Exam 2: Analyzing and Recording Transactions

Richard Redden contributed $70,000 in cash and land worth $130,000 to open a new business, RR Consulting. Which of the following general journal entries will RR Consulting make to record this transaction?

If Taylor Willow, the owner of Willow Hardware proprietorship, uses cash of the business to purchase a family automobile, the business should record this use of cash with an entry to:

A credit is used to record an increase in all of the following accounts except:

Wiley Consulting purchased $7,000 worth of supplies and paid cash immediately. Which of the following general journal entries will Wiley Consulting make to record this transaction? Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts. A) Supplies Expense 7,000 Accounts Payable 7,000 B) Supplies 7,000 Cash 7,000 C) Supplies 7,000 Accounts Payable 7,000 D) Accounts Payable 7,000 Supplies 7,000 E) Cash 7,000 Supplies 7,000

J. Brown Consulting paid $2,500 cash for a 5-month insurance policy which begins on December 1. Given the choices below, determine the general journal entry that J. Brown Consulting will make to record the cash payment. Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts A) Cash 2,500 Insurance Expense 2,500 B) Prepaid Insurance 2,500 Cash 2,500 C) Cash 2,500 Prepaid Insurance 2,500 D) Insurance Expense 2,500 Cash 2,500 E) Insurance Expense 2,500 Prepaid Insurance 2,500

At the beginning of the current year, Trenton Company's total assets were $248,000 and its total liabilities were $175,000. During the year, the company reported total revenues of $93,000, total expenses of $76,000 and owner withdrawals of $5,000. There were no other changes in owner's capital during the year and total assets at the end of the year were $260,000. Trenton Company's debt ratio at the end of the current year is:

Explain the difference between a general ledger and a chart of accounts.

Explain how accounts are used in recording information about a business's transactions.

A business's record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is known as a(n):

Happiness Catering has total assets of $385 million. Its total liabilities are $100 million and its equity is $285 million. Calculate its debt ratio.

BBB Company sends a $2,500 invoice to a customer for catering services it provided during the month. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

Golddigger Services Inc. provides services to clients. On May 1, a client prepaid Golddigger Services $60,000 for 6-months services in advance. Golddigger Services' general journal entry to record this transaction will include a:

Unearned revenues are generally:

The debt ratio helps to assess the risk a company has of failing to pay its debts and is helpful to both its owners and creditors.

Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books: Andrea invested $13,500 cash in the business. Andrea contributed $20,000 of photography equipment to the business. The company paid $2,100 cash for an insurance policy covering the next 24 months. The company received $5,700 cash for services provided during January. The company purchased $6,200 of office equipment on credit. The company provided $2,750 of services to customers on account. The company paid cash of $1,500 for monthly rent. The company paid $3,100 on the office equipment purchased in transaction #5 above. Paid $275 cash for January utilities. Based on this information, the balance in the cash account at the end of January would be:

A company provided $12,000 of consulting services on account. The customer promises payment in 30 days. Identify the journal entry below that properly records this transaction. A) Accounts payable 12,000 Consulting services revenue 12,000 B) Cash 12,000 Consulting services revenue 12,000 C) Accounts receivable 12,000 Cash 12,000 D) Accounts Receivable 12,000 Consulting services revenue 12,000 E) Consulting services revenue 12,000 Cash 12,000

In a double-entry accounting system, the total dollar amount debited must always equal the total dollar amount credited.

Asset accounts are decreased by debits.

Identify the statement that is incorrect.

On May 31, the Cash account of Bottle's R US had a normal balance of $5,000. During May, the account was debited for a total of $12,200 and credited for a total of $11,500. What was the balance in the Cash account at the beginning of May?