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# Answers_test%202[1] - Icrp 1 What effect will the following...

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Icrp 1. What effect will the following entry have on Retained Earnings? B) Retained Earnings will decrease by \$9,150. A) Retained Earnings will increase by \$9,150. B) Retained Earnings will decrease by \$9,150. C) Retained Earnings will remain unchanged. D) Retained Earnings will be transferred to the income statement. 2. On January 1, 2007, Shaffer Co. purchased inventory for \$1,000 cash. These goods were sold on April 30, 2007 for \$1,400 cash. The company can currently earn 3% interest on an account at a bank. What was Shaffer's cost of financing this inventory? C) \$30 A) \$10 B) \$0 C) \$30 D) \$400 3. Sine Company borrowed \$20,000 on October 1, 2007 when the company issued a one- year note with a 6% annual interest rate. The adjusting entry necessary to record accrued interest on December 31, 2007 would include a: D) debit to Interest Expense for \$300. A) debit to Interest Expense for \$1,200. B) debit to Interest Payable for \$1,200. C) debit to Notes Payable for \$300. D) debit to Interest Expense for \$300. 4. George Co. had beginning inventory of \$400 and ending inventory of \$200. The cost of goods sold was \$1,600. Based on this information, George Co. must have purchased inventory amounting to: C) \$1,800. A) \$1,400. B) \$1,600. C) \$1,800. D) \$2,200. 5.

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What effect will the return of merchandise to the supplier have on the accounting equation? A) Assets and equity are reduced by \$600. A) Assets and equity are reduced by \$600.
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