Question

Use the following information for questions 21 – 25 regarding Trident River Co. in 2016 (assume this is the first year of operations for Trident River Co., and assume Trident River pays cash unless noted otherwise, even if it results in Trident River having a credit balance in cash):

1/1   Issued $100,000 of common stock.

2/1   Paid $9,600 to rent an office for one year.

3/1   Purchased $650 in supplies on account. By end of year, $90 worth of supplies is left.

7/1   Paid $21,200 for equipment, 4-year useful life, $2,000 residual value, straight-line depreciation

8/1   Billed customer $170,000 for services performed.

9/1   Received a $240,000 advance payment from a client for services that will be performed in 2017.

10/1  Received $80,000 from the 8/1 customer sale.

12/1  Paid $400 from the 3/1 purchase of supplies. 12/31 Accrued wages payable to employees of $3,600

21. What are Total Assets (including any contra-asset accounts) reported on the 2016 Balance Sheet?

A. $507,290

B. $510,250

C. $498,490

D. $497,690

22. What is 2016 Net Income?

A. $154,640

B. $158,240

C. $394,640

D. $154,550

23. What is the 12/31 adjusting journal entry related to the 7/1 purchase of equipment?

A. Debit Depreciation Expense $40,000; Credit Accumulated Depreciation $40,000

B. Debit Depreciation Expense $50,000; Credit Accumulated Depreciation $50,000

C. Debit Depreciation Expense $4,800; Credit Accumulated Depreciation $4,800

D. Debit Depreciation Expense $2,400; Credit Accumulated Depreciation $2,400

24. What are the Total Liabilities reported on the 12/31/16 Statement of Financial Position?

A. $240,650

B. $240,250

C. $243,850

D. $250

25. What is the adjusting journal entry at December 31, 2016, related to the 3/1 purchase of supplies?

A. Debit Supplies Expense $90; Credit Supplies $90

B. Debit Supplies Expense $560; Credit Supplies $560

C. Debit Supplies Expense $650; Credit Cash $650

D. Debit Supplies $650; Credit Cash $650

Answer 1

21	B. $510,250
22	A. $154,640
23	D. Debit Depreciation Expense $2,400; Credit Accumulated Depreciation $2,400
24	B. Debit Supplies Expense $560; Credit Supplies $560
	Working
						Stockholder's Equity
		Total Assets	=	Total Liabilties	+	Coomon Stock	+	Retained Earnings	Revenue	-	Expenses	=	Net Income
	1/1	$100,000				$100,000
	2/1	$9,600
		-$9,600
	3/1	$650		$650
	7/1	$21,200
		-$21,200
	8/1	$170,000						$170,000	$170,000				$170,000
	9/1	$240,000				$240,000
	10/1	$80,000
		-$80,000
	12/1	-$400		-$400
	12/31			$3,600				-$3,600			$3,600		-$3,600
		$510,250
	12/31	-$8,800						-$8,800			$8,800		-$8,800
	12/31			-$560				-$560			$560		-$560
	12/31	$2,400						-$2,400			$2,400		-$2,400
													$154,640