Chapter 2—A Review of the Accounting Cycle
Chapter 2—A Review of the Accounting Cycle
MULTIPLE CHICE MULTIPLE CHICE
1.
1. In aIn an acn accrucrual aal accoccountunting ing sysystestemm a.
a. all aall accoccountunts havs have nore normal dmal debiebit bat balanlancesces.. b.
b. a debit entry is recorda debit entry is recorded on the left-hand sided on the left-hand side of an account.e of an account. c.
c. liabliabilitilities, ownies, owner's caper's capital, anital, and dividd dividends alends all have norl have normal credmal credit balait balances.nces. d.
d. revenrevenues ues are rare recordecorded oned only wly when hen cash cash is ris receiveceived.ed. A
ANNSS !! ""!!## $$" " %%
%.
%. A A commocommon bun businesiness tss transaransactioction thn that wat wouldouldnot not affect the amount of affect the amount of owners' e&uity isowners' e&uity is a.
a. sigsignining a notng a note paye payablable to pue to purchrchase ease e&ui&uipmepment.nt. b.
b. payment of property tapayment of property taes.es. c.
c. bibillilling of cng of custustomeomers fors for servr serviceices rends rendereered.d. d.
d. papaymymenent ot of df divivididenendsds.. A
ANNSS AA ""!!## $$" " %%
(.
(. )ailu)ailure to recre to record the eord the epirepired amound amount of prept of prepaid reaid rent epent epense wonse woulduld not not a.
a. unundedersrstatate ete eppenensese.. b.
b. overstate net incomeoverstate net income.. c.
c. ovovererststatate owne ownerers' e&s' e&uiuityty.. d.
d. unundedersrstatate lite liababililititieies.s. A
ANNSS ** ""!!## $$" " ((
+.
+. "n #une ("n #une (, a company paid (, a company paid (, for ins, for insurancurance premiue premiums for the currems for the current year and debnt year and debited theited the amount to /repaid Insurance. At *ecember (1, the boo00eeper forgot to record the amount amount to /repaid Insurance. At *ecember (1, the boo00eeper forgot to record the amount
epired. he omission has the following effect on the financial statements prepared *ecember (1 epired. he omission has the following effect on the financial statements prepared *ecember (1 a.
a. oveoverstrstateates s ownownersers' ' e&ue&uityity.. b.
b. overstates assetsoverstates assets.. c.
c. unundedersrstatatetes ns net et inincocomeme.. d.
d. bbototh 2h 2a3 a3 anand 2d 2b3b3.. A
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4.
4. A A chcharart of t of acaccocoununts its iss a.
a. a sua subsbsididiaiary lry lededgegerr.. b.
b. a listing of all accoua listing of all account titles.nt titles. c.
c. a a gegeneneraral l leledgdgerer.. d.
d. a ga genenereral al 5o5oururnanal.l. A
ANNSS !! ""!!## $$" " %%
.
. 6hich of 6hich of the follothe following criteria wing criteria must be mmust be met before an et before an event shouevent should be recold be recorded for accourded for accountingnting purposes7
purposes7 a.
a. he ehe evenvent must must be an art be an arm'sm's-le-lengtngth tranh transacsactiotion.n. b.
b. he event must be repeathe event must be repeatable in a future period.able in a future period. c.
c. he ehe evenvent must must be meat be measursurablable in fine in financancial tial termerms.s. d.
d. he ehe event vent must must be dibe disclosclosed ised in the n the reporreported foted footnootnotes.tes. A
ANNSS 88 ""!!## $$" " %% 9.
9. Ad5Ad5usustinting entg entrieries nors normalmally inly involvolveve
1
1
a.
a. rereal aal accccouountnts os onlnlyy.. b.
b. nominal accounts onnominal accounts onlyly.. c.
c. rereal aal and nd nonomiminanal al accccouountnts.s. d.
d. lialiabibilitlity y accaccounounts ts ononlyly.. A
ANNSS 88 ""!!## $$" " ((
:.
:. 6hich of 6hich of the follothe following is wing is an item than item that is repat is reportable in ortable in the financial the financial records of records of an enterprise7an enterprise7 a.
a. he vhe value alue of goof goodwiodwill eall earned rned throuthrough bugh businesiness opss operatierations.ons. b.
b. he value of human resouhe value of human resources.rces. c.
c. 8h8hanangeges in ps in perersosonnnnelel.. d.
d. 8ha8hangenges in ins in invenventortory cosy costinting metg methodhods.s. A
ANNSS ** ""!!## $$" " 11
;.
;. he bahe balance ilance in a defern a deferred revred revenue acenue account count represrepresents an ents an amounamount that it that iss
<
<aarrnneedd 88oolllleecctteedd
a.
a. Yes Yes YesYes
b. b. Yes Yes NoNo c. c. No No YesYes d. d. No No NoNo A ANNSS 88 ""!!## $$" " (( 1.
1. he debhe debit and creit and credit anadit analysilysis of a transas of a transactioction normaln normally ta0es ply ta0es placelace a.
a. when when the ethe entry ntry is pis posted osted to a to a subssubsidiaridiary ley ledgerdger.. b.
b. when the entry is recowhen the entry is recorded in a 5ournal.rded in a 5ournal. c.
c. whwhen ten the the triarial bal balanlance ce is pis preprepareared.d. d.
d. whwhen the fien the finannanciacial stal statemtementents are pres are preparpared.ed. A
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11
11.. A tA trial brial balancalance is usee is useful becful because iause it indit indicates tcates thathat a.
a. owownenersrs' e' e&u&uitity iy is cos correrrectct.. b.
b. net income is correct.net income is correct. c.
c. all all ententrieries ws were ere madmade coe correrrectlctlyy.. d.
d. tototal tal debdebits its e&ue&ual tal tototal cal credreditsits.. A
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1%.
1%. 6hic6hich of the folh of the followilowing woulng would typicd typically be coally be considnsidered a souered a source docurce document7ment7 a.
a. 8h8harart t of of acaccocoununtsts.. b.
b. =eneral ledger=eneral ledger.. c.
c. ==enenereraal 5ol 5ouurnrnalal.. d.
d. InvInvoicoice re receeceiveived fd from rom selsellerler.. A
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1(
1(.. 6h6hich ich of tof the fhe folollowlowing ing isisnot not among the first five among the first five steps in the accounting cycle7steps in the accounting cycle7 a.
a. >ec>ecord ord tratransnsactactionions is in 5n 5ourournalnals.s. b.
b. >ecord closing entr>ecord closing entries.ies. c.
c. AdAd5us5ust tht the gee generneral lal ledgedger aer accoccountunts.s. d.
d. /os/ost entt entrieries to gs to geneeneral lral ledgedger acer accoucountsnts.. A
ANNSS !! ""!!## $$" " 11
%
%
1+. A routine collection on a customer's account was recorded and posted as a debit to 8ash and a credit to Sales >evenue. he 5ournal entry to correct this error would be
a. a debit to Sales >evenue and a credit to Accounts >eceivable. b. a debit to Sales >evenue and a credit to ?nearned >evenue.
c. a debit to 8ash and a credit to Accounts >eceivable.
d. a debit to Accounts >eceivable and a credit to Sales >evenue. ANS A "!# $" %
14. An accrued epense can be described as an amount
a. paid and matched with earnings for the current period. b. paid and not matched with earnings for the current period.
c. not paid and not matched with earnings for the current period. d. not paid and matched with earnings for the current period.
ANS * "!# $" (
1. 6hich of the following errors will be detected when a trial balance is properly prepared7 a. An amount that was entered in the wrong account
b. A transaction that was entered twice c. A transaction that had been omitted d. None of the above
ANS * "!# $" (
19. he premium on a two-year insurance policy epiring on #une (, %, was paid in total on #uly 1, %+. he original payment was debited to the insurance epense account. he appropriate 5ournal entry has been recorded on *ecember (1, %+. he balance in the prepaid asset account
on *ecember (1, %+, should be a. the same as the original payment.
b. higher than if the original payment had been initially debited to an asset account. c. lower than if the original payment had been initially debited to an asset account. d. the same as it would have been if the original payment had been initially debited to an
asset account.
ANS * "!# $" (
1:. If an inventory account is understated at year end, the effect will be to a. overstate the net purchases.
b. overstate the gross margin.
c. overstate the cost of goods available for sale. d. overstate the cost of goods sold.
ANS * "!# $" (
1;. An ad5usting entry will not ta0e the format of which one of the following entries7 a. A debit to an epense account and a credit to an asset account.
b. A debit to an epense account and a credit to a revenue account. c. A debit to an asset account and a credit to a revenue account. d. A debit to a liability account and a credit to a revenue account.
ANS ! "!# $" (
%. he last step in the accounting cycle is to a. prepare a post-closing trial balance. b. 5ournali@e and post closing entries
c. prepare financial statements.
d. 5ournali@e and post ad5usting entries. ANS A "!# $" 1
%1. 6hich of the following is not presented in an income statement7 a. >evenues.
b. <penses. c. Net Income. d. *ividends.
ANS * "!# $" %
%%. "n arch 1, %(, )orest 8o. borrowed cash and signed a (-month, interest-bearing note on which both the principal and interest are payable on )ebruary %:, %. At *ecember (1, %+, the liability for accrued interest should be
a. 1 months' interest. b. %% months' interest. c. (+ months' interest. d. ( months' interest.
ANS ! "!# $" (
%(. An eample of an ad5usting entry involving a deferred revenue is
a. Cash ... .... xxx
Unearned Rental Revenue ... xxx
b. Rental Revenue ... xxx
Cash ... .... xxx
c. Unearned Rental Revenue ... xxx
Rental Revenue ... xxx
d. Accounts Receivable ... xxx
Sales ... .... xxx
ANS 8 "!# $" (
%+. he allowance for doubtful accounts is an eample of a2n3 a. epense account.
b. contra account. c. ad5unct account. d. control account.
ANS ! "!# $" %
%4. Iowa 8attle 8ompany uses a periodic inventory system. Iowa purchased cattle from !ig * >anch at a cost of %9, on credit. he entry to record the receipt of the cattle would be
a. Purchases ... 27,000 Accounts Payable ... 27,000 b. nventory ... 27,000 Accounts Payable ... 27,000 c. Purchases ... 27,000 Cash ... ... 27,000 d. nventory ... 27,000 Cash ... ... 27,000 ANS A "!# $" %
+
%.6hich of the following is presented in a balance sheet7 a. /repaid <penses. b. >evenues. c. Net Income. d. =ains. ANS A "!# $" %
%9. If an epense has been incurred but not yet recorded, then the end-of-period ad5usting entry would involve
a. a liability account and an asset account. b. a liability account and an epense account.
c. an asset and an epense account.
d. a receivable account and a revenue account. ANS ! "!# $" (
%:. )ailure to record depreciation epense at the end of an accounting period results in a. understated income.
b. understated assets. c. overstated epenses. d. overstated assets.
ANS * "!# $" (
%;. Iowa 8attle 8ompany uses a perpetual inventory system. Iowa purchased cattle from !ig * >anch at a cost of 1;,4, payable at time of delivery. he entry to record the delivery would be a. Purchases ... !",#00 Accounts Payable ... !",#00 b. nventory ... !",#00 Accounts Payable ... !",#00 c. Purchases ... !",#00 Cash ... ... !",#00 d. nventory ... !",#00 Cash ... ... !",#00 ANS * "!# $" %
(. !eginning and ending Accounts >eceivable balances were %:, and %+,, respectively. If collections from clients during the period were :,, then total services rendered on account were apparently a. 9,. b. :+,. c. 1+,. d. 1:,. ANS A "!# $" %
(1. )or a given year, beginning and ending total liabilities were :,+ and 1,, respectively. At year-end, owners' e&uity was %, and total assets were %, larger than at the beginning of the year. If new capital stoc0 issued eceeded dividends by %,+, net income 2loss3 for the year was apparently a. 2%,:3. b. 2%,3. c. +. d. %,:. ANS ! "!# $" %
4
(%. he Supplies on Band account balance at the beginning of the period was ,. Supplies totaling 1%,:%4 were purchased during the period and debited to Supplies on Band. A physical count shows (,:%4 of Supplies on Band at the end of the period. he proper 5ournal entry at the end of the period
a. debits Supplies on Band and credits Supplies <pense for ;,. b. debits Supplies <pense and credits Supplies on Band for 1%,:%4.
c. debits Supplies on Band and credits Supplies <pense for 14,. d. debits Supplies <pense and credits Supplies on Band for 14,.
ANS * "!# $" (
((. Arid 8ompany paid 1,9+ on #une 1, %+, for a two-year insurance policy and recorded the entire amount as Insurance <pense. he *ecember (1, %+, ad5usting entry is
a. debit /repaid Insurance and credit Insurance <pense, +;9. b. debit Insurance <pense and credit /repaid Insurance, +;9.
c. debit Insurance <pense and credit /repaid Insurance, 1,%9. d. debit /repaid Insurance and credit Insurance <pense, 1,%9.
ANS * "!# $" (
(+. oon 8ompany purchased e&uipment on November 1, %+, by giving its supplier a 1%-month, ; percent note with a face value of +:,. he *ecember (1, %+, ad5usting entry is
a. debit Interest <pense and credit 8ash, 9%.
b. debit Interest <pense and credit Interest /ayable, 9%. c. debit Interest <pense and credit Interest /ayable, 1,:. d. debit Interest <pense and credit Interest /ayable, +,(%.
ANS ! "!# $" (
(4. In November and *ecember %+, !ee 8ompany, a newly organi@ed newspaper publisher, received 9%, for 1, three-year subscriptions at %+ per year, starting with the #anuary %, %4, issue of the newspaper. Bow much should !ee report in its %+ income statement for subscription revenue7 a. b. 1%, c. %+, d. 9%, ANS A "!# $" (
(. "n *ecember (1 of the current year, Bolmgren 8ompany's boo00eeper made an entry debiting Supplies <pense and crediting Supplies on Band for 1%,. he Supplies on Band account had a 14,( debit balance on #anuary 1. he *ecember (1 balance sheet showed Supplies on Band of 11,+. "nly one purchase of supplies was made during the month, on account. he entry for that purchase was
a. debit Supplies on Band, :,9 and credit 8ash, :,9.
b. debit Supplies <pense, :,9 and credit Accounts /ayable, :,9. c. debit Supplies on Band, :,9 and credit Accounts /ayable, :,9. d. debit Supplies on Band, 1,4 and credit Accounts /ayable, 1,4.
ANS 8 "!# $" %
(9. he following errors were made in preparing a trial balance the 1,(4 balance of Inventory was omittedC the +4 balance of /repaid Insurance was listed as a creditC and the ( balance of Salaries <pense was listed as ?tilities <pense. he debit and credit totals of the trial balance would differ by a. 1,(4. b. 1,:. c. %,1. d. %,%4. ANS * "!# $" (
(:. 8rescent 8orporation's interest revenue for %+ was 1(,1. Accrued interest receivable on *ecember (1, %+, was %,%94 and 1,:94 on *ecember (1, %(. he cash received for interest during %+ was
a. 1,(4. b. 1,:%4.
c. 1%,9. d. 1(,1.
ANS 8 "!# $" %
(;. S0y 8orporation's salaries epense for %+ was 1(,. Accrued salaries payable on
*ecember (1, %+, was 19,: and :,+ on *ecember (1, %(. he cash paid for salaries during %+ was a. 1%,. b. 1%9,. c. 1+4,+. d. 14(,:. ANS A "!# $" %
+. 6inston 8ompany sells maga@ine subscriptions for one- to three-year subscription periods. 8ash receipts from subscribers are credited to aga@ine Subscriptions 8ollected in Advance, and this account had a balance of ;,, at *ecember (1, %+, before year-end ad5ustment.
"utstanding subscriptions at *ecember (1, %+, epire as follows
$urin% 200# ... &2,'00,000 $urin% 200' ... (,200,000 $urin% 2007 ... !,)00,000
In its *ecember (1, %+, balance sheet, what amount should 6inston report as the balance for maga@ine subscriptions collected in advance7
a. %,, b. (,:, c. 9,, d. ;,,
ANS 8 "!# $" (
+1. $. $ane received 1%, from a tenant on *ecember 1 for four months' rent of an office. his rent was for *ecember, #anuary, )ebruary, and arch. If $ane debited 8ash and credited
?nearned >ental Income for 1%, on *ecember 1, what necessary ad5ustment would be made on *ecember (17
a. Unearned Rental nco*e ... (,000
Rental nco*e ... (,000
b. Rental nco*e ... (,000
Unearned Rental nco*e ... (,000
c. Unearned Rental nco*e ... ",000
Rental nco*e ... ",000
d. Rental nco*e ... ",000
Unearned Rental nco*e ... ",000
ANS A "!# $" (
+%. Ingle 8ompany paid 1%,; for a four-year insurance policy on September 1 and recorded the 1%,; as a debit to /repaid Insurance and a credit to 8ash. 6hat ad5usting entry should Ingle ma0e on *ecember (1, the end of the accounting period7
a. Pre+aid nsurance ... )!0 nsurance x+ense ... )!0 b. nsurance x+ense ... !,0)0 Pre+aid nsurance ... !,0)0 c. nsurance x+ense ... (,2-0 Pre+aid nsurance ... (,2-0 d. Pre+aid nsurance ... !!,))0 nsurance x+ense ... !!,))0 ANS ! "!# $" ( +(. !annister Inc.'s fiscal year ended on November (, %+. he balance in the prepaid insurance account as of November (, %+, was (4,% 2before ad5ustment3 and consisted of the following policies /olicy *ate of *ate of !alance in Number /urchase <piration Account 27"2-) 7!200- '(0200# &!-,-00 '"--2! !2!2002 !!(0200- ",'00 )00'!' -!200( ((!200# !!,200 &(#,200 he ad5usting entry re&uired on November (, %+, would be a. nsurance x+ense ... 2-,000 Pre+aid nsurance ... 2-,000 b. nsurance x+ense ... ",'00 Pre+aid nsurance ... ",'00 c. nsurance x+ense ... !!,200 Pre+aid nsurance ... !!,200 d. nsurance x+ense ... !',-00 Pre+aid nsurance ... !',-00 ANS A "!# $" (
++. Dite 8ompany paid %+,; in insurance premiums during %+. Dite showed (, in prepaid insurance on its *ecember (1, %+, balance sheet and +,4 on *ecember (1, %(. he insurance epense on the income statement for %+ was
a. 1,:. b. %+,. c. %4,:. d. ((,.
ANS 8 "!# $" (
+4. hompson 8ompany sublet a portion of its office space for ten years at an annual rental of (,, beginning on ay 1. he tenant is re&uired to pay one year's rent in advance, which
hompson recorded as a credit to >ental Income. hompson reports on a calendar-year basis. he ad5ustment on *ecember (1 of the first year should be
a. Rental nco*e ... !2,000
Unearned Rental nco*e ... !2,000
b. Rental nco*e ... 2-,000
Unearned Rental nco*e ... 2-,000
c. Unearned Rental nco*e ... !2,000
Rental nco*e ... !2,000
d. Unearned Rental nco*e ... 2-,000
Rental nco*e ... 2-,000
ANS A "!# $" (
+. S0y 8ompany collected 1%,(4 in interest during %+. S0y showed 1,:4 in interest receivable on its *ecember (1, %+, balance sheet and 4,( on *ecember (1, %(. he interest revenue on the income statement for %+ was
a. (,+4. b. :,;. c. 1%,(4. d. 1+,%.
ANS ! "!# $" (
+9. "n September 1, %(, Star 8orp. issued a note payable to )ederal !an0 in the amount of +4,. he note had an interest rate of 1% percent and called for three e&ual annual principal payments of 14,. he first payment for interest and principal was made on September 1,
%+. At *ecember (1, %+, Star should record accrued interest payable of a. 11,.
b. 1%,. c. 1,4. d. 1:,.
ANS ! "!# $" (
+:. he following balances have been ecerpted from <dwards' balance sheets
*ecember (1, %+ *ecember (1, %( /repaid Insurance & ',000 & 7,#00
Interest >eceivable (,700 !-,#00
Salaries /ayable '!,#00 #(,000
<dwards 8ompany paid or collected during %+ the following items
Insurance premiums paid & -!,#00
Interest collected !2(,#00
Salaries paid -)!,000
he insurance epense on the income statement for %+ was a. %:,. b. +,. c. +(,. d. 44,. ANS 8 "!# $" (
;
+;. he wor0 sheet of /SI 8ompany shows Income a <pense of ;, and Income a /ayable of ;, in the Ad5ustments columns. 6hat will be the ultimate disposition of these items on the wor0 sheet7
a. Income a <pense will appear as a debit of ;, and Income a /ayable as credit in the !alance Sheet columns.
b. Income a <pense will appear as a debit of ;, and Income a /ayable as credit in the Income Statement columns.
c. Income a <pense will appear as a debit of ;, in the !alance Sheet columns and Income a /ayable as credit in the Income Statement columns.
d. Income a <pense will appear as a debit of ;, in the Income Statement columns and Income a /ayable as credit in the !alance Sheet columns.
ANS * "!# $" (
4. he following balances have been ecerpted from <dwards' balance sheets
*ecember (1, %+ *ecember (1, %(
Pre+aid nsurance ... & ',000 & 7,#00
nterest Receivable ... (,700 !-,#00
Salaries Payable ... '!,#00 #(,000
<dwards 8ompany paid or collected during %+ the following items
nsurance +re*iu*s +aid ... & -!,#00
nterest collected ... !2(,#00
Salaries +aid ... -)!,000
he interest revenue on the income statement for %+ was a. ;,4.
b. 11%,9. c. 119,4. d. 14,4.
ANS ! "!# $" (
41. 8hips-n-!its 8ompany sells service contracts for personal computers. he service contracts are for a one-year, two-year, or three-year period. All sales are for cash and all receipts are credited to ?nearned Service 8ontract >evenues. his account had a balance of 1++, at *ecember (1, %(, before year-end ad5ustment. Service contract costs are charged as incurred to the Service 8ontract <pense account, which had a balance of (, at *ecember (1, %(. Service contracts still outstanding at *ecember (1, %(, epire as follows
$urin% 200- ... &(0,000 $urin% 200# ... -#,000 $urin% 200' ... 20,000
6hat amount should be reported as unearned service contract revenues in 8hips-n-!its *ecember (1, %(, balance sheet7
a. +;, b. 4;, c. ;4, d. 1:, ANS 8 "!# $" (
1
4%. eller Inc. reported an allowance for doubtful accounts of (, 2credit3 at *ecember (1, %+, before performing an aging of accounts receivable. As a result of the aging, eller Inc.
determined that an estimated 4%, of the *ecember (1, %+, accounts receivable would prove uncollectible. he ad5usting entry re&uired at *ecember (1, %+, would be
a. $oubt/ul Accounts x+ense ... 22,000
Alloance /or $oubt/ul Accounts ... 22,000
b. Alloance /or $oubt/ul Accounts ... 22,000
Accounts Receivable ... 22,000
c. $oubt/ul Accounts x+ense ... #2,000
Alloance /or $oubt/ul Accounts ... #2,000
d. Alloance /or $oubt/ul Accounts ... #2,000
$oubt/ul Accounts x+ense ... #2,000
ANS A "!# $" (
4(. 8omet 8orporation's liability account balances at #une (, %+, included a 1 percent note
payable. he note is dated "ctober 1, %%, and carried an original principal amount of ,. he note is payable in three e&ual annual payments of %, plus interest. he first interest and principal payment was made on "ctober 1, %(. In 8omet's #une (, %+, balance sheet, what amount should be reported as Interest /ayable for this note7
a. 1, b. 14, c. (, d. +4,
ANS 8 "!# $" (
4+. Scott 8o. reported an allowance for doubtful accounts of %:, 2credit3 at *ecember (1, %+, before performing an aging of accounts receivable. As a result of the aging, Scott determined that
an estimated %, of the *ecember (1, %+, accounts receivable would prove uncollectible. he ad5usting entry re&uired at *ecember (1, %+, would be
a. $oubt/ul Accounts x+ense ... 20,000
Alloance /or $oubt/ul Accounts ... 20,000
b. $oubt/ul Accounts x+ense ... 20,000
Accounts Receivable ... 20,000
c. Alloance /or $oubt/ul Accounts ... ),000
$oubt/ul Accounts x+ense ... ),000
d. $oubt/ul Accounts x+ense ... ),000
Alloance /or $oubt/ul Accounts ... ),000
ANS 8 "!# $" (
44. he following balances have been ecerpted from <dwards' balance sheets
*ecember (1, %+ *ecember (1, %(
Pre+aid nsurance ... & ',000 & 7,#00
nterest Receivable ... (,700 !-,#00
Salaries Payable ... '!,#00 #(,000
<dwards 8ompany paid or collected during %+ the following items
nsurance +re*iu*s +aid ... & -!,#00
nterest collected ... !2(,#00
Salaries +aid ... -)!,000
he salary epense on the income statement for %+ was a. (,4. b. +9%,4. c. +:;,4. d. 4;4,4. ANS 8 "!# $" %
4. he use of computers in processing accounting data a. eliminates the need for accountants.
b. eliminates the double entry system as a basis for analy@ing transactions.
c. eliminates the need for financial reporting standards such as those promulgated by the )AS!.
d. may result in the elimination of document trails used to verify accounting records. ANS * "!# $" 4
49. he basic financial statements are listed below
213 !alance sheet
2%3 Statement of retained earnings 2(3 Income statement
2+3 Statement of cash flows
In which of the following se&uences does the accountant ordinarily prepare the statements7 a. 1, +, (, %. b. %, 1, (, +. c. (, %, 1, +. d. (, %, +, 1. ANS 8 "!# $" 1
4:. 6hich of the following regarding accrual versus cash-basis accounting is true7
a. he )AS! believes that the cash basis is appropriate for some smaller companies, especially those in the service industry.
b. he cash basis is less useful in predicting the timing and amounts of future cash flows of an enterprise.
c. Application of the cash basis results in an income statement reporting revenues and epenses.
d. he cash basis re&uires a complete set of double-entry records. ANS ! "!# $" +
4;. ?nder the cash basis of accounting
a. revenues are recorded when they are earned.
b. accounts receivable would appear on the balance sheet.
c. depreciation of assets having an economic life of more than one year is recogni@ed.
d. the matching principle is ignored. ANS * "!# $" +
. otal net income over the life of an enterprise is
a. higher under the cash basis than under the accrual basis.
b. lower under the cash basis than under the accrual basis. c. the same under the cash basis as under the accrual basis. d. not susceptible to measurement.
ANS 8 "!# $" +
PR!LEM"
1. he records of #eric0 8orp. show the following information
2a3 /urchased a three-year insurance policy for 9,% on September 1, %+, and recorded the premium payment in the asset account.
2b3 !orrowed , on a 1-year, 1%E note on #uly 1, %+. Interest is payable at maturity.
2c3 8ollected :,+ on "ctober 1, %+, to cover si months' rent paid in advance, and recorded the receipt in a liability account.
2d3 he Allowance for *oubtful Accounts shows an unad5usted balance of ( 2debit3 as of *ecember (1, %+. !ased on an aging of receivables, it is determined that the balance in the allowance account should be 1,994 at *ecember (1, %+. 2e3 achinery purchased on #anuary 1, %+, for (, is to be depreciated at the
rate of % percent per year.
/repare 5ournal entries to ad5ust the boo0s of #eric0 8orp. at *ecember (1, %+.
ANS
2a3 nsurance x+ense ... )00
Pre+aid nsurance ... )00
2b3 nterest x+ense ... (,'00
nterest Payable ... (,'00
2c3 Unearned Rental nco*e ... -,200
Rental nco*e ... -,200
2d3 $oubt/ul Accounts x+ense ... 2,07#
Alloance /or $oubt/ul Accounts ... 2,07#
2e3 $e+reciation x+ense11achinery . ... '0,000
Accu*ulated $e+reciation11achinery... '0,000
"!# $" (
%. he information listed below was obtained from the accounting records of 8ahill 8ompany as of #une (, %+.
2a3 /ayments to vendors of 1,9 were made for purchases on account during the year and were not recorded.
2b3 "n #une %:, %+, 8ahill received 4,+ in advance for services to be performed in #uly %+. he 4,+ was credited to Sales >evenue.
2c3 !uilding and land were purchased in 1;;9 for 9:,. he building's fair mar0et value was 4, at the time of purchase. he building is being depreciated over a %4-year life using the straight-line method, and assuming no salvage value.
2d3 "n ay 1, %+, 1%, was loaned to a shareholder on a -month note with interest at an annual rate of : percent. Interest is due at maturity.
2e3 Accrued salaries and wages are %,9+ at #une (, %+.
2f3 he office supplies account has a balance of (,19. An inventory of supplies revealed a total of 1,44.
/repare 5ournal entries to ad5ust the boo0s of 8ahill 8ompany at #une (, %+.
ANS
3a4 Accounts Payable ... !,700
Cash ... !,700
3b4 Sales Revenue ... #,-00
Unearned Sales Revenue ... #,-00
3c4 $e+reciation x+ense115uildin% ... 2',000 Accu*ulated $e+reciation115uildin% ... 2',000 3d4 nterest Receivable ... !,'00
nterest Revenue ... !,'00
3e4 Salaries and 6a%es x+ense ... 2,7-0 Salaries and 6a%es Payable ... 2,7-0 3/4 //ice Su++lies x+ense ... !,'20
//ice Su++lies ... !,'20
"!# $" ( (. 8addis 8o. had these unad5usted account balances on *ecember (1, %+ nventory, 8anuary !, 200- ... &!)),2#0 Purchases ... !-2,700 9rei%ht1n ... !2,))0 Purchase $iscounts ... 2,!-0 Purchase Returns and Alloance ... 2',7!0 Assuming that the ending inventory is ;9,;, prepare the entry to ad5ust the inventory accounts. ANS Purchase $iscounts ... 2,!-0 Purchase Returns and Alloances ... 2',7!0 Cost o/ :oods Sold ... 2!7,0)0 Purchases ... !-2,700 9rei%ht1n ... !2,))0 nventory ... "0,(#0 "!# $" ( +. he following account balances pertain to the Benryville anufacturing 8o. at September (, %+ 2before ad5usting entries3. *ebit 8redit Accounts Receivable ... & -0,000 Alloance /or $oubt/ul Accounts ... & 2,#00 nventory ... "",700 Pre+aid nsurance ... 2,-00 ;ui+*ent ... (00,000 Accu*ulated $e+reciation ... !2#,000 Notes Payable ... -),000 Unearned Revenue ... 72,000
1+
Additional information
2a3 he controller and the credit manager agreed that, based on an aging of year-end accounts receivable, the allowance for doubtful accounts should be increased to +,(.
2b3 he credit manager determined that a customer account with a balance of :4 was uncollectible 2without regard to the information in 2a3 above3.
2c3 he +:, note payable is dated August 1(, %+, and bears interest at 1% percent per annum. he note and interest are payable at maturity on November 1(, %+.
2Assume a (4-day year and round to the nearest dollar.3
2d3 he prepaid insurance balance arose from the payment of an annual premium on #anuary 1, %+.
2e3 he company maintains a perpetual inventory system. he inventory at September (, %+, was 1%, as determined by physical count.
2f3 he e&uipment is being depreciated over a %-year estimated useful life.
2g3 he unearned revenue represents an amount received for a long-term e&uipment rental to the Northcrest ool F *ie 8o. he cash 29%,3 was received on April %, %+, and represents prepayment of a 1-year rental beginning ay 1, %+.
/repare ad5usting entries to Benryville 8o.'s accounts at September (, %+. <ach entry should be made in general 5ournal format. Identify each entry by using the letter of the paragraph
containing the additional information for the entry.
ANS
2a3 $oubt/ul Accounts x+ense ... !,)00
Alloance /or $oubt/ul Accounts ... !,)00
2b3 Alloance /or $oubt/ul Accounts ... )#0
Accounts Receivable ... )#0
2c3 nterest x+ense 3&-),000 ´ !2< ´ -)('#4 ... 7#7 nterest Payable ... 7#7 2d3 nsurance x+ense 3&200 ´ " *onths4 .... !,)00
Pre+aid nsurance ... !,)00
2e3 nventory 3&!02,'00 1 &"",7004 ... 2,"00 Cost o/ :oods Sold ... 2,"00 2f3 $e+reciation x+ense11;ui+*ent ... !#,000
Accu*ulated $e+reciation11;ui+*ent... !#,000
2g3 Unearned Revenue 3&72,000 ´ #!24 ... (0,000
Rental Revenue ... (0,000
"!# $" (
4. Schroeder 8o. had the following transactions pertaining to the fiscal year ended "ctober (1, %+.
-- #une 14, %+, paid an annual casualty insurance premium of 4,+ for a policy beginning #uly 1, %+.
-- "ctober 1, %+, received advance payment of ,;( from a customer for a ;-month e&uipment rental.
/rovide the appropriate 5ournal entries to record the preceding transactions. Ad5ust the accounts at year-end assuming that no entries have been made between the transaction date and year-end and assuming that
213 transactions were originally recorded in asset and liability accounts. 2%3 transactions were originally recorded in revenue and epense accounts.
ANS
3!4 nsurance=
200-8une !# Pre+aid nsurance ... #,-00
Cash ... #,-00 ct. (! nsurance x+ense 3&#,-00 ´ -!24 ... !,)00 Pre+aid nsurance ... !,)00 ;ui+*ent rental= ct. ! Cash ... ',"(0
Unearned Rent Revenue .... ',"(0 ct. (! Unearned Rent Revenue
3&',"(0 ´ !"4 ... 770
Rent Revenue ... 770 324 nsurance=
200-8une !# nsurance x+ense ... #,-00
Cash ... #,-00 ct. (! Pre+aid nsurance 3&#,-00 ´ )!24 ... (,'00 nsurance x+ense ... (,'00 ;ui+*ent rental= ct. ! Cash ... ',"(0 Rent Revenue ... ',"(0 ct. (! Rent Revenue 3&',"(0 ´ )"4 ',!'0
Unearned Rent Revenue .... ',!'0
"!# $" %, $" (
. >ecord the following transactions and events of >oyal 6ulff 8ompany in general 5ournal form. If the item does not re&uire a 5ournal entry, write Gno entry.G
2a3 Sold merchandise costing +,4 for 1, cash and 9, on open account. A perpetual inventory system is used.
2b3 /urchased land and building for 1, cash and a (, mortgage. he land was recently appraised at , and the building at (+,.
2c3 >eceived payment on account, 1%,.
2d3 <stimated that utilities epense for the coming si months will total 9,.
2e3 *eclared a cash dividend totaling 1(,4. he dividend will be paid in si wee0s.
ANS
2a3 Cash ... !,000 Accounts Receivable ... 7,000
Sales ... ),000
Cost o/ :oods Sold ... -,#00 nventory ... -,#00 2b3 >and ... '0,000 5uildin% ... (-0,000 Cash ... !00,000 ort%a%e Payable ... (00,000 2c3 Cash ... !2,000 Accounts Receivable ... !2,000 2d3 No entry ... 2e3 $ividends 3or Retained arnin%s4 ... !(,#00
$ividends Payable ... !(,#00
"!# $" % 9. )or each of the 5ournal entries below, write a description of the underlying event. Assume that for prepaid epenses original debits are made to an epense account. 2a3 Alloance /or $oubt/ul Accounts ... xxx
Accounts Receivable ... xxx 2b3 nterest x+ense ... xxx Notes Payable ... xxx Cash ... xxx 2c3 Cash ... xxx Unearned Revenue ... xxx 2d3 Su++lies on ?and ... xxx Su++lies x+ense ... xxx 2e3 Cash ... xxx Accounts Receivable ... xxx ANS
2a3 6rite-off of an uncollectible account.
2b3 8ash payment on a note payable. /art of the payment is for principal and part is for interest.
2c3 >eceived cash in advance for products or services not yet delivered. 2d3 Ad5usting entry to record supplies on hand.
2e3 >eceived customer payment on account.
"!# $" %
:. he following data are from a comparison of the balance sheets of !rassie 8ompany as of *ecember (1, %+, and *ecember (1, %(
Accounts Receivable ... increase &7,'00 nventory ... decrease -,#00 Accounts Payable ... increase 2,-00 3all accounts +ayable relate to inventory
+urchases4
Pre+aid nsurance ... decrease !,(#0 6a%es Payable ... decrease '70
he following data are from !rassie's %+ income statement
Sales ... &200,000 Cost o/ :oods Sold ... !!0,000 nsurance x+ense ... 2#,000 6a%es x+ense ... -0,000
*uring %+
2a3 Bow much cash was collected from customers7 2b3 Bow much cash was paid for inventory purchases7 2c3 Bow much cash was paid for insurance7
2d3 Bow much cash was paid for wages7
ANS 2a3 %, - 9, H 1;%,+ 2b3 11, - +,4 - %,+ H 1(,1 2c3 %4, - 1,(4 H %(,4 2d3 +, 9 H +,9 "!# $" %
;. /heasant ail 8ompany's total e&uity increased by (%, during %+. New stoc0holder investment during the year totaled 4,. otal revenues during the year were 4, and total epenses were +,. 8ash on hand decreased by 9,4 during the year. 6hat amount of dividends did /heasant ail declare during %+7
ANS
ncrease in total e;uity durin% 200- ... & (2,000 Ne stoc@holder invest*ent ... '#,000 $ecrease in retained earnin%s durin% 200- ... &3((,0004 Net inco*e 3�,000 1 &-'0,0004 ... -0,000 $i//erence $ividends declared durin% 200- ... & 7(,000
"!# $" %
1. he trial balance and transaction descriptions below are for 8oachman 8ompany
8oachman 8ompany rial !alance )ebruary 1, %+ *ebit 8redit Cash ... & 2#0 Accounts Receivable ... (20 nventory ... -"# ;ui+*ent ... !,200
Accu*ulated $e+reciation ... & 2-# Accounts Payable ... !)# ort%a%e Payable ... "00 Co**on Stoc@ ... (00 Retained arnin%s ... '(# &2,2'# &2,2'#
1:
Summary transactions for )ebruary 2a3 8ollected 1 on open account
2b3 /urchased 1( inventory for % cash and the remainder on open account. 2c3 !ought new e&uipment costing % for 4 cash, with the remainder due on a
mortgage payable.
2d3 /aid :4 on open account.
2e3 >ecorded depreciation epense of (4.
2f3 Sold goods costing ; for ( cash and 1% on open account.
6hat is 8oachman's total e&uity at the end of )ebruary7
ANS Retained arnin%s 5e%in '(# 3e4 (# 3/4 "0 3/4 !#0 ''0
otal e&uity H >etained <arnings 8ommon Stoc0 ( H ;.
"!# $" %
11. Account balances ta0en from the ledger of iddler 8ompany on *ecember (1, %+, are as follows
Accounts Payable ... &!!",000 Accounts Receivable ... !(",200 Advertisin% x+ense ... !2,000 Accu*ulated $e+reciation115uildin%s ... (!,#00 Alloance /or $oubt/ul Accounts ... 2,##0 5uildin%s ... (!#,000 Ca+ital Stoc@, &!0 +ar ... -#0,000 Cash ... -#,7#0 $ividends ... !2,000 9rei%ht1n ... !0,#00 nsurance x+ense ... 2,!00 nterest x+ense ... #,2"# nterest Revenue ... !,((# nventory, $ece*ber (!, 200( ... !0-,)#0 >and ... 7),000 >on%1Ber* nvest*ents ... !2,!#0 ort%a%e Payable ... -(,#00 Notes Payable11Short1Ber* ... 2-,000 //ice x+ense ... 2),)00 Purchases ... #2!,!(0 Purchase $iscounts ... !2,!#0 Retained arnin%s, $ece*ber (!, 200( ... !(,'"# Sales ... 7-#,000 Sales $iscounts ... 2-,7#0 Sales Returns ... !-,-00 Sellin% x+ense ... "-,0#0 Su++lies x+ense ... (,-#0 Real state and Payroll Baxes ... !",(0#
Ad5ustments on *ecember (1, %+, are re&uired as follows 2a3 he inventory on hand is 1(4,;14.
2b3 he allowance for doubtful accounts is to be increased to a balance of ,%4. 2c3 !uildings are depreciated at the rate of 4 percent per year.
2d3 Accrued selling epenses are ,94. 2e3 here are supplies of 1,4 on hand.
2f3 /repaid insurance at *ecember (1, %+, totals 1,%;. 2g3 Accrued interest on long-term investments is (. 2h3 Accrued real estate and payroll taes are 1,19. 2i3 Accrued interest on the mortgage is %+.
253 Income ta is estimated to be ( percent of the income before income ta 2round to nearest dollar3.
213 /repare an eight-column wor0 sheet. 2%3 /repare ad5usting and closing entries.
ANS 213
iddler 8ompany 6or0 Sheet
)or Jear <nded *ecember (1, %+
rial !alance Ad5ustment
*ebit 8redit *ebit 8redit
Cash ...
-#,7#0 Accounts Receivable ... !(",200 Alloance /or $oubt/ul
Accounts ... 2,##0 3b4 (,700
nventory ... !0-,)#0 3a4 (!,0'#
nterest Receivable ... 3%4 ('0
Pre+aid nsurance ... 3/4 !,2"0
Su++lies on ?and ... 3e4 !,0#0
>on%1Ber* nvest*ents . !2,!#0 >and ... 7),000 5uildin%s ... (!#,000 Accu*ulated $e+reciation11 ... 5uildin%s ... (!,#00 3c4 !#,7#0 Accounts Payable ... !!",000
Sellin% x+ense Payable 3d4 ',07#
Real state and Payroll
Baxes Payable ... 3h4 !,!70
nterest Payable ... 3i4 2-0
nco*e Baxes Payable
30.(0 x &2",#(#4 ... 34 ),)'!
Notes Payable11Short1
Ber* ... 2-,000 ort%a%e Payable ... -(,#00 Ca+ital Stoc@, &!0 +ar -#0,000 Retained arnin%s, $ec. (!, 200( ... !(,'"# $ividends ... !2,000 Sales ... 7-#,000 Sales $iscounts ... 2-,7#0 Sales Returns ... !-,-00
%
nterest Revenue ... !,((# 3%4 ('0
Purchases ... #2!,!(0 3a4 #2!,!(0
Purchase $iscounts .... !2,!#0 3a4 !2,!#0
9rei%ht1n ... !0,#00 3a4 !0,#00
Cost o/ :oods Sold .... 3a4 -)),-!# Real state and Payroll
Baxes x+ense ... !",(0# 3h4 !,!70 Sellin% x+ense ... "-,0#0 3d4 ',07#
Su++lies x+ense ... (,-#0 3e4 !,0#0
$oubt/ul Accounts
x+ense ... 3b4 (,700
$e+reciation x+ense11
5uildin%s ... 3c4 !#,7#0
nco*e Bax x+ense .... 34 ),)'!
Advertisin% x+ense ... !2,000
nsurance x+ense ... 2,!00 3/4 !,2"0
nterest x+ense ... #,2"# 3i4 2-0 //ice x+ense ... 2),)00
!,--2,7(0 !,--2,7(0 #70,!2' #70,!2'
iddler 8ompany 6or0 Sheet
)or Jear <nded *ecember (1, %+
Income Statement !alance Sheet
*ebit 8redit *ebit 8redit
Cash -#,7#0
Accounts Receivable .... !(",200 Alloance /or $oubt/ul
Accounts ... ',2#0 nventory ... !(#,"!# nterest Receivable .... ('0 Pre+aid nsurance ... !,2"0 Su++lies on ?and ... !,0#0 >on%1Ber* nvest*ents .. !2,!#0 >and ... 7),000 5uildin%s ... (!#,000 Accu*ulated $e+reciation11 5uildin%s ... -7,2#0 Accounts Payable ... !!",000
Sellin% x+ense Payable ',07#
Real state and
Payroll ...
Baxes Payable ... !,!70
nterest Payable ... 2-0
nco*e Baxes Payable
3.(0 ´ &2",#(#4 ... ),)'!
Notes Payable11
Short1Ber* ... 2-,000
ort%a%e Payable ... -(,#00
Ca+ital Stoc@, &!0 +ar . -#0,000
Retained arnin%s, $ec. (!, 200( ... !(,'"# $ividends ... !2,000 Sales ... 7-#,000 Sales $iscounts ... 2-,7#0 Sales Returns ... !-,-00
%1
nterest Revenue ... !,'"# Purchases ...
Purchase $iscounts ... 9rei%ht1n ...
Cost o/ :oods Sold ... -)),-!# Real state and
Payroll ... Baxes x+ense ... 20,-7# Sellin% x+ense ... !00,!2# Su++lies x+ense ... 2,-00 $oubt/ul Accounts x+ense ... (,700 $e+reciation x+ense11 5uildin%s ... !#,7#0 nco*e Bax x+ense ... ),)'! Advertisin% x+ense .... !2,000 nsurance x+ense ... )!0 nterest x+ense ... #,#(# //ice x+ense ... 2),)00 72',02! 7-','"# 7-0,7!# 720,0-! Net nco*e 20,'7- 20,'7-7-','"# 7-','"# 7-0,7!# 7-0,7!# 2%3 Ad5usting <ntries 3a4 nventory . ... (!,0'# Purchase $ iscounts . ... !2,!#0 Cost o/ :oods Sold ... -)),-!#
Purchases ... #2!,!(0 9rei%ht1n ... !0,#00 3b4 $oubt/ul Accounts x+ense ... (,700
Alloance /or $oubt/ul Accounts ... (,700 3c4 $e+reciation x+ense, 5uildin%s ... !#,7#0
Accu*ulated $e+reciation, 5uildin%s ... !#,7#0 3d4 Sellin% x+ense ... ',07#
Sellin% x+ense Payable ... ',07# 3e4 Su++lies on ?and ... !,0#0
Su++lies x+ense ... !,0#0 3/4 Pre+aid nsurance ... !,2"0
nsurance x+ense ... !,2"0 3%4 nterest Receivable ... ('0
nterest Revenue ... ('0 3h4 Real state and Payroll Baxes ... !,!70
Real state and Payroll Baxes Payable . !,!70 3i4 nterest x+ense ... 2-0
nterest Payable ... 2-0 34 nco*e Bax ... ),)'!
nco*e Bax Payable ... ),)'!
8losing <ntries
nterest Revenue ... !,'"# Sales ... 7-#,000
Retained arnin%s ... 7-','"# Retained arnin%s ... 72',02!
Cost o/ :oods Sold ... -)),-!# Advertisin% x+ense ... !2,000
nsurance x+ense ... )!0 nterest x+ense ... #,#(# //ice x+ense ... 2),)00 Sales $iscounts ... 2-,7#0 Sales Returns ... !-,-00 Sellin% x+ense ... !00,!2# Real state and Payroll Baxes ... 20,-7# Su++lies x+ense ... 2,-00 $oubt/ul Accounts x+ense ... (,700 $e+reciation x+ense, 5uildin%s ... !#,7#0 nco*e Bax x+ense ... ),)'! Retained arnin%s ... !2,000
$ividends ... !2,000
"!# $" %, $" (
1%. /resented below is the *ecember (1 trial balance of 8assini Studios.
8assini Studios rial !alance *ecember (1, %+ *ebit 8redit Cash ... & !-,)00 Accounts Receivable ... ((,'00
Alloances /or $oubt/ul Accounts ... & 2,!'0 nventory, 8anuary ! ... '2,-00
9urniture and ;ui+*ent ... '7,200 Accu*ulated $e+reciation119urniture and
;ui+*ent ... 2',))0 Pre+aid nsurance ... -,0)0 Notes Payable ... 22,-00 Cassini, Ca+ital ... 72,000 Sales ... -)0,000 Purchases ... (20,000
Sales Salaries x+ense ... -0,000 Advertisin% x+ense ... #,('0 Ad*inistrative Salaries x+ense ... #2,000 //ice x+ense ... -,000
&'0(,--0 &'0(,--0
213 /repare ad5usting 5ournal entries for the following items
2a3 Ad5ust the Allowance for *oubtful Accounts to : percent of the accounts receivable.
2b3 )urniture and e&uipment is depreciated at % percent per year. 2c3 Insurance epired during the year, %,+.
2d3 Interest accrued on notes payable, %,::. 2e3 Sales salaries earned but not paid, 1,;%. 2f3 Advertising paid in advance, 4.
2g3 "ffice supplies on hand, 1,%, charged to "ffice <pense when purchased.
2%3 /repare closing entries for 8assini after the above ad5usting entries have been made. Additional information shows the inventory on *ecember (1 was +,.
ANS
213
3a4 5ad $ebts x+ense ... #2)
Alloance /or $oubt/ul Accounts ... #2)
3b4 $e+reciation x+ense119urniture and ;ui+*ent ... !(,--0 Accu*ulated $e+reciation119urniture and ;ui+*ent ... !(,--0 3c4 nsurance x+ense ... 2,0-0 Pre+aid nsurance ... 2,0-0 3d4 nterest x+ense ... 2,')) nterest Payable ... 2,'))
3e4 Sales Salaries x+ense ... !,"20 Salaries Payable ... !,"20 3/4 Pre+aid Advertisin% ... #'0
Advertisin% x+ense ... #'0
3%4 //ice Su++lies on ?and ... !,200
//ice x+ense ... !,200
2%3 $ec. (! Cost o/ :oods Sold ... (!),-00
nventory ... !,'00
Purchases ... (20,000 $ec. (! Sales ... -)0,000 Retained arnin%s ... -)0,000 $ec. (! Retained arnin%s ... -(),'!' Cost o/ :oods Sold ... (!),-00
Advertisin% x+ense ... -,)00
Ad*inistrative Salaries x+ense ... #2,000 Sales Salaries x+ense ... -!,"20 //ice x+ense ... 2,)00 nsurance x+ense ... 2,0-0 5ad $ebts x+ense ... #2)
$e+reciation x+ense119urniture and ;ui+*ent ... !(,--0
nterest x+ense ... 2,'))
"!# $" (
