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Exam 2: Accounting for Transactions

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Question 31

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Robert Haddon contributed $70,000 in cash and some land worth $130,000 to open a new business, RH Consulting. Which of the following general journal entries will RH Consulting make to record this transaction?

A) $\begin{array}{|c|r|r|}\hline \text { Assets } & 200,000 & \\\hline \text { Common Stock } & & 200,000 \\\hline\end{array}$
B) $\begin{array}{|c|c|c|}\hline \text { Cash and Land } & 200,000 & \\\hline \text { Common Stock } & & 200,000 \\\hline\end{array}$
C) $\begin{array}{|c|r|r|}\hline \text { Cash } & 70,000 & \\\hline \text { Land } & 130,000 & \\\hline \text { Common Stock } & & 200,000 \\\hline\end{array}$
D) $\begin{array}{|c|r|r|}\hline \text { Common Stock } & 200,000 & \\\hline \text { Cash } & & 70,000 \\\hline \text { Land } & & 130,000 \\\hline\end{array}$
E) $\begin{array}{|c|r|r|}\hline \text { Common Stock } & 200,000 & \\\hline \text { Assets } & & 200,000 \\\hline\end{array}$

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Question 32

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The third step in the analyzing and recording process is to post the information to _________________________.

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Question 33

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The following is a list of accounts and identification letters A through J for Shannon Management Co.: Use the form below to identify the type of account and its normal balance. The first item is filled in as an example.

Which of the following items would appear on the balance sheet? Common stock……$120,000 Accounts payable…...$25,000 Cash……………….$116,640 Accounts receivable..$22,450 Supplies………… $ 1,500 Office equipment…...$23,300 Prepaid rent……....$ 3,200 Unearned revenue….$ 4,152 Service revenue..... $ 20,000 Utilities expense…....$ 422 Retained earnings...$ 30,000 Shaving equipment…$31,640

A simple account form widely used in accounting to illustrate how debits and credits work is called a:

A $130 credit to Office Equipment was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?

Stride Rite has total assets of $425 million. Its total liabilities are $110 million. Its equity is $315 million. Calculate the debt ratio.

Double-entry accounting requires that the impact of each transaction be recorded in at least two accounts.

If the Debit and Credit column totals of a trial balance are equal, then:

Wisconsin Rentals purchased office supplies on credit. The journal entry made by Wisconsin Rentals to record this transaction will include a:

A credit is used to record:

IFRS requires that companies report four financial statements with explanatory notes: balance sheet; income statement; statement of changes in equity, and statement of cash flows.

Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year: $\begin{array}{|l|r|r|}\hline & \text { Assets } & \text { Liabilities } \\\hline \text { Beginning of the year } & \$ 114,000 & \$ 68,000 \\\hline \text { End of the year } & 135,000 & 73,000 \\\hline\end{array}$ If the owners made no investments and dividends of $5,000 were paid during the year, what was the amount of net income earned by Josephine's Bakery during the current year?

Given the trial balance amounts below, compute net income. Common stock……. $120,000 Accounts payable…...$25,000 Cash……………….. $116,640 Accounts receivable.. $22,450 Supplies………........ $ 1,500 Office equipment…... $23,300 Prepaid rent………. $ 3,200 Unearned revenue…. $ 4,152 Service revenue…... $ 20,000 Utilities expense….... $ 422 Beginning Shaving equipment… $31,640 Retained earnings. $ 30,000

Match the following definitions and terms by placing the number that identifies the best definition in the blank space next to the term.

A trial balance that is in balance is proof that no errors were made in journalizing the transactions, posting to the ledger, and preparing the trial balance.

Hamilton Industries has total liabilities of $105 million and total assets of $350 million. Its debt ratio is 333.3%.

Of the following errors, which one will cause the trial balance to be out of balance?

Which of the following statements is false with regard to the debt ratio?

After preparing an (unadjusted) trial balance at year-end, G. Chu of Chu Design Company discovered the following errors: 1. Cash payment of the $225 telephone bill for December was recorded twice. 2. Cash payment of a note payable was recorded as a debit to Cash and a debit to Notes Payable for $1,000. 3. A $900 cash dividend was recorded to the correct accounts as $90. 4. An additional investment of $5,000 cash by the owner was recorded as a debit to Common Stock and a credit to Cash. 5. A credit purchase of office equipment for $1,800 was recorded as a debit to the Office Equipment account with no offsetting credit entry. Using the form below, indicate whether the error would cause the trial balance to be out of balance by placing an X in either the yes or no column. $\begin{array} { | c | l | l | l | } \hline \text { Error } & \text { Yes } & & \text { No } \\\hline 1 . & & & \\\hline 2 . & & & \\\hline 3 . & & & \\\hline 4 . & & & \\\hline 5 . & & & \\\hline\end{array}$