ACC300 Principles Of Accounting
University of Phoenix
Acc300 Principles of Accounting
Week 2 Assignment
Problem Set 1
P1-3A
On June 1, Beardsley Service Co. was started with an initial investment in the
company of $22,100 cash. Here are the assets and liabilities of the company at
June 30, and the revenues and expenses for the month of June, its first month
of operations:
Cash 4,600 Notes payable 12,000
Accounts receivable 4,000 Accounts payable 500
Service revenue 7,500 Supplies expense 1,000
Supplies 2,400 Maintenance and repairs expense 600
Advertising expense 400 Utilities expense 300
Equipment 26,000 Salaries and wages expense 1,400
In June,
the company issued no additional stock, but paid dividends of $1,400.
Instructions
(a) Prepare an income statement and a retained earnings statement for the month
of June and a balance sheet at June 30, 2012.
(b) Briefly discuss whether the company’s first month of operations was a
success.
(c) Discuss the company’s decision to distribute a dividend.
P3-5A
Towne Architects incorporated as licensed architects on April 1, 2012. During
the first month of the operation of the business, these events and transactions
occurred:
Apr. 1 Stockholders invested $18,000 cash in exchange for common stock of the
corporation.
1 Hired a secretary-receptionist at a salary of $375 per week, payable monthly.
2 Paid office rent for the month $900.
3 Purchased architectural supplies on account from Spring Green Company $1,300.
10 Completed blueprints on a carport and billed client $1,900 for services.
11 Received $700 cash advance from J. Madison to design a new home.
20 Received $2,800 cash for services completed and delivered to M. Svetlana.
30 Paid secretary-receptionist for the month $1,500.
30 Paid $300 to Spring Green Company for accounts payable due.
The
company uses these accounts: Cash, Accounts Receivable, Supplies, Accounts
Payable, Unearned Service Revenue, Common Stock, Service Revenue, Salaries and
Wages Expense, and Rent Expens
Instructions
(a) Journalize the transactions, including explanations.
(b) Post to the ledger T accounts.
(c) Prepare a trial balance on April 30, 2012.
1.
Use the following data to calculate the current ratio.
Koonce Office Supplies
Balance Sheet
December 31, 2012
|
Cash |
$130,000 |
Accounts Payable |
$140,000 |
||
|
Prepaid Insurance |
60,000 |
Salaries Payable |
20,000 |
||
|
Accounts Receivable |
100,000 |
Mortgage Payable |
160,000 |
||
|
Inventory |
140,000 |
Total Liabilities |
$320,000 |
||
|
Land held for
Investment |
150,000 |
||||
|
Land |
180,000 |
||||
|
Buildings |
$200,000 |
Common Stock |
$240,000 |
||
|
Less Accumulated |
Retained Earnings |
500,000 |
|||
|
Depreciation |
(40,000) |
160,000 |
Total Stockholders’
Equity |
$740,000 |
|
|
Trademarks |
140,000 |
Total Liabilities
and |
|||
|
Total Assets |
$1,060,000 |
Stockholders’
Equity |
$1,060,000 |
1.81 : 1.
1.44 : 1.
3.07 : 1.
2.69 : 1.
2. In horizontal analysis, each item is
expressed as a percentage of the
stockholders’ equity
amount.
base-year amount.
total assets amount.
net income amount.
3. Common stock is reported on the
statement of cash
flows.
balance sheet.
income statement.
retained earnings
statement.
4. When a change in depreciation method
occurs:
the cumulative effect
of the change in accounting principle should be classified as an extraordinary
item on the income statement.
the cumulative effect
of the change should be reflected on the income statement as of the beginning
of the next year.
prior years’
financial statements should be changed to reflect the newly adopted method.
the change should be
reported in current and future years.
5. Using accrual accounting, expenses are
recorded and reported only:
when they are
incurred and paid at the same time.
if they are paid
after they are incurred.
when they are
incurred whether or not cash is paid.
if they are paid
before they are incurred.
6. An investment by the stockholders in a
business increases
assets and
stockholders’ equity.
liabilities and
stockholders’ equity.
assets and
liabilities.
assets only.
7. The reconciliation of the cash register
tape with the cash in the register is an example of
establishment of responsibility.
other controls.
segregation of
duties.
independent internal
verification.
8. Reed Company acquires 80 Holmes 10%, 5
year, $1,000 bonds on January 1, 2012 for $82,000. This includes a brokerage
commission of $2,000. Assume Holmes pays interest semiannually and the July 1
entry was done correctly. The journal entry at December 31, 2012 would include
a credit to
Interest Revenue for
$4,000.
Interest Receivable
for $4,000.
Interest Revenue for
$8,000.
Accrued Expense for
$8,000.
9. Deposits in transit
have not been
recorded by the bank or the company.
have been recorded by
the bank but not yet by the company.
have been recorded on
the company’s books but not yet by the bank.
are customers’ checks
that have not yet been received by the company.
10. From an internal control standpoint, the asset most
susceptible to improper diversion and use is
land.
buildings.
prepaid insurance.
cash.
11. Which of the following financial statements is divided into
major categories of operating, investing, and financing activities?
The statement of cash
flows.
The balance sheet.
The income statement.
The retained earnings
statement.
12. If the retained earnings account increases from the beginning
of the year to the end of the year, then
net income is greater
than dividends.
additional
investments are less than net losses.
a net loss is less
than dividends.
net income is less
than dividends.
13. The Vintage Laundry Company purchased $6,500 worth of laundry
supplies on June 2 and recorded the purchase as an asset. On June 30, an
inventory of the laundry supplies indicated only $2,000 on hand. The adjusting
entry that should be made by the company on June 30 is:
debit Laundry
Supplies Expense, $2,000; credit Laundry Supplies, $2,000.
debit Laundry
Supplies, $4,500; credit Laundry Supplies Expense, $4,500.
debit Laundry
Supplies Expense, $4,500; credit Laundry Supplies, $4,500.
debit Laundry
Supplies, $2,000; credit Laundry Supplies Expense, $2,000
14. Why do pension and mutual funds invest in debt and equity
securities?
They invest for
speculative reasons.
They invest for
strategic reasons.
They have excess
cash.
They want to generate
earnings from investment income.
15. Notification by the bank that a deposited customer check was
returned NSF requires that the company make the following adjusting entry:
Miscellaneous
Expense/Accounts Receivable
No adjusting entry is
necessary
Cash/Accounts
Receivable
Accounts
Receivable/Cash
16. Which of the following items on a bank reconciliation would
require an adjusting entry on the company’s books?
Outstanding checks.
A bank service
charge.
A deposit in transit.
An error by the bank.
17. Stockholders’ equity can be described as claims of
customers on total
assets.
owners on total
assets.
debtors on total
assets.
creditors on total
assets.
18. Which of the following statements is true with respect to
financial statement reporting for all cases when a company changes from one
acceptable accounting method to another?
Comparability across
periods is impaired.
Changes in both
depreciation methods and inventory methods are reported retroactively.
Only a footnote is
required to report the change.
Management must
indicate that the accounting method change is preferable to the old method.
19. Which of the following would be considered a change in
accounting principle?
Changing the
estimated useful life of a plant asset from 5 to 10 years.
Changing the
inventory costing method used from FIFO to LIFO.
Changing the
estimated percentage used in calculating bad debt expense.
Changing auditing
firms to find a more liberal opinion.
20. On July 1 the Fisher Shoe Store paid $15,000 to Acme Realty
for 6 months rent beginning July 1. Prepaid Rent was debited for the full
amount. If financial statements are prepared on July 31, the adjusting entry to
be made by the Fisher Shoe Store is:
debit Rent Expense,
$2,500; credit Prepaid Rent, $2,500.
debit Prepaid Rent,
$2,500; credit Rent Expense, $2,500.
debit Rent Expense,
$15,000; credit Prepaid Rent, $12,500.
debit Rent Expense,
$15,000; credit Prepaid Rent, $2,500.
21. If a parent company has two wholly owned subsidiaries, how
many legal and economic entities are there from the viewpoint of the
shareholders of the parent company?
Legal 3 Economic 3
Legal 2 Economic 1
Legal 1 Economic 2
Legal 3 Economic 1
22. If services are rendered on account, then
liabilities will
decrease.
assets will decrease.
liabilities will
increase.
stockholders’ equity
will increase.
23. A company that owns more than 50% of the common stock of
another company is known as the
parent company.
charge company.
subsidiary company.
management company
24. Notes to the financial statements include which of the
following:
An independent
auditors report.
Short-form Income
Statement.
Explanations of
uncertainties.
Subsidiary ledger for
Accounts Receivable.
25. Use the following data to determine the total dollar amount of
assets to be classified as current assets.
Koonce Office Supplies
Balance Sheet
December 31, 2012
|
Cash |
$130,000 |
Accounts Payable |
$140,000 |
||
|
Prepaid Insurance |
60,000 |
Salaries Payable |
20,000 |
||
|
Accounts Receivable |
100,000 |
Mortgage Payable |
160,000 |
||
|
Inventory |
140,000 |
Total Liabilities |
$320,000 |
||
|
Land held for
Investment |
150,000 |
||||
|
Land |
180,000 |
||||
|
Buildings |
$200,000 |
Common Stock |
$240,000 |
||
|
Less Accumulated |
Retained Earnings |
500,000 |
|||
|
Depreciation |
(40,000) |
160,000 |
Total Stockholders’
Equity |
$740,000 |
|
|
Trademarks |
140,000 |
Total Liabilities
and |
|||
|
Total Assets |
$1,060,000 |
Stockholders’
Equity |
$1,060,000 |
$430,000.00
$580,000.00
$290,000.00
$360,000.00
26. A very small company would have the most difficulty in
implementing which of the following internal control activities?
Separation of duties.
Limited access to
assets.
Sound personnel procedures.
Periodic independent
verification.
27. Which of the following statements is true?
Publicly traded U.S.
companies must provide an annual report to their shareholders only when
operating conditions change significantly.
A Management
Discussion and Analysis section is required in annual reports to shareholders
even when financial results are positive.
Notes to the
financial statements do not need to be included in the annual report because
that information is only for internal users.
An unqualified
independent auditor’s report must be included in the annual report.
28. Reed Company acquires 80 Holmes 10%, 5 year, $1,000 bonds on
January 1, 2012 for $82,000. This includes a brokerage commission of $2,000.
The journal entry to record this investment includes a debit to
Stock Investments for
$80,000.
Debt Investments for
$82,000.
Debt Investments for
$80,000.
Cash for $82,000.
29. A small company may be able to justify using a cash basis of
accounting if they have:
few receivables and payables.
sales under
$1,000,000.
all sales and
purchases on account.
no accountants on
staff.
30. Which of the following is a debt security?
IBM stock.
Treasury stock.
Real Estate.
Treasury bills.
ACC 300 Portfolio Project
The
Portfolio Project is comprised of 5 questions. These questions are independent
of each other. Please download the excel document titled
ACC300_PortfolioTemplate posted in the week 8 assignments page to complete the
project using the information below. All answers to the five questions should
be submitted on the downloaded template.
Question
1
Kelly
Consulting
Post-closing
Trial Balance
April 30,
2008
Account
title Debit Credit
Cash 22,100
Accounts
Receivables 3400
Supplies
1350
Prepaid
Rent 3200
prepaid
insurance 1500
Office
Equipment 14500
Accumulated
Depreciation 330
Accounts
payable 800
Salary
payable 120
Kelly
Capital 42800
Total
$46,050 $46,050
Requirements:
a)
Journalize the following transactions using the file called student Template.
b) Post
them to the general ledgers or T accounts using the same file.
1) Received
cash from clients as an advance payment for services to be provided and
recorded it as unearned fees, $1,550.
2) Received
cash from clients on account, $1,750.
3) Paid
cash for a newspaper advertisement, $100
4) Paid
Office Station Co., previously posted to accounts payable for, $400
5) Recorded
services provided on account for the period May 1-15, $5,100.
6) Paid
part-time receptionist for two weeks’ salary including the amount owed on April
30, $750
7) Recorded
cash received from cash clients for fees earned during the period May 1-16,
$7,380
8)
Purchased supplies on account, $500.
9) Recorded
services provided on account for the period May 16-20, $2,900.
10)Recorded
cash from cash clients for fees earned for the period May 17-23, $4,200.
11) Received
cash from clients on account, $6,600.
12) Paid
part-time receptionist for two weeks’ salary, $750.
Question 2
Woods
corporation
Unadjusted
Trial Balance
December
31, 2014
Account
title Debit Credit
Cash 18,570
Accounts
Receivables 11,900
Supplies 1,820
Prepaid
Rent 750
Equipment
12,000
Accumulated
Depreciation 1,100
Accounts
payable 1,050
Unearned
Fees 2,800
Capital
37,800
Dividends
1400
Fees earned
51450
Wages
Expense 28210
Rent
expense 2250
Utilities
expense 16040
Miscellaneous
Expenses 1260
Total
$94,200 $94,200
Requirements:
a)
Journalize the following adjusting entries as of 12/31/2014. Assume that all
adjustments are made on a monthly basis.
b) Post the
adjusting entries to the unadjusted trial balance and prepare the adjusted
trial balance.
A) The
equipment was purchased on January 1 of this year with an expected life of 10
years. There is no salvage value. Use the straight line method.
B) The
amount of supplies on hand as of December 31 is $1000.00
C) Fees
earned and unbilled $ 1,200
D)
Additional fees earned (collected in prior periods) $ 800.00
E) Wages
incurred and not paid $ 700
F) Rent was
prepaid on February 1 of this year for one year in the amount of $3000
Question 3
M&D
Inc
Adjusted
Trial Balance
12/31/14
Complete
the income statement and balance sheets columns of the worksheet using the
following information.
Account
title Debit Credit
Cash 15,200
Accounts
Receivable 200
Supplies
1000
Prepaid
insurance 550
Equipment
5000
Accumulated
Depreciation 40
Notes
Payable 5000
Accounts
Payable 2500
Unearned
Service revenue 800
Salaries
& wages payable 1200
Interest
payable 50
Owner’s
capital 10000
Owner’s
drawing 500
Service
revenue 10600
Salaries
& wages expense 5200
Supplies
expenses 1500
Rent
expense 900
Insurance
expense 50
Interest
expense 50
Depreciation
expense 40
Total
30,190 30,190
Question 4
Harvest
incorporated
Adjusted
Trial Balance
December
31, 2014
Account
title Debit Credit
Cash $6,700
Accounts
Receivable 600
Supplies
1,000
Prepaid
rent 900
Equipment
15,000
Accumulated
Depreciation 850
Notes
Payable 5,000
Accounts
Payable 1,510
Unearned
rent revenue 500
Salaries
& wages payable 400
Interest
payable 50
Owner’s
capital 14,000
Owner’s
drawing 600
Service
revenue 14,200
Salaries
& wages expense 9,400
Supplies
expenses 200
Rent
expense 1,500
Utilities
expense 510
Interest
expense 50
Depreciation
expense 850
Rent
revenue 800
Total
$37,310 $37,310
Requirements:
a) Prepare
an income statement for the year ending 12/31/2014.
b) Prepare
a balance sheet as of 12/31/2014.
Question
5
Use the
information provided below to prepare closing entries on 12/31/2014 and then
prepare the post-closing trial balances as of 12/31/2014.
EZ Inc
Income
Statement
For the
year ended December 31, 2014
Service
revenue $19,000
Expenses
Supplies
expense 500
Salaries
expense 4,000
Rent
expense 1,500
Total
expenses $6,000
Net income
13,000
EZ Inc
Balance
sheet
As of
December 31, 2014
Assets
Current
Assets
Cash $2,000
Accounts
receivable 1,300
Supplies
600
Prepaid
insurance 500
Total
current assets 4,400
Property,
plant and equipment
Equipment
$5,000
Less:
Accumulated depreciation-Equipment 500 4,500
Total
assets 8,900
Liabilities
and Owner’s Equity
Liabilities
Notes
payable $5,000
Accounts
payable 700
Interest
payable 100
Salaries
payable 1,300
Total
liabilities 7,100
Owner’s
equity
Owner’s
capital 1,800
Total
liabilities and owner’s equity $8,900
Answer is in Excel. Each
question solved in different tabs.
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