Exam 2: Analyzing Transactions

McNally Industries has a condensed income statement as shown. year 2 Year 1 Sales \ 198,000 \ 165,500 Total operating expenses 163,000 147,500 Net income 35,000 18,000 Using horizontal analysis, calculate the amount and percent change for sales. Round to one decimal place.

Set up T accounts for Cash; Accounts Receivable; Supplies; Accounts Payable; Common Stock; Dividends; Professional Fees; and Operating Expenses. a) In the T accounts, record the following transactions of Potter Pool Services for June, identifying each entry by number: 1) Shareholders invested $12,500 cash in the business by purchasing common stock. 2) Purchased supplies on account, $6,250. 3) Paid operating expenses, $5,500. 4) Billed clients for fees, $7,440. 5) Received cash from cash clients, $4,700. 6) Paid creditors on account, $1,400. 7) Received $3,100 from clients on account. 8) Paid $1,500 cash dividends. b) Prepare a trial balance as of June 30 for Potter Pool Services. c) Assuming that supplies expense which has not been recorded) amounts to $1,500 for June, determine the following: 1) Net income for the month. 2) Stockholders' equity as of June 30.

On September 1, Erika Company purchased land for $47,500 cash. Provide the journal entry for this transaction.

An account is said to have a debit balance if

The following errors took place in journalizing and posting transactions: a. Dividends were recorded as a debit to Office Expense and a credit to Cash. b. Accounts receivable payment for $7,800 was recorded as a debit to Cash and a credit to Fees Earned. Journalize the entries to correct the errors. Omit the explanations.

Which of the following is not a useful step in finding errors on the trial balance?

A client has a massage and asks the company bookkeeper to mail her the bill. The bookkeeper should make which entry to record the invoice?

The process of transferring the debits and credits from the journal entries to the accounts is called

Debits will increase unearned revenues and revenues.

May 24 Land 105,000 Cash 105,000 Purchased land for business. What effects does this journal entry have on the accounts?

Prepare a journal entry for the purchase of a truck on April 4 for $85,700, paying $15,000 cash and the remainder on account. Omit explanation.

Which of the following types of accounts have a normal credit balance?

A list of the accounts used by a business is called the

Office supplies were sold by Janer's Cleaning Service at cost to another repair shop, with cash received. Which of the following entries for Janer's Cleaning Service records this transaction?

Accounts payable are accounts that you expect will be paid to you.

The trial balance is out of balance and the accountant suspects that a transposition or slide error has occurred. What will the accountant do to confirm this suspicion?

If the two totals of a trial balance are not equal, it could be due to

Which side of the account increases the cash account?

On January 31, the cash account balance was $96,750. During January, cash receipts totaled $305,000 and cash payments totaled $375,880. Determine the cash balance on January 1.

Which of the following is true regarding normal balances of accounts?