Question 3
- Alpaca Corporation had revenues of $200,000 in its first year of operations. The company purchased $70,000 of inventory during the year. The company had no inventory on hand at the end of the year. The company paid $15,000 in salaries during the year. Owners invested $20,000 in the business and $20,000 was borrowed on a five year note. The company paid $2,000 in interest that was the amount owed for the year, and paid $6,000 for a two year insurance policy on the first day of business. Alpaca has an effective income tax rate of 40%. The company paid $5,000 in dividends. Which of the following is the net income for the first year for Alpaca Corporation? Answer
$110,000 $60,000 $107,000 $57,000 $61,000 $66,000
3 points
Question 4
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Based on the following information, what is the total equity at the end of 2013? The following is selected financial information for Osmond Dental Laboratories for 2012 and 2013:
Retained earnings January 1 2012 = $53,000
Net income 2012 = $37,000; 2013 = $42,000
Dividends declared and paid 2012 = $15,000; 2013 = $18,000
Capital stock issued 2012 = $70,000; 2013 = $20,000
Total assets 2012 = $276,000; 2013 = $320,000
Answer
$75,000 $99,000 $174,000 $189,000 $320,000
3 points
Question 5
- The Supplies account shows a balance of $540, but a count of supplies reveals only $210 on hand at year end. Which of the following is the correct adjusting entry at year end? Answer
Debit supplies $210; Credit cash $210 Debit supplies expense $210; Credit supplies $210 Debit supplies expense $330; Credit supplies $330 Debit supplies $540; Credit supplies expense $540
3 points
Question 6
- Flint Hills initially records the payments of all insurance premiums as expenses. The year end trial balance shows a balance of $420 in Insurance expense. A review of insurance policies reveals that $125 of insurance is unexpired. Which of the following is the correct adjusting entry at year end? Answer
Debit prepaid insurance $295; Credit insurance expense $295 Debit prepaid insurance $125; Credit insurance expense $125 Debit insurance exprense $295; Credit prepaid insurance $295 Debit insurance exprense $125; Credit prepaid insurance $125
3 points
Question 7
- Flint Hills employees work Monday through Friday, and salaries of $2,400 per week are paid each Friday. Flint Hills’ year end falls on Tuesday. Which of the following is the correct adjusting entry at year end? Answer
Debit salary expense $960; credit cash $960 Debit salary expense $2,400; credit cash $2,400 Debit salary expense $960; credit salaries payable $960 Debit salary expense $1,440; credit salaries payable cash $1,440
3 points
Question 8
On year end December 31, Flint Hills received a utility bill for December electricity usage of $190 that will be paid in the following January. Which of the following is the correct adjusting entry at year end?
Answer
| Debit utility expense $190, Credit accounts payable $190 | ||
| Debit utility expense $190, Credit cash $190 | ||
| Debit utility expense $190, Credit unearned revenue $190 | ||
| No entry is needed. |