Worthington Co. issues $500,000 of 5-year, 6% bonds on January 1, 2016.
Required:
Prepare the journal entry to record the issuance of the bonds under each of the
following assumptions:
Part a. The bonds are sold at 100.
Part b. The bonds are sold at 102.
Part c. The bonds are sold at 96.
Which of the following ratios is calculated by dividing net income by revenues?
A) Return on equity ratio
B) Net profit margin ratio
C) Current ratio
D) Fixed asset turnover ratio
If a company’s Cost of Goods Sold is $158,000 for the period, beginning and ending
Inventory balances are $18,000 and $13,000, respectively, and the beginning and
ending Accounts Payable balances are $19,000 and $7,500, respectively, what is the
amount of the cash paid to suppliers?
A) $157,000
B) $163,500
C) $164,500
D) $151,500
Wheeling Inc. uses the aging of accounts receivable method. Its estimate of
uncollectible receivables resulting from the aging analysis equals $5,000. At the end of
the year, the balance of Accounts Receivable is $100,000 and the unadjusted debit
balance of the Allowance for Doubtful Accounts is $500. Credit sales during the year
totaled $150,000. What is the estimated Bad Debt Expense for the current year?
A) $4,500
B) $5,000
C) $5,500
D) $7,000
Which of the following statements is correct regarding a voucher system?A) The
journal entry to record the asset purchased and liability owed should be recorded when
the bill for goods or services is received.
B)A voucher system is most commonly used in very small companies to make up for
the lack of other internal controls.C)A well-designed voucher system will allow
employees requiring office supplies to place orders directly with suppliers for control
purposes.D)A well designed voucher system will eliminate fraud and errors.
Which of the following statements about the statement of cash flows is not correct?
A) The statement of cash flows can be used to assess the likelihood of a company
paying dividends.
B) Net cash flow is the best measure of profitability since it does not rely on estimates.
C) A company can have positive net income but at the same time have negative cash
flow.
D) The statement of cash flows is the only financial statement that reports business
activities.
Some bonds allow the borrower to repay the bond by issuing stock. These bonds are
known as:
A) convertible bonds.
B) debenture bonds.
C) callable bonds.
D) coupon bonds.
Use the information above to answer the following question. What journal entry will be
recorded by Flynn Company on November 15?
A) Debit Accounts Payable and credit Cash for $4,900
B) Debit Accounts Payable for $5,000, credit Purchase Discount for $100, and credit
Cash for $4,900
C) Debit Accounts Payable for $5,000, credit Inventory for $100, and credit Cash for
$4,900
D) Debit Accounts Payable for $4,900, credit Inventory for $100, and credit Cash for
$4,800
Which of the following is performed first at the end of each accounting period?
A) Prepare adjusting entries.
B) Prepare a post-closing trial balance.
C) Prepare closing journal entries.
D) Prepare the statement of retained earnings.
In a period of rising prices, the inventory costing method that assigns a value to
inventory that approximates current cost is:
A) LIFO.
B) FIFO.
C) Weighted average.
D) Specific identification.
When the indirect method is used, details from which of the following balance sheet
accounts are used in calculating both operating and financing cash flows?
A) Bonds Payable
B) Taxes Payable
C) Retained Earnings
D) Common Stock
If the calculation of cash flows from operating activities starts with net income, the
company:
A) is using the net income method.
B) will remove the effects of all noncash items included in the calculation of net
income.
C) is using the direct method.
D) will add all noncash items not included in the calculation of net income.
How do stock splits and stock dividends impact Retained Earnings?
A) Stock splits increase Retained Earnings and stock dividends have no effect on
Retained Earnings.
B) Stock splits have no effect on Retained Earnings and stock dividends decrease
Retained Earnings.
C) Stock splits and stock dividends both decrease Retained Earnings.
D) Stock splits and stock dividends have no effect on Retained Earnings.
If a truck’s engine is overhauled for $8,000, the journal entry would normally include a
debit to:
A) Vehicles.
B) Accounts Payable.
C) Depreciation Expense.
D) Cash.
Use the information above to answer the following question. On a common size income
statement for the year, what is the percentage that would be shown next to the dollar
amount of sales revenue?
A) 100%
B) 14%
C) 60%
D) Cannot be determined
Which of the following statements about the tradeoffs of extending credit is not correct?
A) Extending credit to at least some customers is necessary in a competitive market to
avoid losing sales to competitors.
B) Even if a company were to collect in full from customers, there would be other
additional costs introduced by extending credit to customers.
C) Even though additional costs are incurred if credit is extended, a company expects
that the additional revenue will be more than sufficient to offset the additional costs.
D) Even if there are no bad debts from credit sales, the delayed receipt of cash will
always increase additional costs beyond the increased revenue from the credit sales.