Financial Accounting Final

Failure to make an adjusting entry to recognize accrued wages payable would cause an:

(D) Understatement of expenses and liabilities and an overstatement of
stockholders' equity.

Chad Jones is the sole owner and manager of Jones Glass Repair Shop. In 2021, Jones
purchases a truck for $30,000 to be used in the business.

Which of the following fundamentals requires Jones to record the truck at the price paid to buy it?

C) Historical cost principle.

On Jan. 1, Sandwich Co. issued 2,000 shares of stock to investors for cash at $20/share.

Cash Debit 40,000

Contributed Capital Credit 40,000

Sandwich Co. borrowed $70,000 from a bank on Jan. 2, signing a long-term note.

Cash Debit 70,000

Notes Payable Credit 70,000

On Jan. 5, Sandwich Co. paid $7,200 for a one-year fire insurance policy (recorded as a
prepaid expense).

Prepaid Insurance Debit 7200
Cash Credit 7200

Sandwich Co. purchased furniture for the store on Jan. 10 for $30,000 on account. The amount is due within 30 days.

Furniture (Equipment) Debit 30,000

Accounts Payable Credit 30,000

Sandwich Co. purchased bread, meats, cheeses, and condiments as inventory to sell in the store for $3,300 cash on Jan. 20.

Inventory debit 3300
Cash credit 3300

On Jan. 30, Sandwich Co. made full payment for the furniture purchased on account in

(d).

Accounts Payable Debit 30,000

Cash Credit 30,000

On January 31, Sandwich Co. received $250 from a customer who had previously made
a purchase on account.

Cash Debit 250
Accounts Recieveable Credit 250

Depreciation for 2021, $3,500.

Depreciation Expense Debit 3500

Accumulated Depreciation Credit 3500

Interest of $900 accrued on notes payable

Interest Expense Debit 900

Interest Payable Credit 900

Wages earned since the December 24 payroll but not yet paid, $7,000.

Wages Expense Debit 7000
Wages Payable Credit 7000

Income tax expense was $2,310, payable in 2022.

Income tax expense debit 2310

income tax payable credit 2310