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Exam 3: Accounting for Deferrals

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Question 61

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For each of the following transactions, indicate the type by entering AS for asset source transactions, AU for asset use transactions, AE for asset exchange transactions, and CE for claims exchange transactions.1)________ Paid $2,000 in dividends to its stockholders2)________ Recorded the accrual of $1,000 in salaries to be paid later3)________ Paid $1,200 rent for the upcoming year starting immediately4)________ Earned revenue to be collected next year5)________ Paid the salaries accrued in #2 above6)________ Received cash from customers in #4 above7)________ Purchased supplies on account8)________ Received $500 from a customer for services to be provided later

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1)AU 2)CE 3)AE 4)AS 5)AU 6)AE 7)AS 8)AS1...

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Question 62

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The following events apply to Jason's Lawn Service for Year 1. 1)Issued stock for $14,000 cash2)On January 1, paid $12,000 cash for equipment that has an estimated life of five years and a salvage value of $2,0003)On May 1, issued a $3,000, 5% 3-year note to a local bank4)Performed services of $18,400 and received cash5)Paid $15,000 of operating expenses6a)Adjusted the records to recognize expense associated with use of the equipment during Year 16b)Adjusted the records to recognize interest expense for Year 1Required:Record the effects of the above events under the appropriate account headings in the accounting formula below.

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6a)Depreciation expense = (Co...

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Question 63

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Chester Company started Year 2 with a $2,000 balance in its Cash account, a $500 balance in its Supplies account, and a $2,500 balance in its Common Stock account. During Year 2, the company experienced the following events:(1) Paid $1,400 cash to purchase supplies.(2) Physical count revealed $300 of supplies on hand at the end of Year 2.Based on this information, which of the following shows how the year-end adjusting entry required to recognize supplies expense would affect Chester's account balances?

Indicate how each event affects the financial statements model. Use the following letters to record your answer in the box shown below each element. You do not need to enter amounts. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA.Increase = I Decrease = D Not Affected = NAJennings Company makes an adjusting entry to recognize $500 of previously recorded unearned revenue that it has now been earned by providing services to its client during the period.

Which of the following shows how adjusting the accounts to recognize supplies expense will affect a company's financial statements?

How wouldan advance payment for rent be classified?

Wichita,Incorporated reported the following amounts on its financial statements prepared as of the end of the current accounting period: What is the company's return-on-equity ratio?

On January 1, Year 1, Melon Moving Company paid $55,000 to purchase a truck. The truck was expected to have a four-year useful life and a $5,000 salvage value. If Melon uses the straight-line method, the amount of book value shown on the Year 2 balance sheet is

Chestnut,Incorporated reported the following balances on its balance sheet at December 31, Year 1: On January 1, Year 2, Chestnut purchased equipment for $58,000 on account. What is the company's debt-to-assets ratio immediately after the purchase of the equipment? (Round your answer to 2 decimal places.)

The financial statement ratio that may be of greatest interest to a company's stockholders is the amount of its return-on-assets ratio.

Indicate how each event affects the financial statements model. Use the following letters to record your answer in the box shown below each element. You do not need to enter amounts. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA.Increase = I Decrease = D Not Affected = NAOn January 1, Year 1, Monica Company paid $41,000 cash to purchase a truck.

Unearned revenue is reported on the income statement by subtracting it from revenue.

Asset use transactions always involve the payment of cash.

On January 1, Year 1 Marrow Moving Company paid $35,000 to purchase a truck. The truck was expected to have a four-year useful life and an $8,000 salvage value. If Marrow uses the straight-line method, the amount of accumulated depreciation shown on the Year 2 balance sheet is

Pizitz Company experienced a business event that affected its financial statements as indicated below. Which of the following events could have caused these effects?

Joseph Company purchased a delivery van on January 1, Year 1 for $35,000. The van is estimated to have a 5-year useful life and a $5,000 salvage value. How much expense should Joseph recognize in Year 1 related to the use of the van?

On January 1, Year 1, Martin Mowing Company paid $64,000 to purchase a truck. The truck was expected to have a six-year useful life and a $4,000 salvage value. If Margin uses the straight-line method, the amount of depreciation expense recognized on the Year 2 income statement is

On January 1, Year 2, the Supplies account of Sheldon Company had a balance of $1,200. During the year, the company purchased $3,400 of supplies on account and made partial payments totaling $3,000 on those accounts. On December 31, Year 2, Sheldon determined that there were $1,400 of supplies on hand. Which of the following would be reported on Sheldon's Year 2 financial statements?

Depreciation expense is reported on which financial statement?

Indicate how each event affects the financial statements model. Use the following letters to record your answer in the box shown below each element. You do not need to enter amounts. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA.Increase = I Decrease = D Not Affected = NAOwen Company recognizes rent expense for the period from February 1, Year 1, to December 31, Year 1. Assume the company paid $24,000 cash to lease the office space for one year on February 1, Year 1. Only record the impact of recognizing rent expense at the end of Year 1.