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Wallah Company agreed to accept $5,000 in cash along with an $8,000, 90-day, 13.

ID: 2500803 • Letter: W

Question

Wallah Company agreed to accept $5,000 in cash along with an $8,000, 90-day, 13.5% note from customer Judith Klemper to settle her $13,000 past-due account. How should Wallah record this transaction?

Select one:

a.

5,000

8,000

13,000

b.

13,000

8,000

5,000

c.

5,000

8,000

13,000

d.

13,000

8,000

5,000

e.

8,000

8,000

If a company failed to make the end-of-period adjustment to remove the amount earned from the Unearned Management Fees account, there would be:

Select one:

a. An overstatement of liabilities.

b. An overstatement of net income.

c. An overstatement of equity.

d. An understatement of liabilities.

e. An overstatement of assets.

A company records the fees for legal services paid in advance by its clients in an account called Unearned Legal Fees. If the company fails to make the end-of-period adjusting entry to record the portion of these fees that has been earned, one effect will be:

Select one:

a. An understatement of equity.

b. An overstatement of equity.

c. An overstatement of assets.

d. An understatement of liabilities.

e. An understatement of assets.

A publishing company records the subscriptions paid in advance by its customers in an account called Unearned Subscription Revenue. If the company fails to make the end-of-period adjusting entry to record the portion of the subscriptions that have been earned, one effect will be

Select one:

a. An understatement of liabilities.

b. An overstatement of liabilities.

c. An overstatement of equity.

d. An understatement of assets.

A merchandising company:

Select one:

a. Earns profit from fares only.

b. Earns net income by buying and selling merchandise.

c. Earns profit from commissions only.

d. Buys products from consumers.

e. Receives fees only in exchange for services.

Cost of goods sold:

Select one:

a. Is a term only used by service firms.

b. Is the cost of merchandise sold to customers.

c. Is another term for revenue.

d. Is another term for merchandise sales.

e. Is also called gross margin.

A company had sales of $695,000 and cost of goods sold of $278,000. Its gross profit equals:

Select one:

a. $278,000

b. $417,000

c. $973,000

d. $(417,000)

e. $695,000

A company had sales of $375,000 and gross profit of $157,500. Its cost of goods sold was:

Select one:

a. $(217,000)

b. $217,500

c. $532,500

d. $157,500

e. $375,000

Cash

5,000

Note Receivable

8,000

Sales

13,000

Explanation / Answer

The transaction should be recorded as : Cash A/c DR $ 5,000 Note Receivable A/c DR $ 8,000 To Accounts Receivable = Judith Klemper A/c $ 13,000 If a company failed to make the end-of-period adjustment to remove the amount earned from the Unearned Management Fees account, there would be an overstatement of assets. A company records the fees for legal services paid in advance by its clients in an account called Unearned Legal Fees. If the company fails to make the end-of-period adjusting entry to record the portion of these fees that has been earned, one effect will be an overstatement of assets. A publishing company records the subscriptions paid in advance by its customers in an account called Unearned Subscription Revenue. If the company fails to make the end-of-period adjusting entry to record the portion of the subscriptions that have been earned, one effect will be an overstatement of liabilties. A merchandising company earns net income by buying and selling merchandise. Cost of goods sold is the cost of merchandise sold to customers. A company had sales of $ 695,000 and cost of goods sold of $ 278,000. Its gross profit equals $ 417,000. A company had sales of $375,000 and gross profit of $157,500. Its cost of goods sold was $ 217,500.