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Ch 9 -- Merchandising Worksheet & Adjustments

True/False
Indicate whether the sentence or statement is true or false.
 

1. 
The adjusting entry to allocate the cost of equipment to operations includes a debit to Accumulated Depreciation--Equipment and a credit to Depreciation Expense--Equipment.
 

2. 
The balance of the Merchandise Inventory account that appears in the Trial Balance section of the worksheet represents the stock of goods on hand at the beginning of the current period.
 

3. 
The Merchandise Inventory account is debited when goods are purchased for resale and credited when goods are sold and delivered to customers.
 

4. 
The balance of the Merchandise Inventory account shown in the Adjusted Trial balance section of the worksheet is extended to the Balance Sheet Debit column of the worksheet.
 

5. 
To determine the cost of goods sold, it is necessary to subtract the ending inventory from the total merchandise available for sale.
 

6. 
On the worksheet, the amount of the ending merchandise inventory is shown in the Income Statement Credit column and the Balance Sheet Debit column.
 

7. 
On the worksheet, the totals of the Income Statement columns should equal the totals of the Balance Sheet columns.
 

8. 
The cost of goods sold is calculated by deducting the ending inventory from the sum of the beginning inventory and the net delivered cost of purchases.
 

9. 
Merchandise inventory is adjusted in two steps because both the beginning and ending inventory figures are needed to prepare the income statement.
 

10. 
To take the beginning inventory off the books, the Income Summary account is credited for the amount of the beginning inventory.
 

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
 

11. 
On November 1, 20X5, a firm accepted a 4-month, 10 percent note for $600 from a customer with an overdue balance.  The accrued interest recorded for this note for the year ended December 31, 20X5, is
a.
$45.
c.
$10.
b.
$20.
d.
$60.
 

12. 
The adjusting entry to record accrued interest on a note payable requires
a.
a debit to Interest Income and a credit to Notes Payable.
b.
a debit to Interest Payable and a credit to Interest Expense.
c.
a debit to Interest Expense and a credit to Cash.
d.
a debit to Interest Expense and a credit to Interest Payable.
 

13. 
Allowance for Doubtful Accounts is reported in
a.
the Assets section of the balance sheet.
b.
the Operating Expenses section of the income statement.
c.
the Liabilities section of the balance sheet.
d.
The Cost of Goods Sold section of the income statement.
 

14. 
On May 1, 20X5, a firm purchased a 1-year insurance policy for $1,680 and paid the full premium in advance.  The insurance expense associated with this policy for 20X5 is
a.
$560.
c.
$1,680.
b.
$1,120.
d.
$980.
 

15. 
On January 2, 20X4, a firm purchased equipment for $7,500.  Depreciation expense for 20X4, given the straight-line method, a 5-year useful life, and a salvage value of $500, is
a.
$1,400.
c.
$1,000.
b.
$1,500.
d.
$1,200.
 

16. 
If an account has a debit balance of $500 in the Trial Balance section of a worksheet and there is a credit entry of $200 in the Adjustments section, the account balance in the Adjusted Trial Balance section of the worksheet is
a.
a $700 debit.
c.
a $300 credit.
b.
a $300 debit.
d.
a $700 credit.
 

17. 
The net income for an accounting period appears on the worksheet in
a.
the Income Statement Debit column only.
b.
the Income Statement Credit column only.
c.
the Income Statement Credit and the Balance Sheet Debit columns.
d.
the Income Statement Debit and the Balance Sheet Credit columns.
 

18. 
The beginning merchandise inventory plus the net delivered cost of purchases minus the ending merchandise inventory equals
a.
the total merchandise available for sale.
c.
the gross profit on sales.
b.
the cost of goods sold.
d.
the ending merchandise inventory.
 

19. 
The ending merchandise inventory is recorded on the worksheet in
a.
the Income Statement Credit and the Balance Sheet Debit columns.
b.
the Income Statement Credit column only.
c.
the Balance Sheet Debit column only.
d.
the Income Statement Debit column only.
 

20. 
On the financial statements prepared at the end of an accounting period, the ending merchandise inventory is shown
a.
on the balance sheet but not on the income statement.
b.
on the income statement but not on the balance sheet.
c.
on both the income statement and the balance sheet.
d.
on the Statement of Owner's Equity.
 

21. 
Allowance for Doubtful Accounts is
a.
subtracted from Accounts Receivable in the Assets section of the balance sheet.
b.
deducted for Sales in the Revenue section of the income statements.
c.
listed in the Operating Expenses section of the income statement.
d.
listed in the Liabilities section of the balance sheet.
 

Numeric Response
 
 
For the questions in this section select a red or blue number from the worksheet form below:
I0250000.JPG
 

22. 
Which blue number represents the column in the worksheet where an asset would be decreased in an adjustment?

 

23. 
Which blue number represents the column in the worksheet where the adjusted trial balance debits would be recorded?

 

24. 
Which blue number represents the column in the worksheet where the adjusted trial balance credits would be recorded?

 

25. 
Which blue number represents the column in the worksheet where an expense would be increased in an adjustment?

 

26. 
Which blue number represents the column in the worksheet where accumulated depreciation would be extended to from the adjusted trial balance columns?

 

27. 
Which blue number represents the column in the worksheet where salaries expense would be extended to from the adjusted trial balance columns?

 

28. 
Which blue number represents the column in the worksheet where accounts receivable would be extended to from the adjusted trial balance columns?

 

29. 
Which blue number represents the column in the worksheet where fees earned would be extended to from the adjusted trial balance columns?

 

30. 
Which red number would represent where the Net Income amount would show?

 

31. 
Which red number would represent where the Net Loss amount would show?

 

32. 
Which blue number represents the adjustment for removing the beginning Merchandise Inventory?

 

33. 
Which blue number represents the adjustment for installing the ending Merchandise Inventory?

 

34. 
Which blue number represents the column in the worksheet where drawing would be extended to from the adjusted trial balance columns?

 

35. 
Which blue number represents the column in the worksheet where salaries payable would be extended to from the adjusted trial balance columns?

 

36. 
Which blue number represents the column in the worksheet where a liability would be increased in an adjustment?

 

37. 
Which blue number represents the column in the worksheet where an asset would be decreased in an adjustment?

 



 
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