1) The Vintage Laundry Company purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $2,000 on hand. The adjusting entry that should be made by the company on June 30 is:
A. debit Laundry Supplies Expense, $2,000; credit Laundry Supplies, $2,000.
B. debit Laundry Supplies, $4,500; credit Laundry Supplies Expense, $4,500.
C. debit Laundry Supplies, $2,000; credit Laundry Supplies Expense, $2,000.
D. debit Laundry Supplies Expense, $4,500; credit Laundry Supplies, $4,500.
2) On July 1 the Fisher Shoe Store paid $15,000 to Acme Realty for 6 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by the Fisher Shoe Store is:
A. debit Rent Expense, $15,000; credit Prepaid Rent, $2,500.
B. debit Prepaid Rent, $2,500; credit Rent Expense, $2,500.
C. debit Rent Expense, $2,500; credit Prepaid Rent, $2,500.
D. debit Rent Expense, $15,000; credit Prepaid Rent, $12,500.
3) Use the following data to determine the total dollar amount of assets to be classified as current assets.
Koonce Office Supplies
Balance Sheet
December 31, 2012
- Cash $130,000 Accounts Payable $140,000
- Prepaid Insurance 60,000 Salaries Payable 20,000
- Accounts Receivable 100,000 Mortgage Payable 160,000
- Inventory 140,000 Total Liabilities $320,000
- Land held for Investment 150,000
- Land 180,000
- Buildings $200,000 Common Stock $240,000
- Less Accumulated Retained Earnings 500,000
- Depreciation (40,000) 160,000 Total Stockholders' Equity $740,000
- Trademarks 140,000 Total Liabilities and
- Total Assets $1,060,000 Stockholders' Equity $1,060,000
A. $580,000.
B. $430,000.
C. $360,000.
D. $290,000.
4) Use the following data to calculate the current ratio.
Koonce Office Supplies
Balance Sheet
December 31, 2012
- Cash $130,000 Accounts Payable $140,000
- Prepaid Insurance 60,000 Salaries Payable 20,000
- Accounts Receivable 100,000 Mortgage Payable 160,000
- Inventory 140,000 Total Liabilities $320,000
- Land held for Investment 150,000
- Land 180,000
- Buildings $200,000 Common Stock $240,000
- Less Accumulated Retained Earnings 500,000
- Depreciation (40,000) 160,000 Total Stockholders' Equity $740,000
- Trademarks 140,000 Total Liabilities and
- Total Assets $1,060,000 Stockholders' Equity $1,060,000
A. 1.81 : 1.
B. 1.44 : 1.
C. 3.07 : 1.
D. 2.69 : 1.
5) Reed Company acquires 80 Holmes 10%, 5 year, $1,000 bonds on January 1, 2012 for $82,000. This includes a brokerage commission of $2,000. The journal entry to record this investment includes a debit to
A. Debt Investments for $80,000.
B. Debt Investments for $82,000.
C. Cash for $82,000.
D. Stock Investments for $80,000.
6) Reed Company acquires 80 Holmes 10%, 5 year, $1,000 bonds on January 1, 2012 for $82,000. This includes a brokerage commission of $2,000. Assume Holmes pays interest semiannually and the July 1 entry was done correctly. The journal entry at December 31, 2012 would include a credit to
A. Interest Receivable for $4,000.
B. Interest Revenue for $8,000.
C. Accrued Expense for $8,000.
D. Interest Revenue for $4,000.