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Exam 15: Basic Accounting for Transactions

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Question 41

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Asset accounts normally have credit balances and expense accounts normally have debit balances.

A) True
B) False

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Question 42

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The balances for the accounts of Lance's Consulting Firm, Inc.for the year ended December 31 are shown below.Each account shown had a normal balance. $\begin{array}{lrlr}\text { Accounts payable } & \$ 6,400 & \text { Wages expense } & \$ 35,000 \\\text { Accounts receivable } & 7,000 & \text { Rent expense } & 5,000 \\\text { Cash } & 10,000 & \text { Retained earnings } & 68,700 \\\text { Office supplies } & 1,000 & \text { Land } & 53,000 \\\text { Building } & 99,000 & \text { Unearned revenue } & 7,000 \\\text { Supplies expense } & 15,000 & \text { Dividends } & 20,000 \\\text { Consulting revenue } & 150,000 & \text { Common stock } & 12,900\end{array}$ Calculate net income.

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$150,000 - 15,000 - ...

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Question 43

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Accountants at Amalgamated Corporation incorrectly journalized a $50,000 equipment purchase as a debit to Buildings.This error was not discovered before the journal entry was posted.What is the correcting entry?

A business paid a $100 cash dividend.Assume the company had a $2,000 balance in cash immediately prior to this transaction and that this was the first time dividends had ever been paid.Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.Show ending account balances.

An account balance is:

The credit purchase of a delivery truck for $4,700 was posted to Delivery Trucks as a $4,700 debit and to Accounts Payable as a $4,700 debit.What effect would this error have on the trial balance?

A company paid $2,500 cash to satisfy a previously recorded account payable, the only liability on the books.Assume the company had a $4,000 balance in Cash immediately prior to this transaction.Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.Show ending account balances.

The dividends account normally has a credit balance since it is an equity account.

Posting is the transfer of the information from each journal entry to the ledger.

If insurance coverage for the next three years is paid for in advance, the amount of the payment is debited to an asset account called Prepaid Insurance.

The balance sheet provides a link between beginning and ending income statements.

Compute net income for May based on the following transactions: May 1 paid $2,200 for May's rent. May 14 paid $1,200 for two weeks wages. May 15 performed $5,200 in consulting services on account. May 17 billed a customer $1,500 for services performed May 16. May 20 received $5,200 in payment for May 15 transaction. May 22 performed services and immediately collected $2,000. May 31 paid $500 for advertising in the local paper to take place in June.

The _______________________ is a record containing all accounts (with balances)used by a company.

These transactions were completed by the art gallery opened by Zed Bennett. a.Bennett started the gallery, Artery, by investing $40,000 cash and equipment valued at $18,000 in exchange for common stock. B.Purchased $70 of office supplies on credit. C.Paid $1,200 cash for the receptionist's salary. D.Sold a painting for an artist and collected a $4,500 cash commission on the sale. E.Completed an art appraisal and billed the client $200. What was the balance of the cash account after these transactions were posted?

The following is a list of accounts and identification letters A through J for Shannon Management Co.: Use the form below to identify the type of account and its normal balance.The first item is filled in as an example.

The first step in the analyzing and recording process is to analyze each transaction and event from source documents.

What would be the account balance in the Cash account after the following transactions, assuming a zero beginning balance?

The second step in the analyzing and recording process is to record the transactions and events in the _____________________________.

What is a trial balance? What is its purpose?

Which of the following is the appropriate journal entry if a company performs a service and is paid immediately?