary Oxpense..+seeesevereeeees Service revenue. Page 10Instructor: Ron Lentz Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 Assignment: Practice Midterm ‘Assume the Island Coffee Roasters Corp. ended the month of August 2015 with these data: (© (Click the icon to view the financial data.) Requirement 1. Prepare the balance sheet of Island Coffee Roasters Corp., for August 31, 2015, First prepare the balance sheet header, then complete the assets section of the statement and finall liabilities and stockholders’ equity section of the statement. Island Coffee Roasters Corp. Balance Sheet August 31, 2015 ‘Assets Liabilities Cash $ 5,500 Accounts payable Equipment 205,000 ‘Stockholders’ Equity Office supplies 7,400 Common stock Retained earings Total stockholders’ equity Total assets $217,900 Total abilties and stockholders’ equity Data Table Payments of cash: ‘Acquisition of equipment... $205,000 Cash balance, August 1, 2015....... DWvidendS.....scseessessesseeses 2400 Cash balance, August 31, 2018... Retained earings Cash receipts: August 1, 2016... 0 Issuance (sale) of stock to owners . Retained earings Rent expanse. August 31, 2015 184,700 Common stock. Utities expense . 5,200 Equipment . ‘Adjustments to reconcile net income Office supplies tonet cash provided by operations .... 1,400 Accounts payable, Salary expense... 78,500 _ Service revenue. ... YOU ANSWERED: Page 11 Island Coffee Roasters Corp. Balance Sheet For the Month Ended August 31, 20°24, (cont) Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 Payments of cash: Acquisition of equipment . . = $205,000 Dividends. . 2,400 Retained earings August 4, 2015. 0 Retained earings: August 31, 2015 184,700 Utilities expense . 5,200 Adjustments to reconcile net income tonet cash provided by operations .... 1,400 Salary expense..+++eeeeeee Page 12 Cash balance, Aug Cash balance, Aug Cash receipts: Issuance (sale) 0 Rent expense. .. Common stock Equipment . Office supplies... Accounts payable. Service revenue.: David Tarvin Instructor: Ron Lentz Assignments Practc ‘Submitted: 05/29/15 3:01a Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 ‘Assume Dresses Unlimited opened a store in San Antonio, starting with cash and common stock ‘of $150,000. Patti Brown, the store manager, then signed a note payable to purchase land for $75,000 and a building for $204,000. Brown also paid $39,000 for equipment and $6, 100 for supplies to use in the business. Requirement 4. Suppose the home office of Dresses Unlimited requires a weekly report from store managers. Write Brown's memo to the home office to report on her purchases. Include the store's balance sheet as the final part of your memo. Prepare a T-account to compute the balance for Cash. Let's begin by preparing the memo. To: Home Office From: Patti Brown, Store Manager During the frst week, | used the store's beginning cash to purchase equipment and supplies. | borro $ 279,000" on a note payable _ to buy land and a building. In order to complete Dresses’s balance sheet, we must calculate the balance of Cash. Let's post the affecting the Cash account to a T-account, and calculate the Cash balance. (Enter the and label the separately.) Cash Bal 160,000 | equipment 39,000 supplies 6,100 Bal 104,900 After all these transactions, the store's balance sheet appears as follows. Dresses Unlimited San Antonio Store Balance Sheet Date Assets Liabil Cash $ 104,900 Note payable Building 204,000, Equipment 39,000 ‘Stockholders’ Equity Land 75,000 Common stock Supplies 6,100 Total assets $429,000. Total liabilities and stockholders’ equity YOU ANSWERED: 294000 Page 13(cont) Instructor: Ron Lentz Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 Bal nothing Bal Page 14 Assignment: Practice Midterm Cash 150,000 | equipment nothing _| supplies nothing] nothing 3H 6 not: David Tarvin Instructor: Ron Lentz Assignments Practc ‘Submitted: 05/29/15 3:01a Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 2%. Dr. Rebecca Gray opened a medical practice specializing in physical therapy. During the frst month of operation (January), the business, tiled Dr. Rebecca Gray, Professional Corporation (P.-C), experienced the folowing events (53) (Click the icon to view the events.) Requirement 4. Record the transactions inthe joumal of Dr. Rebecca Gray, P.C. List the transactions by date and give an explanation foreach transaction, (Record debts fs, then edits. Select {explanations on the lat line of tho journal entry table. If an entry isnot required, solect "No entry required” on the fist ine ofthe table.) @ Click the icon to see the Worked Out Solution. Jan 6: Gray invested $150,000 in the business, which in turn issued its common stock to her. Journal Entry Date ‘Accounts and Explanations Debit Credit Jan 6 Cash 460,000 ‘Common Stock 180,000, Issued stock to owner. Jan 9: The business paid cash for land costing $63,000. Gray plans to build an office building on the land Journal Entry Date ‘Accounts and Explanations Debit Creait| Jan @ Land 63,000 Cash x 63,000 Purchased land. Jan 12: The business purchased medical supplies for $1,900 on account. Journal Entry Date Accounts and Explanations Debit Credit Jan 12 Medical Supplies 1,900 Page 15Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 26. ‘Accounts Payable 1,900 (cont) Purchased supplies on account. Jan 15: Dr. Rebecca Gray, P.C., officially opened for business. Journal Entry Date Accounts and Explanations Debit Credit Jan 15. No entry required Jan 15-31: During the rest of the month, Gray treated patients and eared service revenue of $9,601 receiving cash for half the revenue eamed. (Record this transaction as occurring on the last day of ‘the month.) Journal Entry Date ‘Accounts and Explanations Debit Credit Jan 31 Accounts Receivable 4,800 Cash 4,800 Service Revenue 9.60 Performed service for cash and on account. Jan 15-31: The business paid cash expenses: employee salaries, $3,300; office rent, $1,200; utile $3900. (Record this transaction as occurring on the last day of the month, Enter each expense in a separate account.) Journal Entry Date Accounts and Explanations Debit Credit Jan 31 Salary Expense 3,300 Rent Expense 1,200 Utlties Expense 900 Cash 5,400 Paid expenses. Jan 31: The business sold supplies to another physician for cost of $700. Page 16: David Tarvin Instructor: Ron Lentz Assignments Practc ‘Submitted: 05/29/15 3:01a Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 i Journal Entry (cont) Date ‘Accounts and Explanations Debit Credit Jan 31 Cash 700 Medical Supplies 700 Sold supplies. Jan 31: The business borrowed $35,000, signing a note payable to the bank. Journal Entry Date ‘Accounts and Explanations Debit Credit Jan 31 Cash 35,000 Note Payable 35,000 Borrowed money. Jan 31: The business paid $500 on account. Journal Entry Date ‘Accounts and Explanations Debit Credit Jan 31 Accounts Payable 500 Cash 500 Paid on account. Data Table ‘Jan 6 Gray invested $150,000 in the business, which in tum issued its common stock to her. 9 The business paid cash for land costing $63,000. Gray pans to build an office building on the land. 12 The business purchased medical supplies for $1,900 on account 16 Dr. Rebecca Gray, P.C., officially opened for business. 16-31 During the rest of the month, Gray treated patients and earned service revenue of $9,600, receiving cash for haif the revenue earned. 16-31 The business paid cash expenses: employee salaries, $3,300; office rent, $1,200; utilities, $900. Page 17Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 26. 31 The business sold supplies to another physician for cost of $700. 31 The business borrowed $35,000, signing a note payable to the bank (cont) 31 The business paid $500 on account. Jan 9 Land Note Payable nothing nothing YOU ANSWERED: Purchased land. Page 18Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 ‘The trial balance of Amanda's Candies, Inc., at September 30, 2014 does not balance: (@) (Click the icon to view the trial balance.) ‘The accounting records hold the following errors: 1. Recorded a $200 cash revenue transaction by debiting Accounts Receivable. The credit entry was correct b. Posted a $1,000 credit to Accounts Payable as $100. ¢. Did not record utilities expense or the related account payable in the amount of $640. d. Understated Common Stock by $200, . Omitted Insurance Expense of $3,700 from the trial balance. Requirement 1. Prepare the correct trial balance at September 30, 2014, complete with a heading. Journal ‘entries are not required. Review Only ) Click the icon to see the Worked Out Solution. A correct trial balance will start with the appropriate header. Then enter the correct account balances after you adjust for the errors found in the investigation. Total the debits and credit. Amanda's Candies, Inc. Trial Balance ‘September 30, 2014 Account Debi Credi Cash’ $14,400 Accounts receivable 12,600" Inventory 17,300 Supplies 400 Land 41,000 ‘Accounts payable § 13,140 Common stock 47,300 Sales revenue 33,800 Insurance expense 3,700 Salary expense 2,200 Rent expense 4,000 Utities expense 4,640 Total $94,240 $ 94,240 Page 1921 (cont) Instructor: Ron Lentz Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, Assignment: Practice Midterm 106 More Info Cash... $ 14,200 Accounts receivable. 12,800 Inventory. see eeeeeeeeeeeeene 17,300 Supplies... 400 Lang. . 41,000 Accounts payable. $ 11,600 Common stock. 47,100 Sales revenue . . 33,800 Salary expense... 2,200 Rent expense... 4,000 Utilities expense. ...... 4,000 Total $89,900 $ 92,500 Account Debit Credit ‘Cash 14200 nothing Accounts receivable 12800 nothing Inventory 17300 nothing Supplies 400 nothing Land 41000 nothing Accounts payable nothing 13140 ‘Common stock nothing 47300 Sales revenue nothing 33800 Insurance expense 3700 nothing Salary expense 2200 nothing Rent expense 1000 nothing Ustities expense 1640 __ nothing Total 0 YOU ANSWERED: Page 2021 (cont) Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 Cash... S 14,200 ‘Accounts receivable. 12,800 Weyer 17,300 ‘Supplies. 400 Land... 41,000 Accounts payable... .2.665 $11,600 ‘Common stock. 47,100 Sales revenue. 33,600 Salary expense... 2,200 Rent expense, 4,000 Ustities expense. Total : 4,000 $89,900 Page 21Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 Wolfe Nurseries, Inc., experienced four situations for its supplies. (© (Click on the icon to view the four situations.) Requirement 1. Compute the amounts that have been left blank for each situation. For situations 4 and 2, journalize the needed transaction. Consider each situation separately. @ Click the icon to see the Worked Out Solution. Compute the amounts that have been left blank for each situation. Situation Situation Situation Situation 4 2 3 4 - |S 2000]s 300|$ 1,000|$ 1,000 800, 800 |__ 1,000 400 | 2800) 4,100] 2,000} 1,400 1,050) (600) (700) (500) s_1750|$ 500|$ 1,300|$ 900 Beginning supplies Payments for supplies during the year... +++. Total amount to account for. Ending supplies, ‘Supplies Expense For situations 1 and 2, journalize the needed transaction. Consider each situation separately. (Record debits first, then credits. Exclude explanations from any journal entries.) Record the entry for situation 1 to record the cash payment for supplies. Journal Entry Accounts Debit Credit 1 Supplies 800 Cash ‘800 For situation 2, make the needed journal entry to record Supplies Expense. Journal Entry ‘Accounts Debit Credit ‘Supplies Expense 500 a 00 Supplies Page 22Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, De 28, (com) Data Table Situation 1 2 3 4 Beginning supplies. $ 2000 § 300 $ 1,000 $ 1,000 Payments for supplies during the year. 800 2400 Total amount to account for... 2,800 2 2 1,400 Ending supplies . ++ (1.050) (600) __(700) 2 Supplies Expense $1,750 2.8 1,300 $ 900 Journal Entry ‘Accounts Debi 2 Cash 500 Supplies Expense nothing nothing nothing YOU ANSWERED: nothing nothing Situation 1 2 Beginning supplies. $ 2,000 $ 300 $ Payments for supplies during the year. 2 800 Total amount to account for. 2,800 2 Ending supplies... 1,050) (600) _ Supplies Expense... $1,750 28 Page 23Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 29 ‘An accountant made the following adjustments at December 31, the end of the accounting period: a. Prepaid insurance, beginning, $450. Payments for insurance during the period, $1,600. Prepaid insurance, ending, $500. b. Interest revenue accrued, $2,700. . Uneamed service revenue, beginning, $1,400. Unearned service revenue, ending, $300. 4. Depreciation, $5,400. Employees’ salaries owed for two days of a five-day work week; weekly payrol, $25,000. f. Income before income tax, $26,000. Income tax rate is 35%. Requirements 1. Journalize the adjusting entries. 2. Suppose the adjustments were not made, Compute the overall overstatement or Understatement of net income as a result of the omission of these adjustments, @ Click the icon to see the Worked Out Solution. Requirement 1. Journalize the adjusting entries. (Record debits first, then credits. Exclude ‘explanations from any journal entries.) a. Prepaid insurance, beginning, $450. Payments for insurance during the period, $1,600. Prepaid insurance, ending, $500 Journal Entry ‘Accounts Debit Credit Insurance Expense 1,850 Prepaid Insurance : 2 1,550" b. Interest revenue accrued, $2,700. Journal Entry ‘Accounts Debit Credit Interest Receivable 2,700 Interest Revenue : : 2,700" Page 24Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, De 29 . Uneamed service revenue, beginning, $1,400. Unearned service revenue, ending, $300 (com) Journal Entry ‘Accounts Debit Credit Unearned Service Revenue 4,400 Service Revenue : 2 1,107 4. Depreciation, $5,400. Journal Entry ‘Accounts Debit Credit Depreciation Expense 5,400 Accumulated Depreciation : i 5,400" ¢. Employees’ salaries owed for two days of a five-day work week; weekly payroll, $25,000. Journal Entry Accounts Salary Expense Salary Payable i _ 10,000" f. Income before income tax, $26,000. Income tax rate is 35%. Journal Entry Accounts Debit Credit Income Tax Expense 9,400 Income Tax Payable i : 9,100" Requirement 2. Suppose the adjustments were not made. Compute the overall overstatement or understatement of net income as a result of the omission of these adjustments, Select the account from the list and enter the amount of either the overstatement or Page 25Instructor: Ron Lentz Course: Assignment: Practice Midterm MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 (cont) Overstated by omission of. Depreciation Expense Salary Expense Income Tax Expense Insurance Expense Total overstatement Understated by omission of: Interest Revenue Service Revenue Total understatement YOU ANSWERED: Overall effect ~ Net income overstated (understated) by: nothing nothing nothing nothing understatement of the net income as a result of omitting these adjustments. (Use parentheses or a minus sign when entering understatements. Leave unused cells blank. Complete the entire table before checking your answer.) 5,400 ; 10,000 9,100 7 1,550" $26,050 (2,700) (1,100)" @.800)] $ 22,250 Journal Entry Accounts: Debit c nothing nothing nothing nothing Journal Entry Accounts: nothing nothing nothing nothing Page 26(cont) Instructor: Ron Lentz Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 nothing nothing nothing nothing nothing) nothing nothing nothing nothing nothing nothing nothing nothing nothing nothing nothing Page 27 Assignment: Practice Midterm Journal Entry Journal Entry Journal Entry Journal Entry Debit ‘Accounts nothing nothing nothing rothing Debit ‘Accounts nothing nothing nothing nothing Debit ‘Accounts nothing nothing nothing nothing Debit ‘Accounts. nothing nothing nothing nothing ¢(cont) Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 Overstated by omission of: nothing nothing nothing nothing nothing nothing nothing nothing nothing nothing Total overstatement Understated by omission of: nothing nothing nothing nothing nothing Total understatement Overall effect ~ Net income overstated (understated) by: nothing| nothing | nothing] Page 28Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 Instructor: Ron Lentz Assignment: Practice Midterm Consider the following selected accounts from the records of K. Perez Services Corporation at December 31, 2014. (@ (Click the icon to view the selected accounts and balances.) Requirement 1. Prepare the closing entries from the selected accounts from the records of K. Perez Services Corporation at December 31, 2014. How much net income did K. Perez Services eam during 2014? Prepare a T-account for Retained Earnings to show the December 31, 2014, balance. of Retained Earnings. @ Click the icon to see the Worked Out Solution. Begin by preparing the closing entries for K. Perez Services Corporation. Record the entry to close « the revenue accounts. (Record debits fist, then credits. Exclude explanations from any journal ent Journal Entry Date ‘Accounts Debit Gredi (1)Dec 81. Service Revenue 31,900 Other Revenue 4007 Retained Earnings Neier Next, close out the expense accounts. Journal Entry Date ‘Accounts Debit Credit (@)Dec 31 Retained Eamings 25,400 Cost of Services Sold 7 14g ‘Solling, General and Administrative Expenses 2: 6 Depreciation Expense % an Income Tax Expense - ‘ Now close out the dividend account. Journal Entry Date ‘Accounts Debit Cred (@)Dec 31 Retained Eamings 300) Page 2930, (cont) Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, We Dividends i i How much net income did K, Perez Services earn during 20147 Net income for 2014 was $ 6,900) Prepare a T-account for Retained Eamings to show the December 31, 2014, balance of Retained Earnings. Post the beginning balance and closing entries to Retained Eamings and determine the & balance. Retained Eamings Beginning balance 2,600 Clo (2) * 25,400] clo (1) * 32,300" Clo (3) 2 300 : i Ending balance 9,200 Data Table Cost ofservices sold....... $ 14,300 Sericerevenue........ 8 31,900 Accumulated depreciation... 41,100 Depreciation expense. 4,100 Selling, general, and Other revenue. 400 ‘administrative expenses... 6,400. Dividends declared . 300 Retained earings, Income tax expense 600 December 31, 2013. 2,600 _Income tax payable, 1,200 Journal Entry Date Accounts (Dec 31 nothing nothing nothing nothing YOU ANSWERED: nothing Page 30Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, Ie sia Journal Entry (ont Date ‘Accounts (Dec 37 nothing nothing nothing nothing nothing Journal Entry Date ‘Accounts @Dec 34 nothing nothing nothing nothing « nothing nothing Retained Eamings nothing nothing] nothing no! nothing nothing} nothing no! nothing nothing nothing no! nothing nothing | nothing no! Costofsenices sold....... § 14300 Service revenue .. Accumulated depreciation... 41,100 Depreciation expense. Seling, genera, and Other revenue... administrative expenses... 6,400. Dividends dectared . Retained earnings, Income tax expense December 31, 2013. {600_Income tax payable. Page 31Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 31 Ryan Patrick operates a roller skating center. He has just received the monthly bank statement at June 30 from Citizens National Bank, and the statement shows an ending balance of $750. Listed ‘on the statement are an EFT rent coliecion of $409, a service charge of $7, two NSF checks totaling $120, and a $10 charge for printed checks. in reviewing his cash records, Patrick identifies ‘outstanding checks totaling $610 and a June 30 depos in transit of $1,765. During June, ho recorded a $270 check forthe salary ofa parttime employee as $27. Patrick's Cash account shows a June 30 balance of $1,876. Requirement 1. How much cash does Patrick actually have at June 30, 20147 @ Click the icon to see the Worked Out Solution. Prepare the bank section, then the book section of the bank reconciliation to determine how much cash Patrick actually has at June 30. Ryan Patrick Bank Reconciliation June 30, 2014 BANK: Balance, June 30 ] $s 750" Add: Deposit in transit 7 4765" 2515" Less: Outstanding checks j 610) ‘Adjusted bank balance | $1,905" BOOKS. Balance, June 30 q $s 1,876" Add: EFT collection - rent 1 409" 2,285 Less Correction of book error 2437 NSF checks 120" Charge for printed checks : 10° Service charge : Fy (380) Page 32Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 31 ‘Adjusted book balance 4,905 (cont.) Patrick has cash of § 1,905" at June 30, 2014. Ryan Patrick Bank Reconciliation June 30, 2014 BANK: nothing ‘Add: nothing aaa Less: nothing seca ‘YOU ANSWERED: coma BOOKS: nothing ‘Add: nothing nothing | Less: nothing nothing nothing nothing nothing nothing nothing nothing nothing nothing Page 33Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 Ryan Patrick operates a roller skating center. He has just received the monthly bank statement at June 30 from Gitizen National Bank, and the statement shows an ending balance of $750. Listed fn the statement are an EFT rent collection of $409, a service charge of $7, two NSF checks totaling $120, and a $10 charge for printed checks. in reviewing his cash records, Patrick identifies ‘outstanding checks totaling $610 and a June 30 depos in transit of $1,765. During June, ho recorded a $270 check forthe salary ofa parttime employee as $27. Patrick's Cash account shows a June 30 balance of $1,876. (@ (Click the icon to view the bank reconciliation.) Requirement 1. Use the bank reconciliation provided to make the journal entries that Patrick should record on June 30 to update his Cash account. Include an explanation for each entry. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Journal Entry Date ‘Accounts and Explanations Debit Credit Jun 30 Cash 408 Rent Revenue : 2 409 EFT collection of rent. 7 Journal Entry Date ‘Accounts and Explanations Credit Jun 30 Salary Expense i: 243 * Cash iH 243, Correction of book error. 7 Journal Entry Date Accounts and Explanations Credit Jun 30. Accounts Receivable 120 Cash in i 120 NSF checks retumed by bank. i Page 34Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, Instructor: Ron Lentz Assignment: Practice Midterm 106 32, Make one entry to record bath bank charges. (cont) Journal Entry Date ‘Accounts and Explanations Debit Credit Jun 30. Miscellaneous Expense 7 Cash i : Bank service charge and charge for printed checks. Data Table Ryan Patrick Bank Reconciliation June 30, 2014 BANK: Balance, June 30 $750 ‘Add: Deposit in transit 41,765. 2.515 Less: Outstanding checks 610) Adjusted bank balance $1,905 BOOKS: Balance, June 30 $ 1,876 Add: EFT collection ~ rent 409) 2,285 Less: Correction of book error $243 NSF checks 120 Charge for printed checks. 10 Service charge z 380 Adjusted book balance $1,905 Page 35(cont) YOU ANSWERED: Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 Jun 30. nothing nothing nothing nothing nothing Jun 30. nothing nothing nothing nothing nothing Jun 30 nothing nothing nothing nothing nothing Jun 30 nothing nothing nothing nothing nothing Ryan Patrick Bank Reconciliation June 30, 2014 BANK Balance, June 30 $750 ‘Add: Deposit in transit 4,765 2,515 Less: Outstanding checks (610) Adjusted bank balance $1,905 Page 36Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, Ie - 800Ks (cont Balance, June 30 $ 1.876 ‘Ads: EFT collection ~ rent 409° 2,286 Less: Correction of book error «$243, NSF checks 120 Charge for printed checks 10 Service charge 7 Gao ‘Agjusted book balance Page 37Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 On November 30, Windsor Party Planners had a $43,000 balance in Accounts Receivable and a $3,700 credit balance in Allowance for Uncollecible Accounts. During December, Windsor Party Planners made credit sales of $195,000. December collections on account were $164,000, and ‘write-offs of uncollectible receivables totaled $2,820. Uncollecible-account expense is estimated as 1% of credit sales, Requirements 1. Journalize sales, collections, write-offs of uncollectibles, and uncollectible-account expense by the allowance method during December. Explanations are not required. 2. Show the ending balances in Accounts Receivable, Allowance for Uncollectible Accounts, and ‘Net Accounts Receivable at December 31. How much does the store expect to collect? 3. Show how Windsor Party Planners will report accounts recelvable and net sales on its December 31 balance sheet and income statement for the month ended December 31 @ Click the icon to see the Worked Out Solution. Requirement 1. Joumalize sales, collections, write-offs of uncollectibles, and uncollectible-account by the allowance method during December. Explanations are not required, (Record debits first, ther Exclude explanations from any journal entries.) (a) Begin by recording the journal entry for December sales. Journal Entry Date ‘Accounts Debit Credit (@) __Accounis Receivable Sales Revenue _ * 495,000" (b) Next, journalize the collections on account. Journal Entry Date Accounts Debit Credit ame _______Aesown. EE Oot (0) Cash 164,000 Accounts Receivable : * 164,000" (c) Now journalize the write-offs of uncollectibles Page 3833. (cont) : David Tarvin ‘Submitted: 05/29/15 3:01a Instructor: Ron Lentz Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, Assignments Practc De Journal Entry Date ‘Accounts Debit Credit (©) Allowance for Uncollecible Accounts 2,820 Accounts Receivable a 2 2,820" (a) Finally, record the entry to journalize the uncollectible-account expense calculated above. Journal Entry Date ‘Accounts Credit (@) _ Uncollectible-Account Expense Allowance for Uncollectible Accounts : 1.950) Requirement 2. Show the ending balances in Accounts Receivable, Allowance for Uncollectible Ac: and Net Accounts Receivable at December 31. How much does the store expect to collect? In the following T-accounts, enter the beginning balances, the adjusting entries and compute the en: balances. (Enter the corresponding letter as the posting reference. Leave unused cells blank.) Accounts Receivable Allowance for Uncollectibie Accou! BegBal 49,000 © | 164000" © 2820" | Beg Bal (> 195,000" | (©) 2,820" ; | ac Bal 74,480 : q a || ee Compute the net accounts receivable at December 31 Net accounts receivable = $ 68,350" Windsor expects to collect $ 68,350" Requirement 3. Show how Windsor Party Planners will report accounts receivable and net sales or December 31 balance sheet and income statement for the month ended December 31. Begin by preparing the partial balance sheet showing how the store will report accounts receivable December 31, Balance Sheet (Partial): ‘Accounts receivable $ 74,180 Page 39Instructor: Ron Lentz Assignment: Practice Midterm Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, We 33. Less: Allowance for uncollectible accounts a: (2,830), (cont) ‘Accounts receivable, net neg 68,350" Now, prepare the partial income statement showing the net sales on December 31 Income Statement (Partial: Net sales $495,000. Journal Entry Date ‘Accounts Debit (@ nothing nothing nothing nthing nothing nothing YOU ANSWERED: cian cots, Journal Entry Date ‘Accounts Debi (&) nothing nothing nothing nothing nothing nothing nothing nothing Journal Entry Date ‘Accounts Debit (©) nothing nothing nothing nothing nthing nothing nothing nothing Journal Entry ‘Accounts Debit @) nothing nothing nothing nothing nothing nothing nothing nothing Page 40(cont) Instructor: Ron Lentz Course: MBA-503-Q4389-1STW4-Lentz Book: Harrison: Financial Accounting, 106 Accounts Receivable nothing nothing | nothing nothing nothing | _ nothing nothing nothing | nothing Net accounts receivable = $ nothing Balance Sheet (Partial) not Less: nothing nothing Income Statement (Partial: nothing Page 41 Assignment: Practice Midterm nothing nothing nothing nothing Allowance t nothing not nothing _nott nothing noth