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Exam 2: Analyzing and Recording Transactions

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Question 41

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The balances for the accounts of Mike's Maintenance,Inc.for the year ended December 31 are shown below.Each account shown had a normal balance. $\begin{array}{|l|r|l|r}\hline \text { Accounts payable } & \$ 6,500 & \text { Wages expense } & \$ 36,000 \\\hline \text { Accounts receivable } & 7,000 & \text { Rent expense } & 6,000 \\\hline \text { Cash } & ? & \text { Retained Earnings } & 68,700 \\\hline \text { Maintenance supplies } & 1,200 & & \\\hline \text { Building } & 125,000 & \text { Land } & 50,000 \\\hline \text { Supplies expense } & 21,500 & \text { Unearned maintenance fees } & 4,000 \\\hline \text { Common Stock } & 50,000 & & \\\hline \text { Maintenance revenue } & 175,000 & \text { Dividends } & 48,000\\\hline \end{array}$ Calculate the correct balance for Cash and prepare a trial balance.

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Question 42

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Match the following definitions and terms by placing the number that identifies the best definition in the blank space next to the term. -     A simple account form used as a helpful tool in showing the effects of transactions and events on specific accounts 

A)  Credit 
B)  Journal 
C)  Account 
D)  Ledger 
E)  Source documents 
F)  Accounting records 
G)  Debit 
H)  T-account 
I)  Posting 
J)  Double-entry accounting 

K) A) and B)
L) C) and D)

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Question 43

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The debt ratio reflects the risk of a company to both its owners and creditors.

The heading on each financial statement lists the three W's - Who (the name of the organization),What (the name of the statement)and Where (the organization's address)

Match the following definitions and terms by placing the number that identifies the best definition in the blank space next to the term. -     Another name for the accounting books or simply the books 

Match the following definitions and terms by placing the number that identifies the best definition in the blank space next to the term. -     A company's record of all transactions in one place that shows debits and credits for each transaction 

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.

Which of the following statements is correct?

The debt ratio is used:

Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year: $\begin{array}{|l|r|r|} \hline& \text { Assets } & \text { Liabilities } \\\hline \text { Beginning of the year } & \$ 114,000 & \$ 68,000 \\\hline \text { End of the year } & 135,000 & 73,000\\\hline\end{array}$ If the owners made no investments in the business and no dividends were paid during the year,what was the amount of net income earned by Josephine's Bakery during the current year?

A journal gives a complete record of each transaction in one place and shows the debits and credits for each transaction.

Listed below are two pieces of information.Where is the best place to locate this information,in the journal or the ledger? Details of a transaction which took place on October 3^rd All of the sales activity which took place during the current month

Increases in liability accounts are recorded as debits.

Another name for the balance sheet is the statement of financial position.

Stride Rite has total assets of $425 million.Its total liabilities are $110 million.Its equity is $315 million.Calculate the debt ratio.

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

Find net income using the following transactions. 1) Bill Co.paid $2,000 for one month rent 2) Bill Co.paid $1,200 for two weeks wages 3) Bill Co.performed $5,200 in consulting services on account 4) Bill Co billed a customer $1,500 for services performed 5) Bill Co.received $5,200 in payment for item 3 6) Bill Co performed services and immediately collected $2,000 7) Bill Co.paid $500 for advertising in the local paper

Jones Hardware,Inc.pays a cash dividend of $6,000,what is the necessary entry to record this transaction:

On October 31,a company's Cash account had a normal balance of $7,000.During October,the account was debited for a total of $4,250 and credited for a total of $5,340.What was the balance in the Cash account at the beginning of October?

A simple account form widely used in accounting to illustrate how debits and credits work is called a: