Essay on Ac550 Exam

2067 WordsJan 13, 20139 Pages
1. | Question : | (TCO A) Listed below are several information, characteristics, and accounting principles and assumptions. Match the letter of each with the appropriate phrase that states its application. | | | Student Answer: | | : Historical cost principle | | 1 : Earnings process completed and realized or realizable | | | | : Going concern principle | | 2 : Cost of providing financial information versus the benefits derived from its use | | | | : Matching principle | | 3 : Accruals and deferrals in adjusting and closing process | | | | : Monetary unit | | 4 : Business enterprise assumed to have a long life | | | | : Revenue recognition principle | | 5 : Stable dollar assumption | | | | : Full…show more content…
| Question : | (TCO B) Adjusting Entries: Prepaid rent at 1/1/10 was $30,000. During 2010 rent payments of $100,000 were made and charged to "rent expense." The 2010 income statement shows as a general expense the item "rent expense" in the amount of $130,000. You are to prepare the missing adjusting entry that must have been made, assuming reversing entries are not made. For each journal entry write Dr. for debit and Cr. for credit. | | | Student Answer: | | Rent Expense 30,000 Prepaid Rent 30,000 Rent expense $130,000 Less cash paid 100,000 Reduction in prepaid rent account $30,000 | | | | Comments: | | | | 2. | Question : | (TCO B) Adjusting Entries: Retained earnings at 1/1/10 were $100,000 and at 12/31/10 it was $300,000. During 2010, cash dividends of $40,000 were paid and a stock dividend of $40,000 was issued. Both dividends were properly charged to retained earnings. You are to provide the missing closing entry. For each journal entry write Dr. for debit and Cr. for credit. | | | Student Answer: | | Income Summary 280,000 Retained Earnings 280,000 Ending balance $300,000 Beginning balance 100,000 Difference 200,000 Cash dividends $40,000 Stock dividends 40,000 80,000 $280,000 | | | | Comments: | | | | 3. | Question : | (TCO C) Presented below is information related to Bruce Van Company. Retained earnings, December 31, 2010 | $650,000 | Sales | 1,400,000

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