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ACG Final Exam Practice (1)
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ACG Final Exam Practice (1)
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ACG Final Exam PracticeAn Income statement shows - ANS-revenues, expenses, net income
A corporation began the year with total liabilities of $120,000 and stockholders equity of
$40,000. During the year, the company reported the following:
Net Income, $120,000
Dividends, $15,000
Total liabilities at the end of the year were $225,000. How much were total assets at the
end of the year? - ANS-$370,000
First determine the ending balance of stockholders equity. Ending stockholders equity =
beginning stockholders equity + net income - dividends.
Ending stockholders equity = $40,000 + 120,000 - 15,000 = $145,000.
Second, determine total liabilities.
Assets = Liabilities + SE
Assets = $225,000 + 145k
Assets = $370,000
At the start of the current year, a corporations retained earnings account had a credit
balance of $280,000. During the year, the corporation had a net loss of $60,000 and
paid dividends to the stockholders of $40,000. It also borrowed $8,000 by issuing a
note. At December 31, the balance in retained earnings is - ANS-$180,000
ERE=BRE+NI-Div
ERE= $280k-60k-40k=180k
Retained earnings is an equity account; it normally has a credit balance. Certain
transactions do not affect retained earnings, such as borrowing money by issuing a note
A credit sale of $1,900 is made on April 25, terms 2/10, net/30, on which a return of
$100 is granted on April 28. What amount is received as payment in full on May 4? -
ANS-$1,764
The terms 2/10, n/30 indicares that the discount is 2% if payment is made within 10
days of the invoice date. The discount is 2% of the net purchase $36 (2%x($1900-100))
and the company collects $1,764 (i.e., $1,900-100-36= $1,764).
A company uses a perpetual inventory system to record the following events involving a
recent purchase of inventory:
-On June 1, it purchased merchandise for $90,000, terms 2/10, n/30.
-On June 3, it paid freight costs of $450 on merchandise purchased.
-On June 6, it returned $1,800 of merchandise to the supplier.
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