Question

29. The accountant for the Sean Company forgot to make an adjusting entry to record salaries camned but not paid to employees. The cllect of this error would An understatement of assets, net income, and owners' equity. An understatement of liabilities and an understatement of owners' equity. An overstatement of assets and of net income offset by an understatement of owners' equity. An overstatement of owner's equity and an understatement of liabilities None of the above 30 During 2011 Ethan Company had a decrease in sets of $200 and a decrease in liabilities of SROO. No additional shares of common stock were issued during $700 2011 Cash dividends declared and paid during 2011 were $100, If expenses for 2011 were $600, total revenues were: S600. SI 300 S1,200 None of the above Use the following information to answer the new questions On December 26, 2011, Jane Corporation made an entry to record the declaration and payment of a cash dividend to shareholders of $70,000 The journal entry on December 26, 2011 would include a debit to which type of account? Revenue Expense Asset Liability Owners' Equity 32. The journal entry on December 26, 2011, would include a credit to which type of account? Revenue Expense Asset Liability Owners' Equity Use the following information to answer the next two questions: Fran Inc. borrowed $32,000 by issuing a 12%, 150 day note payable on October 2, 2011. Bi h à i cũ : : 1 : .. ..

Answer 1

29. D. An Overstatement of owner's equity and understatement of liabilities.

(Explanation: - It will lead to non recording of Expense which would have increased the owner's equity and non recording of liabilities which would have decreased the same)

30. D. $1,200

Computation:-

Owner's equity = decrease in liability - decrease in asset

= 800 - 200

= $600

{we can also consider Cash dividend declared and paid, but the Owner's equity will be same as because of cash dividend both asset and liabilities will decrease by $100. So net effect on Owner's equity will be zero. i.e, after Cash dividend declared and paid, decrease in asset will be $700 and decrease in liabilities will be $100. Hence revenue will still be $600(700-100)}

Total Revenue = Owner's equity + Expenses

= $600 + 600

= $1,200

31. E. Owner's Equity

32. C. Asset

Explanation:

Entry:-

Owner's Equity $70,000

Cash $70,000