Name: No. 1-15(30%) 1.

On June 30 of the current year, the assets and liabilities of Phoenix Phildell are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of owner's equity as of July 1 of the current year? A. $8,300 B. $13,050 C. $20,500 D. $31,100 E. $40,400 2. Management Services, Inc. provides services to clients. On May 1, a client prepaid Management Services $60,000 for 6-months services in advance. Management Services' general journal entry to record this transaction will include a A. Debit to Unearned Management Fees for $60,000. B. Credit to Management Fees Earned for $60,000. C. Credit to Cash for $60,000. D. Credit to Unearned Management Fees for $60,000. E. Debit to Management Fees Earned for $60,000. 3. On December 30, 2008, KPMG signs a $150,000 contract to provide accounting services to one of its clients in 2009. KPMG has a December 31 year-end. Which accounting principle or assumption requires KPMG to record the accounting services revenue from this client in 2009 and not 2008? A. Business entity assumption B. Monetary unit assumption C. Revenue recognition principle D. Cost principle E. Going-concern assumption 4. Photometer Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation? A. Assets, $30,000 increase; liabilities, no effect; equity, $30,000 increase. B. Assets, $30,000 decrease; liabilities, $30,000 decrease; equity, no effect. C. Assets, $30,000 decrease; liabilities, $30,000 increase; equity, no effect. D. Assets, no effect; liabilities, $30,000 decrease; equity, $30,000 increase. E. Assets, $30,000 decrease; liabilities, no effect; equity $30,000 decrease. 5. Zion Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It buys office equipment on credit for $75,000. What would be the effects of this transaction on the accounting equation? A. Assets increase by $75,000 and expenses increase by $75,000. B. Assets increase by $75,000 and expenses decrease by $75,000. C. Liabilities increase by $75,000 and expenses decrease by $75,000. D. Assets decrease by $75,000 and expenses decrease by $75,000. E. Assets increase by $75,000 and liabilities increase by $75,000. 6. A credit entry: A. Increases asset and expense accounts, and decreases liability, owner's capital, and revenue accounts. B. Is always a decrease in an account. C. Decreases asset and expense accounts, and increases liability, owner's capital, and revenue

accounts. D. Is recorded on the left side of a T-account. E. Is always an increase in an account. 7. Flash had cash inflows from operations $62,500; cash outflows from investing activities of $47,000; and cash inflows from financing of $25,000. The net change in cash was: A. $40,500 increase. B. $40,500 decrease. C. $134,500 decrease. D. $134,000 increase. E. $9,500 increase. 8. On January 1 of the current year, Bob's Lawn Care Service reported owner's capital totaling $122,500. During the current year, total revenues were $96,000 while total expenses were $85,500. Also, during the current year Bob withdrew $20,000 from the company. No other changes in equity occurred during the year. If, on December 31 of the current year, total assets are $196,000, the change in owner's capital during the year was: A. A decrease of $9,500. B. An increase of $9,500. C. An increase of $30,500. D. A decrease of $30,500 E. Impossible to determine from the information provided. 9. A company reported total equity of $145,000 on its December 31, 2008 balance sheet. The following information is available for the year ended December 31, 2009: 2009 Revenues..$210,000 2009 Expenses 165,000 Liabilities, at December 31, 2009.92,000 What are the total assets of the company at December 31, 2009? A. $45,000. B. $92,000. C. $98,000. D. $210,000. E. $282,000. 10. A building is offered for sale at $500,000 but is currently assessed at $400,000. The purchaser of the building believes the building is worth $475,000, but ultimately purchases the building for $450,000. The purchaser records the building at what amount? What accounting principle supports your answer? a. $450,000; Cost principle. b. $400,000; Going-concern assumption. c. $450,000; Monetary unit assumption. d. $475,000; Cost principle. e. $500,000; Going-concern assumption. 11. On April 30, Holden Company had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May? A. $ 5,000. B. $47,000. C. $52,000. D. $57,000. E. $32,000.

12. At the end of the current year, Norman Company reported total liabilities of $300,000 and total equity of $100,000. The company's debt ratio on the last year-end was: A. 300%. B. 33.3% C. 75.0%. D. $400,000. E. Cannot be determined from the information provided. 13. An error in the general journal where a $760 increase in Accounts Payable was recorded as a $760 decrease in Accounts Payable. The error will make the trial balance A. total credits exceed total debits by $760. B. total debits exceed total credits by $1,520. C. total debits exceed total credits by $760. D. total credits exceed total debits by $1,520. E. total debits exceed total credits by $380. 14. Which will make the increase of Cash flows from financing activity? A. Cash paid on an account payable. B. Cash purchase of equipment. C. Cash withdrawal by owner. D. Cash received from clients. E. Cash investment by owner. 15. A company spent $52,000 in cash for this period's advertising activities. Enter the appropriate amounts that reflect this transaction into the accounting equation format shown below. Assets = Liabilities + Equity

16. Indicate whether a debit or credit entry would be made to record the following changes in each account. (12%) __ __ a. To increase Owner, Capital __ __ d. To increase Revenue. _ _ _ _ b. To decrease Accounts Payable. __ __ e. To decrease Accounts Receivable. _ ___ c. To increase Salaries Expense. __ __ f. To increase Owner, Withdrawals.

17. Maria Sanchez began business as Sanchez Law Firm on November 1. Record the following November transactions by making entries directly to the T-accounts provided. Then, prepare a trial balance, as of November 30. (31%) a) Sanchez invested $15,000 cash and a law library valued at $6,000. b) Purchased $7,500 of office equipment from Johnson Bros. on credit. c) Completed legal work for a client and received $1,500 cash in full payment. d) Paid Johnson Bros. $3,500 cash in partial settlement of the amount owed. e) Completed $4,000 of legal work for a client on credit. f) Sanchez withdrew $2,000 cash for personal use. g) Received $2,500 cash as partial payment for the legal work completed for the client in (e). h) Paid $2,500 cash for the legal secretary's salary. a) 15,000

a)

6,000

a) 21,000

Trial Balance

18. Kylan Management Services opens for business and completes these transactions in November. Nov. 1 Rollie Kylan, the owner, invested $190,000 cash along with $29,000 of office equipment in the company. 2 The company prepaid $10,000 cash for six months rent for an office. 4 The company made credit purchases of office equipment for $4,300 and of office supplies for $2,100. Payment is due within 10 days. 8 The company completed work for a client and immediately received $7,000 cash. 12 The company completed a $9,200 project for a client, who must pay within 30 days. 13 The company paid $6,400 cash to settle the payable created on November 4. 19 The company paid $4,100 cash for the premium on a 24-month insurance policy. 22 The company received $3,700 cash as partial payment for the work completed on Nov. 12. 28 R. Kylan withdrew $6,300 cash from the company for personal use. 30 The company paid $1,100 cash for this months utility bill. Required Prepare general journal entries to record these transactions.(27%) Date Nov.1 Cash Office Equipment R. Kylan, Capital Owner invested cash and equipment.. Explanation Debit 190,000 29,000 219,000 Credit