Question

M. Fields Company reported the following year-end amounts:

Total Sales	$16,800
Sales Discounts	300
Sales Returns	?
Cost of Goods Sold	10,500
Gross Profit	2,175

What is the company’s Sales Returns for the year?

Select one:

A. $1,080

B. $5,430

C. $3,825

D. $1,485

The following information was taken from the records of Valentine Corporation for the year ended December 31, 2016.

Advertising expense	$40,000
Income tax expense	26,000
Accounts payable	26,900
Dividends paid	30,000
Retained earnings (Jan 1, 2016)	115,720
Consulting fees revenue	200,000
Rent expense	23,400
Supplies expense	33,800

The net income reported by Valentine Corporation for the year ended December 31, 2016 was:

Select one:

A. $ 49,900

B. $ 76,800

C. $102,800

D. $ 72,800

At the end of the accounting period, the Life Coach Company’s Service Fees Earned account has a normal balance of $304,000. The accountant makes two adjustments--one to accrue unbilled service fees of $24,000, and the other to reduce the Unearned Service Fees liability account by $3,600.

After the adjustments are posted, the Service Fees Earned account has a balance of:

Select one:

A. $288,400

B. $301,600

C. $331,600

D. $319,600

On April 1, 2016, Moonglow Technologies paid $80,000 for rent on warehouse space one year in advance.

If Moonglow makes the appropriate adjusting entry, how much will be reported on the December 31, 2016 income statement for rent expense?

Select one:

A. $15,000

B. $60,000

C. $50,000

D. $45,000

Buena Company, an internet service provider, has 2,000,000 customers. The customers make electronic payments of $280 each for that month’s service on the last day of each month. Buena Company does not send any bills to their customers.

The company’s journal entry on the day they receive the payment will include:

Select one:

A. A credit to Accounts Receivable for $560,000,000

B. A credit to Internet Service Revenue for $560,000,000

C. A debit to Internet Service Expense for $560,000,000

D. A debit to Accounts Receivable for $560,000,000

Answer 1

1.

Sales returns:

= $16,800 - ($10,500 + $300 + $2,175)

= $3,825

2.

Net income:

= $200,000 - $40,000 - $26,000 - $23,400 - $33,800

= $76,800

3.

Service revenue:

= $304,000 + $24,000 + $3,600

= $331,600

4.

Rent expense for 9 months from Apr to Dec:

= $80,000 X 9/12

= $60,000

5.

If no bills are send to customers, there will be no accural entry. Entry is passes on receipt of cash.

= 2,000,000 X $280

= $560,000,000

A credit to Internet Service Revenue for $560,000,000