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    ACC300: using the accounting formula in analyzing transactio

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    Part I Fill in the blanks: Question 1 to 8:

    In the space provided, classify each as it would be reported on a balance sheet. Use the following

    code:

    A -----Asset

    L -----Liability

    SE ------ stockholders' equity

    _____1. Accounts Payable

    _____2. Accounts Receivable

    _____3. Buildings

    _____4. Cash

    _____5. Contributed Capital

    _____6. Land

    _____7. Merchandise Inventory

    _____8. Income Taxes Payable
    --------------------------------------------------------------------------

    Part II Multiple choice: Question 9 to 17

    9. National Corp. purchases $1,000 of supplies on credit. As a result its

    a. current assets will increase by $1,000

    b. current assets will decrease by $1,000

    c. current assets will remain the same

    d. total assets will decrease by $1,000

    10. A journal does all of the following except

    a. summarizes all of the transactions that effect one account in a "T-account"

    b. records all the assets of a company

    c. records each day's transactions

    d. records all the revenues and expenses of a company

    Which of the following requires a debit?

    a. decrease in assets

    b. decrease in liabilities

    c. increase in liabilities

    d. increase in stockholders' equity

    Which of the following requires a credit?

    a. decreases in liabilities

    b. decreases in stockholders' equity

    c. increases to assets

    d. increases to liabilities

    ABC Co. received $20,000 from investors and in return issued $20,000 of stock. As a result of this transaction, what journal entry is required?

    a. debit cash $20,000 and credit contributed capital $20,000

    b. debit cash $20,000 and debit contributed capital $20,000

    c. credit cash 20,000 and credit contributed capital $20,000

    d. credit cash $20,000 and debit contributed capital $20,000

    National Corporation purchased $10,000 of furnishings and equipment for cash. As a result of this transaction, what journal entry is required?

    a. debit cash $10,000 and credit furnishings and equipment $10,000

    b. debit furnishings and equipment $10,000 and credit cash $10,000

    c. debit furnishings and equipment $10,000 and debit cash $10,000

    d. credit furnishings and equipment $10,000 and credit cash $10,000

    XMO, Inc. borrowed $25,000 from a bank, signing a formal agreement to repay the loan plus interest in five years. XMO placed the borrowed money in its checking account. What is the impact of this transaction?

    a. current assets are increased and current liabilities are increased

    b. noncurrent assets are increased and current liabilities are increased

    c. current assets are increased and noncurrent liabilities are increased

    d. noncurrent assets are increased and noncurrent liabilities are increased

    The Hawk Co. borrowed $30,000 from a bank, depositing those funds in its bank account and signing a formal agreement to repay the loan in two years. What is the correct journal entry for this transaction?

    a. debit notes payable and credit cash for $30,000

    b. debit notes payable and debit cash for $30,000

    c. credit notes payable and credit cash for $30,000

    d. debit cash and credit notes payable for $30,000

    The Enterprise Co. paid $4,000 cash to purchase furnishings and equipment. What is the impact of this transaction?

    a. total assets are decreased

    b. current assets are decreased

    c. current assets stay the same

    d. total assets are increased
    -------------------------------------------------------------------------

    Part III Use the following information from 2003 incomestement for ABC company to complete question number 18-20. Please show your computations.

    2003

    Sales
    $121,761

    Cost of Goods Sold
    71,583

    Other operating costs
    37,408

    Income before income tax expense
    12,770

    Income tax expense
    5,344

    Other expense
    196

    Net income
    $7,230

    2003 Avergage Net Fixed Assets = $44,300

    From the information from above, calculate the following financial ratios

    Calculate Gross Profit Percentage.

    Calculate Net Profit Margin.

    Calculate Fixed Assets Turnover.

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    Solution Preview

    Part I Fill in the blanks: Question 1 to 8:

    In the space provided, classify each as it would be reported on a balance sheet. Use the following code:

    A -----Asset
    L -----Liability
    SE ------ stockholders' equity

    L_____1. Accounts Payable
    A_____2. Accounts Receivable
    A_____3. Buildings
    A___ _4. Cash
    SE____5. Contributed Capital
    A_____6. Land
    A_____7. Merchandise Inventory
    L_____8. Income Taxes Payable
    --------------------------------------------------------------------------

    Part II Multiple choice: Question 9 to 17

    9. National Corp. purchases $1,000 of supplies on credit. As a result its

    a. current assets will increase by $1,000
    b. current assets will decrease by $1,000
    c. current assets will remain the same
    d. total assets will decrease by $1,000

    The entry would be a debit to supplies expense and a credit to account payable. Therefore c. current assets will remain the same.

    10. A journal does all of the following except

    a. summarizes all of the transactions that effect one account in a "T-account"
    b. records all the assets of a company
    c. records each day's transactions
    d. records all the revenues and expenses of a company

    A journal records transactions. A ledger summarizes transaction: a is incorrect.

    Which of the following requires a debit?

    a. decrease in assets
    b. decrease in liabilities ...

    $2.19

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