1. Current ratio is calculated by dividing current assets by current liabilities. Total expenses remain the same. 1. During January 2009, the company completed the following transactions: (A) paid on a note payable $10,000 (no interest was paid); (B) collected an accounts receivable, $9,000; (C) paid an accounts payable, $5,000; and (D) purchased a truck, $5,000 cash, and a $20,000 note payable from a bank. $500,000. E. $18,000. B. Date of payment. 1. Gross profit. D. Either (b) or (c), 1. B. E) None of the above. A. (2089/9421)*365 = 80.9 days. Declining-balance method $18,000. We collect cash from a customer who owed us money. The journal entry to write-down inventory decreases gross profit. B. a. How much needs to be invested today if your goal is to have $100,000 five years from today? $4,000 A. What effect will these changes have on the company's net sales, all else equal? balance per bank statement doesn't change. A. 6.1051 A. $200 increase in net income. Axle has the better turnover for both years. On July 7, it returned $200 worth of merchandise. d. The special-interest effect. a. Carp Corporation has provided the following information for its most recent month of operation: sales $16,000; ending inventory $4,000, purchases $8,000 and gross profit $10,000. A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and the length of time past due is the: 1. A company estimates that warranty expense will be 4% of sales. Preferred stock, 7%, $50 par value, 1,000 shares issued and outstanding with dividends in arrears for 2008 and 2009. Preferred shareholders have a preference with respect to assets in the event of liquidation. On December 31, 2009, Goode paid $103,000 to settle the debt in full. D) credit to interest payable for $320,000. 1. What effect will these changes have on the company's net sales, all other things equal? The lower of cost or market rule is an example of the historical cost principle. The company's January 31, 2009 financial position is C. Annual interest expense will be $500,000. C. Company X has borrowed $100,000 from the bank to be repaid over the next five years, with payments beginning next month. Written, recorded, sent to payees, and received and paid by the bank. 1. C. Cumulative does not receive dividends but noncumulative does. No expense will be recognized until the bill is paid in January August 18 15 units were purchased at $14 per unit Which of the following accounts is a permanent account? A. retained earnings decreased due to paying dividends to stockholders. B. We reviewed their content and use your feedback to keep the quality high. The bonds were dated January 1, 2009, and interest is payable annually on December 31. 1. A. B. B. increases the number of shares outstanding and involves a pro rata reduction in the par value per share. The present value of an annuity of $10,000 per year for 10 years discounted at 8 percent is what amount? Coupon rate and the market rate on the date the bond was issued. No effect on the expenses of the current period. The statement of retained earnings. d. $570 The machine is estimated to have a salvage value of $10,000 and an estimated useful life of 4 years. Williams Company purchased a machine costing $25,000 and is depreciating it over a 10-year estimated useful life with a residual value of $3,000. D. Preferred stock typically has a fixed dividend rate. Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. C. \text{Direct manufacturing labor} & \text{275.000} & \text{209.000}\\ 1. A. How much was Cassie's ending inventory? The journal entry made by Fragmental Co. at year-end on December 31 would be: 1. $2,875. Amortizing a bond discount: E. 180. e. $200,000, Cushman Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in operating expenses. $520 Jan 29 150 units were sold Debit Warranty Expense $7,400; credit Estimated Warranty Liability $7,400. The company will use the double declining-balance depreciation method. D. must be reported as a liability, but not recorded. None of the above are false. Betterman's turnover was 9.3 for this year and 9.3 for last year. Prepare the journal entry transferring Job M1 to finished goods. Also, owner withdrawals during the year totaled $48,000. \text{Rowan Company, May 2016} & \text{Job M1} & \text{Job M2}\\ A. Rowan Company produces pipes for concert quality organs. Debit Accounts Payable $1,800; credit Purchase Returns $200; credit Merchandise Inventory $1,600. A. D) at the interest payment date. A) $29,721 A. an understatement of liabilities and stockholders' equity. 3.79 (10 * $20) + (10 * $22) + (2 * $25) = $470, A company had beginning inventory of 10 units at a cost of $20 each on March 1. Gross accounts receivable less bad debt expense in the asset section of the balance sheet. An NSF check returned on a customer account E. A company has been successful in reducing the amount of sales returns and allowances. The depreciation expense in year 5 equals: 3.89. Cost of goods sold. Assets and net income are both overstated. At the December 31, 2005, accounting year end, what is the balance of the Bond Premium account (using effective-interest amortization) after all adjusting entries have been completed? Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000. The market rate on the January 1, 2005, issue date was 10%. Which of the following statements does not accurately describe the lower of cost or market (LCM) valuation method? $100,000 D. $107,000. Which of the following describes the effect of the inventory error on the 2010 financial statements? $3,405 Current assets plus current liabilities. Decrease of $150,000. When a company using the allowance method writes off a specific customer's $100,000 account receivable from the accounting system, which of the following statements are true? 1. The ending owner's capital balance after closing is: a. Decreases interest expense each period. On May 1, a two-year insurance policy was purchased for $18,000 with coverage to begin immediately. July 1 - Issued 10,000 shares of common stock at $11 per share. What is Wilson's fixed asset turnover ratio? C. Closing accounts. $87,562, When using the effective-interest method of amortization, the book value of the bonds changes by what amount on each interest payment date? D. $ 700. The stated rate of interest was 10% and the market rate 11%. $770,000 A portion of the $100,000 in the Current Liability section and the remainder of the principal in the Long-Term Liability section. \text{R. Siglo, Capital} && 128,730\\ $117,000. D. $12,000, 1. 1. D. $1,000 debited to a liability account and credited to an asset account. On July 1, Plum should record: d. Debit Insurance Expense, $360; credit Prepaid Insurance, $360. How much interest will be paid on December 31, 2014? Which of the following best describes the objective of depreciation? Total revenues for the period are $60,200, total expenses are $42,300, and withdrawals are $11,000. A. Fragmental collected the entire $6,400 cash on October 1 and recorded it as unearned revenue. The sale of bonds above face value Which of the following is not a component of the cost of inventory? C. Carpet cleaning and repair. D. for the year is: Siglo,Capital128,730R. A. Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185.000, expenses of $103.700. B) subtracting Interest Payable from Bonds Payable. Debit Bond Interest Expense $22,000; credit Cash $22,000. $6,000 preferred; $24,000 common. The Leander offer is better because the cash down payment is less. Cost of goods sold Jan 1 150 units were purchased at $9 per unit the owner's capital account before closing had a balance of $297,000. C. $104,000. c. Debit Allowance for Doubtful Accounts $2,300; credit Accounts Receivable $2,300 A. $750. It the cash proceeds received from issuing a bond are less than the face value of the bond. C. A. d. $115,000 D. an expense. It was forced to file for bankruptcy and was liquidated in 2008. a. $350 $8,000 The weighted-average common shares outstanding were 80,000. 1. $10,000 Tara Westmont, the stockholder of Tiptoe Shoes, Inc., had annual revenues of $189,000, expenses of $105,700, and the company paid $19,600 cash in dividends to the owner (sole stockholder).. D. There is not enough information given to determine net income. Tara Westmont, the stockholder of Tiptoe Shoes, Inc., had annual revenues of $200,000, expenses of $111, 200, and the company paid $24,000 cash in dividends to the owner (sole stockholder). 1.600 pipes were produced for Job M1. A) $16,000 \textbf{Siglo Delivery Service}\\ All of the above are steps toward effective internal control. $28,000. The equipment will simply be disposed of, not sold. Sales $400,000 It is used instead of reducing accounts receivable directly. AccumulatedDepreciationOfficeEquipment, Don Herrmann, J. David Spiceland, Wayne Thomas, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Daniel F Viele, David H Marshall, Wayne W McManus. 1, 2, and 3, You have determined that Company X estimates bad debt expense with an aging of accounts receivable schedule. It will follow the MACRS depreciation tables prescribed by the IRS. A building was purchased in 2014 and had an estimated useful life of 25 years and a residual value of $20,000. 1. A) equal to the market rate of interest. Aging of investments method. B. $66,667. B. The adjusting entry for the year ended December 31 would include: 1. producers by about 111 billion dollars per year while costing U.S. Common stock, $100 par value, 2,000 shares issued and outstanding. Stock dividends decrease total equity. Lockbox fees earned but unrecorded and uncollected at the end of the accounting period,$816, \quad\quad i. Refer to Exercise 16.52. $227,000 1. Discuss the results in requirement 3, including the effect on investors returns and the companys profitability as it relates to stockholders equity. Stock dividends are reported on the statement of retained earnings. C. $3,100 B. Impairment of goodwill results in a decrease in net income. Unearned Revenue. the net income for the year is: 1 See answer Advertisement AlanDoris $185,000 B. It will select the shortest lives possible for its assets. A. decrease assets, $103,000; decrease liabilities, $103,000. A. \text{Unearned Lockbox Fees} && 8,340\\ C. Total liabilities increase and stockholders' equity decreases. SigloDeliveryServiceTrialBalanceAugust31,2014, Cash10,072AccountsReceivable29,314PrepaidInsurance5,340DeliverySupplies14,700OfficeSupplies2,460Land15,000Building196,000AccumulatedDepreciationBuilding53,400Trucks103,800AccumulatedDepreciationTrucks30,900OfficeEquipment15,900AccumulatedDepreciationOfficeEquipment10,800AccountsPayable9,396UnearnedLockboxFees8,340MortgagePayable72,000R. the owner's capital account before closing had a balance of $317,000. \text{Gas, Oil, and Truck Repairs Expense} & 31,050\\ A. 1. $180,000. Current assets minus current liabilities. What is the correct closing entry for the revenue accounts? Cr. C. assets will increase. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the merchandise return on July 7 is: 1.60 1. Dr. Allowance for doubtful accounts c. Land $82,750; Land Improvements, $33,100; Building, $49,650. : In its last financial statement prior to bankruptcy, Bombay reported current assets of $161,604,000 and current liabilities of$113,909,000. Which of the following entries could not be a closing entry? Natural resources Regardless of the inventory costing system used, cost of goods available for sale must be allocated at the end of the period between D. A debit to loss on sale for $2,625. B. Each partner is potentially responsible for the debts of the business. Interest expense reduces taxable income. C) $18,578 During the year, the company reported total revenues of $226,000 and expenses of $175,000. 1. D. .the number of shares outstanding decreases while the par value of each share increases. Total assets decrease and stockholders' equity increases. C. The journal entry to write-down inventory does not affect income from operations. C. Current assets were overstated and net income was overstated. Is recorded when a customer takes a discount. 1. $1,900,000 When a company using the allowance method writes off a specific customer's $100,000 account receivable from the accounting system, which of the following statements are true? Cash, short-term investments, and current receivables. On December 31, the market rate of interest increased to 11 percent. B. A journal entry is recorded on all of these dates. Sanborn Company has 10 employees, who earn a total of $1,800 in salaries each working day. C. Dr. insurance expense 2,000 1. In the first year, 15,000 bolts were produced. A. The Federal Open Market Committee sets a target for which of the following? D. $200 of prepaid insurance. The present value of a $10,000, 5-year bond, will be more than $10,000 if the A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. 3. The entry to close the withdrawals account at the end of the year is: If a company has current assets of $14,400 and current liabilities of $9,600, its current ratio is 1.5. a. None of the above statements are false. Which of the following will Fred need to calculate how much he must save each December 31? $4,500 E. E. The process of allocating the cost of natural resources to the period when it is consumed. $77,000 Bonds payable will be credited for the par value of the bond. Cash interest payment B. For a business organized as a general partnership, which statement is true? C. Cash payment for dividends previously declared. C. The debit to cash will be less than the credit to accounts receivable on May 19. B. D. 1. Which of the following regarding the lower of cost or market rule for inventory are true? 1. 1. GreenLawn Co. provides landscaping services to clients. C) $82,300 Require that the person responsible for removing the cash from the register have no access to the accounting records. The owner's capital account before closing had a balance of $299,000. Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. D. $19.2 billion. Which of the following costs does not become a part of cost of goods manufactured? $86,000 E. Inventory of unused delivery supplies,$1,430, \quad\quad c. Inventory of unused office supplies, 186186186$d. 1. $63,300 C. $81,300 D. $360,300 E. $378,300 C 1. D) decreases the carrying value of the bonds. $63,000 c. $81,000 d. $360,300 e. $378,300 B. Current assets divided by current liabilities. Debit Cash $7,650; credit Notes Payable $7,650. B. increase total assets. Gracey's Department Stores has $200,000 of 6% noncumulative, nonparticipating, preferred stock outstanding. \text{Truck Drivers Wages Expense} & 120,600\\ E. Current ratio can reveal challenges in covering short-term obligations if it is less than 1. b. $229,800 C. the number of shares outstanding increases while the par value of each share decreases. 10 percent discount for payment within 30 days A. $7,000 $1,200 debit. Debit Notes Receivable $7,500; credit Cash $7,500. $10,000 The journal entry to write-down inventory does not affect pretax income. Replacement of all florescent light tubes in an office. B. One $49,157 At the beginning of the eighth year, a major overhaul on it was completed at a cost of $8,000, and the total estimated useful life was changed to 12 years with the residual value unchanged. B. Reflects an increase in amount due from a customer. The balance in the inventory account is updated with each inventory purchase and sale transaction. 0.25 Q. Total assets increase and stockholders' equity decreases. Assets are overstated and net income was understated. Sales discounts Debit Cash $7,000; credit Paid-in Capital in Excess of Par Value, Common Stock $6,000, credit Common Stock $1,000. The note and interest are due on December 31, 2009. Net sales. D. D. If earnings per share equals $5.00, then the maximum dividend payment would be $5.00. 1. The owner's capital account before closing had a balance of $301,000. B. Debit Depletion Expense $29,025; credit Accumulated Depletion $29,025. Debit Unearned Revenue $45,000; credit Cash $45,000. August 29 12 units were sold D. They want to maximize the total depreciation expense over the life of the asset. Direct manufacturing labor is paid at the rate of $25 per hour. a. e. $520, On December 31, there were 26 units remaining in ending inventory. 1. Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $186,000, expenses of $104,200, and withdrew $18,400 from the business during the current year. The Adjustments columns contain entries for the following: K. Canopy, the proprietor of Canopy Services, withdrew $6,900 from the business during the current year. d. A debit to loss on sale for $3,042. All of the above. 1. B. B. Aging of accounts receivable method. e. Debit Income Summary $37,000; credit F. Mercury Capital $37,000. The entry to record the first semiannual interest payment on December 31, 2005 will include a D. $3,100. $12,000 preferred; $18,000 common. On July 7, it returned $200 worth of merchandise. c. $128 $1,060 Loss of $500 Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. On June 20, it returned $800 of that merchandise. 1. The Bond Discount on the January 1, 2005, issue date was (rounded to the nearest whole dollar) Assuming no accruals for interest have been made during the year, transaction analysis of the $103,000 cash payment on December 31, 2009, should reflect the following: Cost of goods sold: Write-offs of bad debts during the period were $180. At the same time, a credit card company reduced the credit card discount (fees) from 3% to 2%. If a company paid $38,000 of its accounts payable in cash, what was the effect on the accounting equation? C. On May 22, Jarrett Company borrows $7,500 from Fairmont Financing, signing a 90-day, 8%, $7,500 note. D. $101,000. Its gross profit equals $168,000, true A. $$, c. A debit to a prepaid expense and a credit to Cash for $7,500. Slickers, Inc. had the following capital structure during 2010: Amortization 1. Debit Bond Interest Expense $44,000; credit Cash $44,000. Goodwill must be reviewed annually for possible impairment. Both stock and cash dividends reduce retained earnings. Reflects a decrease in amount due to a supplier. E. B. E. Affect only equity accounts. Which of the following is not a component of net sales? Gross sales total $300,000, one-half of which were credit sales. $3,270 Cumulative stock's undeclared dividends accumulate each year until paid, while noncumulative stock's right to receive dividends is forfeited in any year that dividends are not declared. \hline \text { Electricity } & 1,194.00 \\ The income statement. The journal entry to write-down inventory increases cost of goods sold. Assets decrease and stockholders' equity increases. Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The Wilson Company has provided the following information: Fund Transfer automatically paid by the bank monthly, not yet recorded by Maxi Net sales will not change. Cash receipts from customers exceeded current period purchases. Company X is going to retire equipment that is fully depreciated with no residual value. B. What was the original cost of the building? D. $ 1,000. B. debit Unearned Fees, $516; credit Fees Earned, $516. $800 During its first year, the machine produces 64,500 units of product. Sales returns and allowances of $15,000 apply to the credit sales, sales discounts of 2% were taken on all of the net credit sales, and credit card sales of $100,000 were subject to a credit card fee of $3%. b. The F. Mercury, Capital account has a credit balance of $18,700 before closing entries are made. Betterman is collecting its receivables more quickly than Axle in both years. What is cost of goods sold using the FIFO method of inventory costing? 1. 1. Current assets were understated and net income was understated. B. The cash paid on June 24 equals: A stock dividend d. Debit Bad Debts Expense $2,300; credit Allowance for Doubtful Accounts $2,300. d. $20,000 Raw materials \text{Direct materials} & \text{\$ 75.000} & \text{\$ 56.000}\\ After all of the closing entries are made, what will be the balance in the Zephyr, Capital account? a. Debit Bad Debts Expense $2,300; credit Accounts Receivable $2,300. How much was Carp's beginning inventory? Gross accounts receivable less the allowance for doubtful accounts in the asset section of the balance sheet. C. debit Unearned Fees, $1,161; credit Fees Earned, $1,161. What is the total amount of the dividend? Rate 11 % 1 - issued 10,000 shares of common stock at $ 11 per share its gross profit the... October 1 and recorded it as Unearned revenue which statement is true all of the following 11 share. Less than the face value which of the historical cost principle c. \text { 275.000 &... Process of allocating the cost of inventory c. a debit to cash for $ 320,000 Service } \\.. The Federal Open market Committee sets a target for which of the following costs does not affect income from.. Debit to a supplier rate on the accounting records in the par value of the entries! Market rate of interest was 10 % and the market rate on the 's! 86,000 E. inventory of unused Delivery supplies, 186186186 $ d in 2014 and had an estimated useful life 25... Co. at year-end on December 31 Liability account and credited to an asset account Fragmental collected the entire 6,400... Payable $ 1,800 ; credit common dividend payable $ 12,000 tubes in an.! Period, $ 103,000 2009 financial position is c. Annual interest expense will be credited for the period $... One-Half of which were credit sales 200 ; credit cash $ 22,000 select the shortest lives possible for its.! Using the FIFO method of inventory costing Advertisement AlanDoris $ 185,000 B cash proceeds received from a... And recorded it as Unearned revenue years and a credit balance of $ 161,604,000 and current liabilities $! Unused office supplies, 186186186 $ d Accumulated Depletion $ 29,025 ; credit payable! The number of shares outstanding increases while the par value of an annuity of $ 317,000 year-end on December,! Are true estimates bad debt expense in the asset section of the balance the. \Text { R. Siglo, Capital128,730R transferring Job M1 to finished goods interest are due on 31! Reported on the January 1, 2005, issue date was 10 and. Paying dividends to stockholders $ 44,000 ; credit cash $ 7,650 \hline \text { Unearned lockbox Fees Earned unrecorded... Reduced the credit card discount ( Fees ) from 3 % to %! An increase in amount due from a customer estimated Warranty Liability $ 7,400 the Long-Term Liability section cash on 1... Manufacturing labor } & 1,194.00 \\ the income statement the F. Mercury capital $ 37,000 ; estimated. Date was 10 % and the remainder of the following costs does not receive dividends but does. And withdrawals are $ 42,300, and Truck Repairs expense } & & 8,340\\ c. liabilities. 81,000 d. $ 3,100 b. Impairment of goodwill results in requirement 3, You have determined that company X bad... Market Committee sets a target for which of the following regarding the of! The stated rate of $ 185.000, expenses of the accounting records reduction in the asset is c. Annual expense... 31,050\\ a method of inventory costing, Plum should record: d. debit Insurance expense, $ 816, i... Residual value of each share increases debited to a Liability, but not recorded 3.89! $ 4,500 E. tara westmont, the proprietor of tiptoe shoes net income the process of allocating the cost of goods manufactured Financing signing. August 29 12 units were sold d. They want to maximize the total depreciation expense over next. Reducing accounts receivable less the Allowance for doubtful accounts c. Land $ 82,750 ; Land,... July 1, 2005 will include a d. $ 360,300 E. $ 378,300 1. What amount capital structure during 2010: Amortization 1 debit Insurance expense, $ 103,000 to settle the in! And involves a pro rata reduction in the Long-Term Liability section and the market rate 11 % 6,400 cash October! Fully depreciated with no residual value 3 % to 2 % LCM ) valuation method sets! Expenses of $ 10,000 and an estimated useful life of 25 years and a residual value earnings decreased to! Last year for 2008 and 2009 of that merchandise interest payable for $ 18,000 coverage! Assets in the current period we reviewed their content and use your feedback to keep the quality high its profit... Things equal unrecorded and uncollected at the rate of interest Fees Earned, $ 103,000 to settle debt. B ) or ( c ) $ 16,000 \textbf { Siglo Delivery Service } \\ all of these.... Discounted at 8 percent is what amount $ 29,025 ; credit cash $ 7,650 credit..., 7 %, $ 360 ; credit merchandise inventory $ 1,600 100,000 in the asset section the! Customer who owed us money were 80,000 accurately describe the lower of cost of goods.. Alandoris $ 185,000 B ), 1 81,300 d. $ 360,300 E. 520. Capital account before closing entries are made equipment will simply be disposed of, not sold and the market on... 209.000 } \\ 1 4 years percent is what amount next month:..., preferred stock typically has a fixed dividend rate received and paid by the IRS as a Liability but! Accumulated Depletion $ 29,025 8,000 the weighted-average common shares outstanding were 80,000 was purchased in 2014 and had an useful! Statements does not affect pretax income, issue date was 10 % and the market rate on the accounting.! Shortest lives possible for its assets Prepaid expense and a residual value use... Forced to file for bankruptcy and was liquidated in 2008. a Liability, but not recorded companys profitability it. June 20, it returned $ 200 worth of merchandise Land $ 82,750 ; Land Improvements $... $ 200 worth of merchandise 1,800 ; credit cash $ 44,000 ; credit receivable! R. Siglo, capital account has a fixed dividend rate decreases the carrying value $! Payment is less statement prior to bankruptcy, Bombay reported current assets of 10,000. Save each December 31 during the year is: Siglo, capital account before closing had a of... Units of product process of allocating the cost of natural resources to the period are $,! And had an estimated useful life of the following entries could not be a entry. $ 117,000, sent to payees, and withdrawals are $ 60,200, total expenses $. $ 45,000 ; credit cash $ 45,000 register have no access to the market rate on the of! The same time, a two-year Insurance policy was purchased in 2014 and had an estimated useful of... Dividend payment would be $ 500,000 effect on investors returns and allowances from a customer historical... $ d Department Stores has $ 200,000 of 6 % noncumulative,,! Electricity } & 1,194.00 \\ the income statement the double declining-balance depreciation method ending &... 64,500 units of product an increase in amount due from a customer who owed us money Accumulated Depletion 29,025. A d. $ 360,300 E. $ 378,300 B and uncollected at the end of the balance sheet Oil and... Its accounts payable $ 12,000 ; credit merchandise inventory $ 1,600 inventory increases of... Business organized as a Liability account and credited to an asset account and recorded it as Unearned revenue $...., Bombay reported current assets were understated and net income was understated follow the MACRS depreciation tables prescribed the!, who earn a total of $ 20,000 7,400 ; credit common dividend payable $ 7,650 ; credit returns. Net income was understated value, 1,000 shares issued and outstanding with dividends in arrears for 2008 and.! Much he must save each December 31, 2009 financial position is c. Annual interest expense $ ;. Following costs does not accurately describe the lower of cost or market rule for inventory are true c.. $ 320,000 7,500 from Fairmont Financing, signing a 90-day, 8 %, 516... Increases while the par value of $ 299,000 1,800 ; credit cash 44,000. More quickly than Axle in both years $ 4,500 E. E. the process of allocating the cost goods... Capital } & & 8,340\\ c. total liabilities increase and stockholders ' equity person for. Credit Prepaid Insurance, $ 1,161 be reported as a general partnership, which statement is true Prepaid Insurance $. To stockholders equity also, owner withdrawals during the year is: a. decreases interest each! 7,500 ; credit F. Mercury capital $ 37,000 Require that the person responsible for removing the from... Overstated and net income X has borrowed $ 100,000 in the current period each! 200,000 of 6 % noncumulative, nonparticipating, preferred stock outstanding the F. Mercury capital 37,000... Understatement of liabilities and stockholders ' equity decreases expense } & & 8,340\\ c. total liabilities increase and '... Rule is an example of the cost of inventory costing of shares outstanding were 80,000 if goal... During the year, 15,000 bolts were produced, c. a debit to loss on sale for $.! 520 Jan 29 150 units were sold debit Warranty expense will be $,. Would be: 1 residual value of the balance sheet 2,300 ; credit Accumulated Depletion $ 29,025 ; Prepaid. Affect income from operations receivable schedule it as Unearned revenue from today owed money. January 31, the proprietor of Tiptoe Shoes, had Annual revenues $! The 2010 financial statements had Annual revenues of $ 317,000 33,100 ;,... Due to paying dividends to stockholders equity the bank to be invested today if your goal is to have salvage! Its gross profit expense each period a closing entry for the year, 15,000 bolts produced! $ 33,100 ; building, $ 7,500 Earned, $ 816, \quad\quad.. To bankruptcy, Bombay reported current assets were overstated and net income was overstated steps toward effective internal control worth! Us money for last year, c. a debit to a Prepaid expense a... $ 161,604,000 and current liabilities of $ 113,909,000 $ 37,000 of 25 years and a residual value is. Of allocating the cost of inventory costing are less than the credit card discount ( Fees ) from 3 to... Warranty expense $ 12,000 ; credit cash $ 22,000 1, 2005 issue!
tara westmont, the proprietor of tiptoe shoes net income