Exam 15: Analyzing for Business Transactions

Jackson Advertising Co. had assets of $475,000; liabilities of $275,500; and equity of $199,500. Calculate its debt ratio.

The ________ is a record containing all accounts used by a company as well as the transactions and ending balances of each of the accounts.

Identify by marking an X in the appropriate column, whether each of the following items would likely serve as a source document. The first one is done as an example Yes No Ex. Credit card a. Credit card receipt b. Purchase order c. Invoice d. Balance sheet e. Bank statement f. Journal entry g. Telephone bill h. Employee earnings record

Miley Block is a building consultant. Shown below are (a) several accounts in her ledger with each account preceded by an identification number, and (b) several transactions completed by Block. Indicate the accounts debited and credited when recording each transaction by placing the proper account identification numbers to the right of each transaction. 1. Accounts Payable 7. Telephone Expense 2. Accounts Receivable 8. Unearned Revenue 3. Cash 9. Common Stock 4. Consulting Fees Earned 10. Dividends 5. Office Supplies 11. Insurance Expense 6. Office Supplies Expense 12. Prepaid Insurance Debit Credit Example: 2 4 Completed consulting work for a client who will pay at a later date. Received cash in advance from a A. customer for desioning a building B. Pustomer for designing a building C. Paid for the supplies purchased in B. Received the telephone bill of the D. business and immediately paid it. E. Paid for a 3-year insurance policy

The journal is known as a book of original entry.

Smiles Entertainment had the following accounts and balances at December 31: Account Cash Accounts Receival Prepaid Insurance Supplies Accounts Payable Common Stock Retained Earnings Service Revenue Salaries Expense Utilities Expense Totals Debit Credit \ 10,000 2,000 2,400 1,000 \ 5,000 4,000 900 7,000 500 \ 16,900 \ 16,900 Using the information in the table, calculate the company's reported net income for the period.

The following trial balance is prepared from the general ledger of HG's Auto Maintenance. HG'S AUTO MAINTENANCE Trial Balance October 31 Debit Credit Cash \ 1,975 Accounts receivable 2,800 Supplies 500 Shop equipment 13,000 Office equipment 6,600 Accounts payable \ 4,510 Hal Griffin, Capital 22,000 Hal Griffin, Withdrawals 4,200 Repair fees earned 11,875 Supplies expense 8,600 Totals \ 37,675 \ 38,385 Because the trial balance did not balance, you decided to examine the accounting records. You found that the following errors had been made: 1. A purchase of supplies on account for $245 was posted as a debit to Supplies and as a debit to Accounts Payable. 2. An investment of $500 cash by the sole stockholder was debited to Common Stock and credited to Cash. 3. In computing the balance of the Accounts Receivable account, a debit of $600 was omitted from the computation. 4. One debit of $300 to the Dividends account was posted as a credit. 5. Office equipment purchased for $800 was posted to the Shop Equipment account. 6. One entire entry was not posted to the general ledger. The transaction involved the receipt of $125 cash for repair services performed for cash. Prepare a corrected trial balance for the HG's Auto Maintenance as of October 31.

Trimble Graphic Design receives $1,500 from a client billed in a previous month for services provided. Which of the following general journal entries will Trimble Graphic Design make to record this transaction?

During the month of February, Victor Services had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the February 1 beginning cash balance?

Identify the account used by businesses to record the transfer of assets from a business to its stockholders:

The ________ is found by determining the difference between total debits and total credits for an account, including any beginning balance.

If cash was incorrectly debited for $100 instead of correctly crediting it for $100, the cash account's balance will be overstated (too high).

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 in exchange for common stock. • Andrea contributed $20,000 of photography equipment to the business in exchange For common stock. • 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 amount of total stockholders' equity reported on the Balance Sheet at the end of the month would be:

The accounting process begins with:

The debt ratio of Jackson's Shoes is .9 and the debt ratio of Billy's Catering is 1.0. Based on this information, an investor can conclude:

Jason Hope decided to open a hotel in his hometown. Prepare journal entries to record the following transactions. Hope uses the accounts Room Rental Revenue and Event Revenue. All expenses for special events are recorded as Event Expense. (Omit explanations.)

Based on the following trial balance for Barry's Automotive Shop, prepare an income statement, statement of retained earnings, and a balance sheet. Barry, the company's sole stockholder, made no additional investments in the company during the year. Barry's Automotive Shop Trial Balance December 31 Cash \ 12,500 Accounts receivable 1,500 Supplies 500 Repair shop equipment 27,000 Service truck 33,000 Accounts payable \ 2,600 Barry, Capital 38,525 Barry, Withdrawals 36,000 Service revenue 125,000 Supplies expense 3,425 Rent expense 18,000 Utilities expense 5,000 Gas expense 7,200 Wages expense 22,000 Totals

Paul's Landscaping purchased $500 of office supplies on credit. The company's policy is to initially record prepaid and unearned items in balance sheet accounts. Which of the following general journal entries will Paul's Landscaping make to record this transaction?

Rowdy Bolton began Bolton Office Services in October and during that month completed these transactions: a. Invested $10,000 cash, and $15,000 of computer equipment in exchange for common stock. b. Paid $500 cash for an insurance premium covering the next 12 months. c. Completed a word processing assignment for a customer and collected $1,000 cash. d. Paid $200 cash for office supplies. e. Paid $2,000 for October's rent. Prepare journal entries to record the above transactions. Explanations are unnecessary.

Jackson Consulting had the following accounts and balances at December 31: Account Cash Accounts Receivable Prepaid Insurance Supplies Accounts Payable Common Stock Retained Earnings Dividends Service Revenue Utilities Expense Salaries Expense Totals Debit Credit \ 20,000 6,000 1,500 5,000 \ 500 9,000 7,200 1,000 2,000 2,000 Using the information in the table, calculate Jackson Consulting's reported net income for the period.