K2 Corporation has assets of $2,400,000, common stock of $624,000, and retained
earnings of $380,000. What are the creditors’ claims on their assets?
a.$2,156,000
b.$1,004,000
c.$1,396,000
d.$2,644,000
Equipment costing $210,000 was destroyed when it caught on fire. At the date of the
fire, the accumulated depreciation on the equipment was $84,000. An insurance check
for $240,000 was received based on the replacement cost of the equipment. The entry to
record the insurance proceeds and the disposition of the equipment will include a
a.gain on disposal of $30,000.
b.credit to the Equipment account of $126,000.
c.credit to the Accumulated Depreciation account for $84,000.
d.gain on disposal of $114,000.
On May 1, 2014, Irwin Company purchased the copyright to Quick Computer Tutorials
for $90,000. It is estimated that the copyright will have a useful life of 5 years. The
amount of amortization expense recognized for the year 2014 would be
a.$18,000.
b.$12,000.
c.$9,000.
d.$9,600.
The accounts receivable turnover is used to analyze
a.profitability.
b.liquidity.
c.risk.
d.long-term solvency.
An analysis and aging of the accounts receivable of Watts Company at December 31
reveal these data:
What is the cash realizable value of the accounts receivable at December 31 after
adjustment?
a.$2,055,000
b.$2,250,000
c.$2,400,000
d.$2,205,000
operating expenses.
a.1
b.2
c.3
d.both 1 and 2
Erickson Company had a $300 credit balance in Allowance for Doubtful Accounts at
December 31, 2014, before the current year’s provision for uncollectible accounts. An
aging of the accounts receivable revealed the following:
Instructions
(a)Prepare the adjusting entry on December 31, 2014, to recognize bad debts expense.
(b)Assume the same facts as above except that the Allowance for Doubtful Accounts
account had a $300 debit balance before the current year’s provision for uncollectible
accounts. Prepare the adjusting entry for the current year’s provision for uncollectible
accounts.
During 2014, Ecuyer Industries reported cash provided by operations of $397,000,000,
cash used in investing of $343,000,000, and cash used in financing of $95,000,000. In
addition, cash spent for fixed assets during the period was $138,000,000. Average
current liabilities were $325,000,000 and average total liabilities were $858,000,000.
No dividends were paid. Based on this information, what was Ecuyer’s current cash
debt coverage?
a.1.16 times.
b.2.88 times.
c.0.82 times.
d.1.22 times.
A truck costing $48,000 and on which $40,000 of accumulated depreciation has been
recorded was discarded as having no value. The entry to record this event would
include a
a.gain of $8,000.
b.loss of $8,000.
c.credit to Accumulated Depreciation for $40,000.
d.credit to Accumulated Depreciation for $48,000.
A company purchased inventory as follows:
200 units at $5.00
300 units at $5.50
The average unit cost for inventory is
a.$5.00
b.$5.25
c.$5.30
d.$5.50
If the market interest rate for a bond is higher than the stated interest rate, the bond will
sell at
a.a premium.
b.a discount.
c.par.
d.either a discount or premium.
Equipment with a cost of $480,000 has an estimated salvage value of $30,000 and an
estimated life of 4 years or 15,000 hours. It is to be depreciated using the
units-of-activity method. What is the amount of depreciation for the first full year,
during which the equipment was used 3,300 hours?
a.$120,000.
b.$135,600.
c.$99,000.
d.$112,500.
Randall Automotive signed a $5,000,120-day note payable on October 1 that bears
interest at an annual rate of 9%. How much will appear on Randall’s income statement
for interest expense related to this note at December 31?
a.$450
b.$150
c.$112.50
d.$4,500
On December 31, 2013, when its Allowance for Doubtful Accounts had a credit balance
of $1,500, Leeds Company estimates that 6% of its accounts receivable balance of
$95,000 will become uncollectible. On March 3, 2014, Leeds Company determined that
Megan Jost’s account of $950 was uncollectible. On May 15, 2014, Jost paid the
amount previously written off.
Instructions
Prepare the journal entries for December 31, 2013, March 3, 2014 and May 15, 2014.
Horner Corporation reported net sales of $150,000, cost of goods sold of $96,000,
operating expenses of $35,000, other expenses of $10,000, net income of $9,000.
Calculate the following values. 1. Profit margin. 2. Gross profit rate.
The tabular analysis of transactions for Baxter Company is presented below.
Instructions
Prepare a retained earnings statement for August and a classified balance sheet at
August 31, 2014.
Prepare adjusting entries for the following transactions. Omit explanations.
1>Unrecorded interest accrued on savings bonds is $410.
2>Property taxes incurred but not paid or recorded amount to $800.
3>Unearned service revenue of $4,000 was collected in advance. By year end $700 was
still unearned.
4>Prepaid insurance had a $750 debit balance prior to adjustment. By year end, 60
percent was still unexpired.
5>Salaries incurred by year end but not yet paid or recorded amounted to $650.
What is the effect on total stockholders€ equity of a stock dividend and a stock split,
respectively?
On January 10 Donna Stark uses her Baver Co. credit card to purchase merchandise
from Baver Co. for $2,600. On February 10, she is billed for the amount due of $2,600.
On February 12 Stark pays $1,600 on the balance due. On March 10 Stark is billed for
the amount due, including interest at 1% per month on the unpaid balance as of
February 12.
Instructions
Prepare the entries on Baver Co.’s books related to the transactions that occurred on
January 10, February 12, and March 10.
A review of the March 30 bank statement and other data of Sangster Aviation revealed a
$16,220 balance at March 31 on the bank statement and $15,940 as the balance in the
cash account in the company€s ledger. In addition, the following information was
determined:
Instructions: As of March 31, prepare:
1)The bank reconciliation for the month of March (omit heading)
2)Related journal entries
1)BANK RECONCILIATION:
AmountAmount
Balance per bank statement$16,220Balance per books$15,940
Adjusted balance per bank$Adjusted balance per books$
2)ENTRIES:
Current liabilities are obligations that are reasonably expected to be paid from
Use the following income statement for the year 2013 for Haggrad Ltd. to prepare
entries to close the revenue and expense accounts for the company.