Chapters 1-3
What is the Accounting Equation?
Assets=Liabilities + Stockholders' Equity
Company ABC purchases a building for $4,000,000. This is an example of a(an) _____________ activity.
Investing
What are the 2 criteria for recording a contingent liability on a journal entry?
If the loss is probable and estimable (there's a $$ amount)
What is the formula for Net Income?
Revenues-Expenses
How many semesters has Mellayne been an SI for? (including this semester)
3 semesters (this is my third)
If a company incurs rent expense, what happens to stockholders’ equity?
Stockholders' Equity Decreases
Name the 4 Inventory costing methods
What happens when a company declares dividends?
Hint: When dividends are declared, it creates a ___________
It creates a liability
Beginning Inventory: $49,000
Inventory Purchases: $34,500
Ending Inventory: $19,400
What is Cost of Goods Sold?
$64,100
What is the most popular college major in the US?
Business
How does borrowing cash from a bank affect the accounting equation?
Calculate COGS: Beginning Inventory $7,400, Purchases $22,400, Ending Inventory $9,400
$20,400 COGS
On July 1, Company B issues a $200,000, eight-month, 6% note. Interest is payable at maturity.
What is the amount of interest expense that the company would record in a year-end adjusting entry on December 31?
$6,000
What is the debit account when estimating for uncollectible accounts at year-end?
Bad Debt Expense
What was the first company to reach $1 trillion in market value?
Apple Inc.
Company sells $7,000 of goods on account.
Record the journal entry
Debit: Accounts Receivable
Credit: Sales Revenue
Company B sells inventory to Company C on account with terms 2/10, n/30 on May 1 for $4,000. Company C pays company B on May 6th.
What would the journal entry be for recording the cash collection from Company C?
Debit: Cash 3,920
Debit: Sales Discounts 80
Credit: Accounts Receivable 4,000
On January 1, 2024, Company H borrowed $14 million from a bank to finance operations over the next three years. The loan will be paid back in three equal installments of $5,432,469 on December 31 of each year. The payments include interest at a rate of 8%.
Will interest expense be lower or higher in the second installment payment compared to the third installment payment?
higher
Company B purchased equipment for $400,000 on January 1, 2022. By the time it was sold in 2025 for $200,000, the equipment had accumulated depreciation of $140,000.
What is the book value of the equipment on the date of sale?
$260,000
Name all of the planets of the solar system in order (including the dwarf planet)
Mercury, Venus, Earth, Mars, upiter, Saturn, Uranus, Neptune, Pluto
IDGAF Inc. had a beginning Supplies balance of $16,000. At the end of the year, a physical count showed $7,875 of supplies remaining.
What adjusting journal entry should be recorded to reflect supplies used during the year?
Debit: Supplies Expense 8,125
Credit: Supplies 8,125
Company LOL has $440,000 balance in their accounts receivable at the end of the year. They estimate that they will not collect 6% of their accounts receivable. Record the adjusting entry needed at the end of the year for bad debt expense
Debit: Bad Debt Expense 26,400
Credit: AUA 26,400
Company B declares a $0.25 cash dividend on its 5,000 outstanding common shares and a $36,000 dividend on its preferred stock (8%).
Prepare the journal entry to record the declaration of dividends.
Debit: Dividends 37,250
Credit: Dividends Payable 37,250
Company B purchased equipment for $400,000 on January 1, 2022. By the time it was sold in 2025 for $200,000, the equipment had accumulated depreciation of $140,000.
Record the journal entry for the sale of the equipment
Hint: 4 accounts, gain or loss
Debit: Cash 200,000
Debit: Accumulated Depreciation 140,000
Debit: Loss 60,000
Credit: Equipment 400,000
What is the name of all of the Big 4 Accounting firms?
Deloitte, PWC, EY, KPMG