Question

In: Accounting

1.If store rent has been paid in cash for the month, then a. owner's equity will...

1.If store rent has been paid in cash for the month, then

a. owner's equity will decrease.

b. an asset will increase.

c. a liability will increase.

d. the owners equity will increase

2.

Pharoah’s Forest Products showed the following account balances at the end of 2021:

Cash		$ 99650
Accounts Receivable		19500
Accounts Payable		13900
Unearned Revenue		950
Sales		148800
Pharoah, Capital		71250
Pharoah, Withdrawals		59500
Office Supplies		2550
Wages Expense		44900
Utilities Expense		8800

Assuming all accounts have normal balances, what are the totals for the debit and credit columns in the trial balance?

a. $234900

b. $233950

c. $135250

d. $163650

3. The accounts of a business before an adjusting entry is made to record an accrued revenue reflect an

a. understated liability and an overstated owner's capital.

b. overstated asset and an understated revenue.

c. understated expense and an overstated revenue.

d. understated asset and an understated revenue.

4. If a company purchases inventory for $150000 with terms 1/5 n/30 and pays within the discount period, the amount of cash paid is

a. $151500.

b. $148500.

c. $150000.

d. $155000.

5. Windsor Farm Store had a beginning merchandise inventory of $9000. During the period, purchases were $34800; purchase returns, $1700; and freight in $2500. A physical count of inventory at the end of the period revealed that $6400 was still on hand. Using a periodic inventory system, the cost of goods sold was

a. $43800.

b. $38200.

c. $45500.

d. $42100.

Expert Solution


		Reasons
1)	Correct option A	Because Rent expense will be debited which will decrease the profit and thereby decrease owner's equity and asset (cash) will decrease.


2)	Correct Option A	Account	Debit	Credit
		Cash	99,650
		Accounts Receivable	19,500
		Accounts Payable		13,900
		Unearned Revenue		950
		Sales		148,800
		Pharoah, Capital		71,250
		Pharoah, Withdrawals	59,500
		Office Supplies	2,550
		Wages Expense	44,900
		Utilities Expense	8,800
		Total	234,900	234,900


3)	Correct Option D	Because when accrues revenue is recorded, revenue will increase and accounts receivable (asset ) will increase

4)	Correct Option B	Cash paid will be = 150000*(1-1%)
		148500


5)	Correct Option B	Calculation of Cost of Goods Sold

		Beginning Inventory	9000
		Add: Purchase	34800
		Less: Purchase Return	-1700
		Add: Freight	2500
		Less: Ending Inventory	-6400

		Cost of Goods Sold	38200

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