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Exam 2: Review of the Accounting Process

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Question 61

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The accounting system of Carlton and Sons consists of a general journal (GJ),a cash receipts journal (CR),a cash disbursements journal (CD),a sales journal (SJ),and a purchases journal (PJ).For each of the following,indicate which journal should be used to record the transaction.

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Question 62

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When Castle Corporation pays insurance premiums,the transaction is recorded as a debit to prepaid insurance.Additional information for the year ended December 31 is as follows: What was the total amount of cash paid by Castle for insurance premiums during the year?

A) $218,750
B) $166,250
C) $210,000
D) $227,500

E) All of the above
F) A) and B)

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Question 63

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Use the following to answer questions Using the chart of accounts provided,indicate by account number the account or accounts that would be debited and credited in the following transactions and indicate the type of transaction as: (1)an external transaction, (2)an internal transaction recorded as an adjusting journal entry,or (3)a closing entry.The company uses a perpetual inventory system.All prepayments are initially recorded in permanent accounts. -Invested idle cash in short-term money market funds.

Use the following to answer questions Using the chart of accounts provided,indicate by account number the account or accounts that would be debited and credited in the following transactions and indicate the type of transaction as: (1)an external transaction, (2)an internal transaction recorded as an adjusting journal entry,or (3)a closing entry.The company uses a perpetual inventory system.All prepayments are initially recorded in permanent accounts. -Purchased building and equipment for $10,000,000,paying 20% cash and issuing a 30-year note for the balance.

On November 1,2016,Tim's Toys borrows $30,000,000 at 9% to finance the holiday sales season.The note is for a six-month term and both principal and interest are payable at maturity.What is the balance of interest payable for the loan as of December 31,2016?

Prepayments occur when:

-Property taxes payable

Describe what is meant by prepaid expenses and provide two examples.

Cost of goods sold is:

After an unadjusted trial balance is prepared,the next step in the accounting processing cycle is the preparation of financial statements.

The accounting equation can be stated as:

Balance sheet accounts are referred to as temporary accounts because their balances are always changing.

Use the following to answer questions Using the chart of accounts provided,indicate by account number the account or accounts that would be debited and credited in the following transactions and indicate the type of transaction as: (1)an external transaction, (2)an internal transaction recorded as an adjusting journal entry,or (3)a closing entry.The company uses a perpetual inventory system.All prepayments are initially recorded in permanent accounts. -Sold inventory for cash.

-Prepaid rent

Use the following to answer questions The following information,based on the 12/31/16 Annual Report to Shareholders of Krafty Foods ($ in millions): -Based on the information presented above,prepare the 2016 Income Statement for Krafty Foods.

Describe what is meant by deferred revenues and provide two examples.

The adjusting entry required when amounts previously recorded as deferred revenues are recognized includes:

Mama's Pizza Shoppe borrowed $8,000 at 9% interest on May 1,2016,with principal and interest due on October 31,2017.The company's fiscal year ends June 30,2016.What adjusting entry is necessary on June 30,2016?

-Supplies expense

On December 31,2015,Coolwear,Inc.had a balance in its prepaid insurance account of $48,400.During 2016,$86,000 was paid for insurance.At the end of 2016,after adjusting entries were recorded,the balance in the prepaid insurance account was 42,000.Insurance expense for 2016 would be: