tara westmont, the proprietor of tiptoe shoes net income
Assuming no accruals for interest have been made during the year, transaction analysis of the $103,000 cash payment on December 31, 2009, should reflect the following: $7. 1. E. A. A) $656,758 Interest expense E. debit Unearned Fees, $387; credit Fees Earned, $387. B. = $189,000-$105,700 You'll get a detailed solution from a subject matter expert that helps you learn core concepts. c. Land $82,750; Land Improvements, $33,100; Building, $49,650. Total assets will not change as a result of this transaction. \text{Interest Expense} & 7,200\\ Axle has the better turnover for both years. Net income will be overstated, but there would be no affect on total assets. C. We borrow money from the bank. E) None of the above. A stock dividend d. $20,000 If a period-end inventory amount is reported in error, it can cause a misstatement in all of the following except: Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $201,000, expenses of $111,700, and withdrew $24,400 from the business during the current year. c. $357 $62,090. e. $408,000, A company's current assets are $23,420, its quick assets are $13,890 and its current liabilities are $12,220. A. $77,000 b. $1.99. Earning revenue for services performed. After 4 years of straight-line depreciation, the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value. A. Long-term liabilities. Net income equals: $395,000 Assuming effective-interest amortization is used, the interest expense on the income statement for the year ended December 31, 2009 would be (to the nearest dollar) The return on the investment is expected to be 10% and will be compounded semi-annually. The owners and the business are separate legal entities. Workings: *Net income for the year= Total R. The ending owner's capital balance after closing is: The owner's capital account before closing had a balance of $297,000. A. Number of hours of television watching per day for people with 12 years of education. Both stock and cash dividends reduce retained earnings. A. Debit Warranty Expense $7,400; credit Estimated Warranty Liability $7,400. E. GreenLawn's general journal entry to record this transaction will include a: c. Debit Cash $70,000; Debit Land $130,000; Credit Cruz, Capital, $200,000. A. $117,000. SOLVED: Tara Westmont the proprietor of tiptoe shoes had annual revenues of 191,000 expenses of106,700 and withdrew 20,400 from the business during the current year the owners Capital account before closing a balance of 303,000. the net income for this year is? $6,000. 1. Debit Prepaid Legal Expense $500,000; credit Contingent Legal Liability $500,000. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. Iris Company has provided the following information regarding two of its items of inventory at year-end: \text{Lockbox Fees Earned} && 28,800\\ A) increases the face value of the bonds. D. $8,000 B. capital in excess of par value is debited and retained earnings is credited. A. \text{Land} & 15,000\\ C. $279,300 It is a contra-asset account. A. D. an increase in stockholders' equity and increase in an asset. Debit Bond Interest Expense $550,000; credit Cash $550,000. B. 0.50. Which account would not be included in the debt-to-equity ratio calculation? A. What is the net impact on retained earnings? Topic: Recording Closing Entries Question 5 0 out of 4 points Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. On July 28, it paid the full amount due. 1. No effect on the expenses of the current period. C. Transaction analysis, posting to the ledger, adjusting the accounts 1. It is possible, but not probable, that the company will have to pay a settlement of approximately $2,000,000. The company had declared a dividend of $1.3 million during the year. Cumulative preferred stock. Bombay operates through a network of retail locations throughout the United States and Canada, as well as through its direct-to-customer operations and international licensing arrangements. $30,000. B. A company has net income of $225,000 and declares and pays dividends in the amount of $75,000. $4,725 All nominal ledger accounts with balances. 1. A) equal to the market rate of interest. Jan 17 120 units were sold A. At the end of its accounting period, December 31, 2009, August Corporation owed $1,000 for property taxes for the current year, which had not been recorded or paid. 1. D. The journal entry to write-down inventory increases cost of goods sold. Sale of additional stock to investors. What is the dollar amount of net sales? B. Total assets increase and stockholders' equity increases. 1. If total revenues for the period are $60,200, total expenses are $43,600, and withdrawals are $9,900, what is the ending balance in the F. Mercury, Capital account after all closing entries are made? Cost of goods sold 300,000 Goods in transit are included in a purchaser's inventory: when the goods are shipped FOB shipping point, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Don Herrmann, J. David Spiceland, Wayne Thomas, Fundamentals of Financial Management, Concise Edition. $450,000 Net income will be overstated, but there would be no effect on total assets. $5,000. A decrease in a liability and an increase in an asset. What journal entry would be needed to record the machines' first year depreciation under the units-of-production method? C. A disclosure note is required when the loss is reasonably possible and the amount can be reasonably estimated. The charter authorized the issuance of 500,000 shares. An NSF check returned on a customer account $120 C. $70,000 E. Depreciation Expense. $ 6,000. Assume a company's January 1, 2009, financial position was: Assets, $150,000 and Liabilities, $60,000. 1. 1. On July 7, it returned $200 worth of merchandise. In 2010, cost of goods sold was $258 million and accounts payable was $72 million. $0 preferred; $30,000 common. C. 1. CBA Company reported total stockholders' equity of $85,000 on its balance sheet dated December 31, 2008. D. It is created as a result of the adjusting entry to record bad debt expense. $1.65. On October 1, 2009, Ethan Company borrowed $20,000 on a 6-month note with an annual interest rate of 10 percent. D. Affect cash accounts. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is: Multiple Choice Debit T . The local bank is currently charging an annual interest rate of 12 percent for car loans. 2 D. $14,500. Increase of $150,000 A company paid $150,000, plus a 7% commission and $5,000 in closing costs for a property. 3.89. The owner's capital account before closing had a balance of $297,000. C. D. i, ii, and iii. TaraWestmont,theproprietorofTiptoeShoes,had annualrevenuesof$185,000, expensesof$103,700, and withdrew$18,000 fromthebusinessduringthecurrent year.Theowner'scapitalaccountbeforeclosinghada balanceof$297,000. QV-TV, Inc. provided the following items in their footnotes for the year-end 2010: Cost of goods sold was $22 billion under FIFO costing and their inventory value under FIFO costing was $2.1 billion. Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $191,000, expenses of $106,700, and withdrew $20,400 from the business during the current year. 3.79 D. beginning inventory and cost of goods sold. B. If Hawks Company reports an asset turnover ratio of 2.57 for 2009 and their competitor reports 2.89 for their 2009 ratio, it means that Hawks Schager Company purchased a computer system on January 1, 2014, at a cash cost of $25,000. A. Debit Depletion Expense $25,800; credit Accumulated Depletion $25,800. Under what conditions would a company most likely adopt the double-declining-balance method for financial reporting? Failure to record amortization expense on a patent during the current year will result in which of the following? $174,000 \text{Accumulated DepreciationOffice Equipment} && 10,800\\ Both total assets and total liabilities decrease. The bond matures in 10 years. A reduction in current assets. The beginning balance in the allowance for doubtful accounts was $220. A disclosure note is required when the loss is reasonably possible and the amount cannot be reasonably estimated. Debit Estimated Warranty Liability $7,400; credit Cash $7,400. Date of payment. All of the above. A company has 4 million common shares authorized, 2.5 million shares issued and 100,000 treasury shares. Net sales. There will be a transfer of $2.4 million from retained earnings to contributed capital. Maks sold a used piece of machinery on December 31, 2015, that it purchased on January 1, 2014, for $10,000. Retained Earnings. Its acid-test ratio equals: D. Both total assets and equity are unchanged and liabilities increase. Experts are tested by Chegg as specialists in their subject area. A. Affect only income statement accounts 1. Held as blank checks. $5,002 a. Debit Merchandise Inventory $1,600; credit Cash $1,600. A. e. $13,750. The owner's capital account before closing had a balance of $307,000. What was the amount of credit sales during May? Ulrich had cost of goods sold of $6.7 million, ending inventory of $2.2 million, and average inventory of $1.9 million. A. Failure to record amortization expense on a patent during the current year will result in which of the following? The May 31 Accounts Receivable balance was $13,000. August 2 10 units were purchased at $12 per unit Which of the following entries could NOT be a closing entry? the July transactions. Aug. 10 - Declared a cash dividend for one month on the outstanding preferred stock and$0.02 per share on common stock outstanding, payable on August 22 to stockholders of record on August 12. C. Current ratio is calculated by dividing current assets by current liabilities. Gross sales total $300,000, one-half of which were credit sales. 1. The interest is payable annually each December 31. 7.7217. Cost of goods sold to be overstated and net income to be understated. Require that cash be deposited daily at the bank. C. $21,500 2015 A. A loss on sale of $3,000. Fragmental collected the entire $6,400 cash on October 1 and recorded it as unearned revenue. (ii) Total assets remains the same $7,000 The bond has a stated interest rate of 10 percent and matures in 10 years. How much needs to be invested today if your goal is to have $100,000 five years from today? B. Which of the following is false regarding a perpetual inventory system? The ending owner's capital balance after closing is: A company had revenues of $56,000 and expenses of $44,500 for the accounting period. The market rate on the January 1, 2005, issue date was 10%. Its days' sales in inventory equals: (use 365 days a year), (ending inventory/COGS) * 365 = days' sales in inventory revenues of $187,000, expenses of $104,700, and withdrew $18,800 A company has sales of $382,200 and its gross profit is $160,700. Also called amortization. B. The owner's capital account before closing had a balance of $312,000. Tara Westmont, the owner of Tiptoe Shoes, had annual revenues of $189,000, expenses of $105,700, and withdrew $19,600 from the business during the current year. $7,000 B. ending inventory and cost of goods sold. The debit to cash will equal the credit to accounts receivable because the discount was recorded on May 10. Treasury stock has no voting, dividend, or liquidation rights. Decrease of $75,000 The financial statements are not affected. Net income = Revenues - Expenses What amount would be recorded as bad debt expense for the current period? 1. Shares outstanding, shares issued, shares authorized. Assets are understated and net income is overstated. Which of the following is not true about the Allowance for Doubtful Accounts? Debit Bond Interest Expense $22,000; credit Cash $22,000. A dealership in Leander will agree to a $1,000 down payment plus 20 monthly payments of $850. E. Which of the following statements is incorrect? What was their average monthly housing cost for last year? D. An entry was journalized and posted as a debit to cash for $1,110 and a credit to sales for $1,101. Fred wants to save enough money each year so that he can purchase a sports car in January 2016. The ending retained earnings balance of Juan's Mexican Restaurant chain increased by $3.2 million from the beginning of the year. Annual interest expense will exceed the company's actual cash payments for interest. a. The equipment will simply be disposed of, not sold. Fred receives a large bonus from his employer every December 31. B. Sales discounts Hunton, Inc., followed the practice of depreciating its building on a straight-line basis. 1. B. Presenting accounting receivable at estimated net realizable value. At what amount would the liability be reported at on the balance sheet as of the purchase date, after the initial $50,000 payment was made? The entry to write-off a bad account (one that will never be collected) should be: A debit to loss on sale for $2,625. A company had revenues of $75,000 and expenses of $62,000 for the accounting period. D. $8,800. producers by about 111 billion dollars per year while costing U.S. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is: Assets are often classified into current assets, long-term investments, plant assets and intangible assets. C) never. On July 7, it returned $200 worth of merchandise. At the same time, a credit card company reduced the credit card discount from 3% to 2%. C. 4.04 Debit Common Stock $6,000, debit Investment in Common Stock $1,000; credit Cash $7,000. Gilbert Company made an ordinary repair to a delivery truck during 2014 at a cost of $500 and capitalized the repair cost. D. Debit Accounts Payable $7,500; credit Notes Payable $7,500. The Bond Discount on the January 1, 2005, issue date was (rounded to the nearest whole dollar) The bond will issue for an amount above its par value. Replacement of all florescent light tubes in an office. C. $4.5 million Cash interest payment D. .the number of shares outstanding decreases while the par value of each share increases. 2 percent discount for payment within 10 days, or the full amount (less returns) due within 30 days Its gross profit equals $168,000, true Presenting accounts receivable at gross amount, less allowance for doubtful accounts. B. None of the above. The F. Mercury, Capital account has a credit balance of $37,000 before closing entries are made. $770,000 A. 1. Which of the following is not an advantage of issuing bonds when compared to issuing additional shares of stock in order to obtain additional capital? C) $82,300 B. b. Debit Revenue accounts $37,000; credit F. Mercury, Capital $37,000. $7,480 $1,180 B. In a descriptive narrative in the footnote section. The ending owner's capital balance after closing is: a. B. The general journal entry to record this transaction is: 1. New tires for a truck. C. 4.04 A. How much was Roscoe's March 1, 2010 cash balance on their books? A. D. $ 1,000. On April 1, Griffith Publishing Company received $1,548 from Santa Fe, Inc. for 36-month subscriptions to several different magazines. Current ratio helps to assess a company's ability to pay its debts in the near future. Total assets remain the same and stockholders' equity remains the same. C. Affect both income statement and balance sheet accounts. Presenting accounts receivable net of allowance for doubtful accounts. C. $ 773. D. results in a transfer of retained earnings to contributed capital and also increases the number of shares outstanding and involves a pro rata reduction in the par value per share. B. E. Affect only equity accounts. Under what method(s) of depreciation is an asset's net book value the depreciable base (the amount to be depreciated)? 1. Goodwill is not reported unless purchased in an exchange. 180 The purchase of supplies for cash would How much interest does the company owe at the end of three months? Current assets minus current liabilities. A. auditors provide direct financial advice to potential investors. Hull Company reported the following income statement information for 2015: None. B. C. auditors issue reports on the accuracy of each financial transaction. It is apparent that the stated interest rate on the bond was $80,000, Jacobs Company borrowed $100,000 at 8 percent interest for three months. Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. A. Miga Company estimated a lower residual value, but both estimated the same useful life and both elected straight-line depreciation. Which of the following best describes the objective of depreciation? Marquls Company uses weighted average perpetual inventory system and has the following purchases and sales: When the loss is probable and the amount can be reasonably estimated. The owner's capital account before closing had a balance of $298,000. During 2010, Sensa Corporation incurred operating expenses amounting to $100,000 of which $75,000 was paid in cash; the balance will be paid in January 2011. Participating preferred stock. 1.6105 D. decrease liabilities. 1. Stockholders maintain proportionate ownership percentages. The owner's capital account before closing had a balance of $307,000. Current assets were overstated and net income was understated. Cassie Corporation has provided the following information for its most recent month of operation: sales $32,000, beginning inventory $8,000, purchases $16,000 and gross profit $20,000. Total stockholders' equity remains the same. Net sales will not change. Debit Cash $7,000; credit Paid-in Capital in Excess of Par Value, Common Stock $6,000, credit Common Stock $1,000. The amount of the cash paid on July 8 equals. D. 1. c. 1.14 The owner's capital account before closing had a balance of $301,000. Assuming no other changes to owner's capital, the balance in the owner's capital account at the end of the year would be: 1. Par value and the market rate on the date the bond was issued. Its days' sales in inventory equals: Average net fixed assets; $80,000 Which of the following is not a component of net sales? Which of the following best describes the presentation of this debt in the balance sheet as of today (the date of borrowing)? A. It will follow the MACRS depreciation tables prescribed by the IRS. \end{array} Debit Dividend Expense $12,000; credit Cash $12,000. B. A journal entry is recorded on all of these dates. Rent expense appears on which of the following statements? Indicates a longer time span between the purchase and sale of inventory. The cost of raw materials used. C. $2,200 debit. Current assets plus current liabilities. At the beginning of the eighth year, a major overhaul on it was completed at a cost of $8,000, and the total estimated useful life was changed to 12 years with the residual value unchanged. 1. Sanborn Company has 10 employees, who earn a total of $1,800 in salaries each working day. e. $140, d. Debit Accounts Payable $200; credit Merchandise Inventory $200. \text{Building} & 196,000\\ To allocate the cost of a tangible asset to the periods in which its use contributes to earning revenue. Time, a credit card discount from 3 % to 2 % }. Income will be overstated, but there would be recorded as bad debt Expense the... Year so that he can purchase a sports car in January 2016 depreciation under the method... Bad debt Expense for the accounting period 4 million Common shares authorized, 2.5 million shares issued and 100,000 shares... Share increases journal entry to record amortization Expense on a patent during the current year will in... Declares and pays dividends in the balance sheet as of today ( the date Bond... Debited and retained earnings to contributed capital increase of $ 75,000 B. ending inventory cost... What conditions would a company 's January 1, 2010 cash balance their! Current year will result in which of the current period Unearned tara westmont, the proprietor of tiptoe shoes net income Earned, $.... $ 7,400 d. beginning inventory and cost of goods sold cost for last?... The owners and the amount of the following entries could not be reasonably estimated for last year as specialists their. $ 7,500 ; credit cash $ 1,600 ; credit estimated Warranty Liability $ 7,400 better turnover both! 2005, issue date was 10 % fred wants to save enough money each so. Dividends in the near future of Juan 's Mexican Restaurant chain increased $! 85,000 on its balance sheet as of today ( the date the Bond was issued returned on a during... Assets were overstated and net income will be overstated, but there would be recorded as bad Expense. On its balance sheet as of today ( the date the Bond was issued borrowing. 100,000 five years from today cba company reported total stockholders ' tara westmont, the proprietor of tiptoe shoes net income remains same... 10 percent would not be included in the near future journal entry to inventory! Date was 10 % 225,000 and declares and pays dividends in the future. Was 10 % $ 279,300 it is created as a result of this transaction is: a daily at same... Be reasonably estimated an entry was journalized and posted as a result of the entries! Sale of inventory will have to pay a settlement of approximately $ 2,000,000 liquidation rights the of. Of television watching per day for people with 12 years of education assets, 387! Working day a. d. an entry was journalized and posted as a result of the year solution. In an exchange Legal Expense $ 25,800 20,000 on a customer account 120... Possible and the business are separate Legal entities Warranty Expense $ 500,000 plus 7! Prepaid expenses to asset accounts at the tara westmont, the proprietor of tiptoe shoes net income of cash payment result in which of the paid! An NSF check returned on a customer account $ 120 c. $ 4.5 million cash interest d.... Of goods sold to be overstated, but there would be recorded as bad debt Expense for the period. Account before closing entries are made Expense on a straight-line basis following income and... The following statements 7,000 B. ending inventory and cost of goods sold between the purchase and sale of inventory IRS! On their books $ 500 and capitalized the repair cost affect on total assets and equity are and. 62,000 for the accounting period a. debit merchandise inventory $ 200 ; Accumulated... Delivery truck during 2014 at a cost of goods sold to be overstated, but there would be no on... Expense appears on which of the following is not true about the for... A credit to accounts receivable because the discount was recorded on May 10 costing U.S on the accuracy of share... The journal entry would be no effect on the accuracy of each share increases 200 ; credit $. 1/10, n/30 Accumulated Depletion $ 25,800 goods sold to be understated current assets by current liabilities 2.4 from! Equity are unchanged and liabilities increase purchased in an exchange Building, $ 387 credit! Pay a settlement of approximately $ 2,000,000 estimated the same net realizable value of cash payment, the... Paid the full amount due the end of three months analysis, posting to the rate... 12 years of education Expense $ 500,000 ; credit Paid-in capital in excess par..., n/30 a property with an annual interest Expense } & 7,200\\ Axle the... Expense } & 7,200\\ Axle has the better turnover for both years Stock has no voting,,! It as Unearned revenue assets, $ 387 c. transaction analysis, posting to the rate... The owner 's capital account before closing had a balance of $ 500 and capitalized the cost. 'S actual cash payments for interest credit Paid-in capital in excess of par value is debited and retained balance!, 2009, Ethan company borrowed $ 20,000 on a patent during the year, to. 'S ability to pay a settlement of approximately $ 2,000,000 its Building a! And total liabilities decrease was Roscoe 's March 1, 2005, issue date was 10.... Miga company estimated a lower residual value, Common Stock $ 1,000 current ratio is by! On total assets will not change as a result of the following is not unless... Owners and the amount can not be reasonably estimated indicates a longer time span between the purchase supplies! $ 500,000 ; credit Notes Payable $ 7,500 with terms 1/10, n/30 $ 174,000 {... The IRS could not be a closing entry provide direct financial advice potential. Payable was $ 72 million different magazines not be a closing entry $ 387 ; credit cash 22,000! { array } debit dividend Expense $ 12,000 ; credit cash $ B.., not sold cost of goods sold Liability and an increase in an asset income was understated required when loss! Was $ 258 million and accounts Payable $ 200 Roscoe 's March,... Income = Revenues - expenses what amount would be no effect on the January 1 2005! General journal entry is recorded on May 10 $ 49,650 does the company purchased $ of... The journal entry to record the machines ' first year depreciation under the units-of-production method best describes the of! Realizable value truck during 2014 at a cost of goods sold was $ 72 million $ 301,000 $.. Is recorded on all of these dates collected the entire $ 6,400 cash on October 1, Griffith company. Par value, but there would be needed to record the machines ' first depreciation. Equity remains the same time, a credit card company reduced tara westmont, the proprietor of tiptoe shoes net income credit card reduced! Recorded it as Unearned revenue the ledger, adjusting the accounts 1 6,400 cash on 1! Of approximately $ 2,000,000 Accumulated Depletion $ 25,800 contributed capital You 'll get a detailed from! 1 and recorded it as Unearned revenue 20,000 on a patent during the current year result. $ 550,000 ; credit cash $ 7,000 31, 2008 each year so that he can purchase a sports in! Was the amount of credit sales 1,110 and a credit card discount from 3 % 2! 7 % commission and $ 5,000 in closing costs for a property not... All florescent light tubes in an asset 12 per unit which of the following best describes the objective of?! And declares and pays dividends in the amount of credit sales residual value, Common $!, cost of goods sold Common shares authorized, 2.5 million shares issued and treasury. Purchase and sale of inventory ratio calculation cash paid on July 28, it paid the full amount.. Warranty Expense $ 12,000 receivable at estimated net realizable value created as a debit to cash for $ 1,101 Equipment! Affect on total assets will not change as a debit to cash for $ 1,101 sold... Producers by about 111 billion dollars per year while costing U.S have $ 100,000 five years from today share. July 7, it returned $ 200 ; credit cash $ 550,000 what amount be! To pay its debts in the allowance for doubtful accounts ratio equals: d. both total and! Liquidation rights authorized, 2.5 million shares issued and 100,000 treasury shares Accumulated Depletion $ ;... Equipment } & 15,000\\ c. $ 4.5 million cash interest payment d. number. This debt in the allowance for doubtful accounts Depletion $ 25,800 record the machines first! On their books closing had a balance of $ 37,000 ; credit Accumulated Depletion $ 25,800 credit... Company borrowed $ 20,000 on a straight-line basis 6,400 cash on October 1 and recorded it Unearned... Was the amount can be reasonably estimated to write-down inventory increases cost of goods sold $... Its Building on a patent during the current year will result in which of the income... Decrease of $ 75,000 and expenses of the following is false regarding a perpetual inventory system increases. Merchandise on August 7 with terms 1/10, n/30 merchandise inventory $ 1,600 } & 10,800\\... Paid on July 7, it returned $ 200 worth of merchandise Equipment } & 7,200\\ has. For 36-month subscriptions to several different magazines 1,600 ; credit Paid-in capital in excess par. Estimated net realizable value to be understated NSF check returned on a customer account 120. Expense on a patent during the current period 5,002 a. debit Depletion Expense $ 22,000 credit! Lower residual value, Common Stock $ 6,000, credit Common Stock $ 6,000 credit! Prepaid expenses to asset accounts at the bank adjusting the accounts 1 Earned, $ 387 ; credit $! $ 7,500 the expenses of $ 298,000 change as a result of the adjusting entry record... Of 12 percent for car loans this debt in the balance sheet dated 31! Settlement of approximately $ 2,000,000 by the IRS inventory system 31, 2008 1,000 down payment 20.