(solution) Baker, Inc. will be utilized in all questions in this quiz. Baker

(solution) Baker, Inc. will be utilized in all questions in this quiz. Baker

Baker, Inc. will be utilized in all questions in this quiz. Baker prepares financial statements at the end of every month; thus Baker’s Accounting Cycle is one month long.

1. On January 1, 2017 Baker purchased a new stamping machine for its plant. This new piece of equipment cost $120,000 and was recorded in Baker’s accounting system with a $120,000 debit to the Equipment account and a $120,000 credit to the Cash account. Baker estimates that the stamping machine will last 5 years and will have no value at the end of those 5 years. At the end of January, February, March, April, and May, Baker made the correct depreciation adjusting entries.

Select the June 30, 2017 adjusting entry Baker should make for June?s depreciation:

Account Name

Debit

Credit

A.

Accumulated Depreciation

2,000

Depreciation Expense

2,000

B.

Depreciation Expense

12,000

Accumulated Depreciation

12,000

C.

Depreciation Expense

2,000

Accumulated Depreciation

2,000

D.

Depreciation Expense

24,000

Cash

2,000

Loss on Equipment

22,000

E. None of the above

2. If Baker did not make the above June 30 adjusting entry for depreciation:

A The errors on the Income Statement for June would be:

u items understated: Depreciation Expense, Total Expenses

u item overstated: Net Income

The errors on the June 30 Balance Sheet would be:

u item understated: Accumulated Depreciation

u items overstated: Total Assets, Retained Earnings, Total Equity, Total Liabilities and Equity

B The errors on the Income Statement for June would be:

u item understated: Net Income

u items overstated: Depreciation Expense, Total Expenses

The errors on the June 30 Balance Sheet would be:

u items understated: Total Assets, Retained Earnings, Total Equity, Total Liabilities and Equity

u item overstated: Accumulated Depreciation

C The errors on the Income Statement for June would be:

u items understated: Depreciation Expense, Net Income

u item overstated: Total Expenses

The errors on the June 30 Balance Sheet would be:

u items understated: Accumulated Depreciation, Total Assets, Total Liabilities and Equity

u items overstated: Retained Earnings, Total Equity

Quiz: Solid Footing Chapter 7 Pg 2

3. As of June 1, 2017 the beginning balance in the asset account Supplies was $10,000. On June 10, 2017 Baker purchased $7,000 of additional supplies and made the following entry:

Dr. Cr.

Supplies 7,000

Cash 7,000

The entry above is the only entry Baker made to the Supplies account during the month of June.

Based on a physical count, Baker determined that there are $11,500 of supplies remaining on-hand as of June 30.

Select the Supplies adjusting entry Baker should make as of June 30, 2017:

Account Name

Debit

Credit

A.

Supplies Expense

11,500

Supplies

11,500

B.

Supplies Expense

5,500

Supplies

5,500

C.

Supplies

11,500

Supplies Expense

11,500

D.

Supplies

4,500

Supplies Expense

4,500

E. None of the above

4. If Baker did not make the above June 30 adjusting entry for Supplies:

A The errors on the Income Statement for June would be:

u item understated: Net Income

u items overstated: Supplies Expense, Total Expenses

The errors on the June 30 Balance Sheet would be:

u items understated: Supplies, Total Assets, Total Liabilities and Equity

u items overstated: Retained Earnings, Total Equity

B The errors on the Income Statement for June would be:

u item understated: Supplies Expense

u items overstated: Total Expenses, Net Income

The errors on the June 30 Balance Sheet would be:

u item understated: Supplies

u items overstated: Total Assets, Retained Earnings, Total Equity, Total Liabilities and Equity

C The errors on the Income Statement for June would be:

u items understated: Supplies Expense, Total Expenses

u item overstated: Net Income

The errors on the June 30 Balance Sheet would be:

u items understated: none

u items overstated: Supplies, Total Assets, Retained Earnings, Total Equity, Total Liabilities and

Equity

Quiz: Solid Footing Chapter 7 Pg 3

5. Baker pays its employees each Friday for the work that they performed that week. On June 30, Baker owes its employees $3,400 for 3 days of work the employees performed after the last Friday payday in June. This $3,400 will be paid to the employees in July.

The current balance in the Wages Payable account is $0.

Select the adjusting entry Baker should make as of June 30, 2017 related to these 3 days of unpaid wages:

Account Name

Debit

Credit

A.

Wages Payable

3,400

Wages Expense

3,400

B.

Wages Expense

3,400

Wages Payable

3,400

C.

Wages Expense

3,400

Cash

3,400

D. No adjusting entry is required

E. None of the above

6. If Baker did not make the above June 30 adjusting entry for Wages owed to employees:

A The errors on the Income Statement for June would be:

u items understated: Wages Expense, Total Expenses

u item overstated: Net Income

The errors on the June 30 Balance Sheet would be:

u items understated: Wages Payable, Total Liabilities

u items overstated: Retained Earnings, Total Equity

B The errors on the Income Statement for June would be:

u item understated: Net Income

u items overstated: Wages Expense, Total Expenses

The errors on the June 30 Balance Sheet would be:

u item understated: Cash

u items overstated: Wages Payable, Total Liabilities

C The errors on the Income Statement for June would be:

u items understated: none

u items overstated: Wages Expense, Total Expenses, Net Income

The errors on the June 30 Balance Sheet would be:

u items understated: Wages Payable, Total Liabilities

u items overstated: Cash, Total Liabilities and Equity

D There would not be any errors, as no adjusting entry is required

Question 1
Answer: C Question 2
Answer: A Question 3
Answer: B Question 4
Answer: C Question 5
Answer: B Question 6
Answer: A