Chapter 5 sample test

Chapter 5 sample test - Chapter 5 sample test 1. The First...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 5 sample test 1. The First Corporation had the following account balances on January 31. Rent expense $300 Cash $1,500 Supplies $600 Fees revenue $1,400 Dividends $200 Supplies expense $500 Retained earnings $3,000 Accounts receivable $2,400 Determine the balance in the company’s retained earnings account after the closing process is completed at the end of January. The key to this problem is to recognize that retained earnings increases by net income and decreases by dividends. The company's net income for January was $600 ($1,400 fees revenue - $300 rent expense - $500 supplies expense = $600 net income). The $600 net income increased the company's retained earnings and the $200 dividends decreased retained earnings. The retained earnings balance at the end of the month would be $3,400. Retained earnings, January 1 $3,000 Plus: Net income $600 Subtotal $3,600 Less: Dividends $200 Retained earnings, January 31 $3,400 See text exercise 5.3 and 5.4 for similar material. 2. The Second Corporation had the following account balances on February 28. Rent expense $400 Cash $1,500 Supplies $600 Fees revenue $1,900 Dividends $200 Supplies expense $600 Retained earnings $3,000 Accounts receivable $2,400 Determine the balance in the company’s income summary account immediately before it is closed at the end of February. The key to this problem is to recognize that before it is closed to retained earnings,
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

Chapter 5 sample test - Chapter 5 sample test 1. The First...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online