Exam 4: The Bookkeeping Process and Transaction Analysis

Unquiet Hands, Inc.borrowed $30,000 on October 1, 2019 at 6% interest with both principal and interest due on September 30, 2020.Which of the following journal entries should the firm use to accrue interest at the end of each month?

A ledger:

Using the column headings provided below, show the effect, if any, of the transaction entry or adjusting entry on the appropriate balance sheet category or on the income statement by entering the account name, amount, and indicating whether it is an addition (+)or subtraction (?).Column headings reflect the expanded balance sheet equation; items that affect net income should not be shown as affecting stockholders' equity. 1.The firm borrowed $4,000 from the bank; a short-term note was signed. 2.Merchandise inventory costing $1,500 was purchased; cash of $400 was paid and the balance is due in 30 days. 3.Employee wages of $2,000 were accrued at the end of the month. 4.Merchandise that cost $700 was sold for $900 in cash. 5.This month's rent of $1,400 was paid. 6.Revenues from services during month totaled $13,000.Of this amount, $4,000 was received in cash and the balance is expected to be received within 30 days. 7.During the month, supplies were purchased on account at a cost of $1,040, and debited into the Supplies (asset)account.A total of $800 of supplies were used during the month. 8.Interest of $480 has been earned on a note receivable, but has not yet been received. Transaction/ Adjustment Assets Liabilities Stockholders' Equity Net Income 1. 2. 3. 4. 5. 6. 7. 8.

A newspaper ad submitted and published this week, with the agreement to get paid for it next week would, in the newspaper's records:

The effect of an adjustment is:

In the seller's records, the sale of merchandise on account would:

An expanded version of the accounting equation could be:

Chicago Consulting, an engineering consulting firm, provided $6,000 of services to a client; the client paid $2,000 when the bill was submitted and will pay the balance within a week.Chicago Consulting will record this transaction by:

The accounting concept/principle being applied when an adjustment is made is usually:

In an advertiser's records, a newspaper ad submitted and published this week with the agreement to pay for it next week would:

When a firm purchases supplies for its business:

The balance in the Accounts Receivable account decreased from $18,000 at the beginning of the month to $15,000 at the end of the month.Sales on account during the month totaled $130,000.No accounts receivable were written off as uncollectible during the month.Cash collections of accounts receivable during the month totaled:

Wisdom Co.has a note payable to its bank.An adjustment is likely to be required on Wisdom's books at the end of every month that the loan is outstanding to record the:

Unquiet Hands, Inc.borrowed $30,000 on October 1, 2019 at 6% interest with both principal and interest due on September 30, 2020.How much should be in Unquiet Hands, Inc.'s interest payable account at December 31, 2019?

The effect of an adjustment on the financial statements is usually to: