The trial balance for Greenway Corporation appears as follows:
If, on December 31, 2014, supplies on hand were $20, the adjusting entry would
contain a:
a.debit to Supplies for $20.
b.credit to Supplies for $20.
c.debit to Supplies Expense for $120.
d.credit to Supplies Expense for $120.
Sophie’s Dog Supplies has income before taxes of $550,000 and an extraordinary loss
of $170,000. If the income tax rate is 30% on all items, the income statement should
show income before irregular items and an extraordinary loss, respectively, of
a.$550,000 and ($170,000).
b.$385,000 and ($86,700).
c.$385,000 and ($119,000).
d.$165,000 and ($51,000).
Assume that the Quinn Corporation uses the indirect method to depict cash flows.
Indicate where, if at all, interest paid on note would be classified on the statement of
cash flows.
a.Operating activities section.
b.Investing activities section.
c.Financing activities section.
d.Does not represent a cash flow.
Which one of the following represents the correct order of the three business activities
for a new company?
a.Financing, investing, operating
b.Investing, financing, operating
c.Operating, investing, financing
d.Financing, operating, investing
Which statement is true regarding the lower-of-cost-or-market (LCM) method of
inventory?
a.LCM is an example of the revenue recognition principle.
b.LCM is departure from the cost basis of accounting.
c.Market is defined as current selling price.
d.Inventory is adjusted to market value each accounting period.
Darting Company purchased a computer system for $7,200 on January 1, 2014. The
company expects to use the computer system for 3 years. It has no salvage value.
Monthly depreciation expense on the asset is:
a.$0.
b.$200.
c.$2,400.
d.$7,200.
The assumption that requires only those things that can be expressed in money are
included in the accounting records is the
a.economic entity assumption.
b.monetary unit assumption.
c.going concern assumption.
d.periodicity assumption.
On January 1, Edmiston Corporation had 1,600,000 shares of $10 par value common
stock outstanding. On March 31 the company declared a 10% stock dividend. Market
value of the stock was $15/share. As a result of this event,
a.Edmiston’s Paid-in Capital in Excess of Par Value account increased $800,000.
b.Edmiston’s total stockholders’ equity was unaffected.
c.Edmiston’s Stock Dividends account increased $2,400,000.
d.All of these answer choices are correct.
A machine was purchased for $54,000 and it was estimated to have a $9,000 salvage
value at the end of its useful life. Monthly depreciation expense of $750 was recorded
using the straight-line method. The annual depreciation rate is
a.25%.
b.2%.
c.16%.
d.20%.
An aging of a company’s accounts receivable indicates that $4,500 are estimated to be
uncollectible. If Allowance for Doubtful Accounts has a $1,600 debit balance, the
adjustment to record bad debts for the period will require a
a.debit to Bad Debt Expense for $4,500.
b.debit to Bad Debt Expense for $6,100.
c.debit to Bad Debt Expense for $2,900.
d.credit to Allowance for Doubtful Accounts for $4,500.
The following totals for the month of April were taken from the payroll records of Noll
Company.
The journal entry to record the monthly payroll on April 30 would include a
a.debit to Salaries and Wages Expense for $60,000.
b.credit to Salaries and Wages Payable for $60,000.
c.debit to Salaries and Wages Payable for $60,000.
d.debit to Salaries and Wages Expense for $40,660.
Tatum Enterprises’ total assets decreased by $11,000 during the year. Its stockholders’
equity increased by $12,000 during the same period. Net income totaled $8,000 during
the year. What occurred to the company’s total liabilities during the year?
a.$23,000 decrease
b.$1,000 increase
c.$15,000 decrease
d.$31,000 decrease
Mann Corporation decided to issue common stock and used the $120,000 proceeds to
retire all of its outstanding bonds on January 1, 2014. The following information is
available for the company for 2013 and 2014.
Instructions
(a)Compute the return on common stockholders’ equity for both years.
(b)Explain how it is possible that net income increased, but the return on common
stockholders’ equity decreased.
(c)Compute the debt to assets ratio for both years, and comment on the implications of
this change in the company’s solvency.
Sielert Corporation borrowed $900,000 from National Bank on May 31, 2013. The
three-year, 7% note required annual payments of $342,945 beginning May 31, 2014.
The total amount of interest to be paid over the life of the loan is
a.$63,000.
b.$128,835.
c.$251,403.
d.$189,000.
Mango Madness Company is considering purchasing equipment. The equipment will
produce the following cash flows:
Mango Madness requires a minimum rate of return of 10%. What is the maximum price
Mango Madness should pay for this equipment?
a.$61,157.10
b.$36,363.60
c.$70,000
d.$35,000
Which measure(s) is(are) useful in evaluating the efficiency in managing inventories?
1)Inventory turnover
2)Days in inventory
a.1 only.
b.2 only.
c.Both 1 and 2.
d.Neither 1 nor 2.
The following credit sales are budgeted by Milford Company:
The company€s past experience indicates that 70% of the accounts receivable are
collected in the month of sale, 20% in the month following the sale, and 8% in the
second month following the sale. The anticipated cash inflow for the month of August
is
a.$648,060.
b.$588,000.
c.$630,000.
d.$617,400.
The book value of an asset will equal its fair value at the date of sale if
a.a gain on disposal is recorded.
b.no gain or loss on disposal is recorded.
c.the plant asset is fully depreciated.
d.a loss on disposal is recorded.