Unformatted text preview: 1 In making adjusting entries at the end of its accounting period, Chao Consulting failed to record $1,600 of insurance coverage that had expired. This $1,600 costhad been initially
debited to the Prepaid Insurance accounL The company also iailed to record accrued salaries expense of 51,000. As a result of these two oversights, the ﬁnancial statements for the
reporting period will [choose one] (1) understate assets by $1,6m; (2) understate expenses by 52,6“); (3) understate net income by Slﬂl); or (4) overstate liabilities by $1,000. Q5 3-12 Identifying the accounting cycle C3 List the following steps of the accounting cycle in their proper order. 3. Posting the journal entries. f. Preparing the ﬁnancial statements. b. Joumalizing and posting adjusting entries. 3. Preparing the unadjusted trial balance.
c. Preparing the adjusted trial balance. h. Journalizing transactions and events.
d. Journalizing and posting closing entries. i. Preparing the post-closing trial balance. e. Analyzing transactions and events. Q5 3-1 3
Classifying balance sheet items C4 The following are common categories on a classiﬁed balance sheet: A. Current assets D. Intangible assets B. Long-term investments E. Current liabilities C. Plant assets F. Long-term liabilities For each of the following items, select the letter that identiﬁes the balance sheet category where the item typically would appear.
I. Accounts payable _ 5. Land not currently used in operations _ 2. Store equipment _ 6. Notes payable (due in three years)
4 3. Wages payable _ 7. Accounts receivable
_ 4. Cash _ 8. Trademarks 05 3-14 Prepare closing entries from the ledger 1’4 The ledger of Turner Company includes the following accounts with normal balances: Retained Earnings $24,000; Dividends $1,200; Services Revenue $40,000; Wages Expense
$15,000; and Rent Expense $6,000. Prepare the necessary closing entries from the available information at December 31. Q5 3-15 Identify post—closing accounts 1’5 Identify the accounts listed in Q5 314 that would be included in a postdosing trial balance. 05 3-1 6
Analyzing proﬁt margin
A2 1 Miller Company reported net income of $78,750 and net sales of $630,000 for the current year. Compute Miller's proﬁt margin and interpret the result. Assume that Miller's competitors
achieve an average proﬁt margin of 15%. Q5 3-17 Identifying current accounts and computing the current ratio C4A3 Compute Darrah Company's current ratio using the following information. .' 26 ...
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- Spring '09