Question 1

During 2022 its first year of operations Jane's Bakery had revenues of $130000 and expenses of $66000.The business paid cash dividends of $36000.What is the balance in Retained Earnings at December 31 2022?

Accepted Answer

The balance in Retained Earnings is calculated as Revenues minus Expenses minus Dividends. So, $130,000 (Revenues) - $66,000 (Expenses) - $36,000 (Dividends) = $28,000.

Question 2

At September 1 2022 Kern Enterprises reported a cash balance of $140000.During the month Kern collected cash of $60000 and made disbursements of $100000.At September 30 2022 the cash balance is

Accepted Answer

Starting cash balance = $140000
Cash collected during the month = $60000
Total cash available = $200000
Cash disbursed during the month = $100000
Ending cash balance = Total cash available - Cash disbursed during the month
Ending cash balance = $200000 - $100000
Ending cash balance = $100000
Therefore, the correct answer is D) $100000.

Question 3

If a company pays dividends of $10000

Accepted Answer

Dividends are paid out of retained earnings, which is a component of stockholders' equity. Therefore, both retained earnings and stockholders' equity will be reduced by the amount of the dividends paid.

Question 4

Are prepaid amounts received from customers treated as revenue at the time of receipt? Why or why not?

Accepted Answer

Revenue cannot be recognized until the work is performed because of the revenue recognition principle, which states that revenue should only be recognized when it is earned and realizable. Prepaid amounts are considered liabilities until the service or product is delivered.

Question 5

At October 1 2022 Metz Industries had an Accounts Payable balance of $140000.During the month the company made purchases on account of $100000 and made payments on account of $160000.At October 31 2022 the Accounts Payable balance is

Accepted Answer

The Accounts Payable balance is calculated by taking the beginning balance, adding purchases on account, and subtracting payments made. Starting with $140,000, add $100,000 in purchases, and subtract $160,000 in payments, resulting in an ending balance of $80,000.

Question 6

Jamal Company began the year with $126000 in its Common Stock account and a balance in Retained Earnings of $54000.During the year the company earned net income of $27000 and declared and paid $9000 of dividends.In addition the company sold additional common stock amounting to $33000.Based on this information what should the transaction analysis show for the ending total of all stockholders' equity accounts?

Accepted Answer

The total stockholders' equity is the sum of the common stock and retained earnings. The beginning total is $126000 + $54000 = $180000. The net income of $27000 increases the retained earnings to $54000 + $27000 = $81000. The dividends of $9000 decrease the retained earnings to $81000 - $9000 = $72000. The additional common stock of $33000 increases the common stock to $126000 + $33000 = $159000. The ending total of all stockholders' equity accounts is $159000 + $72000 = $231000.

Question 7

If a company issues common stock for $40000 and uses $30000 of the cash to purchase a truck

Accepted Answer

When a company issues common stock, cash increases by the same amount. Therefore, assets will increase by $40000. When the company uses $30000 of the cash to purchase a truck, fixed assets will also increase by $30000, leaving a remaining increase in assets of $10000. Equity will not be reduced by the entire $40000 as only a portion of the cash was used for the truck.

Question 8

At February 1 2022 the balance in Goebel Inc.'s supplies account was $3500.During February Goebel purchased supplies of $3000 and used supplies of $4000.At the end of February the balance in the Supplies account should be

Accepted Answer

The balance at the beginning of February was $3500. Goebel purchased $3000 worth of supplies, increasing the balance to $6500. They used $4000 worth of supplies, reducing the balance to $2500.

Question 9

At January 1 2022 Troyer Industries reported Retained Earnings of $350000.During 2022 Troyer had a net loss of $75000 and paid dividends to the stockholders of $50000.At December 31 2022 the balance in Retained Earnings is

Accepted Answer

The retained earnings at the end of the year is calculated by subtracting the net loss and dividends from the beginning retained earnings: $350,000 - $75,000 - $50,000 = $225,000.

Question 10

At September 1 2022 Baxter Inc.reported Retained Earnings of $423000.During the month Baxter generated revenues of $60000 incurred expenses of $36000 purchased equipment for $15000 and paid dividends of $6000.What is the balance in Retained Earnings at September 30 2022?

Accepted Answer

The balance in Retained Earnings is calculated as: Beginning Retained Earnings + Net Income - Dividends. Net Income is Revenues - Expenses = $60000 - $36000 = $24000. Therefore, Retained Earnings = $423000 + $24000 - $6000 = $441000.

Question 11

The Unearned Service Revenue account is classified as a(n)

Accepted Answer

Unearned Service Revenue is a liability because it represents revenue that has been collected in advance but the service has not yet been provided. Once the service is provided, the liability will be reduced and revenue will be recognized.

Question 12

During January 2022 Carey Services Inc.paid a cash dividend of $2000.This transaction

Accepted Answer

When a company pays cash dividends, its retained earnings account decreases by the amount of the dividend. Retained earnings is a part of stockholders' equity, so reducing retained earnings decreases stockholders' equity as well. Therefore, option A is the correct answer. Option B is incorrect because paying a dividend does not increase stockholders' equity. Option C is incorrect because paying a dividend has no impact on net income. Option D is incorrect because paying a dividend is not an expense.

Question 13

On June 1 2022 England Inc.reported a cash balance of $42000.During June England made deposits of $16000 and made disbursements totaling $48000.What is the cash balance at the end of June?

Accepted Answer

Starting cash balance = $42000
Deposits made during June = $16000
Total inflow (cash received) = $42000 + $16000 = $58000
Total disbursements (cash paid out) = $48000

Ending cash balance = Total inflow - Total outflow
= $58000 - $48000
= $10000

Therefore, the cash balance at the end of June is $10000. Option C is the correct answer.

Question 14

Crawford Company started the year with $60000 in its Common Stock account and a balance in Retained Earnings of $44000.During the year the company earned net income of $48000 and declared and paid $20000 of dividends.In addition the company sold additional common stock amounting to $28000.As a result the amount of its retained earnings at the end of the year would be

Accepted Answer

The ending retained earnings is calculated as the beginning retained earnings ($44000) plus net income ($48000) minus dividends paid ($20000), resulting in $72000.

Question 15

The receipt of cash in advance from a customer

Accepted Answer

The answer of The receipt of cash in advance from...

Question 16

On March 1 2022 Freeze Company hires a new employee who will start to work on March 6.The employee will be paid on the last day of each month.Has an accounting transaction occurred on March 1? Why or why not?

Accepted Answer

While the hiring of a new employee is an important event for the company, it does not represent an accounting transaction. An accounting transaction requires an exchange of assets, liabilities, or equity between two parties. In this case, there has not yet been any exchange of assets or funds between the company and the new employee, as the employee has not yet started working.

Question 17

During January 2022 its first month of operation Osborn Enterprises earned net income of $6800 and paid dividends to the owners of $2000.At January 31 the balance in Retained Earnings will be

Accepted Answer

The balance in Retained Earnings at the beginning of January was $0. 
Net income earned in January was $6800, which would be added to Retained Earnings. 
Dividends paid to the owners were $2000, which would be subtracted from Retained Earnings.

Therefore, the Retained Earnings balance at January 31 would be: 
$0 + $6800 - $2000 = $4800

Thus, choice C is the best answer.

Question 18

During February 2022 its first month of operations the owner of Schwenn Enterprises invested cash of $100000.Schwenn had cash sales of $20000 and paid expenses of $35000.Assuming no other transactions impacted the cash account what is the balance in Cash on February 28?

Accepted Answer

Starting cash balance = $100000
Cash sales = $20000
Expenses paid = $35000
Ending cash balance = Starting cash balance + Cash sales - Expenses paid
= $100000 + $20000 - $35000
= $85000

Question 19

At December 1 2022 Orear Company's Accounts Receivable balance was $16800.During December Orear had credit sales of $45000 and collected accounts receivable of $36000.At December 31 2022 the Accounts Receivable balance is

Accepted Answer

Starting balance in Accounts Receivable = $16,800
Credit sales during December = $45,000
Total amount owed by customers = $16,800 + $45,000 = $61,800
Amount collected during December = $36,000
Ending balance in Accounts Receivable = $61,800 - $36,000 = $25,800
Therefore, the correct answer is B) $25,800.

Question 20

Howard Company had a transaction that caused a $5000 increase in both assets and total liabilities.This transaction could have been a(n)

Accepted Answer

The answer of Howard Company had a transaction that caused...

Quiz 3: The Accounting Information System