ACCTG 211 Study Guide - Quiz Guide: Office Supplies, Accounts Payable, Accrual
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At June 30, 2017, the end of its most recent fiscal year, Primrose Comp Consultants’ post-closing trial balance was as follows:
Debit | Credit | |||
Cash | $5,860 | |||
Accounts receivable | 1,340 | |||
Supplies | 770 | |||
Accounts payable | $450 | |||
Unearned service revenue | 1,250 | |||
Common stock | 4,000 | |||
Retained earnings | 2,270 | |||
$7,970 | $7,970 |
The company underwent a major expansion in July. New staff was hired and more financing was obtained. Culver conducted the following transactions during July 2017, and adjusts its accounts monthly.
July | 1 | Purchased equipment, paying $4,000 cash and signing a 2-year note payable for $22,400. The equipment has a 4-year useful life. The note has a 6% interest rate which is payable on the first day of each following month. | |
2 | Issued 22,400 shares of common stock for $56,000 cash. | ||
3 | Paid $4,200 cash for a 12-month insurance policy effective July 1. | ||
3 | Paid the first 2 (July and August 2017) months’ rent for an annual lease of office space for $4,500 per month. | ||
6 | Paid $4,300 for supplies. | ||
9 | Visited client offices and agreed on the terms of a consulting project. Culver will bill the client, Connor Productions, on the 20th of each month for services performed. | ||
10 | Collected $1,340 cash on account from Milani Brothers. This client was billed in June when Culver performed the service. | ||
13 | Performed services for Fitzgerald Enterprises. This client paid $1,250 in advance last month. All services relating to this payment are now completed. | ||
14 | Paid $450 cash for a utility bill. This related to June utilities that were accrued at the end of June. | ||
16 | Met with a new client, Thunder Bay Technologies. Received $13,400 cash in advance for future services to be performed. | ||
18 | Paid semi-monthly salaries for $12,300. | ||
20 | Performed services worth $31,400 on account and billed customers. | ||
20 | Received a bill for $2,500 for advertising services received during July. The amount is not due until August 15. | ||
23 | Performed the first phase of the project for Thunder Bay Technologies. Recognized $11,200 of revenue from the cash advance received July 16. | ||
27 | Received $16,800 cash from customers billed on July 20. |
Adjustment data:
1. | Adjustment of prepaid insurance. | |
2. | Adjustment of prepaid rent. | |
3. | Supplies used, $1,400. | |
4. | Equipment depreciation, $550 per month. | |
5. | Accrual of interest on note payable. | |
6. | Salaries for the second half of July, $12,300, to be paid on August 1. | |
7. | Estimated utilities expense for July, $900 (invoice will be received in August). | |
8. | Income tax for July, $1,340, will be paid in August |
*Journalize July Transactions**
Question 14 pts
The five components to a system of internal controls include all of the following except:
control procedure |
risk assessment |
safeguarding assets |
monitoring controls |
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Question 24 pts
An automobile company testing brakes on new vehicles is part of:
control procedure |
risk assessment |
information systems |
monitoring controls |
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Question 34 pts
Which account would we debit to open a new petty cash fund?
cash |
petty cash |
miscellaneous expense |
petty cash expense |
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Question 44 pts
Our company established a petty cash fund with a balance of $200. We have petty cash receipts for travel expenses that total $125. We have counted petty cash and found that we were $2 short. Which of the following would be included in the entry to replenish the fund?
a credit to petty cash for $127 |
a debit to travel expenses for $125 |
a credit to cash over and short for $2 |
a credit to cash for $125 |
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Question 54 pts
On a bank reconciliation, which of the following will not appear as a deduction on a bank statement?
deposit |
NSF check (non-sufficient funds) |
service charge |
Payments made by EFT (electronic fund transfer) |
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Question 64 pts
Our company received a bank statement with a balance of $10,000. The reconciling items include outstanding checks that totaled $2,000 and a deposit in transit of $1,000. What is the adjusted bank balance after we complete the bank reconciliation?
$7,000 |
$9,000 |
$11,000 |
$13,000 |
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Question 74 pts
Our company has decided to write off an uncollectible account of $3,000. What account would we credit to record bad debt expense if our company uses the direct write-off method for bad debts?
bad debt expense |
accounts receivable |
allowance for doubtful accounts |
cash |
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Question 84 pts
Where does allowance for doubtful accounts appear on our financial statements?
on balance sheet as a current liability |
on income statement as part of cost of goods sold |
on balance sheet as a contra asset related to accounts receivable |
on the statement of retained earnings as a deduction from net income |
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Question 94 pts
At the end of 2018, we have a credit balance of $10,000 in allowance for doubtful accounts before the adjusting entry for bad debts expense. The company uses the percentage of sales method to estimate bad debt expense. The company estimates that 3% of net credit sales will be uncollectible for the year. Net credit sales for the year amounted to $1,000,000. What account and amount would we debit to record the adjusting entry for bad debt expense?
bad debt expense, $30,000 |
allowance for doubtful accounts, $30,000 |
bad debt expense, $20,000 |
accounts receivable, $20,000 |
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Question 104 pts
On July 1, 2017, our company accepts a 9-month 5% note for $12,000. What account and amount would we debit when we record the year-end adjusting entry on December 31, 2017?
interest revenue, $300 |
interest revenue, $350 |
interest receivable, $300 |
interest receivable, $350 |