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Exam 2: Recording Business Transactions

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Question 91

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The following transactions for the month of March have been journalized and posted to the proper accounts. Mar, 1 The business received $8,000 cash and issued common stock to stockholders. Mar. 2 Paid the first month's rent of $600. Mar. 3Purchasod equipment by paying $2,000 cash and executing a note payable for $6,000. Mar. 4 Purchasod office supplies for $\$ 750 \mathrm { cash }$ . Mar. 5 Billed a client for $14,000 of design services completed. Mar. 6 Received $\$ 5,000$ on account for the services previously recorded. What is the balance in Accounts Receivable?

A) $5,000
B) $9,000
C) $6,000
D) $14,000

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Question 92

Multiple Choice

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Which of the following accounts decreases with a debit?

A) Accounts Receivable
B) Notes Payable
C) Cash
D) Rent Expense

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Question 93

Multiple Choice

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For Retained Earnings, the category of account and its normal balance is ________.

A business makes a payment of $1,400 on a note payable. Which of the following journal entries would be recorded?

State whether the normal balance of each of the following accounts is a debit or credit. $\begin{array} { | l | l | } \hline \text { Account } & \text { Normal Balance } \\\hline \text { Common Stock } & \\\hline \text { Accounts Receivable } & \\\hline \text { Salaries Expense } & \\\hline \text { Unearned Revenue } & \\\hline\end{array}$

A business receives $40,000 for services that it will perform over the next four months. Which of the following accounts is credited?

Wilson Furniture Company received cash of $40,000 and issued common stock. Which of the following accounts will be debited?

Jackson Enterprises is a new corporation. The following transactions occurred during the first month of business. Prepare journal entries and post the journal entries to T-accounts. Prepare a trial balance at the end of the first month using the following transactions. a) Received $15,000 cash and issued common stock. b) Paid the first month's rent with $800 cash. c) Purchased equipment by paying $4,000 cash and executing a note payable for $4,000. d) Purchased office supplies for $200 cash. The supplies remain at the end of the month. e) Billed clients for a total of $7,000 for design services rendered. f) Received $1,000 cash from clients for services rendered above.

In reviewing the T-account for Accounts Payable, you find that the beginning balance is zero, the total increases are $7,900 and the total decreases are $4,200. This means that the ending balance of the account is a credit balance of $3,700.

Which of the following is used by both internal and external users?

Which of the following is a source document that provides the evidence and data for accounting transactions?

Debit is abbreviated as DE and Credit is abbreviated as CR.

A business collects cash from a customer for services that were performed one month earlier. Which of the following accounts is debited?

Adams, Inc. recorded the following journal entry on March 2, 2018. $\begin{array} { | l | r | r | } \hline \text { Cash } & 9,000 & \\\hline \text { Unearned Revenue } & & 9,000 \\\hline\end{array}$ From the journal entry above, identify the transaction on March 2, 2018.

An account that normally has a debit balance may occasionally have a credit balance.

A T-account is a summary device with credits posted on the left side of the vertical line.

A business purchases $1,000 of office supplies on account. Which of the following accounts is debited?

A liability created when a business receives cash from customers in advance of providing services or delivering goods is called a(n) ________.

A posting reference column is used ________.

Calculate the debt ratio using the following trial balance of Superior Instruments, Inc. as of December 31, 2019. Superior Instruments, Inc. Trial Balance December 31, 2019 $\begin{array}{ll}\text { Account Title } & \text { Debit } &\text { Credit }\\\text { Cash } & \$ 88,800 \\\text { Accounts Receivable } & 5,000 \\\text { Office Supplies } & 3,400 \\\text { Land } & 70,000 \\\text { Building } & 16,500 \\\text { Equipment } & 2,000\\\text { Accounts Payable } & & \$ 15,000 \\\text { Notes Payable } & & 60,000 \\\text { Common Stock } & & 50,000 \\\text { Dividends } & 1,200 &\\\text { Service Revenue } & & 72,000 \\\text { Utilities Expense } & 4,100 & \\\text { Salaries Expense } & 4,000 & \\\text { Advertising Expense } & \underline{2,000} & \underline{\quad \quad}\\\text { Total } & \underline{\$ 197,000 }& \underline{\$ 197,000}\end{array}$