Exam 3: The Mechanics of Double-Entry Bookkeeping

On January 1, 2010, Grey Corporation had $1,000 of office supplies on hand. During the year, Grey purchased $10,000 of office supplies on credit. Payments to vendors for those supplies during 2010 totaled $8,400. At the end of the accounting period, only $1,300 of the supplies remained in Grey's supply cabinet. How much office supplies expense should Grey recognize for 2010?

A dividend is a special type of expense account.

The following account balances have been taken from the December 31, 2010, records of Schorg Company: Required: A) Prepare the appropriate December 31 closing entries for Schorg Company. B) Why did the company show no Income Tax Expense for 2010? C) What is the year-end balance of Retained Earnings for Schorg Company?

A method of maintaining financial records developed more than 500 years ago that serves as the foundation of modern accounting systems worldwide is

Financial statements can be prepared even if closing entries have not been prepared.

Retained Earnings may be reduced by the closing of the Income Summary account.

Accumulated depreciation is an example of a(an)

A double-entry booking system

An account whose period-ending balance is carried forward to the next accounting period is a(an)

On May, 1, 2010, John and Adam Smith formed the Smith Bros. Company. John and Adam contributed $1,000,000 cash for 100% ownership of the company's 100,000 shares of $10 par value common stock. How should Smith Bros. record this transaction?

A fundamental rule of double-entry bookkeeping is that

On November 30, 2010, Kali Co. declared a $20,000 dividend to its stockholders. The entry to record this dividend would include a

The following transactions occurred for D Corp. during 2010. A) On January 1, D Corp. purchased equipment costing $6,000 by paying $1,000 down and signing a one-year, 12% note for the remainder. The expected salvage value of the equipment is $600 and the equipment has a useful life of 3 years. B) On March 1, D Corp. received $12,000 for rent on one of the company's buildings for the period March 1, 2010 through April 30, 2011. C) On April 1, D Corp. loaned $4,000 on a two-year, 8% note receivable to a long-time customer that was having some financial difficulties. D) On May 1, D Corp. prepaid $4,500 for a three-year insurance policy. E) On August 1, D Corp. purchased $600 of supplies on account. The Supplies account had a balance on this date of $300. At the end of the year, $250 of supplies remained. F) On September 1, D Corp. paid $450 for three months of advertising. G) On October 1, D Corp. signed a one-year cleaning contract with an outside service. D Corp. paid the service $2,400 at this time. H) On December 31, company employees had earned $2,500 of wages since the last pay period. Required: Prepare both the original entry and the appropriate adjusting entry for these transactions on December 31, 2010 (assuming that no other entries related to these transactions were made during the year).

T-accounts are part of an organization's general ledger.

On May 1, 2010, Pepper Corporation paid a $24,000 premium for insurance coverage from May 1, 2010 through April 30, 2011. Which of the following statements is false?

The primary purpose of a trial balance is to

Closing entries

A company records interest that it is owed, but has not yet received, at the end of the fiscal year. This recognition of interest generates a(an)

The key premise underlying double-entry bookkeeping is that

In a trial balance,