Question 1C
Subject:AccountingPrice: Bought3
Question 1C.S. Lewis Company had the following transactions involving notes payable.July 1, 2014 Borrows $50,000 from First National Bank by signing a 9-month, 8% note.Nov. 1, 2014 Borrows $60,000 from Lyon County State Bank by signing a 3-month, 6% note.Dec. 31, 2014 Prepares adjusting entries.Feb. 1, 2015 Pays principal and interest to Lyon County State Bank.Apr. 1, 2015 Pays principal and interest to First National Bank.
Prepare journal entries for each of the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
DateAccount Titles and ExplanationDebitCreditJuly 1, 2014 Nov. 1, 2014 Dec. 31, 2014 (Adjusting entry for First National Bank note.) Dec. 31, 2014 (Adjusting entry for Lyon County State Bank note.) Feb. 1, 2015 Apr. 1, 2015 Question 2In performing accounting services to small businesses, you encounter the following situations pertaining to cash sales.1. Poole Company enters sales and sales taxes separately on its cash register. On April 10, the register totals are sales $30,000 and sales taxes $1,500.2. Waterman Company does not segregate sales and sales taxes. Its register total for April 15 is $25,680, which includes a 7% sales tax.
Prepare the entry to record the sales transactions and related taxes for each client. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
DateAccount Titles and ExplanationDebitCredit POOLE COMPANY Apr. 10 WATERMAN COMPANY Apr. 15 Question 3Moreno Company publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $20 per year. During November 2014, Moreno sells 15,000 subscriptions beginning with the December issue. Moreno prepares financial statements quarterly and recognizes subscription revenue at the end of the quarter. The company uses the accounts Unearned Subscription Revenue and Subscription Revenue. Prepare the entry in November for the receipt of the subscriptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)DateAccount Titles and ExplanationDebitCreditNov. 30 SHOW LIST OF ACCOUNTSLINK TO TEXTPrepare the adjusting entry at December 31, 2014, to record sales revenue recognized in December 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)DateAccount Titles and ExplanationDebitCreditDec. 31 SHOW LIST OF ACCOUNTSLINK TO TEXTPrepare the adjusting entry at March 31, 2015, to record sales revenue recognized in the first quarter of 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)DateAccount Titles and ExplanationDebitCreditMar. 31 Question 4Suppose Kroger Co.’s 2014 financial statements contained the following data (in millions).Current assets $ 7,450 Accounts receivable $909Total assets 23,093 Interest expense 502Current liabilities 7,714 Income tax expense 532Total liabilities 18,187 Net income 70Cash 424 Compute working capital. (If answer is negative enter it with a negative sign preceding the number e.g. -15,000 or parenthesis e.g. (15,000).)Working capital $million SHOW LIST OF ACCOUNTSLINK TO TEXTCompute current ratio. (Round current ratio to 2 decimal places, e.g. 1.25 : 1.)Current ratio :1 Question 5Mayberry Company has two fringe benefit plans for its employees:1. It grants employees 2 days’ vacation for each month worked. 10 employees worked the entire month of March at an average daily wage of $140 per employee.2. In its pension plan, the company recognizes 10% of gross earnings as a pension expense. Gross earnings in March were $40,000. No contribution has been made to the pension fund.
