1-

Flagg, Inc. records adjusting entries at its December 31 year end. At December 31, employees had earned $9,200 of unpaid and unrecorded salaries. The next payday is January 3, at which time $23,000 will be paid. Prepare the January 1 journal entry to reverse the effect of the December 31 salary expense accrual.

Debit Salaries expense $9,200; credit Salaries payable $9,200.

Debit Salaries expense $13,800; debit Salaries payable $9,200; credit Cash $23,000.

Debit Salaries payable $13,800; credit Cash $13,800.

Debit Salaries payable $9,200, credit Salaries expense $9,200.

Debit Salaries expense $13,800; credit Salaries payable $13,800.

2-

The company paid $22,000 cash in dividends to the owner, Jen Rogers. The entry needed to close the dividends account is:

Debit Income Summary and credit Cash for $22,000.

Debit Dividends and credit Cash for $22,000

Debit Income Summary and credit Dividends for $22,000.

Debit Retained Earnings and credit Dividends for $22,000.

Debit Dividends and credit Retained Earnings for $22,000.

3-

Using the following year-end information for Calvin's Clothing, Inc., calculate the current ratio and acid-test ratio for the business:

Cash	$52,000
Short-term investments	12,000
Accounts receivable	54,000
Inventory	325,000
Prepaid expenses	17,500
Accounts payable	106,500
Other current payables	25,000

1.80 and 1

1.97 and 1.52

2.73 and 1.52

3.50 and 0.90

1.80 and 0.90

4-

The amount recorded for merchandise inventory includes all of the following except:

Purchase discounts.

Returns and allowances.

Freight costs paid by the buyer.

Freight costs paid by the seller.

Trade discounts.

5-

A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. The correct journal entry to record the payment on July 28 is:

Debit Merchandise Inventory $1,600; credit Cash $1,600.

Debit Cash $1,600; credit Accounts Payable $1,600.

Debit Accounts Payable $1,600; credit Merchandise Inventory $32; credit Cash $1,568.

Debit Accounts Payable $1,800; credit Cash $1,800.

Debit Accounts Payable $1,600; credit Cash $1,600.