Financial Accounting Information for Decisions 6th Edition by Wild Test Bank

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[Question]

173. A business paid a $100 cash dividend. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.
 

  

Answer:  

Dividends		Cash
100			100

Bloom’s Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-A1
 

[Question]

174. On December 3, the Matador Company paid $5,400 cash in salaries to office personnel. Prepare the general journal entry to record this transaction. 

Answer: 

12/3	Office Salaries Expense	5,400
	Cash		5,400

 Bloom’s Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-A1
 

[Question]

175. On February 5, Textron Stores purchased a van that had a cost of $35,000. The firm made a down payment of $5,000 cash and signed a long-term note payable for the balance. Show the general journal entry to record this transaction. 

Answer:

2/5	Van	35,000
	Cash		5,000
	Note Payable		30,000

  

Bloom’s Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-A1
 

[Question]

176. On October 1, 2011, Smith invested $20,000 cash, office equipment costing $15,000, and drafting equipment costing $12,000 into the company in exchange for common stock. Show the general journal entry to record this transaction. 

Answer:

10/1/2011	Cash		20,000
	Office Equipment		15,000
	Drafting Equipment		12,000
	Common Stock			47,000

Bloom’s Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-A1

[Question]

Cash				Equipment
9/01	(a) 4,200	9/4 (b)	550	9/1	(a)    800
9/11	(d)    150			9/4	(b) 2,550
9/15	(e)    190

Common Stock				Notes Payable
		9/1	(a)  5,000			9/4	(b) 2,000

177. Krenz Car Care, which is owned and operated by Karl Krenz, began business as a corporation in September of the current year. Karl, a master mechanic, had no experience with keeping a set of books. As a result, Karl entered all of September's transactions directly to the ledger accounts. When he tried to locate a particular entry he found it to be confusing and time consuming. He has hired you to improve his accounting procedures. The accounts in his General Ledger are as follows:
 

  

Accounts Receivable				Repair Revenue
9/9	(c)    275	9/15 (c)	190			9/9 (c)	275
						9/11 (d)	150

 Prepare the general journal entries, in chronological order (a) through (e), from the T-account entries shown. Include a brief description of the probable nature of each transaction. 

Answer:

a.  

Sept. 1	Cash	4,200
	Equipment	800
	Common Stock To record initial investment		5,000

 b.  

4	Equipment	2,550
	Cash		550
	Notes Payable   To record purchase of equipment, paying$550 in cash and signing a $2,000 note  payable for the balance due		2000

 c.  

9	Accounts Receivable	275
	Repair Revenue   To record credit sale of services		275

 d.  

11	Cash	150
	Repair Revenue   To record cash sale of services		150

 e.  

15	Cash	190
	Accounts Receivable   To record collection from customer		190

Bloom’s Taxonomy: Create
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-A1
 

[Question]

178. Flora Accounting Services completed these transactions in February:
a. Purchased office supplies on account, $300
b. Completed work for a client on credit, $500
c. Paid cash for the office supplies purchased in (a)
d. Completed work for a client and received $800 cash
e. Received $500 cash for the work described in (b).
f. Received $1,000 from a client for accounting services to be performed in March.
Prepare journal entries to record the above transactions. Explanations are not necessary. 

Answer:

a.  

Office Supplies	300
Accounts Payable		300

b.  

Accounts Receivable	500
Accounting Services Revenue		500

 c.  

Accounts Payable	300
Cash		300

 d.  

Cash	800
Accounting Services Revenue		800

 e.  

Cash	500
Accounts Receivable		500

 f.   

Cash	1,000
Unearned Accounting Service Revenue		500

Bloom’s Taxonomy: Create
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-A1
 

[Question]

179. Leonard Matson completed these transactions during December of the current year:
 

Dec	1	Began a financial services practice by investing $15,000 cash and office equipment having a $5,000 value in exchange for common stock.
	2	Purchased $1,200 of office equipment on credit.
	3	Purchased $300 of office supplies on credit.
	4	Completed work for a client and immediately received a payment of $900 cash.
	8	Completed work for Acme Loan Co. on credit.  $1,700
	10	Paid for the supplies purchased on December 3.
	14	Paid for the annual $960 premium on an insurance policy.
	18	Received payment in full from Acme Loan Co. for the work completed on December 8.
	27	Paid a $650 cash dividend.
	30	Paid $175 cash for the December utility bills
	30	Received $2,000 from a client for financial services to be rendered next year.

Prepare general journal entries to record these transactions. 

Answer:

Dec. 1	Cash	15,000
	Office Equipment	5,000
	Common Stock		20,000
	Owner invested in business
2	Office Equipment	1,200
	Accounts Payable		1,200
	Purchased office equipment on credit
3	Office Supplies	300
	Accounts Payable		300
	Purchased office supplies on credit
4	Cash	900
	Fees Earned		900
	Rendered services for cash
8	Accounts Receivable	1,700
	Fees Earned		1,700
	Rendered services on account
10	Accounts Payable	300
	Cash		300
	Paid amount owed for supplies
14	Prepaid Insurance	960
	Cash		960
	Paid insurance premium for one year
18	Cash	1,700
	Accounts Receivable		1,700
	Received payment on account
27	Dividends	650
	Cash		650
	Cash dividend paid
30	Utility Expense	175
	Cash		175
	Paid utility bills
30	Cash	2,000
	Unearned Fees		2,000

 Bloom’s Taxonomy: Create
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-A1
 

[Question]

180. Maria Sanchez began business as Sanchez Law Firm on November 1. Record the following November transactions by making entries directly to the T-accounts provided. Then, prepare a trial balance, as of November 30.
a. Sanchez invested $15,000 cash and a law library valued at $6,000 in exchange for common stock.
b. Purchased $7,500 of office equipment from Johnson Bros. on credit.
c. Completed legal work for a client and received $1,500 cash in full payment.
d. Paid Johnson Bros. $3,500 cash in partial settlement of the amount owed.
e. Completed $4,000 of legal work for a client on credit.
f. Paid a $2,000 cash dividend.
g. Received $2,500 cash as partial payment for the legal work completed for the client in (e).
h. Paid $2,500 cash for the legal secretary's salary.

  

	Cash		Office Equipment			Dividends

 

	Accounts Receivable		Accounts Payable			Legal Fees Earned

	Law Library		Common Stock			Salaries Expense

  

Answer:

	Cash		Office Equipment			Dividends
	(a) 15,000	(d)  3,500	(b) 7,500			(f)  2,000
	(c)  1,500	(f)  2,000
	(g)  2,500 11,000	(h)  2,500

	Accounts Receivable		Accounts Payable			Legal Fees Earned
	(a)  4,000	(g)  2,500	(d)  3,500	(b)  7,500			(c)  1,500
	1,500			4,000			(e)  4,000
							5,500

	Law Library		Common Stock			Salaries Expense
	(e)  6,000			(a) 21,000		(h)  2,500

 

Sanchez Law Firm Trial Balance November 30
Account	Debit	Credit
Cash	$ 11,000
Accounts Receivable	1,500
Law Library	6,000
Office Equipment	7,500
Accounts Payable		$  4,000
Common Stock		21,000
Dividends	2,000
Legal Fees Earned		5,500
Salaries Expense	2,500	______
Totals	$30,500	$30,500

Bloom’s Taxonomy: Create
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-A1
Learning Objective: 02-P3