Exam 4: The Bookkeeping Process and Transaction Analysis

Martin & Associates borrowed $5,000 on April 1, 2013 at 8% interest with both principal and interest due on March 31, 2014. How much should be in the firm's interest payable account at December 31, 2013?

A debit entry will:

The balance in the Wages Payable account increased from $12,200 at the beginning of the month to $15,000 at the end of the month. Wages accrued during the month totaled $61,000.

An expanded version of the accounting equation could be:

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 $2,000 from the bank; a short-term note was signed. (2.) Merchandise inventory costing $750 was purchased; cash of $200 was paid and the balance is due in 30 days. (3.) Employee wages of $1,000 were accrued at the end of the month. (4.) Merchandise that cost $350 was sold for $450 in cash. (5.) This month's rent of $700 was paid. (6.) Revenues from services during month totaled $6,500. Of this amount, $2,000 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 $520, and debited into the Supplies (asset) account. A total of $400 of supplies were used during the month. (8.) Interest of $240 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. 5.

Sage, Inc. has 20 employees who work Monday through Friday each week; each employee earns $100 per day and is paid every Friday. The end of the accounting period is on a Wednesday. How much wages expense should the firm accrue at the end of the period?

The effect of an adjustment is:

A credit entry will:

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

When a firm purchases supplies for use in its business, and the cost of the supplies purchased is recorded as an asset, the following adjustment to recognize the cost of supplies used will probably be required: A. Dr. Supplies Cr. Accounts payable B. Dr. Supplies Cr. Supplies expense C. Dr. Supplies expense Cr. Supplies D. No adjustment will probably be required.

The accountant at Abco, Inc. made an adjusting entry at the end of February to accrue interest on a note receivable from a customer. The effect of this entry is to:

Which of the following is not one of the 5 questions of transaction analysis?

The Interest Receivable account for February showed transactions totaling $8,500 and an adjustment of $11,200.

At the beginning of the current fiscal year, the balance sheet of Arches Co. showed liabilities of $380,000. During the year liabilities increased by $10,000, assets increased by $55,000, and paid-in capital increased by $20,000 to $165,000. Dividends declared and paid during the year were $60,000. At the end of the year, stockholders' equity totaled $402,000. Calculate net income or loss for the year. SE = + PIC + Beginning \ (5) = \ 380,000 + (4) + (6) Changes +55,000 +10,000 + +20,000 (7) Net income -60,000 Dividends Ending (3) (2) \ 165,000 (1)

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:

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

Martin & Associates borrowed $5,000 on April 1, 2013 at 8% interest with both principal and interest due on March 31, 2014. Which of the following journal entries should the firm use to accrue interest at the end of each month? A. Dr. Interest payable Cr. Cash B. Dr. Interest receivable Cr. Interest payable C. Dr. Interest expense Cr. Interest payable D. Dr. Interest payable Cr. Interest expense

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.) During the month, the board of directors declared a cash dividend of $1,200, payable next month. (2.) Employees were paid $1,900 in wages for their work during the first three weeks of the month. (3.) Employee wages of $600 for the last week of the month have not been recorded. (4.) Merchandise that cost $900 was sold for $1,350. Of this amount, $1,000 was received in cash and the balance is expected to be received within 30 days. (5.) A contract was signed with a local radio station for a $100 advertisement; the ad was aired during this month but will not be paid for until next month. (6.) Store equipment was purchased at a cash price of $300. The original list price of the equipment was $400, but a discount was received. (7.) Received $180 of interest income for the current month. (8.) Accrued $310 of interest expense at the end of the month. Transaction/ Adjustment Assets Liabilities Stockholders' Equity Net Income 1. 2. 3. 4. 5. 6. 8.

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: