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1.Cash was paid by California Ltd to creditors. Which of the following entries for California Ltd's records this transaction?

A.Dr Cash Cr Accounts Payable

B.Dr Accounts Payable Cr Cash

C.Dr Accounts Receivable Cr Cash

D.Dr Cash Cr Accounts Receivable

E.None of the above

2.Which of the following entries records the receipt of an electricity bill by Broome Ltd from the Western Australian power company?

A.Dr Electricity expense Cr Accounts payable

B.Dr Electricity payable Cr Accounts payable

C.Dr Accounts payable Cr Electricity expense

D.Dr Accounts payable Cr Utilities payable

E.None of the above

3.When goods for re-sale are ordered by a LA Ltd, what is the accounting entry?

A.Dr Inventory Cr Accounts Payable

B.Dr Purchases Cr Accounts Payable

C.Dr Accounts Receivable Cr Accounts Payable

D.None of the above

4.Inventory of $100,000 was purchased by Houston Ltd on credit. The journal entry is:

A.Dr Inventory Cr Cash

B.Dr Inventory Cr Accounts Payable

C.Dr Accounts Payable Cr Inventory

D.Dr Inventory Cr Accrued Expenses

E.None of the above

5.The inventory purchased above by Houston Ltd was sold on credit for $150,000.

The journal entry is:

A.Dr COGS $100,000 Cr Inventory $100,000

B.Dr Cash $150,000 Cr Accounts Receivable $150,000

C.Dr Accounts Receivable $150,000 Cr Sales $150,000

D.A and C

E.None of the above

6.Denver Corporation paid $1 million for a business and acquired the following assets and liabilities:

Property, Plant and Equipment $700,000

Accounts Receivable$200,000

Inventory$300,000

Accounts Payable$250,000

The following entry would be made for goodwill:

A.Dr Goodwill $50,000

B.Dr Goodwill $950,000

C.Cr Goodwill $200,000

D.Goodwill is not entered in the accounts until the business is sold

E.None of the above

Answer the following seven questions pertaining to New York Ltd according to the journal entry required to record the transaction.

7.New York Ltd received cash from customer.

A.Dr Accounts Receivable Cr Cash

B.Dr Cash Cr Accounts Payable

C.Dr Cash Cr Accounts Receivable

D.None of the above

8.New York Ltd purchased goods on credit.

A.Dr Inventory Cr Accounts Payable

B.Dr Inventory Cr Accounts Receivable

C.Dr Accounts Receivable Cr Inventory

D.None of the above

9.Depreciation expense for the year on New York Ltd's motor vehicles.

A.Dr Motor Vehicles Cr Accumulated Depreciation

B.Dr Accumulated Depreciation Cr Depreciation Expense

C.Dr Depreciation Expense Cr Motor Vehicles

D.Dr Depreciation Expense Cr Accumulated Depreciation

E.None of the above

10.New York Ltd's estimated income tax for the year.

A.Dr Income Tax Expense Cr Retained Profits

B.Dr Taxes Payable Cr Income Tax Expense

C.Dr Income Tax Expense Cr Taxes Payable

D.None of the above

11.The amount of income tax previously estimated is now paid by the management of New York Ltd.

A.Dr Taxes Payable Cr Income Tax Expense

B.Dr Income Tax Expense Cr Taxes Payable

C.Dr Taxes Payable Cr Retained Profits

D.Dr Taxes Payable Cr Cash

E.None of the above

12.The board of directors of New York Ltd declared a dividend.

A.Dr Retained Profits Cr Dividend Payable

B.Dr Dividend Payable Cr Cash

C.Dr Dividend Payable Cr Retained Profits

D.None of the above

13.The dividend previously declared by New York Ltd now paid.

A.Dr Retained Profits Cr Dividend Payable

B.Dr Dividend Payable Cr Cash

C.Dr Cash Cr Dividend Payable

D.None of the above

14.Boston Ltd purchases inventory for $220, paying $50 cash and owing the rest. The journal entry will include:

A.A debit to creditors of $170

B.A debit to inventory of $170

C.A credit to creditors of $50

D.None of the above

15.Chicago Ltd borrowed $10,000 from a finance company, promising to repay the debt in 3 years' time together with interest at 12% p.a. Chicago Ltd should record the transaction as:

A.Dr Cash Cr Loan Cr Interest Payable

B.Dr Loan Cr Cash

C.Dr Cash Dr Interest Expense Cr Loan

D.Dr Cash Cr Loan

E.None of the above

16.Detroit Ltd received its monthly bank statement showing bank charges of $20. The transaction should be recorded as:

A.Dr Cash Cr Bank Charges

B.Dr Accounts Payable Cr Cash

C.No record necessary

D.None of the above

The following information relates to Austin Ltd and pertains to the next four questions.

Austin Ltd performs services for a client on 30 June 2018 and bills the client $350 to be paid within sixty days. Payment is duly made on 29 August 2018. Accrual accounting is used by both parties.

17.What is the journal entry made by Austin Ltd on 30 June 2018?

A.Dr Service Revenue Cr Accounts Payable

B.Dr Accounts Receivable Cr Cash

C.Dr Accounts Receivable Cr Service Revenue

D.None of the above

18.What is the journal entry made by Austin Ltd on 29 August 2018?

A.Dr Cash Cr Accounts Receivable

B.Dr Cash Cr Service Revenue

C.Dr Accounts Receivable Cr Cash

D.None of the above

19.What is the journal entry made by the client on 30 June 2018?

A.Dr Accounts Payable Cr Accounting Expenses

B.Dr Accounting Expenses Cr Accounts Payable

C.Dr Accounting Expenses Cr Cash

D.None of the above

20.What is the journal entry made by the client on 29 August 2018?

A.Dr Accounting Expenses Cr Cash

B.Dr Cash Cr Accounting Expenses

C.Dr Accounting Expenses Cr Accounts Payable

D.None of the above

The following information relates to San Francisco Ltd and pertains to the next two questions.

On 30 June 2018 San Francisco Ltd, which uses accrual accounting estimates that it will incur warranty costs of $24,000 in the next financial year on products sold during the year just ended. On 7 October 2018 the manufacturer pays $3,500 under the warranty.

21.What is the journal entry made by San Francisco Ltd on 30 June 2018?

A.Dr Warranty Liability Cr Cash

B.Dr Warranty Liability Cr Warranty Expense

C.Dr Warranty Expense Cr Warranty Liability

D.None of the above

22.What is the journal entry made by San Francisco Ltd on 7 October 2018?

A.Dr Warranty Expense Cr Warranty Liability

B.Dr Warranty Liability Cr Warranty Expense

C.Dr Warranty Liability Cr Cash

D.Dr Cash Cr Warranty Liability

E.None of the above

23.On 14 April 2018 Seattle Ltd sells on credit for $8,000 merchandise which had cost $5,000. Which of the following journal entries would Seattle Ltd make on 14 April 2018?

A.Dr Cost of Goods Sold $5,000 Cr Inventory $5,000

B.Dr Accounts Receivable $8,000 Cr Sales $8,000

C.Dr Cash $8,000 Cr Accounts Receivable $8,000

D.A and B

E.None of the above

The following information relates to Washington Ltd and pertains to the next two questions.

At 30 June 2006 Washington Ltd had a balance in Accounts Receivable of $40,000 and a Allowance for Doubtful Debts of $2,000. It was decided to write off as irrecoverable the debt of Houston Ltd totalling $3,500. It was further decided that the Allowance for Doubtful Debts should stand at 10% of Accounts Receivable.

24.What was the journal entry made by Washington Ltd to write-off the debt of Houston Ltd as irrecoverable?

A.Dr Allowance for Doubtful Debts $3,500 Cr Accounts Receivable $3,500

B.Dr Bad Debts Expense $3,500 Cr Allowance for Doubtful debts $3,500

C.Dr Bad Debts Expense $3,500 Cr Accounts Receivable $3,500

D.None of the above

25.What was the journal entry to bring the Allowance for Doubtful Debts to the required level after writing off the debt of Houston Ltd?

A.Dr Bad Debts Expense $4,000 Cr Allowance for Doubtful Debts $4,000

B.Dr Bad Debts Expense $5,150 Cr Allowance for Doubtful Debts $5,150

C.Dr Bad Debts Expense $5,500 Cr Allowance for Doubtful Debts $5,500

D.Dr Allowance for Doubtful Debts $3,500 Cr Accounts Receivable $3,500

E.None of the above

26.The correct classification for the following five ledger accounts in the chart of accounts is:

1. Prepayments

2. Municipal rates

3. Depreciation

4. Accumulated depreciation

5. Accrued expenses

A.1. Asset 2. Expense 3. Expense 4. Asset 5. Expense

B.1. Asset 2. Expense 3. Asset 4. Expense 5. Liability

C.1. Asset 2. Expense 3. Expense 4. Asset 5. Liability

D.1. Expense 2. Expense 3. Expense 4. Expense 5. Expense

E.None of the above

27.If New York Ltd pays a 12 month insurance premium for $1,200 on 1 May 2018, at 30 June 2018 the accounts will show:

A.A prepayment of $1,000 in the balance sheet and an insurance expense of $200 in the income statement

B.A prepayment of $200 in the balance sheet and an insurance expense of $1,000 in the income statement

C.$1,200 asset in the balance sheet

D.$1,200 expense in the income statement

E.None of the above

28.If the last wages bill for the year is paid by San Francisco Ltd on 28 June and $10,000 is owing at 30 June in unpaid wages:

A.The $10,000 would appear as accrued wages payable in the balance sheet but it would not be included in the expenses for the year.

B.The $10,000 would appear as accrued wages payable in the balance sheet and would be included in the expenses for the year.

C.The 10,000 would not be included in either the balance sheet or the income statement

D.None of the above.

29.The balance in the prepaid rent account of Denver Ltd before adjustment at the end of the year is $15,000, which represents three months' rent paid on May 1. The adjusting entry required on June 30 is:

A.Dr Rent Expense $10,000 Cr Prepaid Rent $10,000

B.Dr Rent Expense $5,000 Cr Prepaid Rent $5,000

C.Dr Prepaid Rent $10,000 Cr Rent Expense $10,000

D.Dr Prepaid Rent $5,000 Cr Rent Expense $5,000

E.None of the above

30.What is the proper adjusting entry at June 30, the end of the financial year, based on a supplies account balance before adjustment, $5,200, and supplies inventory on June 30, $1,200?

A.Dr Supplies $1,200 Cr Supplies Expense $1,200

B.Dr Supplies Expense $1,200 Cr Supplies $1,200

C.Dr Supplies Expense $4,000 Cr Supplies $4,000

D.Dr Supplies $4,000 Cr Supplies Expense $4,000

E.None of the above

31.Seattle Ltd pays weekly salaries of $25,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the financial period ending on Wednesday is:

A.Dr Salaries Payable $15,000 Cr Cash $15,000

B.Dr Salary Expense $15,000 Cr Salaries Payable$15,000

C.Dr Salary Expense $10,000 Cr Salaries Payable$10,000

D.Dr Salaries Payable $10,000 Cr Cash $10,000

E.None of the above

32.The net profit reported on California Ltd's income statement is $50,000. However, adjusting entries have not been made at the end of the period for depreciation of $500 and accrued salaries of $1,300. Net profit should be:

A.$48,200

B.$48,700

C.$50,000

D.$50,500

E.None of the above

33.A machine purchased by New jersey Ltd on 1 July 2016 cost $100,000 and has a zero estimated salvage value. The life of the machine is five years. What is the balance of accumulated depreciation at 30 June 2018?

A.$20,000

B.$40,000

C.$60,000

D.None of the above

The following information relates to Boston Ltd and pertains to the next two questions.

On 15 September 2018 Boston Ltd receives an advance of $7,000 from a client for future services. The work was completed to the client's satisfaction on 10 October 2018. The surveyor uses accrual accounting.

34.What is the journal entry made by Boston Ltd on 15 September 2018?

A.Dr Cash Cr Unearned Revenue

B.Dr Unearned Revenue Cr Cash

C.Dr Cash Cr Surveying Revenue

D.Dr Customer Deposits Cr Unearned Revenue

E.None of the above

35.What is the journal entry made by Boston Ltd on 10 October 2018?

A.Dr Cash Cr Unearned Revenue

B.Dr Accrued Revenue Cr Surveying Revenue

C.Dr Unearned Revenue Cr Surveying Revenue

D.Dr Surveying Revenue Cr Unearned Revenue

E.None of the above

The following information relates to LA Ltd and pertains to the next three questions.

LA Ltd uses accrual accounting and its financial year ends on 30 June. Expenses paid in advance are treated as assets. On 1 May 2018 Data Ltd pays $480 for a one year fire insurance policy that expires on 30 April 2019.

36.What is the journal entry made by LA Ltd on 1 May 2018?

A.Dr Insurance Expense $80 Cr Prepaid Insurance $80

B.Dr Insurance Expense $480 Cr Prepaid Insurance $480

C.Dr Prepaid Insurance $480 Cr Cash $480

D.Dr Insurance Expense $480 Cr Cash $480

E.None of the above

37.What is the journal entry made by LA Ltd on 30 June 2018?

A.Dr Prepaid Insurance $480 Cr Cash $480

B.Dr Prepaid Insurance $80 Cr Insurance Expense $80

C.Dr Insurance Expense $480 Cr Prepaid Insurance $480

D.Dr Insurance Expense $80 Cr Prepaid Insurance $80

E.None of the above

38.Which of the following will appear on LA Ltd's balance sheet at 30 June 2018?

A.Prepaid insurance $480

B.Prepaid insurance $400

C.Prepaid insurance $80

D.Insurance expense $80

E.None of the above

39.Detroit Ltd pays salaries on Friday to cover the previous five working days up to including Thursday. The weekly wages bill is $100,000. 30 June 2018 falls on a Monday. The adjusting journal entry on 30 June 2018 will be:

A.Dr Wages Expense $20,000 Cr Accrued Wages $20,000

B.Dr Wages Expense $40,000 Cr Accrued Wages $40,000

C.Dr Accrued Wages $20,000 Cr Wages Expense $20,000

D.Dr Accrued Wages $40,000 Cr Wages Expense $40,000

E.None of the above

40.Hollwood Ltd invested $200,000 with a bank for one year at 12% on 1 September 2017 (interest payable at end of loan). What is the adjusting journal entry at balance date, 30 June 2018?

A.Dr Accrued Revenue $18,000 Cr Interest Revenue $18,000

B.Dr Accrued Revenue $20,000 Cr Interest Revenue $20,000

C.Dr Accrued Revenue $24,000 Cr Interest Revenue $24,000

D.Dr Unearned Revenue $18,000 Cr Interest Revenue $18,000

E.None of the above