Question 3

1. Alpaca Corporation had revenues of $200,000 in its first year of operations. The company purchased $70,000 of inventory during the year. The company had no inventory on hand at the end of the year. The company paid $15,000 in salaries during the year. Owners invested $20,000 in the business and $20,000 was borrowed on a five-year note. The company paid $2,000 in interest that was the amount owed for the year, and paid $6,000 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 40%. The company paid $5,000 in dividends. Which of the following is the net income for the first year for Alpaca Corporation?

   Answer

   		$110,000
   		$60,000
   		$107,000
   		$57,000
   		$61,000
   		$66,000

3 points

Question 4

1. Based on the following information, what is the total equity at the end of 2013? The following is selected financial information for Osmond Dental Laboratories for 2012 and 2013:

   Retained earnings January 1 2012 = $53,000

   Net income 2012 = $37,000; 2013 = $42,000

   Dividends declared and paid 2012 = $15,000; 2013 = $18,000

   Capital stock issued 2012 = $70,000; 2013 = $20,000

   Total assets 2012 = $276,000; 2013 = $320,000

   Answer

   		$75,000
   		$99,000
   		$174,000
   		$189,000
   		$320,000

3 points

Question 5

1. The Supplies account shows a balance of $540, but a count of supplies reveals only $210 on hand at year end. Which of the following is the correct adjusting entry at year end?

   Answer

   		Debit supplies $210; Credit cash $210
   		Debit supplies expense $210; Credit supplies $210
   		Debit supplies expense $330; Credit supplies $330
   		Debit supplies $540; Credit supplies expense $540

3 points

Question 6

1. Flint Hills initially records the payments of all insurance premiums as expenses. The year end trial balance shows a balance of $420 in Insurance expense. A review of insurance policies reveals that $125 of insurance is unexpired. Which of the following is the correct adjusting entry at year end?

   Answer

   		Debit prepaid insurance $295; Credit insurance expense $295
   		Debit prepaid insurance $125; Credit insurance expense $125
   		Debit insurance exprense $295; Credit prepaid insurance $295
   		Debit insurance exprense $125; Credit prepaid insurance $125

3 points

Question 7

1. Flint Hills employees work Monday through Friday, and salaries of $2,400 per week are paid each Friday. Flint Hills' year-end falls on Tuesday. Which of the following is the correct adjusting entry at year end?

   Answer

   		Debit salary expense $960; credit cash $960
   		Debit salary expense $2,400; credit cash $2,400
   		Debit salary expense $960; credit salaries payable $960
   		Debit salary expense $1,440; credit salaries payable cash $1,440

3 points

Question 8

On year end December 31, Flint Hills received a utility bill for December electricity usage of $190 that will be paid in the following January. Which of the following is the correct adjusting entry at year end?

Answer

		Debit utility expense $190, Credit accounts payable $190
		Debit utility expense $190, Credit cash $190
		Debit utility expense $190, Credit unearned revenue $190
		No entry is needed.