Accounting 2210 Zeigler: Group Quiz #2 of 4 – Spring 2015
Due Tuesday, February 17th (30 Points)
Circle Class Period: 4:00 6:00 Group Number: ______
Full Names:______
____1. The following general journal entry was recorded in the books of Collins & Pender, Inc.
Cash / 2,500Revenue / 2,500
Based on this entry,
a. liabilities decreased.
b. assets decreased.
c. equity increased.
d. net income was unaffected.
____ 2. The following general journal entry was recorded in the books of Kesler, Kaesberg & Carter, Inc.
Accounts Payable / 1500Cash / 1500
Based on this entry,
a. liabilities decreased.
b. assets increased.
c. equity decreased.
d. net income was unaffected.
____3. Teague, Boyer & Sunjic Co. collected $5,000 cash that was due on an account receivable. The company accountant recorded the entry as a debit to cash and a credit to service revenue. As a result of this error:
a. the totals of the trial balance will not be equal.
b. the amount of cash will be overstated.
c. expenses will be understated.
d. retained earnings will be overstated.
____4. Select the true statement.
a. A debit to an asset account will increase the balance of the account.
b. A debit to a liability account will increase the balance of the account.
c. A credit to a revenue account will decrease the balance of the account.
d. A credit to the retained earnings account will decrease the balance of the account.
____5. The following adjusted trial balance was drawn from the records of Daley & Weyrick, Inc.
Account Title Dr Cr
Cash 300
Equipment 3,000
Common Stock 2,700
Retained Earnings 500
Service Revenue 750
Operating Expenses 650
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Totals ??? ???
Based on the information in the trial balance, the amount of retained earnings reported on the year-end balance sheet, after all year-end closing entries were posted, would be:
a. $100 b. $600 c. $900 d. $1,250 e. $3,950
____6. Baxter & Karakis, Inc. began the accounting period with a $8,000 debit balance
in its accounts receivable account. During the accounting period, the company recorded
revenue on account amounting to $17,000. The accounts receivable account at the
end of the accounting period contained a $5,000 debit balance. Based on this
information, the cash collected from accounts receivable during the period is/was:
a.$19,000
b.$9,000
c.$20,000
d.$25,000
____7. The journal entry to record accrued interest expense on a note payable involves:
a. a credit to interest expense and a debit to cash.
b. a credit to interest expense and a debit to interest payable.
c. a debit to interest expense and a credit to interest payable.
d. a credit to interest receivable and a debit to interest expense.
e. none of the above represent a correct entry.
____8. Zeigler, Inc. recorded the purchase of supplies on account by correctly debiting supplies, but mistakenly crediting cash. As a result of this error:
a. the period-end “Trial Balance” will not balance.
b. liabilities are overstated.
c. expenses are overstated.
d. assets are understated.
e. both “b” and “c” are correct.
____9. Kaplan & Taylor, Inc. borrowed $10,000 from Wang National Bank on October 1, 2014. The note had a 6 percent annual interest rate and a one-year term. Which of the following general journal entries would be necessary to record the accrued interest adjustment at the December 31, 2014 company year-end?
a. Interest Expense $450
Interest Payable $450
b. Interest Payable $450
Interest Expense $450
c. Interest Expense $150
Interest Payable $150
d. Interest Payable $150
Interest Expense $150
____10. Essom & Bowman, Inc. experienced an accounting event that affected its financial statements:
Assets / = / Liab. / + / Equity / Rev. / ─ / Exp. / = / Net Inc. / Cash Flow+ / NA / + / + / NA / + / NA
The general journal entry to record the event must have included:
a. A credit to an asset account and a debit to a revenue account.
b. A debit to cash and a credit to unearned revenue.
c. A debit to cash and a credit to accounts receivable.
d. A debit to accounts receivable and a credit to revenue.
_____ 11. What business event is represented by this general journal entry?
a. Incurred supplies expense
b. Purchased supplies with cash
c. Used supplies
d. Purchased supplies on account
12. Goodenough, Grushaber & Burgett, Inc. has the following adjusted trial balance on Dec 31, 2014:
Dr. Cr.
Cash 64,000
Accounts Receivable 32,500
Prepaid Rent 3,600
Equipment 92,000
Accounts Payable 9,580
Unearned Revenue 12,465
Note Payable 38,000
Common Stock 58,000
Retained Earnings 43,675
Dividends 12,000
Service Revenue 83,955
Wages Expense 23,500
Rent Expense 1,400
Utility Expense 10,100
Advertising Expense 5,200
Miscellaneous Expense 1,375 ______
?? ??
Required (6pts total: 3 pts for each part):
a. Prepare the necessary closing (journal) entries (see pgs 155-156) - Show all work below.
b. After the necessary closing entries have been made, prepare, in good form, the Company’s ending Balance Sheet as of December 31, 2014 (see pg 154). Show all work below.
____13. Hughes & Critchfield, Inc. experienced an event that is recorded in the following T-accounts:
Cash / Service Revenue2,200 / 2,200
Which of the following reflects how this event affects the company’s financial statements?
Assets / = / Liab. / + / Equity / Rev. / ─ / Exp. / = / Net Inc. / Cash Flowa. / + / NA / + / NA / + / ─ / + FA
b. / + / + / NA / NA / NA / NA / + OA
c. / + / NA / + / + / NA / + / + OA
d. / + / + / NA / NA / NA / NA / + FA
____ 14. Which of the following statements is true?
a. A debit entry in an asset account will decrease the account.
b. Adjusting entries are recorded at the beginning of an accounting cycle.
c. Equal totals in a trial balance proves that no errors have been made in the recording process.
d. Expense accounts normally have debit balances immediately before the closing entries are recorded.
15. Before any month-end adjustments, the December 31st trial balance for Furukawa, Pratt & Waag, Inc. indicates that the company had total revenues of $67,500 and expenses of $36,200.
Upon analysis, month-end adjustments were deemed necessary for the following items:
1. The accrued interest due on a note payable to the bank is $150.
2. Revenue earned, but not billed, is $1,900.
3. The $75 utility bill for the month was received, but not recorded.
4. $6,300 of revenue, collected in advance from a customer, has now been earned.
5. Salaries that have been incurred but not yet paid amount to $650.
6. Prepaid Rent that has expired amounts to $600.
7. A physical count of office supplies showed the use of $300 for the period.
8. Accrued interest earned on a “Certificate of Deposit” (CD) at the bank totaled $1,250.
Required (6 pts):
Analyze the effect of each adjustment above and list each (with the item number) as an addition or subtraction below to determine the correct net income for the period ending December 31st.
You must show all work below to earn credit.
Net Income Before Adjustments $______
Add:
Less:
Net Income After Adjustments $______
Ratio Analysis: Use the following information for questions 16-18:
Falcon, Inc. had the following amounts on its 12/31/14 financial statements.
____ 16. The “Return on Assets” (ROA) ratio for the company is:
a. 5%
b. 10%
c. 20%
d. 50%
____ 17. The “Return on Equity” (ROE) ratio for the company is:
a. 5%
b. 10%
c. 20%
d. 50%
____ 18. The “Debt-to-Assets” ratio for the company is:
a. 5%
b. 10%
c. 20%
d. 50%
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Two points below: An analysis of the ROA formula (How to influence/impact a ratio):
____ 19. Which of these transactions would immediately increase a company's “Return on Assets” ratio?
a. Received cash from customers for goods sold to them on account last month.
b. Borrowed cash from a local bank.
c. Paid cash on accounts payable.
d. Incurred expenses on account.