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Exam 3: Review of a Companys Accounting System

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Question 31

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The Mercer Company uses the cash basis of accounting.Mercer Company made $500, 000 in payments to its suppliers during the year.Mercer's beginning inventory was $20, 000, and its ending inventory was $35, 000.In addition, Mercer had a beginning accounts payable of $50, 000 and an ending accounts payable of $70, 000.What is Mercer's cost of goods sold under the accrual basis of accounting?

A) $465, 000
B) $495, 000
C) $505, 000
D) $535, 000

E) A) and D)
F) A) and C)

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Question 32

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The balance in deferred (unearned) revenue accounts represents amounts that are $\begin{array}{ll}&\text { Earned }&\text { Collected }\\I.&\text { Yes } & \text { No } \\II.&\text { Yes } & \text { Yes } \\III.&\text { No } & \text { No } \\IV.&\text { No } & \text { Yee }\end{array}$

A) I
B) II
C) III
D) IV

E) A) and D)
F) All of the above

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Question 33

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Which of the following statements regarding a post-closing trial balance is not true?

Fox Corp.engaged in the following transactions during the month of June: $\begin{array}{ll}\text { June } 1 & \text { Made cash sales of } \$ 8,000 \\5 & \text { Made credit sales of } \$ 21,000, \text { terms } 2 / 10, \mathrm{n} / 30 . \\9 & \text { Customers returned } \$ 500 \text { of merchandise from the June } 5 \text { sale because it was defective. } \\14 & \text { Received payment for balance due on the June } 5 \text { sale. } \\19 & \text { Sold land that had originally cost } \$ 8,500 \text { for } \$ 10,000 \text { cash }\end{array}$ Required: Record these transactions in a general journal, assuming Fox uses a periodic inventory system.

The Victor Company rents numerous properties throughout the year.Victor pays rents in advance in some cases, and in others, rents are paid after the rental period expires.The following data are included in Victor's December 31 balance sheets: $\begin{array}{lll}&2010&2011\\\text { Prepaid Rents } & \$ 70,000 & \$ 30,000 \\\text { Rent Payable } & \$ 50,000 & \$ 35,000\end{array}$ During 2011, Victor paid $200, 000 in rentals.In its income statement for the year ended December 31, 2011, Victor should report rent expense of

The Rogers Company uses the straight-line method to depreciate its equipment.On May 1, 2010, the company purchased some equipment for $200, 000.The equipment is estimated to have a useful life of ten years and a salvage value of $20, 000.If depreciation is to be recorded for each month the equipment is owned, how much depreciation expense should Rogers record for the equipment in the adjusting entry on December 31, 2010?

On June 1, 2010, Whipple Corporation received $2, 520 in advance for a two-year rental of some land and properly credited Unearned Rent.In the adjusting entry at December 31, 2010, there would be a

Information related to the Franklin Company for the calendar year 2010 follows: $\begin{array}{ll}\text { Liabilities, December } 31,2010 & \$ 400 \\\text { Assets, December } 31,2010 & 700 \\\text { Dividends clistributed during } 2010 & 90 \\\text { Liabilities, December } 31,2009 & 250 \\\text { Asssets, December } 31,2009 & 350\end{array}$ Assuming no capital stock was issued during 2010, the net income earned by the Jones Company during 2010 was

Which accounts are increased with debits?

The Ball Corporation uses a general journal, a sales journal, a purchases journal, a cash receipts journal, and a cash payments journal.Below are listed 12 of Ball Corporation's transactions in 2010. a. Purchased $\$ 3,000$ of merchandise on credit. b. Sold $\$ 500$ merchandise on account. c. Sold $\$ 1,500$ merchandise for cash. d. Credited $\$ 300$ in sales returns to customer accounts. e. Prepared adjusting and closing entries. f. Paid $\$ 200$ office salaries. g. Returned $\$ 250$ of defective merchandise to supplier for credit on account. h. Purchased building site for $\$ 7,500$ cash i. Purchased $\$ 1,000$ merchandise for cash j. Collected $\$ 750$ from customers on account. k. Purchased building by issuing $\$ 10,000$ note payable. 1. Received a $\$ 600$ income tax refund. Required: List letters (a)through (l)and indicate which journal would be used by Ball to record each transaction.

Several accounts are listed below: Required: In the space to the left of each account, place a (P)if the account is a permanent (or real)account or a (T)if the account is a temporary account.

Marge Company has all of the special journals that were described in your text (other than the voucher register) as a part of its accounting system.Which of the following journal entries would therefore be recorded in Marge's general journal?

The total of the individual customer account balances should equal the balance in Accounts Receivable, which is the

Which of the following is a permanent account?

An accrued expense is an expense

Which of the following transactions would be recorded in a sales journal of the type illustrated in the text?

When you prepare a journal entry, the standard format is to list all

Which of the following is not a type of adjusting entry?

Special journals, including the sales, purchases, cash receipts, cash payments, and general journals, were discussed in the textbook.Indicate (a)the reasons why special journals may be used, and (b)which transactions would appear in each of the five journals.

Several transactions for Menlo Co.are presented below.The company adjusts its books only at year-end. a. On February 1, Menlo Co. leased a warehouse to another company for $\$ 36,000$ for a three-year period. The company credited a revenue account on Februaty 1 when the total amount of $\$ 36,000$ was received in cash b. On September 1, Menlo Co. paid $\$ 4,800$ to a local trucking company for certain deliveries each day over a two-year period of time. The company charged an asset account on September 1. c.On May 1 , the company borrowed $\$ 10,000$ on an $8 \%$ , one-year note. d.On March 10, Menlo Co. bought $\$ 180$ of office supplies and debited the office supplies account. At the beginning of the year; office supplies of $\$ 30$ were on hand and disclosed on the Januaty 1 balance sheet. At the end of the year, there were $\$ 46$ of office supplies on hand. Required: Prepare adjusting entries for December 31.