Exam 3: Processing Accounting Information

The bookkeeper for B. Sebastian & Company, Inc. prepared the following journal entries and posted the entries to the general ledger as indicated in the T accounts presented. Assume that the dollar amounts and the descriptions of the entries are correct. Journal entries: Payment is made for the office furniture bill received on May 15. See the journal entries and T accounts for B. Sebastian & Company. REQUIRED: If you assume that all journal entries have been posted correctly, use the above information to answer these questions: 1 Identify the transactions that the bookkeeper recorded incorrectly in the general journal. 2 Prepare the journal entry that the bookkeeper should have made for each transaction that you have identified as being made incorrectly. 3 For each journal entry recorded incorrectly, indicate the impact of the error on the accounting equation. For your answer, indicate whether each element of the accounting equation, Assets, Liabilities, and Stockholders' Equity, has been "Understated" or "Overstated" or there has been "No Effect."

Several events are listed below. Indicate whether each event is an external event that should be recorded as a transaction, an internal event which should be recorded as a transaction, or an event which should not be recorded. Use the following identification codes for your answers: E - External event to be recorded as a transaction I - Internal event to be recorded as a transaction NR - An event which should NOT be recorded _____ A An order is placed with a supplier for merchandise. _____ B Common stock is issued to investors. _____ C Cash sales are made. _____ D Raw materials are entered into production. _____ E Federal income tax returns are prepared by the company's accountant. _____ F Bills are received for utility expenses. _____ G Payment is received from customers to whom merchandise had been sold on credit. _____ H Money collected from cash and credit customers is deposited in the company's checking account at a local bank.

For each of the following accounts, indicate whether it is a balance sheet account or an income statement account. -Sales Revenue

Identify which of the following would be recorded as external events, recorded as internal events, or not recorded. -The company signs a contract with the marketing firm and pays a retainer.

Which of the following events transactions is an internal event for a business entity?

An is a chronological record of all transactions entered into by a business.

Parachute Country Club Use the selected accounts for Parachute Country Club presented below to answer the following questions. -Read the information for Parachute Country Club. On which date did the country club make a credit sale of club memberships?

Refer to the transactions for Terry Company. Use the transactions incurred by the Terry Corporation to set up T accounts and post each transaction to the T accounts.

The following list of accounts was taken from the general ledger of Bassett Corporation on December 31, 2015. The bookkeeper thought it would be helpful if the accounts were arranged in alphabetical order. Each account contains the balance that is normal for that type of account; for example, Cash normally has a debit balance. Prepare a trial balance as of this date with the accounts arranged in the following order: 1 assets, 2 liabilities, 3 stockholders' equity, 4 revenues, 5 expenses, and 6 dividends.

Choose from the following list of account titles the one that most accurately fits the description of that account or is an example of that account. An account title may be used more than once or not at all. -Amounts owed on an open account to a vendor, due in 70 days

Blecker Corp. made cash sales to customers. What effect does this transaction have on the accounting equation?

The correct term for the process of recording the economic effects of business transactions in a book of original entry is:

Under the cost principle, assets are always carried at their current market value.

An is a numerical list of all of the accounts used by an entity.

All of the following are external events transactions except for:

Four journal entries are presented below. Write an explanation for each entry in the space provided below the entry.

You have just taken a job as the accountant for a stucco repair firm whose accounting year ends on December 31. As part of the management team, you receive a year­end bonus directly related to the firm's earnings for the year. One of your duties is to review the journal entries recorded by the bookkeepers. A new bookkeeper prepared the following journal entry: To record deposit from client. You notice that the explanation for the journal entry refers to the amount as a deposit, and the bookkeeper explains to you that the firm plans to provide the services to the client in March of the following year. Required 1. Did the bookkeeper prepare the correct journal entry to account for the client's deposit? Explain your answer. 2. What is your responsibility in this situation as the new accountant for the firm? Explain your answer.

Which of the following accounts is increased by a debit entry?

Choose from the following list of account titles the one that most accurately fits the description of that account or is an example of that account. An account title may be used more than once or not at all. -A plot of land held for speculation

The payment of salaries and wages decreases cash and increases an .