On April 25, Gregg Repair Service extended an offer of $115,000 for land that had been priced for sale at $140,000. On May 3, Gregg Repair Service accepted the seller’s counteroffer of $127,000. On June 20, the land was assessed at a value of $88,000 for property tax purposes. On August 4, Gregg Repair Service was offered $150,000 for the land by a national retail chain. At what value should the land be recorded in Gregg Repair Service’s records?
a.
$115,000
b.
$88,000
c.
$140,000
d.
$127,000
____ 2. Donner Company is selling a piece of land adjacent to their business. An appraisal reported the market value of the land to be $120,000. The Focus Company initially offered to buy the land for $107,000. The companies settled on a purchase price of $115,000. On the same day, another piece of land on the same block sold for $122,000. Under the cost concept, what is the amount that will be used to record this transaction in the accounting records?
a.
$107,000
b.
$115,000
c.
$120,000
d.
$122,000
____ 3. The assets and liabilities of the company are $175,000 and $40,000, respectively. Owner’s equity should equal
a.
$215,000
b.
$135,000
c.
$175,000
d.
$40,000
____ 4. If total liabilities decreased by $55,000 during a period of time and owner’s equity increased by $60,000 during the same period, the amount and direction (increase or decrease) of the period’s change in total assets is
a.
$115,000 increase
b.
$5,000 increase
c.
$5,000 decrease
d.
$115,000 decrease
____ 5. If total assets decreased by $88,000 during a period of time and owner’s equity increased by $65,000 during the same period, then the amount and direction (increase or decrease) of the period’s change in total liabilities is
a.
$23,000 increase
b.
$88,000 decrease
c.
$153,000 increase
d.
$153,000 decrease
____ 6. Land, originally purchased for $20,000, is sold for $75,000 in cash. What is the effect of the sale on the accounting equation?
a.
assets increase $75,000; owner’s equity increases $75,000
b.
assets increase $55,000; owner’s equity increases $55,000
c.
assets increase $75,000; liabilities decrease $20,000; owner’s equity increases $55,000
d.
assets increase $20,000; no change for liabilities; owner’s equity increases $75,000
____ 7. Allen Marks is the sole owner and operator of Great Marks Company. As of the end of its accounting period, December 31, 2011, Great Marks Company has assets of $940,000 and liabilities of $300,000. During 2012, Allen Marks invested an additional $65,000 and withdrew $45,000 from the business. What is the amount of net income during 2012, assuming that as of December 31, 2012, assets were $995,000, and liabilities were $270,000?
a.
$ 65,000
b.
$ 50,000
c.
$105,000
d.
$370,000
____ 8. Prarie Clinic purchased X-ray equipment for $4,000, paid $1,275 down, with the remainder to be paid later. The correct entry would be
a.
Equipment 1,275
Cash 1,275
b.
Cash 1,275
Accounts Payable 2,725
Equipment 4,000
c.
Equipment Expense 4,000
Accounts Payable 1,275
Cash 2,725
d.
Equipment 4,000
Accounts Payable 2,725
Cash 1,275
____ 9. Joshua Scott invests $65,000 into his new business. How would the journal entry for this transaction be entered in the journal?
a.
Cash 65,000
Joshua Scott, Capital 65,000
Invested cash in business
b.
Cash 65,000
Joshua Scott, Capital 65,000
Invested cash in business
c.
Joshua Scott, Capital 65,000
Cash 65,000
Invested cash in business
d.
Joshua Scott, Capital 65,000
Cash 65,000
Invested cash in business
____ 10.
March
6
Cash
375
Unearned Fees
375
????????????
What is the best explanation for this journal entry?
a.
Received cash for services performed
b.
Received cash for services to be performed in the future.
c.
Paid cash in advance for services to be done.
d.
Paid cash for services to be performed.
____ 11.
April
14
Equipment
6,700
Cash
2,000
Note Payable
4,700
????????????
Which is the best explanation for this journal entry?
a.
Purchased equipment, paid cash of $2,000, with the remainder to be paid in payments.
b.
Purchased equipment, paid cash of $4,700, with the remainder to be received in the future.
c.
Purchased equipment, paid cash for the entire amount.
d.
Purchased equipment on credit.
The chart of account for the Corning Company includes some of the following accounts:
Account Name
Account Number
Cash
11
Accounts Receivable
13
Prepaid Insurance
15
Accounts Payable
21
Unearned Revenue
24
Corning, Capital
31
Corning, Drawing
32
Fees Earned
41
Salaries Expense
54
Rent Expense
56
On the journal page 3, the following transaction was found:
Prepaid Insurance
1,530
Cash
1,530
____ 12. What is the post reference that will be found on the cash account?
a.
11
b.
15
c.
3
d.
None
____ 13. What is the post reference that will be found on the Prepaid Insurance account?
a.
11
b.
15
c.
3
d.
None
____ 14. What is the post reference that will be found on the journal entry?
a.
15, 11
b.
15
c.
11
d.
3
____ 15. The chart of account for the Miguel Company includes some of the following accounts:
Account Name
Account Number
Cash
11
Accounts Receivable
13
Prepaid Insurance
15
Accounts Payable
21
Unearned Revenue
24
Miguel, Capital
31
Miguel, Drawing
32
Fees Earned
41
Salaries Expense
54
Rent Expense
56
On the journal page 5, the following transaction was found:
Salaries Expense
525
Cash
525
What is the post reference that will be found on the Salaries Expense account?
a.
5
b.
11
c.
54
d.
None
____ 16. The accounts in the ledger of Monroe Entertainment Co. are listed in alphabetical order. All accounts have normal balances.
Accounts Payable
1,500
Fees Earned
3,000
Accounts Receivable
1,800
Insurance Expense
1,300
Investment
2,000
Land
3,000
Cash
2,600
Wages Expense
1,400
Drawing
1,200
Capital
8,800
The total of all the assets is:
a.
$9,400
b.
$9,000
c.
$9,100
d.
$9,800
____ 17. The accounts in the ledger of Monroe Entertainment Co. are listed in alphabetical order. All accounts have normal balances.
Accounts Payable
1,500
Fees Earned
3,000
Accounts Receivable
1,800
Insurance Expense
1,300
Investment
2,000
Land
3,000
Cash
2,600
Wages Expense
1,400
Drawing
1,200
Capital
8,800
Prepare a trial balance. The total of the debits is
a.
$13,300
b.
$9,400
c.
$9,100
d.
$9,600
____ 18. Which of the following errors, each considered individually, would cause the trial balance totals to be unequal?
a.
a transaction was not posted
b.
a payment of $67 for insurance was posted as a debit of $42 to Prepaid Insurance and a credit of $42 to Cash
c.
a payment of $1,311 to a creditor was posted as a debit of $3,111 to Accounts Payable and a debit of $311 to Accounts Receivable
d.
cash received from customers on account was posted as a debit of $680 to Cash and a credit of $680 to Accounts Payable
____ 19. The balance in the prepaid rent account before adjustment at the end of the year is $24,000, which represents four months’ rent paid on December 1. The adjusting entry required on December 31 is
a.
debit Rent Expense, $6,000; credit Prepaid Rent, $6,000
b.
debit Prepaid Rent, $18,000; credit Rent Expense, $6,000
c.
debit Rent Expense, $18,000; credit Prepaid Rent, $6,000
d.
debit Prepaid Rent, $6,000; credit Rent Expense, $6,000
____ 20. The balance in the office supplies account on June 1 was $6,300, supplies purchased during June were $3,100, and the supplies on hand at June 30 were $2,500. The amount to be used for the appropriate adjusting entry is
a.
$3,700
b.
$11,900
c.
$5,700
d.
$6,900
