Use the following information to prepare a balance sheet and Bear Corporation had the following accounts and balances in its general ledger at December 31, 20x9:
Cash $45,000
Accounts Payable $80,000
Property, Plant, & Equipment $200,000
Long-Term Debt $60,000
Capital Stock $150,000
Accounts Receivable $90,000
Retained Earnings ?
Inventory $75,000
1. What amount will Bear report on its balance sheet for Total Assets?
A. $320,000
B. $410,000
C. $500,000
D. $560,000
2. What’s Bear’s Retained Earnings balance at the end of 20x9?
A. $120,000
B. $140,000
C. $270,000
D. $410,000
Use the following information to prepare journal entries and an income statement for Random Corporation. (You may also choose to prepare T accounts.) Then answer Questions 3 through 6.
July 1 Bills are sent to clients for services provided in June in the amount of $800.
July 8 First Bank loans the company $2,500. The company will pay back the loan in August.
July 9 Office Supply Corp. delivers furniture ($1,060) and expendable office supplies ($160) to Random, leaving an invoice for $1,220.
July 15 Payment is made to Office Supply Corp. for the furniture and office supplies delivered on July 9.
July 23 A $430 bill for electricity for the month of June is received and will be paid on its
due date in August.
July 31 Salaries are paid to employees in the amount of $850.
3. The journal entry to record the July 9 transaction will include a credit of $1,220 to
A. Furniture and Supplies.
B. Cash.
C. Accounts Payable.
D. Administrative Expenses.
4. What’s the total amount of expenses that should appear on July’s income statement?
A. $430
B. $850
C. $1,280
D. $1,440
5. Assuming a beginning cash balance of $4,300, what is the balance in the Cash account at
July 31?
A. $300
B. $1,010
C. $4,730
D. $5,530
Use the following information to prepare journal entries for Martin Rental Corporation. (You
may also choose to prepare T accounts.) Then answer Questions 6 through 8.
October 1 Martin buys two new saws on credit at $375 each. The saws are added to
Martin’s rental fleet; payment is due in 30 days.
October 8 Martin accepts advance deposits for tool rentals of $75.
October 15 Martin receives a $150 bill for electricity provided by Local Electric Company;
payment is due in 30 days.
October 20 Martin charges customers $750 for tool rentals; payment is due from customers
in 30 days.
October 31 Martin receives payments of $500 from customers billed for rentals on
October 20.
6. The journal entry to record the October 1 transaction is
A. $750 debit, Tool Rental Equipment; $750 credit, Accounts Payable.
B. $750 debit, Tool Rental Equipment; $750 credit, Cash.
C. $750 debit, Cash; $750 credit, Tool Rental Expense.
D. $750 debit, Accounts Payable; $750 credit, Tool Rental Equipment.
7. How much is still owed to Martin from its customers?
A. $0
B. $250
C. $500
D. $750
8. What’s Martin’s income for the month of October?
A. $600
B. $675
C. $750
D. $825
9. If a company has assets of $350,000, liabilities of $130,000, and retained earnings of
$180,000, investments by the owners must be
A. $40,000.
B. $225,000.
C. $295,000.
D. $310,000.
10. If a company reports a loss of $15,000 and total expenses of $310,000, its revenues
A. are $295,000.
B. are $310,000.
C. are $325,000.
D. can’t be determined.
Answer Questions 11 and 12 using the following information reported on a company’s balance sheet:
Cash $25,000
Accounts Payable $14,000
Accounts Receivable $27,000
Notes Payable Due Within One Year $24,000
Merchandise Inventory $24,000
Land $40,000
Notes Payable Due Beyond One Year $120,000
Equipment $33,000
Buildings $80,000
Accumulated Depreciation: Buildings & Equipment $12,000
11. How much is the current ratio?
A. .52 to 1
B. 1.61 to 1
C. 1.91 to 1
D. 2 to 1
12. What’s the working capital of the company?
A. $13,000
B. $14,000
C. $38,000
D. $59,000
13. Calamari Associates bought land for $1,200,000 in 1982. In 2004, the land was appraised at $1,795,000. The land would appear on the company’s books in 2004 at
A. $595,000.
B. $1,200,000.
C. $1,795,000.
D. $2,995,000.
14. Conrad Company reported revenues of $215,000 and net income of $60,000 for 2004.
Cash generated by operations was $55,000. In addition, Conrad Company borrowed
$36,000 from a bank. During 2004, Conrad bought new equipment for $30,000 cash and
paid cash dividends of $20,000 to stockholders. What’s the amount of cash flows from
investing activities?
A. $16,000
B. $55,000
C. ($30,000)
D. ($36,000)
15. Computix Company received advance payments from customers during 20x2 of $14,800. At December 31, 20x2, $1,800 of the advance payments still hadn’t been earned. After the adjustments are recorded and posted at December 31, 20x2, the balances in the
Customer Payment Received in Advance and Service Revenue accounts will be
A. Customer Payment Received in Advance, $1,800; Service Revenue, $13,000.
B. Customer Payment Received in Advance, $1,800; Service Revenue, $16,600.
C. Customer Payment Received in Advance, $13,000; Service Revenue, $1,800.
D. Customer Payment Received in Advance, $1,800; Service Revenue, $14,800.
16. M Corp. had $1,800 of supplies on hand at January 1, 20x7. During 20x7, supplies with a cost of $7,000 were purchased. At December 31, 20x7, the actual supplies on hand
amounts to $2,300. After the adjustments are recorded and posted at December 31, 20x7,
the balances in the Supplies and Supplies Expense accounts will be
A. Supplies, $900; Supplies Expense, $4,100.
B. Supplies, $2,300; Supplies Expense, $6,500.
C. Supplies, $2,300; Supplies Expense, $4,700.
D. Supplies, $4,000; Supplies Expense, $2,300.
17. Which of the following entries properly closes a temporary account?
A. $200 debit, Dividends; $200 credit, Retained Earnings
B. $400 debit, Income Summary; $400 credit, Rent Expense
C. $1,600 debit, Accumulated Depreciation; $1,600 debit, Income Summary
D. $20,000 debit, Income Summary; $20,000 credit, Service Revenue
18. Industrial Activities operates five days per week with a daily payroll of $4,000. Employees are paid every Saturday for the workweek just completed (Monday through Friday). The last day of the month is Wednesday, March 31. What’s the amount of Wages Expense recorded on the next payday, Saturday, April 3?
A. $-0-
B. $8,000
C. $12,000
D. $20,000
Answer Question 19 using the following information:
Income Tax Expense $295,000
Sales $5,200,000
Selling Expenses $800,000
Interest Expense $570,000
Cost of Goods Sold $2,756,000
General and Administrative Expenses $600,000
Earnings Per Share $2.97
19. Determine the gross profit ratio.
A. 20%
B. 26%
C. 47%
D. 53%
Prepare journal entries, an adjusted trial balance, an income statement, and a statement of
retained earnings from the following information. Then answer Questions 20 through 25.
Smith Photography’s account balances at December 31, 20x4, before recording
adjusting entries:
Cash $26,667 debit
Prepaid Insurance $ 450 debit
Film on Hand $250 debit
Cameras $ 20,000 debit
Accumulated Depreciation – Cameras $3,667 credit
Accounts Payable $7,000 credit
Unearned Revenue $5,700 credit
Note Payable $3,000 credit
Capital Stock $1,000 credit
Retained Earnings $5,800 credit
Dividends $1,200 debit
Revenue $28,000 credit
Utilities Expense $ 3,200 debit
Salaries Expense $2,400 debit
Other information:
The insurance policy was dated December 1; the monthly insurance cost is $50.
Film on Hand at December 31, 20x4, was $180.
The cameras were purchased on January 1, 20x4. The estimated life is five years.
The balance in unearned revenue is $2,000.
Interest owed but not paid on the note was $30.
Salaries owed but not paid at December 31 were $2,000.
20. What’s the balance in the debit column of the adjusted Trial Balance?
A. $44,650
B. $52,500
C. $56,350
D. $56,530
21. What’s the balance in Accumulated Depreciation—Cameras?
A. $2,000
B. $2,333
C. $4,000
D. $6,000
22. What are the Total Expenses after the adjustments?
A. $5,600
B. $8,083
C. $9,753
D. $10,950
23. What’s the balance in Retained Earnings after the adjustments?
A. $21,950
B. $28,217
C. $27,750
D. $29,417
24. The journal entry to adjust the balance in Unearned Revenue is
A. $2,000 debit, Unearned Revenue; $2,000 credit, Revenue.
B. $2,000 debit, Revenue; $2,000 credit, Unearned Revenue.
C. $3,700 debit, Unearned Revenue; $3,700 credit, Revenue.
D. $3,700 debit, Revenue; $3,700 credit, Unearned Revenue Equipment.
25. Which of the following entries will properly close the Revenue account?
A. $28,000 debit, Revenue; $28,000 credit, Income Summary
B. $28,000 debit, Income Summary; $28,000 credit, Revenue
C. $31,700 debit, Income Summary; $31,700 credit, Revenue
D. $31,700 debit, Revenue; $31,700 credit, Income Summary
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