TRANSACTION ANALYSIS: Mima Inc. has been in operation for two years. Below find
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Question
TRANSACTION ANALYSIS: Mima Inc. has been in operation for two years. Below find description of activities that occurred during Y8. You might find it helpful to prepare journal entry for each transaction
Transaction 4A - May 1, Y8: Mima signed a $200,000, interest-bearing note payable. It was for two years and specified 6 percent annual interest payable at the maturity date of the note.
Q33. Indicate the account title to be debited by $200,000.
Acct Payable
B.
Cash
C.
Long-term Note Payable
D.
Short-term Note Payable
E.
None
Indicate the account title to be credited.
Acct Payable
Cash
Long-term Note Payable
Short-term Note Payable
None
Record interest expense on the note payable discussed in Transaction 4A.
What is the amount of the interest expense?
A.
$16,000
B.
$8,000
C.
$4,000
D.
$1,333
E.
$800
Indicate the account title to be debited.
Acct Payable
Cash
Interest Expense
Interest Payable
Note Payable
Indicate the account title to be credited.
Acct Payable
Cash
Interest Expense
Interest Payable
Note Payable
Transaction 5A – August 15, Y8: At the beginning of Y8, Mima had office supplies inventory of $1,500. On August 15, Y8, Mima purchased office supplies amounting to $3,500 on account.
Prepare journal entries for the purchase of supplies.
Q38. Indicate the account title to be debited by $3,500.
Acct Payable
Cash
Cost of Sales
Supplies
Supplies Expense
Indicate the account title to be credited.
Acct Payable
Cash
Cost of Sales
Supplies
Supplies Expense
Transaction 5B – December 31, Y8: At December 31, Y8, the end of the accounting year, a count of office supplies still on hand reflected $1,000. Prepare adjusting entry to adjust the office supplies inventory account. (You might need to refer to Transaction 5A to find related information to answer this question.)
Q40. What is the amount of the adjustment?
$1,000
1,500
$3,500
$4,000
$5,000
Indicate the account title to be debited.
Acct Payable
Cash
Prepaid Expense
Supplies
Supplies Expense
Indicate the account title to be credited.
Acct Payable
Cash
Prepaid Expense
Supplies
Supplies Expense
On December 31, Y10, Mima Inc. had the following balances in its stockholders' equity accounts: Common stock, $50,000 (10,000 shares of $5 par value stock); additional paid-in capital, $100,000; and retained earnings, $50,000.
Q43.Total shareholder’s equity as of December 31, Y10 is:
$90,000
$200,000
$270,000
$290,000
During Y11, the above company issued 2,000 additional shares of common stock for $15 per share, reported net income of $60,000 and paid cash dividends of $20,000. Total shareholder’s equity as of December 31, Y11 is: (You might need to refer to Q43 to find related information to answer this question.)
$90,000
$200,000
$270,000
290,000
A.Acct Payable
B.Cash
C.Long-term Note Payable
D.Short-term Note Payable
E.None
Explanation / Answer
4A Cash account to be debited Long-term Note Payable to be credited Interest expense = 200000*6%/12*8 = 8000 Interest Expense to be debited Interest Payable to be credited 5A Supplies to be debited Acct Payable to be credited Amount of the adjustment = 1500+3500-1000 = 4000 Supplies Expense to be debited Supplies to be credited Total shareholder’s equity as of December 31, Y10 = 50000+100000+50000 = 200000 Total shareholder’s equity as of December 31, Y11 = 200000+30000+60000-20000 = 270000
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