Description
1- (a) If operations for an accounting period resulted in cash sales of $25,000, sales on account of $30,000, and expenses paid in cash of $50,000, did the business incur a net income or a net loss for the period?
(b) What is the amount of net income or net loss?
(c) If liabilities are $65,000 and owner’s equity is $35,000, the amount of the assets is:
(d) If assets are $205,000 and owner’s equity is $75,000, the amount of the liabilities is:
- 2- There are four steps that are involved in the closing process. What are the four journal entries that are required in closing the temporary accounts?
- 3- The following balance sheet data for Lester’s Company are shown below:
2011: Current Assets = $288,000; Current Liabilities = $120,000
2010: Current Assets = $171,000; Current Liabilities = $ 90,000
(a) Calculate the working capital for 2011 and 2010.
(b) Calculate the current ratio for 2011 and 2010.
- 4-During the current year, merchandise sold for $775,000. The cost of the merchandise sold was $426,250.
(a) What is the amount of gross profit?
(b) What is the gross profit percentage (gross profit divided by sales)?
- 5-(a) Who bears the freight when the terms of the sale are FOB shipping point?
(b) Who bears the freight when the terms of the sale are FOB destination?
- 6- The following items were available for sale during the year:
Beginning inventory ........................................... 10 units at $61
First purchase ...................................................... 40 units at $62
Second purchase ................................................. 35 units at $65
Third purchase .................................................... 15 units at $63
(a) Based on the periodic system, the total cost of the 23 units in inventory at the end of the year, according to the first-in, first-out (FIFO) method is:
(b) Based on the data, the total cost of the 23 units in inventory for the last-in, first-out (LIFO) method is:
7-Merchandise inventory is reported on which financial statement and in what section?
Explanation & Answer
Attached.
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Running head: ACCOUNTING
ACCOUNTING
First Middle Last
Name of Institution
ACCOUNTING
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Question 1
a) The business incurred net income for the period.
b) Net income = cash sales + sales on account – expenses
Net income = $25,000+$30,000-$50,000
Net income = $5,000
c) Liabilities = $65,000
Owner’s equity = $35,000
Assets = Liabilities + Owner’s equity
Assets = $65,000 + $35,000
Assets = $100,000
d) Assets = $205,000
Owner’s equity = $75,000
Liabilities = Assets – Owner’s equity
Liabilities = $205,000 - $75,000
Liabilities = $130,000
Question 2
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Closing the revenue acc...
