1. If total assets were $21,000 and total liabilities were $12,000 at the beginning of the year, and if net income for the year was $5,000, how much was total stockholders' equity at the end of the year?

a. $ 4,000

b. $ 5,000

c. $ 9,000

d. $14,000

2. At the beginning of the year, stockholders' equity totaled $119,000. During the year, net income was $35,000 and dividends of $29,000 were declared (but not paid). How much was stockholders' equity at the end of the year?

a. $113,000

b. $125,000

c. $148,000

d. $154,000

3. Regarding bank reconciliation, which of the following is true?

a.Deposits in transit are added to the bank balance.

b.Service charges are subtracted from the bank balance. X

c.Interest earned on notes collected by the bank is not a reconciling item (only the note

itself is a reconciling item).

d.NSF (not sufficient fund) checks result in the recognition of bad debts expense

on the books.

e.Outstanding checks are subtracted from the book balance. X

4.As it relates to financial reporting, which of the following is not a true statement ?

a. A financial statement presenting the financial position of the entity at a point of time.

b. A financial statement presenting the results of the entity's operations for a period of time.

c. A financial statement summarizing the entity's cash flows for a period of time.

d. A financial statement presenting the changes of the entity's retained earnings at a point of time.

1) Kyoto Art is a new business. During its first year of operations, credit sales were $41,000 and collections of credit sales were $38,000. One account, $725, was written off. Management uses the aging-of-receivables method to account for bad debts expense and estimated $525 as uncollectible at year end. The ending balance of the Allowance for Bad Debts is $ ________.

2) A newly created design business, Kyoto Art, is finishing its first year of operations. During the year, credit sales were $45,000 and collections of credit sales were $33,000. One account for $675 was written off. Kyoto Art uses the aging-of-receivables method to account for bad debts expense. It has estimated $200 as uncollectible at year-end. The amount of the Bad Debts Expense for the first year of operations is $.

3) At the beginning of 2019, Tokyo Office Supplies, Inc. has the following account balances:

Accounts Receivable $44,000 (debit balance)

Allowance for Bad Debts $6,000 (credit balance)

Bad Debts Expense $0

During the year, credit sales amounted to $800,000. Cash collected on credit sales amounted to $760,000, and $18,000 has been written off. At the end of the year, the company adjusted for bad debts expense using the percent-of-sales method and applied a rate, based on past history, of 3.5%. The ending balance of Accounts Receivable is ________.

4) At the beginning of 2019, Chiba Food Supply, Inc. has the following ledger balances:

Accounts Receivable $40,000 (Debit)

Allowance for Bad Debts $7,000 (Credit)

During the year, credit sales amounted to $810,000. Cash collected on credit sales amounted to $760,000, and $16,000 has been written off. Chiba Food Supply uses the aging-of-receivables method to record bad debts expense. The estimate of uncollectible accounts was $26,000. The ending balance in the Allowance for Bad Debts is ________.

5) At the beginning of 2019, Osaka Sweets, Inc. has the following account balances:

Accounts receivable $44,000 (Debit)

Allowance for Bad Debts $7,000 (Credit)

During the year, credit sales were $820,000. Cash collected on credit sales was $750,000, and $18,000 was written off. Osaka Sweets uses the aging-of-receivables method to record bad debts expense. The amount estimated as uncollectible was $26,000. The amount of Bad Debts Expense for 2019 is ________.

Problem 3

Journalize the following transactions. Each transaction occurred independently. Assume that the closing date for a financial statement purpose is December 31.Explanations are not required.

1.On July 19, 2019 Akita International Corporation traded in a printing machine for a new one priced at $2,600 receiving a trade-in allowance of $600 and the paying the balance in cash. The old machine cost $1,800 and had an accumulated depreciation of $1,400. What is the journal entry to record the acquisition of the new machine?

2.On December 25, 2019, Akita International Corporation paid employee salary, $4,000.At the year end, the AIC recognized unpaid salary $1,200 for 6 days (December 26-31, 2019) as accrued.

(2-1)Journalize an adjusting entry (entries) necessary at the date of the year end.

(2-2)Journalize the transaction to be expected on the next salary payment date (January25, 2020). Assume that the same amount of salary will be paid.

3The AIC's unadjusted trial balance as of December 31, 2019 includes the total amount of accounts receivable $1,500: $600 (Customer A) was recorded during the accounting period (2017) and $400 (Customer B) and $500 (Cusomer C) were recorded during the current year (2019). The allowance for Bad Debt account as of January 1, 2019 had a credit balance of $250.

(3-1) On December 25, 2019, Customer A went to bankruptcy, so the AIC considered the entire amount due from Customer A to be uncollectible. On the same date, a busness magazine revealed that Customer C became financially worse, so the AIC judged the account due from Customer C to be probably uncollectible. Record any journal entry to be recognized at the point of time, December 25, 2019. Note: Disregard (3-2) in answering the (3-1) question.

(3-2) On December 31, 2019, based on an analysis of the accounts receivable collectibility, the AIC concluded that the balance $600 of the Allowance for Bad Debt account at the end of the period would be required. Record any adjusting entry to be recognized at the end of period. Note: Disregard (3-1) in answering the (3-2) question.