Use the adjusted trial balance for Stockton Company below to answer the questions that follow. Stockton Company
Adjusted Trial Balance
December 31
Cash 7,530
Accounts Receivable 2,100
Prepaid Expenses 700
Equipment 13,700
Accumulated Depreciation 1,100
Accounts Payable 1,900
Notes Payable 4,300
Common Stock 1,000
Retained Earnings 12,940
Dividends 790
Fees Earned 9,250
Wages Expense 2,500
Rent Expense 1,960
Utilities Expense 775
Depreciation Expense 250
Miscellaneous Expense 185
Totals 30,490 30,490

Determine total assets.

a.$24,030

b.$22,930

c.$16,830

d.$25,130

Part 2: If the two totals of a trial balance are not equal, it could be due to

a. recording the same transaction more than once

b. an error in determining the account balances, such as a balance being incorrectly computed

c. recording the same erroneous amount for both the debit and the credit parts of a transaction

d. failure to record a transaction

Part 3:The assets section of the balance sheet normally presents assets in

a. the order of smallest to largest dollar amounts

b. the order of largest to smallest dollar amounts

c. the order in which they will be converted into cash or used in operations

d. alphabetical order

part 4:Which of the following entries records the collection of cash from cash customers?

a. Fees Earned, debit; Accounts Receivable, credit

b. Cash, debit; Fees Earned, credit

c. Accounts Receivable, debit; Fees Earned, credit

d. Fees Earned, debit; Cash, credit

Part 1: Total assets is $22,930.

Part 2: b. an error in determining the account balances, such as a balance being incorrectly computed.

Part 3: c. the order in which they will be converted into cash or used in operations.

Part 4: b. Cash, debit; Fees Earned, credit

Explanation:

Part 1: Determine total assets.

Total assets is the addition of all the values of all the assets which include intangible assets, fixed assets (less accumulated depreciation) and current assets.

For this question, the total assets Stockton Company of can be calculated as follows:

Particulars                                             Amount ($)      

Fixed Assets:                          

Equipment                                                13,700

Accumulated Depreciation                     (1,100)  

Net book value                                        12,600

Current Assets:

Cash                                                          7,530

Accounts Receivable                               2,100

Prepaid Expenses                                      700  

Total assets                                           22,930  

Therefore, the total assets is $22,930.

Part 2: If the two totals of a trial balance are not equal, it could be due to

b. an error in determining the account balances, such as a balance being incorrectly computed.

When a balance being incorrectly computed, this will make the total of the debit and credit sides of the trial balance not to equal. This is usually referred to a computation error. To fix this kind of error, the balance that is incorrectly computed has be identified and recomputed correctly.

Part 3:The assets section of the balance sheet normally presents assets in

c. the order in which they will be converted into cash or used in operations.

The order in which assets will be converted into cash is known as order of liquidity. This order is followed in Part 1 above under the Current Assets. As it can be seen, Cash is already cash and it is therefore the most liquid assets followed by Accounts Receivable and then Prepaid Expenses in that order.

Part 4: Which of the following entries records the collection of cash from cash customers?

b. Cash, debit; Fees Earned, credit

When a cash is received from a cutomer, it is debited to the Cash Account while the account of the business activity from which the cash came from is credited.

The above indicates that Fees are paid in cash by a customer. That is why Cash is debite while Fees Earned is credited.

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