Chapter 4 TAPQ, TF, MC, P 6,7,8,9TAPQ1. Beginning A/R:770Cash Collections: 8,000Ending A/R: 570What are credit sales?2. Ending A/P: 520Payments on account: 1,840Purchases on account: 1,790What are beginning A/P?3. Beginning land: 7,500Land purchases: 9,000Ending land: 5,780What is orginial cost of land sold?If land is sold for 12,000, what is the amount of gain or loss?If land is sold for 7,000, what is the amount of gain or loss?TF1. ____ Debits and credits must equal for every transaction.2. ____ A list of all recorded journal entries is recorded in the ledger, which is maintained by a company.3. ____ Revenue may not be recorded until cash is collected.4. ____ A transaction is any event that has a financial impact on a company.5. ____ The balance of an expense account is increased with a credit.6. ____ Examples of accrued expenses include salary, rent, and interest.7. ____ The term “revenue” and the term “gain” are interchangeable.8. ____ Posting refers to the process of analyzing transactions and producing journal entries.9. ____ A company must recognize each accrued expense as it is incurred.10. ____ The matching principle states that expenses should be recognized in the same period as the revenue they help generate.11. ____ Unearned revenue is reported on the balance sheet as a liability account.12. ____ The Hampstone Company buys 20,000 pieces of inventory (all identical) for $70,000. The company sells 8,000 units of this inventory for $5 each in cash. The company should debit cash for $40,000, credit inventory for $28,000, and credit gain for $12,000.13. ____ Assume a company buys inventory for $8,000 for cash. It then spends $700 in cash on advertising in order to sell 60 percent of the inventory for $11,000. Of that amount, it collects $5,000 immediately and will collect the remaining $6,000 next year. The company pays a cash dividend of $1,000. The amount of net income to be recognized this year will be $5,500.14. ____ A company buys inventory for $6,000 on credit on December 31, Year One. By accident, the journal entry is made backward (debits are shown as credits and credits are shown as debits). The company reports working capital of $140,000. The correct amount of working capital is $134,000.Jessica Hujber9/7/14BusinessPID: 72047263815. ____ A matching principle is the portion of U.S. GAAP that sets the rule for the timing of recognition of revenues.16. ____ Assume a company buys inventory for $3,000 on credit. It then spends $400 on advertising in order tosell 30 percent of the inventory for $9,000. Of that amount, it collects $5,000 immediately and will collect the remaining $4,000 next year. The amount of gross profit to be recognized this year will be $7,700.Multiple Choice1. Which of the following is not true about double-entry bookkeeping?1. It originated in Italy.2. Debits and credits must equal.3. It is still used today by most businesses.4. Each entry can have only one credit and one debit.2. Which of the following entries could Yeats Company not make when they perform a service for a client?1. Figure 4.22 2. Figure 4.23 3. Figure 4.24 4. Figure 4.25 3. Which of the following is a transaction for Tyler Corporation?1. Tyler pays its employees $400 for work done.2. Tyler considers renting office space that will cost $1,500 per month.3. Tyler agrees to perform services for a client, which will cost $7,000.4. Tyler places an order for supplies that will be delivered in two weeks. The supplies cost $200.4. Elenor Company sells 400 units of inventory for $40 each. The inventory originally cost Elenor $26 each. What is Elenor’s gross profit on this transaction?1. $ 5,6002. $ 9,6003. $10,4004. $16,0005. Which of the following increases with a debit?1. Retained earnings2. Sales revenue3. Inventory4. Note payable6. In January, Rollins Company is paid $500 by a client for work that Rollins will not begin until February. Which of the following is the correct journal entry for Rollins to make when the $500 is received?1. Figure 4.26 2. Figure 4.27 3. Figure 4.28 4. Figure 4.29 7. The accountant for the Babson Corporation determines that the current Cash balance held by the company is $32,564. Which of the following could not have been the source of that information?1. Trial balance2. Journal3. T-account4. Ledger8. In the accounting system for the Caldwell Company, which of the following comes first?1. Journal2. Financial statements3. T-account4. Ledger9. Which of the following T-accounts is least likely to have a credit balance?1. Revenue2. Equipment3. Accounts payable4. Capital stock10. The Brooklyn Corporation rents a building for $100 per day. The company’s accounting system accrues thisexpense each day. After twelve days, payment is made. What account is debited when that payment is made?1. Rent expense2. Rent payable3. Cash4. Cannot be determined based on the information provided11. The Bronx Corporation rents a building for $100 per day. The company’s accounting system makes no recognition of this expense as it accrues. After twelve days, payment is made. What account is debited when that payment is made?1. Rent expense2. Rent payable3. Cash4. Cannot be determined based on the information providedP 6,7,8,9- The following are the account balances for the Ester Company for December 31, Year Four, and the year that ended. All accounts have normal debit or credit balances. For some reason, company accountants do not know the amount of sales revenue earned this year. What is the balance of that account?Figure 4.30 Trial Balance—Ester Company- State whether a debit or credit balance is normal for each of the following T-accounts:1. Cash2. Dividends paid3. Notes payable4. Unearned revenue5. Cost of goods sold6. Prepaid rent7. Accounts receivable8. Capital stock- Near the end of her freshman year at college, Heather Miller is faced with the decision of whether to get a summerjob, go to summer school, or start a summer dress-making business. Heather has some experience designing and sewing and believes that third option might be the most lucrative of her summer alternatives. Consequently, she starts “Sew Cool.”During June, the first month of business, the following occur:1. Heather deposits $1,000 of her own money into Sew Cool’s checking account.2. Sew Cool purchases equipment for $1,000. The company signs a note payable for this purchase.3. Sew Cool purchases $1,000 in sewing supplies and material paying cash.4. Sew Cool gives Heather’s