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If revenues are $270,000, expenses are $220,000, and dividends are $30,000, before it is closed, the Income Summary will have a:
A) Credit balance of $50,000
B) Debit balance of $50,000
C) Debit balance of $20,000
D) Credit balance of $20,000
Shown below is the adjusted Trial Balance for Simon Incorporated, on December 31, after the first year of operations, after adjusting entries:
Debit:
Cash:
$1,400
Accounts Receivable: $4,000
Office Equipment: $16,800
Dividends: $960
Wages Expense: $3,200
Supplies Expense: $1,120
Depreciation Expense: $960
Credit:
Accumulated Depreciation: $1,600
Capital Stock: $2,400
Retained Earnings: $2,720
Service Fees Earned: $21,920
The entry to close the Service Fees Earned account will:
A) Produce a zero balance in that account when posted
B) Include a debit to Income Summary
C) Include a credit to Service Fees Earned
D) Include a debit to Capital Stock
Shown below is an adjusted trial balance for Novelty Toys, Incorporated, on December 31, Year 1:
Debit:
Cash $7,750
Accounts Receivable $6,375
Office Equipment $11,250
Dividends $3,750
Salaries Expense $8,000
Advertising Expense $1,625 Depreciation Expense $2,125
Credit:
Accumulated Depreciation $3,000
Accounts Payable $3,875
Capital Stock
$11,250
Retained Earnings -0-
Fees Earned $22,750
Totals $40,875
The Income Summary will have what balance before it is closed?
A) Zero
B) $11,750
C) $7,250
D) $11,000
D) $11,000
When they are closed, the revenue account balance of $22,750 will be credited to the Income Summary, and the expense account balances totaling $11,750 (or $8,000 + $1,625 + $2,125) will be debited to the Income Summary. Before it is closed, the Income Summary will have a credit balance of $11,000 (or credits of $22,750 − debits of $11,750).
Alternatively, before it is closed, the balance of the Income Summary will equal the net income of the period.
Net income = Revenues of $22,750 − Expenses of ($8,000 + $1,625 + $2,125) = $22,750 − $11,750 = $11,000
Shown below is an adjusted trial balance for Novelty Toys, Incorporated, on December 31, Year 1:
Debit:
Cash $7,750
Accounts Receivable $6,375
Office Equipment $11,250
Dividends $3,750
Salaries Expense $8,000
Advertising Expense $1,625 Depreciation Expense $2,125
Credit:
Accumulated Depreciation $3,000
Accounts Payable $3,875
Capital Stock $11,250
Retained Earnings -0-
Fees Earned $22,750
Totals $40,875
The entry to close the Fees Earned account will:
A) Produce a zero balance in that account when posted
B) Include a debit to Income Summary
C) Include a credit to Fees Earned
D) Include a debit to Capital Stock
Shown below is an adjusted trial balance for Novelty Toys, Incorporated, on December 31, Year 1:
Debit:
Cash $15,520
Accounts Receivable $12,625
Office Equipment $22,000
Dividends $7,250
Salaries Expense $15,500
Advertising Expense $3,125
Depreciation Expense $4,125
Credit:
Accumulated Depreciation $5,750
Accounts Payable $7,625
Capital
Stock $22,250
Retained Earnings -0-
Fees Earned $44,250
Totals $79,875
Net income for the period equals:
A) $14,250
B) $21,500
C) $44,250
D) $22,750
Shown below is an adjusted trial balance for Novelty Toys, Incorporated, on December 31, Year 1:
Debit:
Cash $15,750
Accounts Receivable $12,875
Office Equipment $23,000
Dividends $7,750
Salaries Expense $16,500
Advertising Expense $3,375
Depreciation
Expense $4,375
Credit:
Accumulated Depreciation $6,250
Accounts Payable $7,875
Capital Stock $22,750
Retained Earnings -0-
Fees Earned $46,750
Totals $83,625
Net income for the period equals:
A) $14,750
B) $22,500
C) $46,750
D) $24,250