Exam 2: Processing Accounting Information

On December 31, 2019, the end of the first month of operation, the balance sheet of Drake's Driving School reported total assets of $400,000. The following transactions occurred during the month of January 2020: (1) The business purchased land for $500,000, paying $200,000 cash and issuing a note payable for the balance. (2) The business collected accounts receivable totaling $90,000. (3) The business sold land (which had cost $100,000) for $120,000 cash. (4) The business paid off $100,000 of Notes Payable. What is the amount of the company's total assets on January 31, 2020?

Sayali Company had a transaction that caused a $50,000 increase in both assets and stockholders' equity. This transaction could have been a(n):

On December 31, 2019, Munchkin Company had a $367,650 balance in Accounts Receivable. During the year 2020, the company collected $600,000 from its credit customers. The December 31, 2020 balance of the Accounts Receivable was $511,950. Determine the amount of sales on accounts for 2020.

On December 31, 2019, the end of the first month of operation, the balance sheet of Michaelene's Real Estate Training School reported total assets of $1,200,000. The following transactions occurred during the month of January 2020: (1) The business purchased land for $1,500,000, paying $600,000 cash and issuing a note payable for the balance. (2) The business collected accounts receivable totaling $270,000. (3) The business sold land (which had cost $300,000) for $360,000 cash. (4) The business paid off $300,000 of Notes Payable. What is the amount of the company's total assets on January 31, 2020?

Bob Smith, starting his own business, made an investment of a building to the company. The building is valued at $1,200,000 with a $1,080,000 outstanding mortgage payable. The effect of this transaction on the accounting equation of the business would be to:

Martin Company had $113,500 of Accounts Payable on March 31, 2019. During March, the company made total purchases on account of $193,740, and paid a total of $210,460 cash on accounts payable. Determine the balance of Accounts Payable on March 1, 2019.

During its first month of operations, Neptune Company (1) borrowed $200,000 from a bank, and then (2) purchased an equipment costing $80,000 by paying cash of $40,000 and signing a long term note for the remaining amount. During the month, the company also (3) purchased inventory for $60,000 on credit, (4) performed services for clients for $120,000 on account, (5) paid $30,000 cash for accounts payable, and (6) paid $60,000 cash for utilities. What is the amount of Stockholders' equity at the end of the month?

Compute the unknown amount required in each of the following four independent situations.

Horizon Company, an internet service provider, has 2,000,000 customers. The customers make electronic payments of $140 each for that month's service on the last day of each month. Horizon Company does not send any bills to their customers. The company's journal entry on the day they receive the payment will include:

A company incurred $180,000 (to be paid next year) for the current year's advertising activities. What would the effect of this transaction on the current year's accounting equation?

During January 2019, Dakota Corporation purchased $600,000 of inventory; they paid one-fourth in cash, and signed a note for the remaining balance. This transaction will be recorded as:

Make T-accounts for the following general ledger accounts of Mighty Movers, which began business on January 1, 2019: Cash; Accounts Receivable; Supplies; Equipment; Accounts Payable; Notes Payable; Common Stock; Dividends; Moving Fees Earned; Salaries Expense; Rent Expense; and Utilities Expense. Record the following January 2019 transactions in the accounts and key each entry with the transaction number. (1) Shareholders purchased $270,000 in stock. (2) Paid rent for the month, $3,300. (3) Purchased equipment for $90,000, giving a note payable for $90,000. (4) Purchased supplies on account, $15,000. (5) Billed clients for services rendered, $57,000. (6) Paid salaries for the month, $23,400. (7) Paid $12,000 on account for supplies purchased in transaction (4). (8) Collected $26,100 from clients previously billed. (9) Paid utilities for the month, $1,470. (10) Paid $17,400 cash dividends.

Aashish Company had a transaction that caused a $120,000 decrease in both assets and liabilities. This transaction could have been a(n):

Morgan Company had $340,500 of Accounts Payable on March 31, 2019. During March, the company made total purchases on account of $581,220, and paid a total of $631,380 cash on accounts payable. Determine the balance of Accounts Payable on March 1, 2019.

The most important source documents used in analyzing transactions are a firm's general journal and general ledger.

Baker Company's Accounts Receivable account had a balance of $15,000 on September 1, 2019, and a balance of $21,400 on September 30, 2019. During September 2019, the company received cash of $39,400 from credit customers. Determine the amount of sales on account that occurred in September 2019.

The Cash T-account of Firefly, Inc. has a beginning balance of $156,000. During the year, $732,000 was debited and $723,000 was credited to the account. What is the ending balance of cash?

MoveLo Company had $85,380 of accounts payable on September 1 and $76,560 on September 30. During September, the company paid total cash of $79,650 on accounts payable. Determine the total purchases on account during September.

Lumos Pet Supplies had the following transactions during December 2019: •Paid a note of $34,000, owed since March, plus $850 for interest. •Sold $73,050 of merchandise to customers on account. Cost of goods sold was $42,500. [Hint: Cost of goods sold is an expense related to the reduction of inventory (merchandise sold).] •Paid accounts payable of $4,100. As a result of these transactions, at year-end, liabilities and stockholders' equity would show a combined total:

The unadjusted Trial Balance for N. Gaffney Company shows the following accounts (in alphabetical order) on December 31, 2019. Each account shown has a normal balance. Assuming the Trial Balance is in balance, determine N. Gaffney Company's Utilities Expense for 2019: