1) Peach corporation experienced the following events during 2015: * The busines
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Question
1) Peach corporation experienced the following events during 2015:
* The business acquired $20,000 cash by issuing common stock to investors
* The business purchased land for $12,000 cash.
* Services were provided to customers for $16,000 cash.
* Services were provided to customers for $6,000 on account.
* Operating expenses of $10,000 were incurred and paid in cash.
* Operating epxneses of $2,000 were incurred but not paid yet.
* A dividend of $2,000 was paid to the owners of Peach Corporation.
Assuming the company began operations during 2015, the amount of retianed earnings as of December 31, 2015, would be:
A) $6,000
B) $8,000
C) $10,000
D) $22,000
2) Cherry company purchases a machine for $3,600 and supplies for $200 from Pear Co. for $3,800 cash. The entry for this transcation will include
A) a debit to Machine for $3,600 and a debit to Supplies for $400 for Cherry.
B) a credit to Cash for Pear.
C) a credit to Accounts Payable for Chery.
D) a debit to Machine for $1,200 and a debit to Supplies for $400 for Pear.
Use the following information to answer questions 3 and 4.
The inventory records for Tiger Co. reflect the following:
* Beginning Inventory @ July 1 300 units @ $2.00
* First Purchase @ July 7 400 units @ $3.00
* Second Purchase @ July 17 200 units @ $4.00
* Sales @ July 31 700 units @ $5.00
3) Determine Tiger's inventory at the end of July assuming the LIFO method.
A) $800
B) $600
C) $400
D) $1,000
4) Determine Tiger's gross margin for the month of July assuming the LIFO method.
A) $1,300
B) $1,500
C) $1,900
D) $900
5) The Orange Company provided $60,000 of services on account during 2015, its first year in operation. During 2015 Morgan collected $40,000 of cash from its accounts receivable accounts. The company estimates that it will be unable to collect 2% of its revenues on account. The amount of net realizable accounts receivable on the company's 2015 balance sheet was:
A) $20,000
B) $18,800
C) $19,600
D) $58,800
6) On September 1, John's Laundry Service borrows $300,000 from First National Bank on a 5-month, $300,000, 6% note. What entry must Jogns Laundry Service make on December 31 before financial statements are prepared?
A) Debit Interest Payable for $6,000; Credit Interest Expense for $6,000
B) Debit Interest Expense for $6,000; Credit Interest Payable for $6,000
C) Debit Interest Expense for $6,000; Credit Notes Payable for $6,000
D) Debit Interest Expense for $18,000; Credit Interest Payable for $18,000
E) Debit Interest Expense for $18,000; Credit Notes Payable for $18,000
7) At the end of the accounting period, Srawberry Company had a balanace of $20,000 in its common stock account, additional paid in capital of $40,000, retained earnings of $50,000, and $10,000 of treasury stock. The total amount of stockholders' equity is:
A) $100,000
B) $110,000
C) $120,000
D) $60,000
Explanation / Answer
1) Services provided for cash 16,000.00 Services provided on account 6,000.00 Operating exp 10,000.00 Operating exp incurred not paid 2,000.00 Dividend paid 2,000.00 the amount of retianed earnings 8,000.00 2) B) a credit to Cash for Pear. 3) Beg 600.00 300*2 Pruchases 1,200.00 400*3 Second purchase 800.00 200*4 Total inventory 2,600.00 Sale: Cost of sale 800.00 200*4 1,200.00 400*3 200.00 100*2 Total cost of sale 2,200.00 Ending inventory 400.00 4) Sales 3500 (700*5) cost of sale 2,200.00 Gross margin 1,300.00
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