Question

1. The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2013:

Accounts payable

$ 19,000

Accounts receivable	11,000
Accumulated depreciation – equipment	28,000
Advertising expense	21,000
Cash	11,000
Common stock	40,000
Dividends	14,000
Depreciation expense	12,000
Equipment	190,000
Insurance expense	3,000
Note payable, due 6/30/14	70,000
Patents	20,000
Prepaid insurance (12-month policy)	6,000
Rent expense	17,000
Retained earnings (1/1/13)	65,000
Salaries and wages expense	32,000
Service revenue	125,000
Supplies	4,000
Supplies expense	6,000

What is total liabilities and stockholders' equity at December 31, 2013?

	A.	$214,000
	B.	$194,000
	C.	$228,000
	D.	$231,000

2.

The following information is for Sunny Day Real Estate:

Sunny Day Real Estate Balance Sheet December 31, 2013

Cash		$ 25,000			Accounts Payable	$ 60,000
Prepaid Insurance		30,000			Salaries and Wages Payable	15,000
Accounts Receivable		50,000			Mortgage Payable	85,000

Inventory

70,000

Total Liabilities

$160,000

Land Held for Investment		85,000
Land		120,000

Building

$100,000

Common Sock

$120,000

Less Accumulated

Retained Earnings

250,000

370,000

Depreciation

(20,000)

80,000

Trademark

70,000

Total Liabilities and

Total Assets

$530,000

Stockholders' Equity

$530,000

The total dollar amount of assets to be classified as current assets is

	A.	$105,000.
	B.	$260,000.
	C.	$175,000.
	D.	$190,000 3. The income statement for the year 2013 of Fugazi Co. contains the following information: Revenues $70,000 Expenses: Salaries and Wages Expense $45,000 Rent Expense 12,000 Advertising Expense 8,000 Supplies Expense 6,000 Utilities Expense 2,500 Insurance Expense 2,000 Total expenses 75,500 Net income (loss) $(5,500) The entry to close the expense accounts includes a A. credit to Income Summary for $5,500. B. debit to Income Summary for $5,500. C. debit to Salaries and Wages Expense for $2,500. D. debit to Income Summary for $75,500.

Answer 1

Question 1. Option No. A.$214,000 Calculation:
Income statement
Service revenue		1,25,000
Rent expense	17,000
Supplies expense	6,000
Salaries and wages expense	32,000
Insurance expense	3,000
Depreciation expense	12,000
Advertising expense	21,000
Total Expenses		91,000
Operating Profit		34,000
Less: Dividends		14,000
Net Income		20,000
Retained Earnings Statement
Retained earnings (1/1/13)	65,000
Add: Net Income	20000
Retained earnings (31/12/13)	85,000
Balance Sheet
Assets
Accounts receivable	11,000
Supplies	4,000
Cash	11,000
Prepaid insurance (12-month policy)	6,000
Equipment	1,90,000
Accumulated depreciation – equipment	-28,000
Patents	20,000
Total Assets	2,14,000
Liabilities and Stockholders' equity
Accounts Payable	19,000
Note payable, due 6/30/14	70,000
Common stock	40,000
Retained earnings (12/31/13)	85,000
Total Liabilities and Stockholders' equity	2,14,000

Question 2. Option A. $105,000
Cash	25000
Prepaid Insurance	30000
Accounts Receivable	50000
Total Current Assets	105000

Question 3 . Option D. Debit to Income Summary for $75,500

Income Summary	75500
Salaries and Wages Expense		45000
Rent Expense		12,000
Advertising Expense		8,000
Supplies Expense		6,000
Utilities Expense		2,500
Insurance Expense		2,000