Assets Cash $500,000 Accounts Receivable 700,000 Inventory 300,000 Property, Pla
ID: 2510417 • Letter: A
Question
Assets
Cash $500,000
Accounts Receivable 700,000
Inventory 300,000
Property, Plant & Equipment 900,000
Accumulated Depreciation (100,000)
Total Assets $2,300,000
Liabilities & Equity
Accounts Payable $300,000
Notes Payable 1,000,000
Common Stock 500,000
Retained Earnings 500,000
Total Liabilities & Equity $2,300,000
Journal Entries for January 2013
Transaction 1: Sales Return
The buyer returns merchandise to the seller.
Journal Entry: Dr. Cr.
Sales Returns & Allowances 22,000
Accounts Receivable 22,000
Transaction 2: Sales Discounts
Description: Recorded collection within 2/10, n/30 period.
Journal Entry: Dr. Cr.
Cash 24,500
Sales Discounts 500
Accounts Receivable 25,000
Journal Entry: Dr. Cr.
Cash 155,000
Sales Revenue 155,000
Transaction 4: Cost Flow Assumption
Recorded cost of goods sold under one of the cost flow assumptions.
Journal Entry: Dr. Cr.
Cost of Goods Sold 45,000
Inventory 45,000
Transaction 5: Recording Estimated Uncollectible
Description: The credit manager estimates that $16,000 of sales will be uncollectible.
Journal Entry: Dr. Cr.
Bad Debts Expense 16,000
Allowance for Doubtful Accounts 16,000
Transaction 6: Write-off of an uncollectible account
Description: The credit manager authorizes a write-off of a $5,500 balance owed by a customer.
Journal Entry: Dr. Cr.
Allowance for Doubtful Accounts 5,500
Accounts Receivable 5,500
Transaction 7: Depreciation Expense
Recorded depreciation expense under one of the depreciation methods.
Journal Entry: Dr. Cr.
Depreciation Expense 12,000
Accumulated Depreciation 12,000
Transaction 8: Investment by Stockholders
Description: Invested $55,000 cash in the business in exchange for common stock.
Journal Entry: Dr. Cr.
Cash 55,000
Common Stock 55,000
Transaction 9: Dividends
Description: The corporation pays a dividend of $4,700 in cash to the stockholders.
Journal Entry: Dr. Cr.
Dividends 4,700
Cash 4,700
Transaction 10: Purchase of Equipment
Description: Purchases computer equipment for $7,800 cash.
Journal Entry: Dr. Cr.
Equipment 7,800
Cash 7,800
Transaction 11: Purchase of Supplies on Credit
Description: Purchases $4,800 of inventory on credit.
Journal Entry: Dr. Cr.
Inventory 4,800
Accounts Payable 4,800
5. What is the ending accounts payable balance?
A. $304,800
B. $314,000
C. $316,800
D. $320,000
6. What is the ending retained earnings balance?
A. $500,000
B. $545,000
C. $554,800
D. $567,800
7. What is the net income?
A. $48,500
B. $59,500
C. $65,000
D. $68,200
8. What is the amount of total expenses?
A. $63,000
B. $75,000
C. $73,000
D. $81,000
9. What is the net increase in cash for the period?
A. $222,000
B. $225,000
C. $300,000
D. $325,000
10. What is the net cash provided by operating activities?
A. $179,500
B. $186,500
C. $183,400
D. $178,300
11. What is the net cash used by investing activities?
A. $(7,200)
B. $(9,200)
C. $(8,900)
D. $(7,800)
12. What is the net cash provided by financing activities?
A. $40,300
B. $50,500
C. $50,300
D. $40,200
Explanation / Answer
Answer 5.
A. $304,800
Reason:
Beginning Balance: $ 300,000
Add: Purchases of inventory on credit: $4,800
$304,800
Answer 6.
C. $554,800
Reason:
Beginning Balance: $ 500,000
Add: Net income: $59,500
Less: Dividend paid: $ 4,700
$554,800
Answer 7.
B. $59,500
Reason:
Revenue: $ 155,000
Less: Sales Returns & Allowances : $ 22,000
Less: Cost of Goods Sold: $ 45,000
Less: Bad Debts Expense: $ 16,000
Less: Sales Discount: $ 500
Less: Depreciation Expense: $ 12,000
$59,500
Answer 8.
C. $73,000
Reason:
Cost of goods sold: $ 45,000
Add: Bad debt expense: $ 16,000
Add: Depreciation expense: $ 12,000
$ 73,000
Note: As per answering guidelines, I am submitting answers for first four parts, for rest of the answers post question separately.
Good luck.