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Question]
169. A company pays $12,000 to purchase a
one-year insurance policy. Record the transaction.
Answer:
Learning Objective: 02-04
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Recording Transactions
[Question]
170. Record the following transactions for
Acme Builders:
(a) Purchase office supplies on account,
$1,200.
(b) Provide services to customers for cash,
$2,500.
(c) Pay $1,100 in salaries for the current
month.
Answer:
(a)
Supplies 1,200
Accounts
Payable 1,200
(b)
Cash 2,500
Service
Revenue 2,500
(c)
Salaries
Expense 1,100
Cash 1,100
Learning Objective: 02-04
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Recording Transactions
[Question]
171. Record the following transactions for
the Stroud Music Store:
(a) Provide music lessons to students for
$12,000 on account.
(b) Purchase music supplies on account,
$1,500.
(c) Pay rent for the current month, $2,000.
(d) Receive $10,000 cash from students in
(a) above.
Answer:
(a)
Accounts
Receivable 12,000
Service
Revenue 12,000
(b)
Supplies 1,500
Accounts
Payable 1,500
(c)
Rent
Expense 2,000
Cash 2,000
(d)
Cash 10,000
Accounts
Receivable 10,000
Learning Objective: 02-04
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Understand
Topic: Recording Transactions
[Question]
172. Rite Shoes was involved in the
transactions described below. Record each transaction. If an entry is not
required, state "No Entry."
(a) Purchased $8,200 of supplies on
account.
(b) Paid weekly salaries, $920.
(c) Provide services to customers: Cash:
$7,100; On account: $5,300.
(d) Paid for supplies purchased in (a)
above.
(e) Placed an order for $6,200 of supplies.
Answer:
|
(a)
|
Supplies
|
8,200
|
|
|
|
Accounts
Payable
|
|
8,200
|
|
(b)
|
Salaries expense
|
920
|
|
|
|
Cash
|
|
920
|
|
(c)
|
Cash
|
7,100
|
|
|
|
Accounts Receivable
|
5,300
|
|
|
|
Service
Revenue
|
|
12,400
|
|
(d)
|
Accounts Payable
|
8,200
|
|
|
|
Cash
|
|
8,200
|
|
(e)
|
No Entry.
|
|
|
Learning Objective: 02-04
Difficulty: Hard
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Apply
Topic: Recording Transactions
[Question]
173. Record the following transactions. If
an entry is not required, state "No Entry."
(a) Started business by issuing 10,000
shares of common stock for $20,000.
(b) Hired Rebecca as an administrative assistant,
promising to pay her $2,000 every two weeks.
(c) Rented a building for three years at
$500 per month and paid six months' rent in advance.
(d) Purchased equipment for $5,400 cash.
(e) Purchased $1,800 of supplies on
account.
(f) Provided services to customers for
$7,800 cash.
(g) Paid employee salaries, $5,200.
(h) Paid for supplies purchased in item
(e).
(i) Paid $800 for current advertising in a
local newspaper.
(j) Paid utility bill of $1,300 for the
current month.
Answer: 
Learning Objective: 02-04
Difficulty: Hard
AACSB: Reflective Thinking
AICPA: FN Measurement
Blooms: Apply
Topic: Recording Transactions
[Question]
174. Consider the following T-account for Accounts
Payable.
1. Compute the balance of the Accounts Payable account.
2. Give an example of a transaction that
would have resulted in the $8,800 posting to the account.
3. Give an example of a transaction that
would have resulted in the $4,500 posting to the account.
Answer:
1. $10,200 
$8,800 + $4,500 = $5,900.
$8,800 + $4,500 = $5,900.
2. Postings on the left side (or debit
side) of the Accounts Payable T-account represent decreases to accounts
payable, such as making a payment on the account.
3. Postings on the right side (or credit
side) of the Accounts Payable T-account represent increases to accounts
payable, such as purchasing office supplies on account.
Learning Objective: 02-05
Difficulty: Hard
AACSB: Analytic
AICPA: FN Measurement
Blooms: Analyze
Topic: Posting Transactions
[Question]
175. Consider the following transactions
for Mittel Corporation:
a. Sell common stock for $10,000.
b. Purchase equipment for $11,500 cash.
c. Pay employee salaries of $3,700.
e. Provide services to customers for $6,200
cash.
1. Post these transactions to the Cash
T-account. Assume the balance of Cash before these transactions is $4,200.
2. Calculate the ending balance of the Cash
account.
Answer: 
Learning Objective: 02-05
Difficulty: Hard
AACSB: Analytic
AICPA: FN Measurement
Blooms: Analyze
Topic: Posting Transactions
[Question]
176. Use the following information to
prepare a trial balance.
Answer: 
Learning Objective: 02-06
Difficulty: Hard
AACSB: Analytic
AICPA: FN Measurement
Blooms: Analyze
Topic: Trial Balance
Essay
The following answers point out the key
phrases that should appear in students’ answers. They are not intended to be
examples of complete student responses. It might be helpful to provide detailed
instructions to students on how brief or in-depth you want their answers to be.
[Question]
177. Describe the difference between
external events and internal events and give two examples of each.
Answer: External events involve an exchange
between the company and a separate economic entity. Examples include purchasing
office supplies on account or borrowing money from a bank. Internal events
directly affect the financial position of the company but do not involve
exchange transactions with another entity. Examples include depreciation of
equipment or use of supplies.
Learning Objective: 02-01
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
Blooms: Understand
Topic: External and Internal Events
[Question]
178. Describe the six steps in the FN
Measurement process of external transactions.
Answer: The six steps include: (1) Use
source documents to identify accounts affected by external transactions, (2)
analyze the impact of the transaction on the accounting equation, (3) assess
whether the impact of the transaction results in a debit or credit to the
account balance, (4) record transactions using debits and credits, (5) post the
transaction to the T-accounts in the general ledger, and (6) prepare a trial
balance.
Learning Objective: 02-01
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
Blooms: Understand
Topic: FN Measurement Process for External
Transactions
[Question]
179. Explain what it means that external
transactions have a dual effect.
Answer:
Dual effect refers to each transaction
having at least two effects on the accounting equation. Either an economic
event increases (decreases) one side of the equation and also increases
(decreases) the other side of the equation by the same amount, or the economic
event increases one element and decreases another element by an equal amount,
both on the same side of the accounting equation.
Learning Objective: 02-02
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
Blooms: Understand
Topic: Effect of Transactions on Accounting
Equation
Matching
Reference: 02_142
Listed below are ten terms followed by a
list of phrases that describe or characterize five of the terms. Match each
phrase with the best term by placing the letter designating the term in the
space provided.
Terms:
Terms:
a. Assets
b. Debit
c. Journal entry
d. Liabilities
e. Revenues
f. Expenses
g. Credit
h. General ledger
i. Trial balance
j. Dividends
[Question]
180. ____ Refers to the right side of an
account.
Answer: g
Learning Objective: 02-02
Learning Objective: 02-03
Learning Objective: 02-04
Learning Objective: 02-06
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
Blooms: Understand
Topic: Debits and Credits
Refer To: 02_142
[Question]
181. ____ Convention used to record
transactions of a company.
Answer: c
Learning Objective: 02-02
Learning Objective: 02-03
Learning Objective: 02-04
Learning Objective: 02-06
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
Blooms: Understand
Topic: Recording Transactions
Refer To: 02_142
[Question]
182. ____ Resources earned by providing
goods and services to customers.
Answer: e
Learning Objective: 02-02
Learning Objective: 02-03
Learning Objective: 02-04
Learning Objective: 02-06
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
Blooms: Understand
Topic: Revenues
Refer To: 02_142
[Question]
183. ____ Resources owned by a company.
Answer: a
Learning Objective: 02-02
Learning Objective: 02-03
Learning Objective: 02-04
Learning Objective: 02-06
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
Blooms: Understand
Topic: Assets
Refer To: 02_142
[Question]
184. ____ List of all accounts and their
balances after external transactions are recorded.
Answer: i
Learning Objective: 02-02
Learning Objective: 02-03
Learning Objective: 02-04
Learning Objective: 02-06
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
Blooms: Understand
Topic: Trial Balance
Refer To: 02_142
Reference: 02_147
Listed below are ten terms followed by a
list of phrases that describe or characterize five of the terms. Match each
phrase with the best term by placing the letter designating the term in the
space.
Terms:
Terms:
a. Assets
b. Debit
c. Journal entry
d. Liabilities
e. Revenues
f. Expenses
g. Credit
h. General ledger
i. Trial balance
j. Dividends
[Question]
185. ____ Asset and expense accounts normally
have this type of balance.
Answer: b
Learning Objective: 02-02
Learning Objective: 02-03
Learning Objective: 02-05
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
Blooms: Understand
Topic: Debits and Credits
Refer To: 02_147
[Question]
186. ____ Contains all the accounts of a
company.
Answer: h
Learning Objective: 02-02
Learning Objective: 02-03
Learning Objective: 02-05
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
Blooms: Understand
Topic: General Ledger
Refer To: 02_147
[Question]
187. ____ Costs to generate revenues.
Answer: f
Learning Objective: 02-02
Learning Objective: 02-03
Learning Objective: 02-05
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
Blooms: Understand
Topic: Expenses
Refer To: 02_147
[Question]
188. ____ Resources owed by a company.
Answer: d
Learning Objective: 02-02
Learning Objective: 02-03
Learning Objective: 02-05
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
Blooms: Understand
Topic: Liabilities
Refer To: 02_147
[Question]
189. ____ Payments to stockholders.
Answer: j
Learning Objective: 02-02
Learning Objective: 02-03
Learning Objective: 02-05
Difficulty: Medium
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
Blooms: Understand
Refer To: 02_147
Topic: Dividends
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