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Effect of entries: Maso Company, Brown Company, Big-Mouth Fr

Maso Company recorded journal entries for the issuance of common stock for $40,000, the payment of $13,000 on accounts payable, and the payment of salaries expense of $21,000. What net effect do these entries have on owners' equity?

Increase of $40,000.

Increase of $27,000.

Increase of $19,000.

Increase of $6,000.

Brown Company's account balances at December 31, 2007 for Accounts Receivable and the related Allowance for Doubtful Accounts are $460,000 debit and $700 credit, respectively. From an aging of accounts receivable, it is estimated that $12,500 of the December 31 receivables will be uncollectible. The necessary adjusting entry would include a credit to the allowance account for

$12,500.

$13,200.

$11,800.

$700

Big-Mouth Frog Corporation had revenues of $200,000, expenses of $120,000, and dividends of $30,000. When Income Summary is closed to Retained Earnings, the amount of the debit or credit to Retained Earnings is a

debit of $50,000.

debit of $80,000.

credit of $50,000.

credit of $80,000.

In November and December 2007, Lane Co., a newly organized magazine publisher, received $90,000 for 1,000 three-year subscriptions at $30 per year, starting with the January 2008 issue. Lane included the entire $90,000 in its 2007 income tax return. What amount should Lane report in its 2007 income statement for subscriptions revenue?

$0.

$5,000.

$30,000.

$90,000.

Solution Preview

Maso Company recorded journal entries for the issuance of common stock for $40,000, the payment of $13,000 on accounts payable, and the payment of salaries expense of $21,000. What net effect do these entries have on owners' equity?

Increase of $40,000.

Increase of $27,000.

Increase of $19,000.

Increase of $6,000.
Answer: Increase of $40,000

Cash 6,000
Accounts payable 13,000
Salaries expense 21,000
Common stock 40,000

Brown ...

Solution Summary

This solution is comprised of a detailed explanation to answer what net effect do these entries have on owners' equity.

$2.19