ACG3173 Exam 1 Practice

The equity of Lime Company is $200,000 and the total liabilities are $80,000. The total assets are _______.

Answer explanation

Liabilities

+ Equity

Assets

Grapefruit Services started the year with total assets of $130,000 and total liabilities of $60,000. The company is a sole proprietorship. The revenues and the expenses for the year amounted to $130,000 and $90,000, respectively. During the year, there were no new capital contributions and the owner withdrew $50,000. What is the amount of owner's equity at the end of the year?

Answer explanation

Total Assets

• + Revenues

- Total Liabilities

• - Expenses

- Withdrawals

Owner's Equity

The following transactions for the month of March have been journalized and posted to the proper accounts of a sole proprietorship:

 

Mar. 1 The business received $7000 cash from the owner of the business, Lemon. The business gave capital to Lemon.

Mar. 2 Paid the first month's rent of $1000.

Mar. 3 Purchased equipment by paying $3500 cash and executing a note payable for $6000.

Mar. 4 Purchased office supplies for $740 cash.

Mar. 5 Billed a client for $8000 of design services completed.

Mar. 6 Received $7900 on account for the services previously recorded.

 

What is the balance in Cash on March 6?

Answer explanation

Cash Deposit (Mar. 1)

- Rent Expense (Mar. 2)

- Equipment Purchase (Mar. 3)

- Office Supplies Purchase (Mar. 4)

+ Cash Deposit (Mar. 6)

Cash Balance (Mar. 6)

Pear Company uses the indirect method to prepare the statement of cash flows. Refer to the following income statement:

Additional Information provided by the company includes the following:

1. 1) Current assets, other than cash, increased by $24,000.

2. 2) Current liabilities decreased by $1,400.

Compute the net cash provided by operating activities.

Answer explanation

Net Income

- Change in Current Assets

- Change in Current Liabilities

+ Depreciation Expense

- Gain on Sale of Plant Assets

Net Cash by Operating Activities

Peach Corp. is preparing its statement of cash flows using the indirect method. It provides the following information about transactions for the year:

Plant assets, net beginning balance: $110,000
Plant assets, net ending balance: $147,000
Equipment was purchased for $62,400 with cash.
Equipment with a net asset value of $12,000 was sold for $17,000.
Depreciation Expense of $20,000 was recorded during the year.

 

What was the amount of net cash used by investing activities?

Answer explanation

Equipment Purchase

- Receipt From Disposal of Equipment

Net Cash Used for Investing Activities

Orange Corp. uses the indirect method to prepare its statement of cash flows. Refer to the following information for the year:

What is the net cash provided by financing activities?

Answer explanation

Long-Term Notes Payable Borrowed

- Long-Term Notes Payable Repaid

+ (Ending Common Stock - Beginning Common Stock)

+ (Beginning Treasury Stock - Ending Treasury Stock)

+ (Ending Retained Earnings - Beginning Retained Earnings - Net Income)

Net Cash from Financing Activities

The following Office Supplies account information is available for Avocado Company.

 

Beginning Balance: $1,200

Office Supplies Expensed: $5,000

Ending Balance: $1,000

 

From the above information, calculate the amount of office supplies purchased.

Answer explanation

Office Supplies Expense

+ Ending Balance

- Beginning Balance

Office Supplies Purchased

Big Apple Company sells tickets in advance for its weekly productions and records the proceeds as Unearned Revenue. At the end of each month, the company makes an adjusting entry to account for the tickets used during the month (ticket revenue.) On March 1, the Unearned Revenue account had a credit balance of $3000. During March, Big Apple sold 300 tickets at $30 each, and 250 tickets were used during the month. What is the credit balance in Unearned Revenue at the end of March?

Answer explanation

Beginning Balance

+ (Tickets Sold x Sales Price per Ticket)

- (Tickets Used x Sales Price per Ticket)

Unearned Revenue in March

Plum Painting Services has a weekly payroll of $23,000. December 31 falls on Wednesday and Plum will pay its employees the following Monday (January 5) for the previous full week. Assume that Plum has a five-day workweek and has an unadjusted balance in Salaries Expense of $740,000 at December 31. What amount should be debited to Salaries Expense on December 31?

Answer explanation

(Salary per Week / Days in a Week)

x Days Salary

Salaries Payable

The following are all of the current month's balances for Coconut Company (sole proprietorship) before preparing the trial balance. All balances are normal, positive balances.

What amount should be shown for Owner, Capital on the trial balance?

Answer explanation

Cash

+ Expenses

+ Furniture

+ Accounts Receivable

- Accounts Payable

- Revenue

- Notes Payable

Owner's Capital