Net Income, Employee Salaries Expense, Journal Entries, Financial Accounting Fundamentals
The key terms in this Financial Accounting course include Net Income, Employee Salaries Expense, Interest Expense, Journal Entries, Financial Statement Accounts, Asset (A), Liability (L), Equity (EQ) Account, Ending Inventory, Perpetual LIFO inventory, Cost of the Ending Inventory, Accounts Receivable, Dividends
Determine the net income of a company for which the following information is available for the month of July.
| Employee salaries expense | $193,000 |
| Interest expense | 23,000 |
| Rent expense | 33,000 |
| Consulting revenue | 452,000 |
$203,000.
$249,000.
$269,000.
$452,000.
$701,000.
Explanation
Net Income = Revenues – Expenses
Or Net Income = Consulting Revenue – Employee Salaries Expense – Interest Expense – Rent Expense
Net Income = $452,000 – $193,000 – $23,000 – $33,000; Net Income = $203,000
A law firm billed a client $2,600 for work performed in the current month. Which of the following general journal entries will the firm make to record this transaction?
Debit Accounts Receivable, $2,600; credit Unearned Legal Fees Revenue, $2,600.
Debit Cash, $2,600; credit Unearned Legal Fees Revenue, $2,600.
Debit Legal Fees Revenue, $2,600; credit Accounts Receivable, $2,600.
Debit Accounts Receivable, $2,600; credit Legal Fees Revenue, $2,600.
Debit Cash, $2,600; credit Accounts Receivable, $2,600.
Identifying financial statement accounts
Classify each of the following accounts as an asset (A), liability (L), or equity (EQ) account.
| a. | Office Equipment | A |
| b. | Dividends | EQ |
| c. | Common Stock | EQ |
| d. | Prepaid Insurance | A |
| e. | Office Supplies | A |
| f. | Prepaid Rent | A |
| g. | Cash | A |
| h. | Unearned Rent | L |
| i. | Accounts Payable | L |
A company had the following purchases and sales during its first year of operations:
| Purchases | Sales | |
| January: | 28 units at $210 | 19 units |
| February: | 38 units at $215 | 18 units |
| May: | 33 units at $220 | 22 units |
| September: | 30 units at $225 | 21 units |
| November: | 28 units at $230 | 35 units |
On December 31, there were 42 units remaining in ending inventory. Using the Perpetual LIFO inventory valuation method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)
$14,174.
$9,060.
$13,596.
$14,751.
$20,945.
Explanation
Ending Inventory
| 9 | @ | $210 | = | $ | 1,890 |
| 20 | @ | $215 | = | 4,300 | |
| 11 | @ | $220 | = | 2,420 | |
| 2 | @ | $225 | = | 450 | |
| 0 | @ | $230 | = | 0 | |
| 42 units | $ | 9,060 |