Question

The company has a beginning cash balance of $7,000. Using the following information, calculate the ending balance of cash:

-Note receivable collected by the bank = $5,000
-Checks outstanding = $8,000
-Bank service fees = $1,000
-Non-sufficient funds (NSF) checks = $2,000
-Deposits Outstanding = $11,000

I know the anwer is 9000. Explain it!!!!!

Suppose supplies at the beginning of the year equal $1,200. During the year, an additional $5,400 of supplies is purchased. At the end of the year, $1,400 of supplies remains. The adjusting entry for supplies would include:

	A.	Credit Supplies Payable for $5,200
	B.	Debit Supplies for $5,400
	C.	Debit Supplies Expense for $5,200
	D.	Debit Supplies Expense for $5,600
	E.	Credit Supplies Expense for $5,600

Why this question is not A?

Which of the following transactions would cause an increase in both the assets and stockholders’ equity of a company?

	A.	The purchase of supplies on account from a vendor
	B.	Prepaying for next year’s rent
	C.	Purchase of land with cash obtained from a bank loan
	D.	Collection of an account receivable which was the result of services provided on account in a previous period
	E.	Services provided to a customer on account Explain D. On May 1, 2012, Red’s Basket Company purchased a one-year insurance policy for $12,000 ($1,000 per month). What is the amount of insurance expense in 2012 using accrual-basis versus cash-basis accounting? A. Accrual-basis = $6,000; Cash-basis = $6,000 B. Accrual-basis = $8,000; Cash-basis = $12,000 C. Accrual-basis = $0; Cash-basis = $12,000 D. Accrual-basis = $4,000; Cash-basis = $0 E. Accrual-basis = $12,000; Cash-basis = $8,000 Explain why the Accrual is 8000

Answer 1

Solution 1:

Computation of Ending Cash Balance
Beginning Cash Balance	$7,000.00
Add: Note Receivable collected by bank	$5,000.00
Less: Bank Service Fees	$1,000.00
Less: Non sufficient funds (NSF)Checks	$2,000.00
Ending Cash Balance	$9,000.00

Checks outstanding and deposits outstanding have no effect on cash balance.

Solution 2:

Supplies Expense = Beginning Supplies + Purchases - ending Supplies
= 1200+5400-1400 = $5200

Therefore supplies expense would be recorded as:

Debit Supplies expense $5,200

Credit Supplies $5,200

Hence Option "C" is correct

A cannot be correct because supplies payable is a liability account not an expense account.

Solution 3:

Services provided to a customer on account will increase the assets by the amount of Accounts Receivables and increase the stockholders' equity bt the amount of Revenue.

Hence option "E" is correct.

D is not correct because collection of accounts receivable for the services provided on account in previous period will decrease the assets from accounts receivable and increase the assets by incoming cash. Thereby no effect on Stockholders' equity.

Solution 4:

Insurance period expired in 2012 = May 2012 to Dec 2012 = 8 months

Insurance expense under accrual basis = $1000*8 = $8,000

Under cash basis, expense is recognized at the time of payment, therefore insurance expense under cash basis = $12,000

Therefore option "B" is correct.