1. Equipment with an estimated market value of $29,048 is offered for sale at $46,250. The...
1. Equipment with an estimated market value of $29,048 is offered for sale at $46,250. The equipment is acquired for $16,194 in cash and a note payable of $23,353 due in 30 days. The amount used in the buyer's accounting records to record this acquisition is
a.$45,242
b.$16,194
c.$29,048
d.$39,547
2. Which of the following is not an asset?
a.cash
b.owner's equity
c.inventory
d.investments
3. The assets and liabilities of a company are $128,000 and $84,000, respectively. Owner's equity should equal
a.$128,000
b.$212,000
c.$84,000
d.$44,000
4. A business paid $7,000 to a creditor in payment of an amount owed. The effect of the transaction on the accounting equation was to
a.increase an asset, increase a liability
b.increase an asset, increase owner's equity
c.increase an asset, decrease another asset
d.decrease an asset, decrease a liability
5. Which of the following is not considered to be a liability?
a.Unearned Revenue
b.Accounts Receivable
c.Wages Payable
d.Accounts Payable
6. The accounts in the ledger of Monroe Entertainment Co. are
listed below. All accounts have normal balances.
| Accounts Payable | $1,500 | Fees Earned | $3,600 | |
| Accounts Receivable | 1,800 | Insurance Expense | 1,300 | |
| Prepaid Insurance | 2,000 | Land | 3,000 | |
| Cash | 3,200 | Wages Expense | 1,400 | |
| Drawing | 1,200 | Capital | 8,800 |
Total assets are
a.$9,700
b.$9,800
c.$8,000
d.$10,000
7. The process of transferring the debits and credits from the journal entries to the accounts is called
a.transposing
b.sliding
c.journalizing
d.posting
8. Which of the following entries records the acquisition of office supplies on account?
a.Office Supplies, debit; Cash, credit
b.Office Supplies, debit; Accounts Payable, credit
c.Cash, debit; Office Supplies, credit
d.Accounts Receivable, debit; Office Supplies, credit
9. Which of the following entries records the collection of cash from cash customers?
a.Fees Earned, debit; Cash, credit
b.Accounts Receivable, debit; Fees Earned, credit
c.Fees Earned, debit; Accounts Receivable, credit
d.Cash, debit; Fees Earned, credit
10. The assets and liabilities of Rocky's Day Spa on December 31
and its revenue and expenses for the year are listed below. The
capital of the owner was $68,000 on January 1. The owner invested
an additional $10,000 during the year.
| Accounts payable |
$ 4,375 |
Spa operating expense |
$23,760 |
| Accounts receivable |
8,490 |
Office expense |
2,470 |
| Cash |
??? |
Spa supplies |
9,230 |
| Fees earned |
98,435 |
Wages expense |
26,580 |
| Spa furniture and equipment |
56,000 |
Drawing |
38,170 |
| Computers |
2,130 |
Prepare a balance sheet for the year ended December 31.
Homework Answers
1. Whatever buyer has paid will be recorded.
Hence = $16194 + $23353 = $39547
Answer is option D
2. Answer is option B. Owners equity is not an asset because business has a separate entity from owner so his equity is internal liability.
3.owners equity = assets - liabilities
= $128000 - $84000 = $44000
Answer is option D.
4. Answer is option D. Liabilities will decrease because creditor is repaid and assets is reduced because of cash given to creditor.
5.account receivable is a part of our assets which we are bound to receive in future. Hence answer is option B.
6. Assets = $1800 + $2000 + $3200 + $3000 = $$10000
Answer is option D.
7. It is called posting. hence answer is option D.
8.answer is option B. Office supplies will be debited because assets increased. Account payable will be credited because account payable increased.
9. Answer is option D. Cash account will be debited and fees earned will be credited.
10.
| Liabilities | Amount | Asset | Amount |
| Owners capital | $85455 | furniture and equipment | $56000 |
| Account payable | $4375 | computer | $2130 |
| Spa supplies | $9230 | ||
| Account receivable | $8490 | ||
| Cash (balancing figure) | $13980 | ||
| Total | $89830 | Total | $89830 |
1. Profit earned
= $98435 - $23760 - $2470 - $26580 = $45625
Increase in retained earnings = $45625
Ending capital of owner = $68000 + $10000 + $45625 - $38170 = $85455
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