A retail store credited the Sales Revenue account for the sales price and the amount of
sales tax on sales. If the sales tax rate is 5% and the balance in the Sales Revenue
account amounted to $252,000, what is the amount of the sales taxes owed to the taxing
agency?
a.$240,000
b.$252,000
c.$12,600
d.$12,000
The following information is related to December 31, 2013 balances.
During 2014 sales on account were $195,000 and collections on account were
$115,000. Also, during 2014 the company wrote off $11,000 in uncollectible accounts.
An analysis of outstanding receivable accounts at year end indicated that bad debts
should be estimated at $72,000. The change in the cash realizable value from the
balance at 12/31/13 to 12/31/14 was
a.$68,000 increase.
b.$80,000 increase.
c.$57,000 increase.
d.$69,000 increase.
The Holiday House had severe damage done to its Christmas inventory due to an
escaped circus monkey rampaging through the store. The inventory loss was $150,000
before applicable taxes of $30,000. The Holiday House should record the loss as a(n)
a.$150,000 loss in other expenses and losses.
b.$180,000 extraordinary loss.
c.$120,000 extraordinary loss.
d.$180,000 extraordinary loss.
Hutchinson Company had retained earnings of $15,000 on the balance sheet but
disclosed in the footnotes that $2,000 of retained earnings was restricted for plant
expansion and $1,000 was restricted for bond repayments. Cash of $2,000 had been set
aside for the plant expansion. How much of retained earnings is available for
dividends?
a.$12,000.
b.$13,000.
c.$15,000.
d.$10,000.
At the beginning of the current period, Emler Corp. had balances in Accounts
Receivable of $200,000 and in Allowance for Doubtful Accounts of $9,000 (credit).
During the period, it had net credit sales of $650,000 and collections of $590,000. It
wrote off as uncollectible accounts receivable of $5,000. However, a $3,000 account
previously written off as uncollectible was recovered before the end of the current
period. Uncollectible accounts are estimated to total $20,000 at the end of the period.
Instructions
(a)Prepare the entries to record sales and collections during the period.
(b)Prepare the entry to record the write-off of uncollectible accounts during the period.
(c)Prepare the entries to record the recovery of the uncollectible account during the
period.
(d)Prepare the entry to record bad debts expense for the period.
(e)Determine the ending balances in Accounts Receivable and Allowance for Doubtful
Accounts.
(f)Calculate the net realizable value of the receivables at the end of the period.
On July 1, 2014, Fleming Company sells machinery for $120,000. The machinery
originally cost $300,000, had an estimated 5-year life and an expected salvage value of
$50,000. The Accumulated Depreciation account had a balance of $175,000 on January
1, 2014, using the straight-line method. The gain or loss on disposal is
a.$20,000 gain.
b.$5,000 loss.
c.$10,000 loss.
d.$5,000 gain.
The following information pertains to Blue Flower Company. Assume that all balance
sheet amounts represent both average and ending balance figures. Assume that all sales
were on credit.
What is the price earnings ratio for this company?
a.1.9 times
b.3.8 times
c.3.8 times
d.4.8 times
Echo Sound Company just began business and made the following four inventory
purchases in June:
A physical count of merchandise inventory on June 30 reveals that there are 210 units
on hand. The inventory method which results in the highest gross profit for June is
a.the FIFO method.
b.the LIFO method.
c.the average cost method.
d.not determinable.
Winrow Company received proceeds of $565,500 on 10-year, 8% bonds issued on
January 1, 2013. The bonds had a face value of $600,000, pay interest annually on
December 31st, and have a call price of 101. Winrow uses the straight-line method of
amortization. What is the amount of interest Winrow must pay the bondholders in
2013?
a.$45,240
b.$48,000
c.$51,450
d.$44,550
(a)Faster Company purchased equipment in 2007 for $104,000 and estimated an $8,000
salvage value at the end of the equipment’s 10-year useful life. At December 31, 2013,
there was $67,200 in the Accumulated Depreciation account for this equipment using
the straight-line method of depreciation. On March 31, 2014, the equipment was sold
for $21,000.
Prepare the appropriate journal entries to remove the equipment from the books of
Faster Company on March 31, 2014.
(b)Lewis Company sold equipment for $11,000. The equipment originally cost $25,000
in 2011 and $6,000 was spent on a major overhaul in 2014 (charged to the Equipment
account). Accumulated Depreciation on the equipment to the date of disposal was
$20,000.
Prepare the appropriate journal entry to record the disposition of the equipment.
(c)Selby Company sold equipment that had a book value of $13,500 for $15,000. The
equipment originally cost $45,000 and it is estimated that it would cost $57,000 to
replace the equipment.
Prepare the appropriate journal entry to record the disposition of the equipment.
The amount you must deposit now in your savings account paying 6% interest, in order
to accumulate $2,000 for a down payment 5 years from now on a new Vintage
Convertible Mustang is
a.$400.
b.$1,494.52.
c.$1,492.44.
d.$1,400.00.
Financial information is presented below:
Gross profit would be
a.$40,000.
b.$43,000.
c.$55,000.
d.$52,000.
Arnold Company purchases a new delivery truck for $40,000. The sales taxes are
$2,500. The logo of the company is painted on the side of the truck for $1,200. The
truck’s annual license is $120. The truck undergoes safety testing for $220. What does
Arnold record as the cost of the new truck?
a.$44,040.
b.$43,920.
c.$42,500.
d.$41,920.
The board of directors of Yancey Company declared a cash dividend of $1.50 per share
on 42,000 shares of common stock on July 15, 2014. The dividend is to be paid on
August 15, 2014, to stockholders of record on July 31, 2014. The effects of the journal
entry to record the declaration of the dividend on July 15, 2014, are to
a.decrease stockholders’ equity and increase liabilities.
b.decrease stockholders’ equity and decrease assets.
c.increase stockholders’ equity and increase liabilities.
d.increase stockholders’ equity and decrease assets.
At what value are inventory items reported on the balance sheet?
a.At the lower of selling price or replacement cost
b.At the lower of selling price or original cost
c.At the original cost to acquire
d.At the lower of original cost or replacement cost
U.S. standards are referred to as
a.IFRS.
b.GAAP.
c.IASB.
d.FASB.
An aging of a company’s accounts receivable indicates that $4,500 are estimated to be
uncollectible. If Allowance for Doubtful Accounts has a $1,200 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 Allowance for Doubtful Accounts for $5,700.
c.debit to Bad Debt Expense for $5,700.
d.credit to Allowance for Doubtful Accounts for $4,500.
Under IFRS, companies can choose which inventory system?
Perpetual Periodic
a. Yes No
b. Yes Yes
c. No Yes
d. Yes No
Financial information is presented below:
Gross profit would be
a.$90,000.
b.$70,000.
c.$60,000.
d.$66,000.
What type of accounts can be found on a post-closing trial balance?
a.All accounts that have balances after the closing process is complete
b.Permanent and temporary accounts
c.Assets, expenses, revenues, and liabilities
d.Accounts that have been closed during the period
Ramos Company receives a payment on account from Martinez Industries. Based on
the original sale of $8,000 using the periodic inventory approach, Ramos honors the 3%
cash discount and records the payment. Which of the following is the correct entry for
Ramos to record?
Using the following data for Hayes, Inc., compute its asset turnover ratio and the return
on assets ratio.
Hayes, Inc.
A cash register tape shows cash sales of $6,000 and sales taxes of $300. The journal
entry to record this information is
The income statement of Gise Company is shown below:
Additional information:
1)Accounts receivable increased $600,000 during the year.
2)Inventory increased $250,000 during the year.
3)Prepaid expenses increased $150,000 during the year.
4)Accounts payable to merchandise suppliers increased $125,000 during the year.
5)Accrued expenses payable increased $180,000 during the year.
Instructions
Prepare the operating activities section of the statement of cash flows for the year ended
December 31, 2014, for Gise Company, using the direct method.
275. Horizontal and vertical analyses are analytical tools frequently used to
analyze financial statements. What type of information or insights can be obtained
by using these two techniques? Explain how the output of horizontal analysis and
vertical analysis can be compared to industry averages and/or competitive
companies.
River Ridge Music School borrowed $30,000 from the bank signing a 6%, 6-month
note on November Principal and interest are payable to the bank on May If the
company prepares monthly financial statements, what adjusting entry should the
company make at November 30 with regard to the note (round answer to the nearest
dollar)?