Exam 2: A Review of the Accounting Cycle

In an accrual accounting system,

Caribou Corporation shows the following balances: Caribou paid suppliers $100,000 during the year.What is Caribou's cost of goods sold for the year?

The following balances have been excerpted from Edwards' balance sheets: Edwards Company paid or collected during 2013 the following items: The salary expense on the income statement for 2013 was

Total sales for a year are $40,000,which includes cash sales of $5,000.The beginning and ending balances of accounts receivable are $10,000 and $15,000,respectively.How much cash was received from customers?

Crescent Corporation's interest revenue for 2013 was $13,100.Accrued interest receivable on December 31,2013,was $2,275 and $1,875 on December 31,2012.The cash received for interest during 2013 was

Comet Corporation's liability account balances at June 30,2013,included a 10 percent note payable.The note is dated October 1,2011,and carried an original principal amount of $600,000.The note is payable in three equal annual payments of $200,000 plus interest.The first interest and principal payment was made on October 1,2012.In Comet's June 30,2013,balance sheet,what amount should be reported as Interest Payable for this note?

The following ten items are independent of each other.For each item,indicate the amount of any cash flow that occurs or state that no cash flow resulted from the item. 1.Prepaid rent decreased $20,000 during the year.Rent expense recognized for the year amounted to $30,000. 2.Patent amortization recognized amounted to $30,000. 3.Net income was $100,000; retained earnings increased $60,000; and dividends payable decreased $20,000. 4.Wages payable decreased $12,000 and wages expense for the year amounted to $48,000. 5.The balance in accounts receivable at the beginning of the year was $600,000,and at the end of the year was $175,000.Sales for the year were $1,000,000.The balance of the allowance for doubtful accounts was $20,000 at the beginning of the year and $35,000 at the end of the year.Bad debt expense for the year was $40,000. 6.Sales on account for the year are $1,000 and the balance in accounts receivable increased $200 during the year.All sales are on account. 7.Sale at a gain of $500 of a plant asset costing $4,000 with $2,500 of accumulated depreciation. 8.The balance in accumulated depreciation increased $10,000 for the year.No disposals of plant assets occurred during the year. 9.At the beginning of the fiscal year,merchandise inventory amounted to $30,000.A physical count at year-end showed $37,000 worth of inventory on hand.The balance of accounts payable at the beginning of the fiscal year was $26,000 and at the end of the fiscal year was $30,000.Cost of goods sold for the fiscal year was $42,000.The company uses a perpetual inventory system. 10.The retained earnings account decreased $10,000.Net income for the fiscal year was $15,000.Dividends payable decreased $10,000.

On August 1 of the current year,Kyle Company borrowed $278,000 from the local bank.The loan was for 12 months at 9 percent interest payable at the maturity date.The adjusting entry at the end of the fiscal year relating to this obligation would include a

The premium on a two-year insurance policy expiring on June 30,2015,was paid in total on July 1,2013.The original payment was debited to the insurance expense account.The appropriate journal entry has been recorded on December 31,2013.The balance in the prepaid asset account on December 31,2013,should be

A company sold 10,000 shares of its own $1 par value common stock for $60,000.The entry to record the sale would include a

Kite Company paid $24,900 in insurance premiums during 2013.Kite showed $3,600 in prepaid insurance on its December 31,2013,balance sheet and $4,500 on December 31,2012.The insurance expense on the income statement for 2013 was

Sky Corporation's salaries expense for 2012 was $136,000.Accrued salaries payable on December 31,2013,was $17,800 and $8,400 on December 31,2012.The cash paid for salaries during 2013 was

Statement of Financial Accounting Concepts No.1 states that one of the objectives of financial reporting is to help "current and potential investors and creditors (and other users)in assessing the amounts,timing,and uncertainty of future cash flows such as dividends or interest payments." Generally Accepted Accounting Principles (GAAP)require the use of the accrual basis of accounting. Explain the difference between the accrual basis and the cash basis of accounting and why GAAP requires the accrual basis.

In November and December 2013,Bee Company,a newly organized newspaper publisher,received $72,000 for 1,000 three-year subscriptions at $24 per year,starting with the January 2,2014,issue of the newspaper.How much should Bee report in its 2013 income statement for subscription revenue?

Ingle Company paid $12,960 for a four-year insurance policy on September 1 and recorded the $12,960 as a debit to Prepaid Insurance and a credit to Cash.What adjusting entry should Ingle make on December 31,the end of the accounting period?

Adjusting entries normally involve

An example of an adjusting entry involving a deferred revenue is

The allowance for doubtful accounts is an example of a(n)

Ryan Company purchased a machine on July 1,2013.The machine cost $250,000 and has a salvage value of $10,000 and a useful life of eight years.The adjusting entry for the year ending December 31,2014,would include a debit to Depreciation Expense of

At the beginning of the fiscal year,office supplies inventory amounted to $600.During the year,office supplies amounting to $8,800 were purchased.This amount was debited to office supplies expense.An inventory of office supplies at the end of the fiscal year showed $400 of supplies remaining.The beginning of the year balance is still reflected in the office supplies inventory account.What is the required amount of the adjustment to the office supplies expense account?