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25 multiple choice questions!!!

Omit all general journal entry explanations. Be sure to include correct dollar signs, commas, underlines, and double-underlines where required. Question 1 (40 points) XYZ Company's December 31, 2015, trial balance is as follows: XYZ Company Trial Balance December 31, 2015 Account Cash Accounts Receivable Allowance for Doubtful Accounts Notes Receivable Merchandise Inventory Land Building Accumulated Depreciation, Building Equipment Accumulated Depreciation, Equipment Goodwill Accounts Payable Long-Term Notes Payable Common Stock, $10 par, 2,000 shares authorized and outstanding Retained Earnings Sales Revenue Salaries Expense Utilities Expense Cost of Goods Sold Administrative Expenses Sales Expenses Totals Debit $ 43,500 53,500 1,500 30,000 55,000 20,000 150,000 Credit $ 15,000 50,000 21,000 26,000 25,000 75,000 20,000 147,000 700,000 150,000 3,500 350,000 55,000 15,000 _______ $1,003,00 $1,003,00 0 0 XYZ is a small company and records adjusting entries and closing entries only at fiscal (calendar) year end. Correcting and adjusting entries have not been recorded. Additional Information: a. Notes Receivable is a 3-month, 6% note accepted on November 1, 2015. b. Long-Term Notes Payable is a 5-year, 5% note that was signed on July 1, 2015. Interest is payable annually. c. Building is depreciated at 3% per year. There is no salvage value. d. Equipment is depreciated at 15% per year. There is no salvage value. e. XYZ discovered, on December 30, that the inexperienced bookkeeper recorded in the general journal and general ledger that day's $1,500 cash sales as a debit to Accounts Receivable and a credit to Sales Revenue. f. The year-end physical count for Merchandise Inventory reflected a value of $51,500. Any difference in value will not be considered theft or loss. g. Salaries for the last half of December, payable in January, amount to $5,500. h. XYZ estimates that of the Accounts Receivable, 5% will not be collectable. Required: a. Prepare in journal form, any required correcting entries. b. Prepare in journal form, all end-of-the-period adjusting entries. c. Prepare a December adjusted trial balance. d. Prepare a classified balance sheet for the year ended December 31, 2015. e. Prepare in journal form, the closing entries for the year ended December 31, 2015. Question 2 (8 points) XYZ Company uses the periodic method and had the following inventory events during January: Date Jan. 1 Jan. 5 Jan. 10 Jan. 15 Jan. 20 Jan. 25 Jan. Units Purchased 150 225 100 150 200 Unit Date Cost $7.00Jan. 2 7.20Jan. 7 Jan. 7.50 12 Jan. 7.80 17 Jan. 7.95 24 150 8.00 75 8.20 Units Sold 100 125 Unit Sales Price $10.00 10.00 75 12.00 200 12.50 150 15.00 30 Note: The January 1 amounts were the beginning inventory and unit value. (Round all total dollar values to the nearest dollar. Round all unit values to the nearest penny.) Required: a. Calculate the cost of goods available for sale. b. Calculate the dollar value of sales. c. Calculate the value of Ending Inventory and Cost of Goods Sold under the following independent assumptions: (1) LIFO method (2) FIFO method (3) Average-cost method Question 3 (7 points) Required: Prepare Acme Supply Company's general journal entries for the following transactions: Jan. 1 Accepted RunTimeCo's 120-day, 10% note as settlement of an outstanding $15,000 account receivable for goods sold last year. Jan. Purchased $10,000 Equipment from XYZ, signing a 9-month, 12% note. 15 Jan. Loaned Warner Co. $30,000 cash, accepting a 90-day, 10% note. 15 Jan. Prepared accrual adjusting entry for any interest revenue. 31 Apr. Received payment in full from Warner Co. for outstanding note and interest. 15 May 1 Received payment in full from RunTimeCo for outstanding note and interest. Oct. Paid XYZ in full. 15 Question 4 (9 points) XYZ Company purchased a refrigerated delivery truck for $65,000 on January 1, 2015. The plan is to use the truck for 5 years and then replace it. At the end of its useful life, the truck is expected to have a salvage value of $10,000. The fiscal year ends December 31. a. Prepare the depreciation table for XYZ's truck, assuming that the company uses the straightline method for depreciation. b. Prepare the depreciation table for XYZ's truck, assuming that the company uses the doubledeclining-balance depreciation method. c. Compute the depreciation expense for 2015 for XYZ's truck, assuming the truck has an expected life of 200,000 miles and during 2015 the truck was driven 24,540 miles. Round your depreciation expense per mile to three decimal places. Question 5 (7 points) Acme Company has a January 15 mid-month gross salaries expense of $25,000. All is subject to FICA Social Security (6.2%), FICA Medicare (1.45%), state income tax (5%) and federal income tax (15%) withholdings. Additionally, all is subject to employer taxes to include FUTA (0.8%) and SUTA (5.4%) taxes. (Round all calculations to the nearest penny.) Required: a. Prepare the general journal entry to record the employer's payroll liability. b. Prepare the general journal entry to record the employer's payroll-tax liability. c. Prepare the general journal entry to liquidate the liabilities accrued in parts (a) and (b) on January 22. Question 6 (4 points) At the end of the fiscal 2015 year, Acme Company has the following information: Credit Sales, $2,500,000; Sales Returns and Allowances, $25,000; Accounts Receivable, $200,000; and Allowance for Doubtful Accounts with a Debit, $1,500. Required: a. Prepare the general journal entry to record the end-of-the-year adjusting entry if Acme uses 0.5% of Net Credit Sales as the basis for determining Bad-Debt Expense. b. Prepare the general journal entry to record the end-of-the-year adjusting entry if Acme uses 5% of Accounts Receivable as the basis for determining Bad-Debt Expense. \fSolution of 1st question XYZ Trial Balance 31-Dec-15 Account Cash Accounts Receivable Allowance for Doubtful Accounts Notes Receivable Merchandise Inventory Land Building Accumulated Depreciation, Building Equipment Debit $43,500 53,500 1500 30,000 55,000 20,000 150,000 $15,000 50,000 Accumulated Depreciation, Equipment Goodwill Accounts Payable Long Term Notes Payable Credit 21,000 26,000 25,000 75,000 Common Stock, $10 par, 2,000 shares authorized & outstanding 20,000 Retained Earnings 147,000 Sales Revenue 700,000 Salaries Expense 150,000 Utilities Expense 3,500 Cost of Goods Sold 350,000 Administrative Expenses 55,000 Sales Expenses 15,000 _______ Totals $1,003,000 $1,003,000 XYZ is a small company and records adjusting entries & closing entries only at fiscal (calendar) year end. Correcting and adjusting entries h Additional Information: a. Notes Receivable is a 3-months, 6% note accepted on December 1, 2015. b. Long Term Notes Payable is a 5-year, 5% note, that was signed on July 1, 2015. Interest is payable annually. c. Building is depreciated at 3% per year. There is no salvage value. d. Equipment is depreciated at 15% year. There is no salvage value. e. Flip discovered, on December 30th, that the inexperienced bookkeeper recorded in the general journal and general ledger that day f. The year-end physical count for Merchandise Inventory reflected a value of $52,500. Any difference in value will not be considered g. Salaries for the last half of December, payable in January, amount to $6,500. h.XYZ estimates that of the Accounts Receivable 5% will not be collectable. Required: a. Prepare in journal form, any required correcting entries b. Prepare in journal form, all end-of-the period adjusting entries c. Prepare a December adjusted trial balance d. Prepare a classified balance sheet for the year ended December 31, 2015 e. Prepare in journal form, the closing entries for the year ended December 31, 2015 a. Prepare in journal form, any required correcting entries General Journal entries Date 30-Dec Cash Accounts Receivable Account Debit Credit 1,500 1,500 b. Prepare in journal form, all end-of-the period adjusting entries Date Account 31-Dec Interest Receivable Interest Revenue Debit Credit 150 150 31-Dec Interest expense Interest payable 1,875 31-Dec Depreciation expense Accumulated Depreciation on Building 4,500 1,875 4,500 31-Dec Depreciation expense Accumulated Depreciation on Equipment 7,500 31-Dec Cost of Goods Sold Merchandise inventory 2,500 31-Dec Salaries expense Salaries payable 6,500 31-Dec Bad debts expense Allowance for doubtful Accounts 2,650 7,500 2,500 6,500 2,650 c. Prepare a December adjusted trial balance XYZ Adjusted Trial Balance 31-Dec-15 Account Cash Accounts Receivable Allowance for Doubtful Accounts Notes Receivable Merchandise Inventory Interest Receivable Land Building Accumulated Depreciation, Building Equipment Accumulated Depreciation, Equipment Goodwill Accounts Payable Interest Payable Salaries Payable Long Term Notes Payable Debit 45,000 53,000 Credit 2,150 30,000 52,500 150 20,000 150,000 19,500 50,000 28,500 26,000 25,000 1,875 6,500 75,000 Common Stock, $10 par, 2,000 shares authorized & outstanding Retained Earnings Sales Revenue Interest revenue Salaries Expense Utilities Expense Cost of Goods Sold Administrative Expenses Sales Expenses Interest expense Depreciation Expense Bad debts expense Totals 20,000 147,000 700,000 150 156,500 3,500 352,500 55,000 15,000 1,875 12,000 2,650 1,025,675 _______ 1,025,675 d. Prepare a classified balance sheet for the year ended December 31, 2015 XYZ Classified Balancesheet As on 31-12-2015 Assets Cash Accounts Receivable Allowance for Doubtful Accounts Notes Receivable Merchandise Inventory Interest Receivable Total Current Assets Land Building Accumulated Depreciation, Building Equipment Accumulated Depreciation, Equipment Goodwill Total Assets Liabilities & Shareholder's equity Accounts Payable Interest Payable Details $ 45,000 53,000 (2,150) 30,000 52,500 150 Amount $ 178,500 20,000 150,000 (19,500) 50,000 (28,500) 26,000 25,000 1,875 198,000 376,500 Salaries Payable Total Current Liabilities Long Term Notes Payable Total Liabilities 6,500 Common Stock, $10 par, 2,000 shares authorized & outstanding 20,000 33,375 75,000 108,375 Retained Earnings Total Liabilites & Shareholder's Equity 248,125 268,125 376,500 e. Prepare in journal form, the closing entries for the year ended December 31, 2015 Date Account Debit 31-Dec Sales Revenue Interest revenue Net Income 700,000 150 31-Dec Net Income Salaries Expense Utilities Expense Cost of Goods Sold Administrative Expenses Sales Expenses Interest expense Depreciation Expense Bad debts expense Credit 599,025 Net Income Retained earnings 700,150 156,500 3,500 352,500 55,000 15,000 1,875 12,000 2,650 101,125 101,125 ing entries have not been recorded. dger that day's $1,500 cash sales as a debit to Accounts Receivable and a credit to Sales Revenue. be considered theft or loss. Solution of 2nd Question XYZ uses the period method and had the following inventory events during January: Date Units Purchased Unit Cost Date Units Sold Jan. 1 150 $7.00 Jan. 2 100 Jan. 5 225 7.2 Jan. 7 125 Jan. 10 100 7.5 Jan. 12 75 Jan. 15 150 7.8 Jan. 17 200 Jan. 20 200 7.95 Jan. 24 150 Jan. 25 150 8 Jan. 30 75 8.2 Note: January 1 amount was the beginning inventory and unit value. (Round all total dollar values to the nearest dollar. Round all unit values to the nearest penny.) a) Goods Available for Sale Date Jan. 1 Jan. 5 Jan. 10 Jan. 15 Jan. 20 Jan. 25 Jan. 30 Units Purchased Date Jan. 2 Jan. 7 Jan. 12 Jan. 17 Jan. 24 Unit Cost 150.00 225.00 100.00 150.00 200.00 150.00 75.00 Goods Avaialble for sale b) Unit Sales Price $10.00 10 12 12.5 15 7.00 7.20 7.50 7.80 7.95 8.00 8.20 7.61 Total Cost 1,050.00 1,620.00 750.00 1,170.00 1,590.00 1,200.00 615.00 7,995.00 Sales Units Sold 100 125 75 200 150 Total Sales c. Value of: 1) LIFO method 2) FIFO method Unit Sales Price $10.00 10 12 12.5 15 Total Sales 1,000.00 1,250.00 900.00 2,500.00 2,250.00 7,900.00 Ending Inventory COGS 3) Average-cost method 1) LIFO method Units 7.00 150.00 (100.00) 7.20 7.50 7.80 7.95 8.00 8.2 Total 225.00 (125.00) 100.00 (75.00) (25.00) ### 150.00 (150.00) 200 (150) 150 Ending no. of Units Ending Inventory Cost of Goods Sold 50.00 350.00 700.00 75.00 540.00 1,080.00 750.00 1,170.00 50 397.50 1,192.50 150 1,200.00 7.00 150.00 (100.00) 7.20 7.50 7.80 7.95 8.00 75 75 615.00 400.00 3,102.50 4,892.50 2) FIFO method Units (50.00) 225.00 (75.00) 8.2 Total (75.00) 100.00 (100.00) 150.00 (25.00) (125.00) (75.00) 200 (25) 150 Ending no. of Units Ending Inventory Cost of Goods Sold 1,050.00 3) Average-cost method Ending Inventory Cost of Goods Sold 3,045.71 4,949.29 1,620.00 750.00 1,170.00 175 1,391.25 198.75 150 1,200.00 75 75 615.00 400.00 2,666.25 4,788.75 Solution of 3rd Question Date Account 1-Jan 10% Notes Receivable Accounts Receivable Debit Credit 15,000 15,000 Jan-15 Equipment 12% Notes payable 10,000 25-Jan 10% Notes receivable Cash 30,000 31-Jan Interest Receivable Interest Revenue 125 25-Apr Cash 10,000 30,000 125 30,750 10% Notes receivable Interest Revenue 1-May Cash 30,000 750 15,500 10% Notes receivable Interest Revenue Interest Receivable 15-Oct 12% Notes payable Interest expense Cash 15,000 375 125 10,000 900 10,900 Solution of 4th Question XYZ Company purchased a refrigerated delivery truck for $65,000 on April 1, 2056. The plan is to use the truck for 4 years and then replace it. a. Prepare the depreciation table for XYZs truck assuming that the company uses the straight-line method for depreciation. b. Prepare the depreciation table for XYZ truck assuming that the truck was purchased on January 1, 2015 and the company c. Compute the depreciation expense for 2015 for XYZ truck assuming the truck has an expected life of 200,000 miles and during 2016 a. Prepare the depreciation table for XYZ truck assuming that the company uses the straight-line method for depreciation. Year Depreciation expense 1 2 3 4 10,313 13,750 13,750 13,750 Total Accumulated Depreciation End of year Book Value 10,313 24,063 37,813 51,563 54,688 40,938 27,188 13,438 Note; In the first year depreciation has been charged for only 9 months b. Prepare the depreciation table for XYZ truck assuming that the truck was purchased on January 1, 2015 and the company uses the d Year Depreciation expense 1 2 3 4 32,500 16,250 8,125 4,063 Total Accumulated Depreciation 32,500 48,750 56,875 60,938 End of year Book Value 32,500 16,250 8,125 4,063 c. Compute the depreciation expense for 2015 for XYZ truck assuming the truck has an expected life of 200,000 miles and during 2015 the truck w Depreciation expense for 2015 6748.5 place it. At the end of it's useful life the truck is expected to have a salvage value of $10,000. ciation. ompany uses the double-declining-balance depreciation method. ng 2016 the truck was driven 24,540 miles. uses the double-declining-balance depreciation method. he truck was driven 24,540 miles. Solution of 5th Question ACME Company has a January 15 mid-month gross salaries expense of $25,000. federal income tax (15%) withholdings. All is subject to FICA Social Security (6.2%), FICA Medicare (1.45%), state income tax (5%) and Additionally, all is subject to employer taxes to include FUTA (0.8%) and SUTA (5.4%) taxes. (Round all calculations to the nearest penny.) Required: a. Prepare the general journal entry to record the employer's payroll liability. b. Prepare the general journal entry to record the employer's payroll tax liability. c. Prepare the general journal entry to liquidate the liabilities accrued in parts (a) and (b) on January 22. a. Prepare the general journal entry to record the employer's payroll liability. Date Account Debit 15-Jan Salary expense Federal Income tax payable State Income tax Payable FICA Taxes payable Cash Credit 25,000 3,750 1,250 1,913 18,088 b. Prepare the general journal entry to record the employer's payroll tax liability. Date Account 15-Jan Payroll tax expense FICA Taxes payable SUTA Taxes payable FUTA taxes payable Debit Credit 3,463 1,913 200 1,350 c. Prepare the general journal entry to liquidate the liabilities accrued in parts (a) and (b) on January 22. Date Account 22-Jan Federal Income tax payable State Income tax Payable FICA Taxes payable SUTA Taxes payable FUTA taxes payable Cash Debit Credit 3,750 1,250 3,825 200 1,350 10,375 Solution of 6th Question ACME Company at the end of the fiscal 2015 year has the following information: Credit Sales, $2,500,000 Sales Returns & Allowances $25,000 Accounts Receivable $200,000 and Allowance for Doubtful Accounts with a debit o $1,500. Required: a. Prepare the general journal entry to record the end of the year adjusting entry if ACME uses 0.5% of Net Credit Sales as the basis fo b. Prepare the general journal entry to record the end of the year adjusting entry if ACME uses 5% of Accounts Receivable as the basis a. Prepare the general journal entry to record the end of the year adjusting entry if ACME uses 0.5% of Net Credit Sales as the basis fo Date 2014 Account Debit Bad debts expense Allowance for Bad debts Credit 12,375 12,375 b. Prepare the general journal entry to record the end of the year adjusting entry if ACME uses 5% of Accounts Receivable as the basis Date 2014 Account Bad debts expense Allowance for Bad debts Debit Credit 11,500 11,500 asis for determining Bad Debt Expense. e basis for determining Bad Debt Expense. basis for determining Bad Debt Expense. e basis for determining Bad Debt Expense. Question 7 (1 point) Question 7 Unsaved After the bank reconciliation is prepared, the entry to record bank service charges would have a credit to _______________. Question 7 options: Bank Service Charge Expense Cash Petty Cash Cash Short and Over None of the above Save Question 8 (1 point) Question 8 Unsaved Malloy Company estimates uncollectible accounts using the percentage-of-receivables method and expects that 5 percent of outstanding receivables will be uncollectible for 2015. The balance in Accounts Receivable is $200,000, and the allowance account has a $3,000 credit balance before adjustment at year end. The uncollectible accounts expense for 2015 will be _______________. Question 8 options: $7,000 $10,000 $13,000 $9,850 None of the above Save Question 9 (1 point) Question 9 Unsaved Malloy Company signed a $10,000, 90-day note with a bank. The only payment Malloy will ever make to the bank will be when the note is due in 90 days, on the maturity date of the loan. The interest rate on the loan is 10%. The total repaid on the maturity date is _______________. Question 9 options: $10,000 $9,000 $9,750 $10,250 None of the above Save Question 10 (1 point) Question 10 Unsaved On July 1, 2015, Malloy Company purchased equipment for $400,000, and installation and testing costs totaled $40,000. The equipment has an estimated useful life of 10 years and an estimated salvage value of $40,000. If Malloy uses the double-declining-depreciation method, the depreciation expense for 2015 is _______________. Question 10 options: $88,000 $72,000 $36,000 $44,000 $40,000 Save Question 11 (1 point) Question 11 Unsaved The result of recording a capital expenditure as a revenue expenditure is an _______________. Question 11 options: overstatement of current year's expense understatement of current year's expense understatement of subsequent year's net income overstatement of current year's net income None of the above Save Question 12 (1 point) Question 12 Unsaved Cole Inc., a new company, purchases a two-year insurance policy for $12,000. Six months later, the correct balance in the prepaid insurance account would be _______________. Question 12 options: $12,000 $6,000 $9,000 None of the above Save Question 13 (1 point) Question 13 Unsaved Which of the following is not an advantage of the corporate form of organization? Question 13 options: continuous existence of the entity limited liability of stockholders government regulation easy transfer of ownership Save Question 14 (1 point) Question 14 Unsaved Treasury stock should be shown on the balance sheet as a(n) _______________. Question 14 options: reduction of the corporation's stockholders' equity current asset current liability investment asset Save Question 15 (1 point) Question 15 Unsaved When the stockholders invest cash in the business, what is the effect? Question 15 options: Liabilities increase and stockholders' equity increases. Both assets and liabilities increase. Both assets and stockholders' equity increase. None of the above Save Question 16 (1 point) Question 16 Unsaved The ending balance in retained earnings is shown in the _______________. Question 16 options: (a) income statement (b) statement of retained earnings (c) balance sheet both (b) and (c) both (a) and (c) (a), (b), and (c) Save Question 17 (1 point) Question 17 Unsaved A cash dividend of $500 was declared and paid to stockholders. The correct journal entry to record the declaration is _______________. Question 17 options: debit Capital Stock 500 and credit Cash 500 debit Cash 500 and credit Dividends 500 debit Dividends 500 and credit Dividends Payable 500 debit Cash 500 and credit Capital Stock 500 Save Question 18 (1 point) Question 18 Unsaved If $3,000 has been earned by a company's workers since the last payday in an accounting period, the necessary adjusting entry would be _______________. Question 18 options: debit an expense and credit a liability debit an expense and credit an asset debit a liability and credit an asset debit a liability and credit an expense Save Question 19 (1 point) Question 19 Unsaved The accrual basis of accounting _______________. Question 19 options: recognizes revenues only when cash is received is used by almost all companies recognizes expenses only when cash is paid out recognizes revenues when sales are made or services are performed, and recognizes expenses only when cash is paid out Save Question 20 (1 point) Question 20 Unsaved The need for adjusting entries is based on _______________. Question 20 options: the matching principle source documents the cash basis of accounting activity that has already been recorded in the proper accounts Save Question 21 (1 point) Question 21 Unsaved Which of the following statements is false regarding the closing process? Question 21 options: The Dividends account is closed to Income Summary. The closing of expense accounts results in a debit to Income Summary. The closing of revenues results in a credit to Income Summary. The Income Summary account is closed to the Retained Earnings account. Save Question 22 (1 point) Question 22 Unsaved Which of the following statements is true regarding the classified balance sheet? Question 22 options: Current assets include cash, accounts receivable, and equipment. Plant, property, and equipment is one category of long-term assets. Current liabilities include accounts payable, salaries payable, and notes receivable. Stockholders' equity is subdivided into current and long-term categories. Save Question 23 (1 point) Question 23 Unsaved The underlying assumptions of accounting include all the following except _______________. Question 23 options: periodicity going concern Government regulation money measurement Save Question 24 (1 point) Question 24 Unsaved Malloy Company began the accounting period with $60,000 of merchandise, and the net cost of purchases was $240,000. A physical inventory showed $72,000 of merchandise unsold at the end of the period. The cost of goods sold of Malloy Company for the period is _______________. Question 24 options: $300,000 $228,000 $252,000 $168,000 None of the above Save Question 25 (1 point) Question 25 Unsaved A classified income statement consists of all of the following major sections except _______________. Question 25 options: Operating revenues Cost of goods sold Operating expenses Non-operating revenues and expenses Current assets Save Question 26 (1 point) Question 26 Unsaved A business purchased merchandise for $12,000 on account; terms are 2/10, n/30. If $2,000 of the merchandise was returned and the remaining amount due was paid within the discount period, the purchase discount would be _______________. Question 26 options: $240 $200 $1,200 $1,000 $3,600 Question 27 (1 point) Question 27 Unsaved Malloy Company began the accounting period with inventory of 3,000 units at $30 each. During the period, the company purchased an additional 5,000 units at $36 each and sold 4,600 units. Assume the use of periodic inventory procedure. The cost of ending inventory using weighted-average is _______________. Question 27 options: $114,750 $157,600 $122,400 $109,650 None of the above Question 28 (1 point) Question 28 Unsaved Malloy Company began the accounting period with inventory of 3,000 units at $30 each. During the period, the company purchased an additional 5,000 units at $36 each and sold 4,600 units. Assume the use of periodic inventory procedure. The cost of goods sold using weighted-average is _______________. Question 28 options: $147,200 $160,350 $155,250 $114,000 None of the above Question 29 (1 point) Question 29 Unsaved During a period of rising prices, which inventory method might be expected to give the highest net income? Question 29 options: Weighted-average FIFO LIFO Specific identification Cannot determine Question 30 (1 point) Question 30 Unsaved The following information is related to the bank reconciliation of the Acme Company: Balance per bank statement $1,951.20 Balance per ledger 1,869.60 Deposits in transit 271.20 Outstanding checks 427.80 NSF check 61.20 Service charges 13.80 The adjusted/correct cash balance is _______________. Question 30 options: $1,794.60 $1,719.60 $1,638.00 $1,713.00 $1,876.20 Question 31 (1 point) Question 31 Unsaved In a bank reconciliation, deposits in transit should be _______________. Question 31 options: deducted from the balance per books deducted from the balance per bank statement added to the balance per ledger added to the balance per bank statement disregarded in the bank reconciliation \fSolution of 1st question XYZ Trial Balance 31-Dec-15 Account Cash Accounts Receivable Allowance for Doubtful Accounts Notes Receivable Merchandise Inventory Land Building Accumulated Depreciation, Building Equipment Debit $43,500 53,500 1500 30,000 55,000 20,000 150,000 $15,000 50,000 Accumulated Depreciation, Equipment Goodwill Accounts Payable Long Term Notes Payable Credit 21,000 26,000 25,000 75,000 Common Stock, $10 par, 2,000 shares authorized & outstanding 20,000 Retained Earnings 147,000 Sales Revenue 700,000 Salaries Expense 150,000 Utilities Expense 3,500 Cost of Goods Sold 350,000 Administrative Expenses 55,000 Sales Expenses 15,000 _______ Totals $1,003,000 $1,003,000 XYZ is a small company and records adjusting entries & closing entries only at fiscal (calendar) year end. Correcting and adjusting entries h Additional Information: a. Notes Receivable is a 3-months, 6% note accepted on December 1, 2015. b. Long Term Notes Payable is a 5-year, 5% note, that was signed on July 1, 2015. Interest is payable annually. c. Building is depreciated at 3% per year. There is no salvage value. d. Equipment is depreciated at 15% year. There is no salvage value. e. Flip discovered, on December 30th, that the inexperienced bookkeeper recorded in the general journal and general ledger that day f. The year-end physical count for Merchandise Inventory reflected a value of $52,500. Any difference in value will not be considered g. Salaries for the last half of December, payable in January, amount to $6,500. h.XYZ estimates that of the Accounts Receivable 5% will not be collectable. Required: a. Prepare in journal form, any required correcting entries b. Prepare in journal form, all end-of-the period adjusting entries c. Prepare a December adjusted trial balance d. Prepare a classified balance sheet for the year ended December 31, 2015 e. Prepare in journal form, the closing entries for the year ended December 31, 2015 a. Prepare in journal form, any required correcting entries General Journal entries Date 30-Dec Cash Accounts Receivable Account Debit Credit 1,500 1,500 b. Prepare in journal form, all end-of-the period adjusting entries Date Account 31-Dec Interest Receivable Interest Revenue Debit Credit 150 150 31-Dec Interest expense Interest payable 1,875 31-Dec Depreciation expense Accumulated Depreciation on Building 4,500 1,875 4,500 31-Dec Depreciation expense Accumulated Depreciation on Equipment 7,500 31-Dec Cost of Goods Sold Merchandise inventory 2,500 31-Dec Salaries expense Salaries payable 6,500 31-Dec Bad debts expense Allowance for doubtful Accounts 2,650 7,500 2,500 6,500 2,650 c. Prepare a December adjusted trial balance XYZ Adjusted Trial Balance 31-Dec-15 Account Cash Accounts Receivable Allowance for Doubtful Accounts Notes Receivable Merchandise Inventory Interest Receivable Land Building Accumulated Depreciation, Building Equipment Accumulated Depreciation, Equipment Goodwill Accounts Payable Interest Payable Salaries Payable Long Term Notes Payable Debit 45,000 53,000 Credit 2,150 30,000 52,500 150 20,000 150,000 19,500 50,000 28,500 26,000 25,000 1,875 6,500 75,000 Common Stock, $10 par, 2,000 shares authorized & outstanding Retained Earnings Sales Revenue Interest revenue Salaries Expense Utilities Expense Cost of Goods Sold Administrative Expenses Sales Expenses Interest expense Depreciation Expense Bad debts expense Totals 20,000 147,000 700,000 150 156,500 3,500 352,500 55,000 15,000 1,875 12,000 2,650 1,025,675 _______ 1,025,675 d. Prepare a classified balance sheet for the year ended December 31, 2015 XYZ Classified Balancesheet As on 31-12-2015 Assets Cash Accounts Receivable Allowance for Doubtful Accounts Notes Receivable Merchandise Inventory Interest Receivable Total Current Assets Land Building Accumulated Depreciation, Building Equipment Accumulated Depreciation, Equipment Goodwill Total Assets Liabilities & Shareholder's equity Accounts Payable Interest Payable Details $ 45,000 53,000 (2,150) 30,000 52,500 150 Amount $ 178,500 20,000 150,000 (19,500) 50,000 (28,500) 26,000 25,000 1,875 198,000 376,500 Salaries Payable Total Current Liabilities Long Term Notes Payable Total Liabilities 6,500 Common Stock, $10 par, 2,000 shares authorized & outstanding 20,000 33,375 75,000 108,375 Retained Earnings Total Liabilites & Shareholder's Equity 248,125 268,125 376,500 e. Prepare in journal form, the closing entries for the year ended December 31, 2015 Date Account Debit 31-Dec Sales Revenue Interest revenue Net Income 700,000 150 31-Dec Net Income Salaries Expense Utilities Expense Cost of Goods Sold Administrative Expenses Sales Expenses Interest expense Depreciation Expense Bad debts expense Credit 599,025 Net Income Retained earnings 700,150 156,500 3,500 352,500 55,000 15,000 1,875 12,000 2,650 101,125 101,125 ing entries have not been recorded. dger that day's $1,500 cash sales as a debit to Accounts Receivable and a credit to Sales Revenue. be considered theft or loss. Solution of 2nd Question XYZ uses the period method and had the following inventory events during January: Date Units Purchased Unit Cost Date Units Sold Jan. 1 150 $7.00 Jan. 2 100 Jan. 5 225 7.2 Jan. 7 125 Jan. 10 100 7.5 Jan. 12 75 Jan. 15 150 7.8 Jan. 17 200 Jan. 20 200 7.95 Jan. 24 150 Jan. 25 150 8 Jan. 30 75 8.2 Note: January 1 amount was the beginning inventory and unit value. (Round all total dollar values to the nearest dollar. Round all unit values to the nearest penny.) a) Goods Available for Sale Date Jan. 1 Jan. 5 Jan. 10 Jan. 15 Jan. 20 Jan. 25 Jan. 30 Units Purchased Date Jan. 2 Jan. 7 Jan. 12 Jan. 17 Jan. 24 Unit Cost 150.00 225.00 100.00 150.00 200.00 150.00 75.00 Goods Avaialble for sale b) Unit Sales Price $10.00 10 12 12.5 15 7.00 7.20 7.50 7.80 7.95 8.00 8.20 7.61 Total Cost 1,050.00 1,620.00 750.00 1,170.00 1,590.00 1,200.00 615.00 7,995.00 Sales Units Sold 100 125 75 200 150 Total Sales c. Value of: 1) LIFO method 2) FIFO method Unit Sales Price $10.00 10 12 12.5 15 Total Sales 1,000.00 1,250.00 900.00 2,500.00 2,250.00 7,900.00 Ending Inventory COGS 3) Average-cost method 1) LIFO method Units 7.00 150.00 (100.00) 7.20 7.50 7.80 7.95 8.00 8.2 Total 225.00 (125.00) 100.00 (75.00) (25.00) ### 150.00 (150.00) 200 (150) 150 Ending no. of Units Ending Inventory Cost of Goods Sold 50.00 350.00 700.00 75.00 540.00 1,080.00 750.00 1,170.00 50 397.50 1,192.50 150 1,200.00 7.00 150.00 (100.00) 7.20 7.50 7.80 7.95 8.00 75 75 615.00 400.00 3,102.50 4,892.50 2) FIFO method Units (50.00) 225.00 (75.00) 8.2 Total (75.00) 100.00 (100.00) 150.00 (25.00) (125.00) (75.00) 200 (25) 150 Ending no. of Units Ending Inventory Cost of Goods Sold 1,050.00 3) Average-cost method Ending Inventory Cost of Goods Sold 3,045.71 4,949.29 1,620.00 750.00 1,170.00 175 1,391.25 198.75 150 1,200.00 75 75 615.00 400.00 2,666.25 4,788.75 Solution of 3rd Question Date Account 1-Jan 10% Notes Receivable Accounts Receivable Debit Credit 15,000 15,000 Jan-15 Equipment 12% Notes payable 10,000 25-Jan 10% Notes receivable Cash 30,000 31-Jan Interest Receivable Interest Revenue 125 25-Apr Cash 10,000 30,000 125 30,750 10% Notes receivable Interest Revenue 1-May Cash 30,000 750 15,500 10% Notes receivable Interest Revenue Interest Receivable 15-Oct 12% Notes payable Interest expense Cash 15,000 375 125 10,000 900 10,900 Solution of 4th Question XYZ Company purchased a refrigerated delivery truck for $65,000 on April 1, 2056. The plan is to use the truck for 4 years and then replace it. a. Prepare the depreciation table for XYZs truck assuming that the company uses the straight-line method for depreciation. b. Prepare the depreciation table for XYZ truck assuming that the truck was purchased on January 1, 2015 and the company c. Compute the depreciation expense for 2015 for XYZ truck assuming the truck has an expected life of 200,000 miles and during 2016 a. Prepare the depreciation table for XYZ truck assuming that the company uses the straight-line method for depreciation. Year Depreciation expense 1 2 3 4 10,313 13,750 13,750 13,750 Total Accumulated Depreciation End of year Book Value 10,313 24,063 37,813 51,563 54,688 40,938 27,188 13,438 Note; In the first year depreciation has been charged for only 9 months b. Prepare the depreciation table for XYZ truck assuming that the truck was purchased on January 1, 2015 and the company uses the d Year Depreciation expense 1 2 3 4 32,500 16,250 8,125 4,063 Total Accumulated Depreciation 32,500 48,750 56,875 60,938 End of year Book Value 32,500 16,250 8,125 4,063 c. Compute the depreciation expense for 2015 for XYZ truck assuming the truck has an expected life of 200,000 miles and during 2015 the truck w Depreciation expense for 2015 6748.5 place it. At the end of it's useful life the truck is expected to have a salvage value of $10,000. ciation. ompany uses the double-declining-balance depreciation method. ng 2016 the truck was driven 24,540 miles. uses the double-declining-balance depreciation method. he truck was driven 24,540 miles. Solution of 5th Question ACME Company has a January 15 mid-month gross salaries expense of $25,000. federal income tax (15%) withholdings. All is subject to FICA Social Security (6.2%), FICA Medicare (1.45%), state income tax (5%) and Additionally, all is subject to employer taxes to include FUTA (0.8%) and SUTA (5.4%) taxes. (Round all calculations to the nearest penny.) Required: a. Prepare the general journal entry to record the employer's payroll liability. b. Prepare the general journal entry to record the employer's payroll tax liability. c. Prepare the general journal entry to liquidate the liabilities accrued in parts (a) and (b) on January 22. a. Prepare the general journal entry to record the employer's payroll liability. Date Account Debit 15-Jan Salary expense Federal Income tax payable State Income tax Payable FICA Taxes payable Cash Credit 25,000 3,750 1,250 1,913 18,088 b. Prepare the general journal entry to record the employer's payroll tax liability. Date Account 15-Jan Payroll tax expense FICA Taxes payable SUTA Taxes payable FUTA taxes payable Debit Credit 3,463 1,913 200 1,350 c. Prepare the general journal entry to liquidate the liabilities accrued in parts (a) and (b) on January 22. Date Account 22-Jan Federal Income tax payable State Income tax Payable FICA Taxes payable SUTA Taxes payable FUTA taxes payable Cash Debit Credit 3,750 1,250 3,825 200 1,350 10,375 Solution of 6th Question ACME Company at the end of the fiscal 2015 year has the following information: Credit Sales, $2,500,000 Sales Returns & Allowances $25,000 Accounts Receivable $200,000 and Allowance for Doubtful Accounts with a debit o $1,500. Required: a. Prepare the general journal entry to record the end of the year adjusting entry if ACME uses 0.5% of Net Credit Sales as the basis fo b. Prepare the general journal entry to record the end of the year adjusting entry if ACME uses 5% of Accounts Receivable as the basis a. Prepare the general journal entry to record the end of the year adjusting entry if ACME uses 0.5% of Net Credit Sales as the basis fo Date 2014 Account Debit Bad debts expense Allowance for Bad debts Credit 12,375 12,375 b. Prepare the general journal entry to record the end of the year adjusting entry if ACME uses 5% of Accounts Receivable as the basis Date 2014 Account Bad debts expense Allowance for Bad debts Debit Credit 11,500 11,500 asis for determining Bad Debt Expense. e basis for determining Bad Debt Expense. basis for determining Bad Debt Expense. e basis for determining Bad Debt Expense