Testbank to accompany
Accounting 8th Edition by John Hoggett, Lew Edwards, John Medlin, Matthew Tilling Tilling & Evelyn Hogg
Prepared by
Barbara Burns
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Testbank to accompany Accounting 8e
Chapter 4: Adjusting the accounts and preparing financial statements Multiple Choice
% The statem statement ent concern concerning ing accrua accruall accountin accounting g that is true true is' a (ro)it is is the e*cess o) cash in)lows in)lows )rom )rom income income over cash cash out)lows out)lows )or e*penses b +ncome is recognised in the period when the )low )lo w o) economic bene)its can be reliably measured c or most most businesses businesses the cash approach approach gives gives a better better measure measure o) economic economic per)ormance per)ormance than does the accrual approach d +ncome )rom sales is is recognised recognised in in the period when the the che-ue che-ue is cashed ".!E/ B !ection 0%
# The cash cash approach approach to pro)it pro)it measurement measurement will not give a reliabl reliablee pro)it )igure )igure )or an entity entity that conducts a signi)icant portion o) its business' a 1verseas b ith subsidiaries c ith ith bor borro rowe wed d mon money ey d 1n cr credit ".!E/ 2 !ection 0%
3 4nder the the cash approach approach to to pro)it measurem measurement ent income income is recorded recorded in in the accounting accounting period period when' a 5ash 5ash is rece receiv ived ed b 6oods are sold or services serv ices per)ormed c " cont contra ract ct is sign signed ed d "n orde orderr is is pla place ced d ".!E/ " !ection 0%
0 Harry 5ompany 5ompany uses uses cleaning cleaning supplies supplies on a daily basis 4nder the the accrual accrual basis o) accounting these supplies would be an e*pense o) the period in which they are' a 1rdered b /eceived c (aid )or d 4sed © John iley & !ons "ustralia, Ltd #$%#
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Chapter 4: Adjusting the accounts and preparing financial statements
".!E/ 2 !ection 0% 7 +t is corre correct ct that that each each balanc balancee day ad8us ad8ustme tment nt a "))ect "))ect eithe eitherr the incom incomee stateme statement nt or the bala balance nce sheet sheet b Has one e))ect on the income statement sta tement and one e))ect on the balance balanc e sheet c 1nly 1nly a))ec a))ectt the the incom incomee state stateme ment nt d "lways "lways have have an e))ec e))ectt on the the ban9 ban9 accoun accountt ".!E/ B !ection 0#
: 2uring #$%% #$%% The !tyle !tyle Hairdressing Hairdressing !alon paid paid out ;0% $$$ in wages )rom )rom its ban9 ban9 account "t year :$$ b ;0% $$$ c ;03 0$$ d ;0# :$$ ".!E/ 5 !ection 07
? The (repaid (repaid +nsurance +nsurance account account o) (@/ Traders Traders shows shows a balance balance o) ;A$$ net net o) 6!TC 6!TC representing a payment on % July #$%% o) a three
a +nsurance E*pense (repaid +nsurance
; % 7$
b +nsurance E*pense E*pens e (repaid +nsurance
3$$
c (repaid +nsurance +nsurance E*pense
% 7$
d (repaid +nsurance +nsurance E*pense
? 7$
3 $$
% 7$
? 7$
".!E/ " !ection 00
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03
Testbank to accompany Accounting 8e
> hich statement statement relating relating to the "ccumulated "ccumulated 2epreciat 2epreciation ion account is correct= correct= a +t nor norma mall lly y has has a debi debitt bala balance nce b +t re)lects the portion portio n o) the cost o) the asset that has been assigned as an e*pense since purchase c +t provide providess in)orma in)ormation tion on on the mar9et mar9et valu valuee o) the asset asset d +t is clas classi)i si)ied ed as a liabi liabilit lity y in the the balance balance sheet sheet ".!E/ B !ection 00
A Michael purchased purchased two two vehicles vehicles )or his business business on % January #$%% #$%% These vehicles vehicles cost ;7$,$$$ each and have a use)ul li)e o) 7 years with an e*pected residual o) ;#$,$$$ each The ad8usting entry )or depreciation on 3% 2ecember #$%%, using the straight
%$ Tan Traders Traders received a ;?7$ advance payment )rom a customer )or wor9 to be carried out in the ne*t accounting period The accounting entry to initially record the ;?7$ is' a 2ebit 2ebit unearn unearned ed incom incomee ;?7$D ;?7$D credi creditt ban9 ban9 ;?7$ ;?7$ b 2ebit ban9 ;?7$D credit cred it unearned income ;?7$ ; ?7$ c 2ebit 2ebit ban9 ban9 ;?7$ ;?7$DD credi creditt credi creditor tor ;?7$ ;?7$ d 2ebit 2ebit incom incomee earned earned ;?7$D ;?7$D credit credit ban9 ;?7$ ".!E/ B !ection 00
%% The o))ice supplies inventory account o) Tan Tan Traders Traders shows a balance o) ;% :$$ on 3% 2ecember #$%% The ad8usting entry to record o))ice supplies o) ;77$ issued to sta)) sta)) in the %# months up to 3% 2ecember #$%% is' a 2ebit o))ice o))ice supplies supplies inventory inventory ;77$D ;77$D credit credit o))ice o))ice supplies supplies e*pense e*pense ;77$ b 2ebit o))ice supplies inventory inven tory ;% $7$D credit o))ice supplies su pplies e*pense ;% $7$ $7 $ c 2ebit o))ice o))ice supplies supplies e*pense e*pense ;77$D ;77$D credit credit o))ice o))ice supplies supplies inventory inventory ;77$ d 2ebit o))ice o))ice supplies supplies e*pense e*pense ;% :$$D credit credit o))ice o))ice supplies supplies inventory inventory ;% :$$ ".!E/ 5 !ection 00
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Chapter 4: Adjusting the accounts and preparing financial statements
%# !ampras 5ompany 5ompany purchased a machine )or ;3$ $$$ on % January #$%$ with an estimated li)e o) 7 years and a residual value o) ero The straight $$$ d ;%# $$$ ".!E/ 5 !ection 0?
%3 1n July % #$%% the (epper (epper 2iner rented rented out part o) its property and collected collected ;A$$$ in advance )or a nine
%0 +) an ad8ustment )or depreciation depreciation is omitted )rom the )inancial )inancial reports the a))ect is' a "ssets "ssets are are underst understate atedD dD pro)it pro)it is unders understat tated ed b "ssets are overstatedD pro)it is understated c "ssets "ssets are are underst understate atedD dD pro)it pro)it is overst overstated ated d "ssets "ssets are are overst overstated atedDD pro)it pro)it is is oversta overstated ted ".!E/ 2 !ection 0%$
%7 1n % July Ju ly #$%% #$ %% Tan Tan Traders Traders paid ;:$$, representing representing a two
07
Testbank to accompany Accounting 8e
!ection 0? %: Tan Traders Traders paid salaries o) ;%3$ $$$ during the year and owes ;# %$$ )or three days wor9 carried out be)ore the 3% 2ecember #$%% which will not be paid until January 3 #$%# ")ter the ad8usting entry )or the year ended 3% 2ecember #$%%' a !alaries !alaries in the income stateme statement nt are ;%3# ;%3# %$$ and and accrued accrued salaries salaries in the the balance balance sheet are ;# %$$ b !alaries in the income statement state ment are ;%3$ $$$ and accrued salaries in the balance b alance sheet are ;# %$$ c !alaries !alaries in the income stateme statement nt are ;%#? ;%#? A$$ and and accrued accrued salaries salaries in the the balance balance sheet are ;# %$$ d !alaries !alaries in the income stateme statement nt are ;%3# ;%3# %$$ and and accrued accrued salaries salaries in the the balance balance sheet are ;%3# %$$ ".!E/ " !ection 0?
%? G 5os 5os employees carry carry out wor9 to the value o) ;? 7$$ They They are paid ;0 7$$ immediately with the balance to be settled in the ne*t accounting period 4nder the accrual approach to pro)it measurement the amount o) wages e*pense that will be recorded in the current period is' a .il b ;0 7$$ c ;3 $$$ d ;? 7$$ ".!E/ 2 !ection 0?
%> "t year
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Chapter 4: Adjusting the accounts and preparing financial statements
%A 2e)erral type ad8ustments ad8ustments occur when cash )or e*penses e*penses is paid in advance or cash )rom incomes is pre
".!E/ 2 !ection 03
#$ 1n the )irst day o) the year Tan Traders Traders purchased purchased a )or9li)t )or9li)t truc9 )or ;%# $$$ wh which ich is to be depreciated by #7I a year year "t the end o) the )irst year' a 2epreciation 2epreciation in the income income statement statement is ;3 $$$ and the carrying carrying value value o) the the )or9li)t )or9li)t in the balance sheet is ;%# $$$ b 2epreciation in the income in come statement is ;3 $$$ and an d the carrying value o) o ) the )or9li)t in the balance sheet is ;%7 $$$ c 2epreciation 2epreciation in the income income statement statement is ;3 $$$ and the carrying carrying value value o) the the )or9li)t )or9li)t in the balance sheet is ;A $$$ d 2epreciation 2epreciation in the income statement statement is is ;$ and the the carrying value o) the the )or9li)t )or9li)t in the balance sheet is ;%# ;% # $$$ ".!E/ 5 !ection 0?
#% The wages e*pense account )or 6erry Mander, Mander, political consultants, consultants, showed the )ollowing entries )or #$%% hat was the portion o) wages that was treated as an e*pense in #$%$ but was not paid until #$%%= ages E*pense 2ate (articulars 2 eb i t 5redit Balance #$%% ; ; ; Jan % "ccrued e*penses % #$$ % #$$ 5r ear Karious cash cas h payments 7% $$$ 0A >$$ 2r 2ec "ccrued e*penses # #$$ 7# $$$ 2r 3% a ;0A >$$ b ;7% $$$ c ;% #$$ d ;# #$$ ".!E/ 5 !ection 07 © John iley & !ons "ustralia, Ltd #$%#
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Testbank to accompany Accounting 8e
## +) a company has earned income income which has not been received received in cash at the end o) the accounting period an ad8ustment should be made which will' a 2ebit 2ebit an asset asset accou account nt and and credit credit an incom incomee account account b 2ebit an e*pense account acco unt and credit cash c 2ebit 2ebit an incom incomee account account and and credit credit an asset asset account account d 2ebit 2ebit an asset asset accoun accountt and credit credit an e*pen e*pense se account account ".!E/ " !ection 07
#3 "B5 collects collects rents )rom several properties properties (rior to recording ad8usting entries, entries, assume the /ent +ncome account has a credit balance o) ;>$$$ Two ad8ustments are to be made at the end o) the )inancial year %C an accrual )or accrued rent income o) ;:$$ #C the 4nearned /ent +ncome account is to be decreased by ;#$$ ")ter processing these ad8usting entries the amount o) /ent +ncome to be shown in the income statement is' a ;>>$$ b ;>0$$ c ;?:$$ d ;?#$$ ".!E/ " !ection 0?
#0 The publishers o) 6uide to the !toc9 Mar9et, a magaine published monthly, monthly, received ;%#% in advance, including ;%% 6!T on % March, )or a % years subscription %% issuesC beginning with the March Mar ch issue 1n receipt o) the subscription su bscription which entry will the th e company ma9e= a 2ebit 2ebit 5ash 5ash ;%#%D ;%#%D credit credit !ubscrip !ubscription tionss +ncome +ncome ;%#% ;%#% b 2ebit 5ash ;%#%D credit 6!T 5ollections ;%%, credit 4nearned 4nearn ed !ubscriptions liabilityC liability C ;%%$ c 2ebit 5ash 5ash ;%#%D credit credit 6!T 5ollections 5ollections ;%%, ;%%, credit !ubscriptions !ubscriptions /eceived /eceived in "dvance assetC ;%%$ d 2ebit 2ebit 5ash ;%%$D ;%%$D credit credit !ubscr !ubscript iptions ions +ncom +ncomee ;%%$ ;%%$ ".!E/ B !ection 00
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Chapter 4: Adjusting the accounts and preparing financial statements
#7 The publishers o) 6uide to the !toc9 Mar9et, a magaine published monthly, monthly, received ;%#% in advance, including ;%% 6!T on % March, )or a % years subscription %% issuesC beginning with the March Mar ch issue "t the end o) the )inancial year on 3$ June Ju ne what entry will the company ma9e= a 2ebit 4nearned !ubscriptions !ubscriptions liabilit liabilityC yC ;0$D credit !ubscriptions !ubscriptions +ncome +ncome ;0$ ;0$ b 2ebit 5ash ;0$D credit !ubscriptions !ubs criptions +ncome ;0$ c 2ebit 5ash 5ash ;%#%D credit credit 6!T 5ollections 5ollections ;%%, ;%%, credit 4nearned !ubscriptions !ubscriptions liabilityC liabilityC ;%%$ d 2ebit 4nearned 4nearned !ubscriptions !ubscriptions liability liabilityCC ;0$D credit credit !ubscripti !ubscriptions ons +ncome +ncome ;3:D credit credit 6!T 5ollections ;0 ".!E/ " !ection 00
#: +n preparing its #$%% ad8usting entries, entries, the (hilippoussis 5ompany 5ompany neglected to ad8ust the 1))ice !upplies assetC account )or the amount o) supplies used up during the year "s a result o) this error' a #$%% pro)it is understated, understated, the the balance balance o) e-uity e-uity is understated, understated, and assets are are understated understated b #$%% pro)it is overstated, the balance ba lance o) e-uity is overstated, overs tated, and assets are correctly cor rectly stated c #$%% pro)it is overstated, overstated, the the balance balance o) e-uity e-uity is overstated, overstated, and assets are are overstated overstated d Liab Liabili ilitie tiess are und under ersta state ted d ".!E/ 5 !ection 0?
#? 2etermine 2etermine the cash payments made during the year )or insurance premiums premiums )rom the )ollowing in)ormation' ; +n +nsurance e*pense income statementC 0? 7 Prepaid Insurance: Insurance: Begi Beginni nning ng Balan Balance ce ##$ Ending Balance %A 7 "ssume all insurance premiums are paid in cash a ;0?7 b ;%A7 c ;:A7 d ;07$ ".!E/ 2 !ection 00
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Testbank to accompany Accounting 8e
#> The primary basis )or the classi)ication classi)ication o) assets and liabilities liabilities in the balance sheet is' a (ro) (ro)it itab abil ilit ity y b Tangibility c Li-uidity d 2egr 2egree ee o) ris9 ris9 ".!E/ 5 !ection 0>
#A The capital account o) a sole trader was credited with with ;7$$$ hich o) these items would not give rise to such a credit= a Th Thee busine business ss earn earned ed a pro)i pro)itt o) ;7$$$ ;7$$$ b The owner brought in a private p rivate car valued at ;7$$$ ;7$ $$ )or business use c The owner owner intro introduce duced d ;7$$$ ;7$$$ new capital capital d The owner owner paid an outstanding outstanding private private gambling gambling debt debt o) ;7$$$ ;7$$$ )rom the business business ban9 account ".!E/ 2 !ection 0?
3$ 5urrent assets assets may be listed in the balance sheet in the order o) their li-uidity li-uidity Li-uidity Li-uidity is' a "nothe "notherr name name )or the the oper operat ating ing cycl cyclee b " measure measure o) how many buyers buy ers there are )or the asset ass et c hether hether the the asset asset is is secured secured over a liabil liability ity d The averag averagee length length o) time time it ta9es ta9es to convert convert an asset asset into into cash ".!E/ 2 !ection 0>
3% The current current liability liability is' is' a "ccru "ccrued ed 2eli 2elive very ry E* E*pen penses ses b "ccounts /eceivable c Elec Electr tric icit ity y E*p E*pen ense se d Lo Long ng
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Chapter 4: Adjusting the accounts and preparing financial statements
3# The e*cess o) current current assets over current liabiliti liabilities es is 9nown as' a E-uity b or9ing capital c +nta +ntang ngib ible le ass asset etss d .et assets ".!E/ B !ection 0>
33 1bligations 1bligations o) the entity that do not re-uire payment within one year o) the balance sheet date are classi)ied as' a 5urr 5urren entt lia liabi bili liti ties es b .on
30 hich o) these is not an advantage advantage o) using a wor9sheet to assist assist in preparing the )inancial statements= a "ll the the in)or in)ormat mation ion is assembl assembled ed in one place place b +t aids in the preparation prepara tion o) interim )inancial statements )or internal use u se c /eports /eports can can be prepare prepared d be)ore be)ore ma9ing ma9ing closin closing g entries entries d +t means means that that the the ledger ledger can be be dispens dispensed ed with with ".!E/ 2 !ection 0A
37 hich o) the )ollowing is not an advantage o) preparing an ad8usted trial trial balance= a +t veri)ies veri)ies that the debits debits e-ual the credits credits in the the ledger ledger a)ter the preparation preparation o) the ad8usting entries b +t reduces the possibility poss ibility o) errors being carried )orward )rom the ledger ledg er into the accounting reports c +t is a shortcut which means means that that the ad8usting ad8usting entries entries do not have have to be entered into the ledger d +t assists assists in the the preparat preparation ion o) the )inan )inancia ciall statemen statements ts ".!E/ 5 !ection 0:
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0%%
Testbank to accompany Accounting 8e
Fill in the blanks
% 4nder the the basis basis o) accounting accounting,, income income is recognised recognised when when earned earned and e*penses when incurred ".!E/ accrual !ection 0%
# The c c basis o) accounting accounting is not a generally generally accepted accepted method method o) determining pro)it )or businesses that have signi)icant credit transactions ".!E/ cash !ection 0%
3 The o o cycle is the average average time time it ta9es ta9es )or a )irm to ac-uire ac-uire and sell sell inventory and collect the cash )rom the sale ".!E/ operating !ection 0>
0 4nearned income is classi)ied classi)ied as a l l in the balance sheet as, i) i) the the income is not earned, it may need to be repaid ".!E/ liability !ection 00
7 "ccumulated "ccumulated depreciation depreciation is is re)erred re)erred to as as a c asset account account because because it o))sets a related asset account ".!E/ contra !ection 0?
: The c c v v o) an asset is its original original cost cost less accumulated accumulated depreciation ".!E/ carrying value !ection 00
? 6oodwil 6oodwilll is classi)i classi)ied ed in the balance balance sheet sheet as an i i asset asset ".!E/ intangible !ection 0> © John iley & !ons "ustralia, Ltd #$%#
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Chapter 4: Adjusting the accounts and preparing financial statements
> 5 5 l are obligations o) the )irm that are e*pected, in the normal course o) business, to be settled in the ne*t twelve months ".!E/ 5urrent liabilities !ection 0>
A " spreadsheet, spreadsheet, prepared prepared either either manually manually or electronically electronically and and used by accountants accountants to organise in)ormation, is 9nown as a w ".!E/ wor9sheet !ection 0A
%$ Because income income and e*pense accounts accounts are reduced to ero at the end o) the year they are 9nown as t accounts ".!E/ temporary !ection 0%
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Testbank to accompany Accounting 8e
Exam tpe !uestions "#E$T%&' 4()
The )ollowing trial balance was prepared )rom the ledger accounts o) !ingapore Enterprises, a service business Trial *alance *al ance as a s at +) ,ecemb ,e cember er -.))
2ebit ; Ban9 overdra)t (repaid rent 1))ice e-uipment and )ittings "ccumulated depreciation, o))ice e-uipment "ccounts payable 6!T collections 6!T outlays "ccounts receivable +ncome earned !alaries +nternet service provider 4tilities e*penses "dministrative e*penses +nterest e*pense 5apital N L Tan % January #$%% 2rawings N L Tan
5redit ; 7,%$$
0 ,7 $ $ % > ? ,$ $ $ 3$,$$$ %A,:$$ 3,?$$ # ,> $$ 33 , $$ $ #07,$$$ A7 ,$ $ $ 7$ $ %> ,$$ $ % 7 ,$ $$ % # ,$ $ $ A0,0$$ 3 $ ,$ $ $ ; 3 A ? ,> $$
;3A?,>$$
"d8ustments'
/ent e*pired )or the year was ;#,7$$ 2epreciation o) o))ice e-uipment is at %7I per annum using the straight line method !alaries owing at 3% 2ecember #$%% were ;3,$$$
/E@4+/E2' aC (repare general 8ournal entries entries )or )or the balance day day ad8ustments ad8ustments .arrations .arrations are not re-uired bC (repare an +ncome !tatement )or the year ended 3$ 2ecember #$%% cC (repare (repare a classi) classi)ied ied Balan Balance ce !heet !heet as at 3% 2ecemb 2ecember er #$%% #$%%
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Chapter 4: Adjusting the accounts and preparing financial statements
"#E$T%&' 4(-
The )ollowing trial balance was prepared )rom the ledger accounts o) Taiwan 5onsultants a )irm o) management consultants Taiwan Consultants
4nad8usted Trial Balance as at 3$ June #$%%
2ebit Ban9 !toc9 o))ice supplies on hand 1))ice e-uipment "ccumulated depreciation, o))ice e-uipment (remises "ccumulated depreciation, premises "ccounts payable 6!T collections 6!T outlays "ccounts receivable ees revenue /ent revenue "dvertising e*pense "dministrative e*penses !alaries +nternet service provider +nterest e*pense Telephone e*pense Loan due % !ept #$%7C 5apital N L Lee 2rawings N L Lee
; 0%,7#$ %%,>A$ %7#,$$$
5redit ;
#0,0$$ > $ $ ,$ $ $ :0,$$$ 33,$$$ 7,7$$ 3 ,7 $$ 0: , $$ $ >>$,:$$ %:,$$$ # 7 ,$ $$ 3 $ ,$ $$ 3 A$ , $ $$ # ,$ $ $ % A ,$ $ $ > ,$ $ $ #$$,$$$ 307,0%$ 0 $ ,$ $$ ;%,7:>,A%$
;%,7:>,A%$
"d8ustments'
!alaries are ;%7$$ per day They are paid wee9ly in arrears The ne*t pay day is July 3 which is a ednesday 2epreciation on premises is #I pa, on a straight
/E@4+/E2' aC (repare general 8ournal entries )or the balance day ad8ustments ad8ustments bC (repare an +ncome !tatement )or ) or the year ended 3$ June Ju ne #$%% cC (repa (repare re a class classi)i i)ied ed Bala Balance nce sheet sheet as as at 3$ June June #$% #$%% %
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Testbank to accompany Accounting 8e
$olution "uestion 4()
aC 6eneral Journal #$%% 2e c 3 % /ent (repaid rent
bC
!+.6"(1/E E.TE/(/+!E! ; #,7$$
#,7$$
2epreciation o))ice e-uipment "ccumulated depreciation o))ice e-uip & )ittings ;%>?,$$$ * %7IC
#>,$7$
!alaries !alaries payable
3,$$$
#>,$7$
3,$$$
!ingapore Enterprises +ncome !tatement )or the year ended 3% 2ecember #$%% ; +ncome earned Less E*penses !alaries /ent +nternet service provider 4tilities e*penses "dministrative e*penses 2epreciation o))ice e-uipment +nterest e*pense
A> ,$ $ $ # , 7$ $ 7$ $ %> ,$$ $ % 7 ,$ $$ # > ,$ 7 $ % # ,$ $ $ (/1+T
cC
;
!ingapore Enterprises Balance sheet as at 3% 2ecember #$%% ;
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;
; #07,$$$
%?0,$7$ ; ?$,A7$
;
0%:
Chapter 4: Adjusting the accounts and preparing financial statements
54//E.T "!!ET! (repaid rent "ccounts receivable
#,$$$ 33,$$$
.1.<54//E.T "!!ET! 1))ice e-uipment & )ittings Less "ccumulated depreciation
%>?,$$$ 7>,$7$
54//E.T L+"B+L+T+E! Ban9 overdra)t !alaries payable "ccounts payable 6!T payable ;3,?$$ < ;#>$$ )
7,%$$ 3,$$$ %A,:$$ A $$
E@4+T 5apital, L Tan N % January #$%% O (ro)it < 2rawings
A0,0$$ ?$,A7$ %:7,37$ 3 3$ $,$$$
37,$$$
%#>,A7$ ;%:3,A7$
#>,:$$
%37,37$ ;%:3,A7$
$olution 4(-
aC 6eneral 6ener al Journal Jour nal T"+". "+". 51.!4LT".T! 51.!4LT".T! #$%% June 3$ !alaries !alaries payable ;?,7$$P7 Q ;%,7$$ * # days
; 3,$$$
3,$$$
2epreciation premises "ccumulated depreciation premises ;>$$,$$$ * #I
%:,$$$
2epreciation o))ice e-uipment "ccumulated depreciation o))ice e-uip ;%7#,$$$ * %$I
%7,#$$
/ent revenue 4nearned rent revenue ;%:,$$$P#
>,$$$
1))ice supplies e*pense !toc9 o))ice supplies on hand 1))ice supplies used
:,3A$
(repaid advertising "dvertising e*pense
#,$$$
"ccounts receivable ees revenue
:,$$$
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;
%:,$$$
%7,#$$
>,$$$
:,3A$
#,$$$ :,$$$
0%?
Testbank to accompany Accounting 8e
T"+". 51.!4LT 51.! 4LT".T! ".T! +ncome !tatement )or the year ye ar ended 3$ June #$%% ;
bC ees revenue /ent revenue
Less EG(E.!E! "dvertising "dministrative e*penses !alaries +nternet service provider +nterest e*pense Telephone e*pense 2epreciation o))ice e-uipment 2epreciation premises 1))ice supplies e*pense (/1+T
cC
#3 ,$$ $ 3 $ ,$ $$ 3 A3 , $ $$ # ,$ $ $ % A ,$ $ $ >,$$$ % 7 ,# $ $ % : ,$ $ $ : ,3 A$
T"+". 51.!4L 51.! 4LT T".T! Balance sheet as at 3$ June #$%% ;
; >>:,:$$ >,$$$ >A0,:$$
7%#,7A$ ;3>#,$%$
;
;
0%,7#$ 7,7$$ 7#,$$$ #,$$$
%$%,$#$
CURRENT ASSETS
Ban9 1))ice supplies on hand "ccounts receivable (repaid advertising
NON-CURRENT ASSETS
1))ice e-uipment Less "ccumulated depreciation (remises Less accumulated depreciation
%7#,$$$ 3A,:$$ >$$,$$$ >$,$$$
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%%#,0$$ ?#$,$$$
>3#,0$$ ;A33,0#$
0%>
Chapter 4: Adjusting the accounts and preparing financial statements
CURRENT LIABILITIES
!alaries payable "ccounts payable 6!T payable ;7,7$$< ;3,7$$C 4nearned rent revenue
3,$$$ 33,$$$ #,$$$ >,$$$
0:,$$$
NON-CURRENT LIABILITIES
Loan
#$$,$$$
EQUITY
5apital, L Lee N % July #$%$ O (ro)it < 2rawings
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307,0%$ 3>#,$%$ ?#?,0#$ 0$,$$$
;:>?,0#$ ;A33,0#$
0%A
