ADMS 2500 Quiz #4

1. The following financial statements were prepared at the end of the month of May:
TOPS IN TOPIARY - INCOME STATEMENT FOR the month of May
Revenue $2,540
Expenses:
Rent Expense $500
Advertising Expense $500
Wages Expense $200 $1,200
Net Income $1,340

TOPS IN TOPIARY - STATEMENT OF OWNER'S EQUITY FOR the month of MAY

Owner's Equity at May 1 $0
plus: Investment 2,000
plus: Net Income 1,340
less: Withdrawals 0
Owner's Equity at May 31 $3,340

TOPS IN TOPIARY - BALANCE SHEET AS OF MAY 31

ASSETS LIABILITES AND OWNER'S EQUITY
Current Assets: Current Liabilities:
Cash $1,380 Accounts Payable $300
Accounts Receivable $1,500 Advertising Payable $500
Prepaid Rent $ 500 Advances from Customers $200
Prepaid Advertising $ 500
Supplies $ 100 $3,980
Equipment $ 360 Owner's Equity $3,340
Total Assets $4,340 Total Liabilities & OE $4,340

During June the following transactions occurred:

1) Paid the helper the $1,000 owed from works done in May (the amount owed is in Accounts Payable).

2) Completed the job for which the customer paid $200 in May. Tops in Topiary collected $2000 in cash once
finished.

3) Paid $500 for the rent of July.

4) At the end of June notices that there are no supplies left. Makes a note to buy some in July.

5) At the end of June notices that there are few flyers left (used for advertising) worth $200 and decides to order
some for July. Before ordering, the printer (supplier of flyers) asks to be paid $600 of the amount owed for the flyers
done in May. Tops in Topiary pays $600.

6) In June collected in cash $3,000 for 3 jobs are done for a total of $4,500, the rest is owed in account by the
customers.

7) In June decided to start depreciating the equipment bought for $360 that is expected to last for 3 years.

8) In June 23rd Edward Scissorhands withdrew some cash for personal reasons ($2,000).

Prepare "T" Accounts in ACCRUAL Basis for the period ended on June 30th and then answer the questions.
At the end of the accounting period (June 30th, T account after AJE), what is the balance of Depreciation Expense?
a. $20
b. $360
c. $10
d. None of the others alternatives are correct
 e. $0

2. A company pays $9,000 in interest on notes consisting of $6,000 of interest that was accrued during the last
accounting period and $3,000 of interest that accumulated during this accounting period that has not yet been
accrued on the books. The journal entry for the interest payment should:
a. debit Interest Payable $6,000, debit Accrued Interest $3,000, and credit Cash $9,000.
b. debit Interest Expense $9,000 and credit Cash $9,000.
c. debit Interest Expense $3,000, debit Interest Payable $6,000, and credit Cash $9,000.
d. None of the above
e. debit Cash $9,000 and credit Interest Payable $9,000.

3. The following financial statements were prepared at the end of the month of May:
TOPS IN TOPIARY - INCOME STATEMENT FOR the month of May
Revenue $2,540
Expenses:
Rent Expense $500
Advertising Expense $500
Wages Expense $200 $1,200
Net Income $1,340

TOPS IN TOPIARY - STATEMENT OF OWNER'S EQUITY FOR the month of MAY

Owner's Equity at May 1 $0
plus: Investment 2,000
plus: Net Income 1,340
less: Withdrawals 0
Owner's Equity at May 31 $3,340

TOPS IN TOPIARY - BALANCE SHEET AS OF MAY 31

ASSETS LIABILITES AND OWNER'S EQUITY
Current Assets: Current Liabilities:
Cash $1,380 Accounts Payable $300
Accounts Receivable $1,500 Advertising Payable $500
Prepaid Rent $ 500 Advances from Customers $200
Prepaid Advertising $ 500
Supplies $ 100 $3,980
Equipment $ 360 Owner's Equity $3,340
Total Assets $4,340 Total Liabilities & OE $4,340

During June the following transactions occurred:

Paid the helper the $200 owed from works done in May (the amount owed is in Accounts Payable).

Completed the job for which the customer paid $200 in May. Tops in Topiary collected $1000 in cash once finished.

Paid $500 for the rent of July.

At the end of June notices that there are no supplies left. Makes a note to buy some in July.

At the end of June notices that there are few flyers left (used for advertising) worth $100 and decides to order some
for July. Before ordering, the printer (supplier of flyers) asks to be paid $500 of the amount owed for the flyers done
in May. Tops in Topiary pays $500.

In June collected in cash $3,000 for 3 jobs are done for a total of $4,200, the rest is owed in account by the
customers.
In June decided to start depreciating the equipment bought for $360 that is expected to last for 3 years.

In June 23rd Edward Scissorhands withdrew some cash for personal reasons ($3,000).

Prepare "T" Accounts in ACCRUAL Basis for the period ended on June 30th and then answer the question.
At the end of the accounting period (June 30th, T account after AJE), what is the total of Owner's Equity including
the Net Income/Net Loss of the period?
a. More than $5,500
b. Less than $2,000
c. Between $2,000 and $2,999
d. Between $3,000 and $4,499 ??
e. Between $4,500 and $5,500

4. Which of the following errors would most likely lead to an overstatement of net income in the current year?
a. Recording revenue when the cash is collected next year although it is earned in the current year
b. Failing to adjust the Unearned Rent Revenue account for the portion of rent earned this year.
c. A, B and C would all lead to overstatement
d. None of the above would lead to an overstatement of net income in the current year.
e. Recording an expense when paid next year although it is incurred this year

5. The following transaction occurred during the first month of operations, please indicate how the adjusting journal
entry (AJE) at the end of September should be recorded:
September Description Amount
3 Paid in cash the set up of the web site. It expects to last the whole life of this business. $2,000
a. None of the others journal entries are correct, it is another journal entry
b. Dr. Depreciation Costumes 83.33 and Cr. Accumulated Depreciation Costumes 83.33
c. Dr. Depreciation Web site 1,000 and Cr. Accumulated Depreciation Web site 1,000
d. Dr. Web site 2,000 and Cr. Cash 2,000
e. The transaction does not need an AJE

6. The following financial statements were prepared at the end of the month of May:
TOPS IN TOPIARY - INCOME STATEMENT FOR the month of May
Revenue $2,540
Expenses:
Rent Expense $500
Advertising Expense $500
Wages Expense $200 $1,200
Net Income $1,340

TOPS IN TOPIARY - STATEMENT OF OWNER'S EQUITY FOR the month of MAY

Owner's Equity at May 1 $0
plus: Investment 2,000
plus: Net Income 1,340
less: Withdrawals 0
Owner's Equity at May 31 $3,340

TOPS IN TOPIARY - BALANCE SHEET AS OF MAY 31

ASSETS LIABILITES AND OWNER'S EQUITY
Current Assets: Current Liabilities:
Cash $1,380 Accounts Payable $300
Accounts Receivable $1,500 Advertising Payable $500
Prepaid Rent $ 500 Advances from Customers $200
Prepaid Advertising $ 500
Supplies $ 100 $3,980
Equipment $ 360 Owner's Equity $3,340
Total Assets $4,340 Total Liabilities & OE $4,340
During June the following transactions occurred:

Paid the helper the $200 owed from works done in May (the amount owed is in Accounts Payable).

Completed the job for which the customer paid $200 in May. Tops in Topiary collected $1000 in cash once finished.

Paid $500 for the rent of July.

At the end of June notices that there are no supplies left. Makes a note to buy some in July.

At the end of June notices that there are few flyers left (used for advertising) worth $100 and decides to order some
for July. Before ordering, the printer (supplier of flyers) asks to be paid $500 of the amount owed for the flyers done
in May. Tops in Topiary pays $500.

In June collected in cash $3,000 for 3 jobs are done for a total of $4,200, the rest is owed in account by the
customers.

In June decided to start depreciating the equipment bought for $360 that is expected to last for 3 years.

In June 23rd Edward Scissorhands withdrew some cash for personal reasons ($3,000).

Prepare "T" Accounts in ACCRUAL Basis for the period ended on June 30th and then answer the question.
At the end of the accounting period (June 30th, T account after AJE), what is the balance of Accounts Receivables?
a. Between $500 and $999
b. Between $1,000 and $1,999
c. Less than $500
d. More than $3,000
e. Between $2,000 and $3,000

7. The following financial statements were prepared at the end of the month of May:
TOPS IN TOPIARY - INCOME STATEMENT FOR the month of May
Revenue $2,540
Expenses:
Rent Expense $500
Advertising Expense $500
Wages Expense $200 $1,200
Net Income $1,340

TOPS IN TOPIARY - STATEMENT OF OWNER'S EQUITY FOR the month of MAY

Owner's Equity at May 1 $0
plus: Investment 2,000
plus: Net Income 1,340
less: Withdrawals 0
Owner's Equity at May 31 $3,340

TOPS IN TOPIARY - BALANCE SHEET AS OF MAY 31

ASSETS LIABILITES AND OWNER'S EQUITY
Current Assets: Current Liabilities:
Cash $1,380 Accounts Payable $300
Accounts Receivable $1,500 Advertising Payable $500
Prepaid Rent $ 500 Advances from Customers $200
Prepaid Advertising $ 500
Supplies $ 100 $3,980
Equipment $ 360 Owner's Equity $3,340
Total Assets $4,340 Total Liabilities & OE $4,340
During June the following transactions occurred:

Paid the helper the $200 owed from works done in May (the amount owed is in Accounts Payable).

Completed the job for which the customer paid $200 in May. Tops in Topiary collected $1000 in cash once finished.

Paid $500 for the rent of July.

At the end of June notices that there are no supplies left. Makes a note to buy some in July.

At the end of June notices that there are few flyers left (used for advertising) worth $100 and decides to order some
for July. Before ordering, the printer (supplier of flyers) asks to be paid $500 of the amount owed for the flyers done
in May. Tops in Topiary pays $500.

In June collected in cash $3,000 for 3 jobs are done for a total of $4,200, the rest is owed in account by the
customers.

In June decided to start depreciating the equipment bought for $360 that is expected to last for 3 years.

In June 23rd Edward Scissorhands withdrew some cash for personal reasons ($3,000).

Prepare "T" Accounts in ACCRUAL Basis for the period ended on June 30th and then answer the question.
At the end of the accounting period (June 30th, T account after AJE), what is the total of Non Current Liabilities?
a. Between $300 and $400
b. Between $200 and $299
c. Between $100 and $199
d. Less than $100
e. More than $400

8. During June the following transactions occurred:

1) Paid the helper the $1,000 owed from works done in May (the amount owed is in Accounts Payable).

2) Completed the job for which the customer paid $200 in May. Tops in Topiary collected $2000 in cash once
finished.

3) Paid $500 for the rent of July.

4) At the end of June notices that there are no supplies left. Makes a note to buy some in July.

5) At the end of June notices that there are few flyers left (used for advertising) worth $200 and decides to order
some for July. Before ordering, the printer (supplier of flyers) asks to be paid $600 of the amount owed for the
flyers done in May. Tops in Topiary pays $600.

6) In June collected in cash $3,000 for 3 jobs are done for a total of $4,500, the rest is owed in account by the
customers.

7) In June decided to start depreciating the equipment bought for $360 that is expected to last for 3 years.

8) In June 23rd Edward Scissorhands withdrew some cash for personal reasons ($2,000).

Prepare "T" Accounts in ACCRUAL Basis for the period ended on June 30th and then answer the questions. At
the end of the accounting period (June 30th, T account after AJE), what is the balance of Rent Expense?

a. $250
b.
Save & Exit Submit
 c. 8.
d.
e.
f.

g. The following financial statements were prepared at the end of the month of May:
h.

TOPS IN TOPIARY - INCOME STATEMENT FOR the month of May

Revenue $2,540
Expenses:
Rent Expense $500
Advertising Expense $500
Wages Expense $200 $1,200
Net Income $1,340
i.

TOPS IN TOPIARY - STATEMENT OF OWNER'S EQUITY FOR the month of MAY

Owner's Equity at May 1 $0

plus: Investment 2,000
plus: Net Income 1,340
less: Withdrawals 0
Owner's Equity at May 31 $3,340
j.

TOPS IN TOPIARY - BALANCE SHEET AS OF MAY 31

ASSETS LIABILITES AND OWNER'S EQUITY

Current Assets: Current Liabilities:
Cash $1,380 Accounts Payable $300
Accounts Receivable $1,500 Advertising Payable $500
Prepaid Rent $ 500 Advances from Customers $200
Prepaid Advertising $ 500
Supplies $ 100 $3,980
Equipment $ 360 Owner's Equity $3,340
Total Assets $4,340 Total Liabilities & OE $4,340
k.

During June the following transactions occurred:

1) Paid the helper the $1,000 owed from works done in May (the amount owed is in Accounts Payable).

2) Completed the job for which the customer paid $200 in May. Tops in Topiary collected $2000 in cash
once finished.

3) Paid $500 for the rent of July.

 4) At the end of June notices that there are no supplies left. Makes a note to buy some in July.

5) At the end of June notices that there are few flyers left (used for advertising) worth $200 and decides to
order some for July. Before ordering, the printer (supplier of flyers) asks to be paid $600 of the amount
owed for the flyers done in May. Tops in Topiary pays $600.

6) In June collected in cash $3,000 for 3 jobs are done for a total of $4,500, the rest is owed in account by
the customers.

7) In June decided to start depreciating the equipment bought for $360 that is expected to last for 3 years.

8) In June 23rd Edward Scissorhands withdrew some cash for personal reasons ($2,000).

Prepare "T" Accounts in ACCRUAL Basis for the period ended on June 30th and then answer the
questions.At the end of the accounting period (June 30th, T account after AJE), what is the balance of
Rent Expense?

a. $250
b. $500
c. $1,000
d. None of the others alternatives are correct
e. $0
f.
9. The balance in the Prepaid Rent Account is $1,000 less at the end of the month than at the beginning of the
month. This implies that:
a. $1,000 must have been charged to an expense account during the month
b. $1,000 must have been charged to a revenue account during the month
c. $1,000 must have been charged to a liability account during the month
d. $1,000 must have been charged to an asset account during the month
e. None of the above are correct statements

10. The account "Accumulated Depreciation" reflects depreciation:

a. for the most current period only
b. equal to the amount of revenue from that asset
c. equal to the salvage value of the asset
d. still to be taken on the asset in future periods
e. taken since acquisition of the asset