Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Trudy, Inc. had the following bank reconciliation at March 31, 2015:
All reconciling items at March 31, 2015 cleared the bank in April. Outstanding checks
at April 30, 2015 totaled $6,000. There were no deposits in transit at April 30, 2015.
What is the cash balance per books at April 30, 2015?
a. $25,900
b. $31,900
c. $34,200
d. $38,500
Answer:
Arens Corporation purchased 4,000 shares of its $5 par value common stock for a cash
price of $10 per share. Two months later, Arens sold the treasury stock for a cash price
of $8 per share.
Instructions
Prepare the journal entry to record the sale of the treasury stock assuming
(a) No balance in Paid-in Capital from Treasury Stock.
(b) A $3,000 balance in Paid-in Capital from Treasury Stock.
Answer:
A petty cash fund should be replenished
a. every day.
b. at the end of every accounting period.
c. once a year.
d. as soon as an expense is paid from the fund.
Answer:
On February 2, Jerry's Printing Service received a payment of $9,000 for contracted
printing work that will be completed over the next 3 months. As of the end of February,
the company had completed 1/3 of the work. The adjusting journal entry at the end of
February for unearned revenue will include
a. a debit to Unearned Service Revenue for $9,000
b. a credit to Unearned Service Revenue for $6,000
c. a credit to Service Revenue for $3,000
d. a debit to Cash for $3,000
Answer:
A machine with a cost of $480,000 has an estimated salvage value of $30,000 and an
estimated useful life of 5 years or 15,000 hours. It is to be depreciated using the
units-of-activity method of depreciation. What is the amount of depreciation for the
second full year, during which the machine was used 5,000 hours?
a. $150,000
b. $90,000
c. $130,000
d. $160,000
Answer:
The United States and the international standard-setting environment are primarily
driven by meeting the needs of
a. investors and creditors.
b. tax authorities.
c. central government planners.
d. academic researchers.
Answer:
The comparative balance sheet of Nathan Company appears below:
Instructions
(a) Using horizontal analysis, show the percentage change for each balance sheet item
using 2015 as a base year.
(b) Using vertical analysis, prepare a common size comparative balance sheet.
Answer:
South Airlines purchased a 747 aircraft on January 1, 2014, at a cost of
$35,000,000. The estimated useful life of the aircraft is 20 years, with an
estimated salvage value of $5,000,000. On January 1, 2017 the airline
revises the total estimated useful life to 15 years with a revised salvage
value of $3,500,000.
Instructions
(a) Compute the depreciation and book value at December 31, 2016 using
the straight-line method and the double-declining-balance method.
(b) Assuming the straight-line method is used, compute the depreciation
expense for the year ended December 31, 2017.
Answer:
A double rule applied to accounts in the ledger during the closing process implies that
a. the account is a temporary account.
b. the account is a balance sheet account.
c. the account balance is not zero.
d. a mistake has been made, since double ruling is prescribed.
Answer:
Blaine Company had these transactions pertaining to stock investments:
The entry to record the purchase of the Horton stock would include a
a. debit to Stock Investments for $45,900.
b. credit to Cash for $45,900.
c. debit to Stock Investments for $51,000.
d. debit to Investment Expense for $5,100.
Answer:
Under the equity method, the Stock Investments account is credited when the
a. investee reports net income.
b. investee reports a net loss.
c. investment is originally acquired.
d. investee reports net income and when the investment is originally acquired.
Answer:
A debit memorandum would not be issued by the bank for
a. a bank service charge.
b. the issuance of traveler's checks.
c. the wiring of funds.
d. the collection of a notes receivable.
Answer:
Employees at Tengo Corporation are paid $15,000 cash every Friday for working
Monday through Friday. The calendar year accounting period ends on Wednesday,
December 31. How much salaries and wages expense should be recorded two days later
on January 2?
a. $15,000
b. $9,000
c. $6,000
d. None, matching requires the weekly salary to be accrued on December 31.
Answer:
From the standpoint of the issuing company, a disadvantage of using bonds as a means
of long-term financing is that
a. bond interest is deductible for tax purposes.
b. interest must be paid on a periodic basis regardless of earnings.
c. income to stockholders may increase as a result of trading on the equity.
d. the bondholders do not have voting rights.
Answer:
Which of the following expressions is incorrect?
a. Gross profit '“ operating expenses = net income
b. Sales revenue '“ cost of goods sold '“ operating expenses = net income
c. Net income + operating expenses = gross profit
d. Operating expenses '“ cost of goods sold = gross profit
Answer:
When recording exchanges of assets that have commercial substance,
a. both gains and losses are recognized immediately.
b. the gain or loss on the old asset is the difference between its cost and its fair market
value.
c. gains are treated as increases in the cost of the new asset.
d. none of these answer choices are correct.
Answer:
The only acceptable cost flow assumptions under IFRS are
a. FIFO and LIFO.
b. FIFO and average.
c. LIFO and average.
d. FIFO, LIFO and average.
Answer:
Financial information is presented below:
The gross profit rate would be
a. .133.
b. .400.
c. .600.
d. .733.
Answer:
During an accounting period, a business has numerous transactions affecting each of the
following accounts. State for each account whether it is likely to have (a) debit entries
only, (b) credit entries only, or (c) both debit and credit entries.
Answer:
The factor that is not relevant in computing depreciation is
a. replacement value.
b. cost.
c. salvage value.
d. useful life.
Answer:
Presented here is a partial amortization schedule for Roseland Company who sold
$300,000, five year 10% bonds on January 1, 2014 for $312,000 and uses annual
straight-line amortization.
Which of the following amounts should be shown in cell (ii)?
a. $32,400
b. $27,600
c. $31,200
d. $28,800
Answer:
Identify the following expenditures as capital expenditures or revenue expenditures.
(a) Replacement of worn out gears on factory machinery.
(b) Construction of a new wing on an office building.
(c) Painting the exterior of a building.
(d) Oil change on a company truck.
(e) Painting and lettering of a used truck upon acquisition of the truck.
(f) Overhaul of a truck motor. One year extension in useful life is expected.
(g) Purchased a wastebasket at a cost of $10.
Answer:
The board of directors must assign a per share value to a stock dividend declared that is
a. greater than the par or stated value.
b. less than the par or stated value.
c. equal to the par or stated value.
d. at least equal to the par or stated value.
Answer:
Valuing assets at their fair value rather than at their cost is inconsistent with the:
a. economic entity assumption.
b. historical cost principle.
c. periodicity assumption.
d. full disclosure principles.
Answer:
Ann Hech's regular hourly wage is $18 an hour. She receives overtime pay at the rate of
time and a half. The FICA tax rate is 7.65%. Ann is paid every two weeks. For the first
pay period in January, Ann worked 86 hours of which 6 were overtime hours. Ann's
federal income tax withholding is $400 and her state income tax withholding is $170.
Ann has authorized that $50 be withheld from her check each pay period for savings
bonds.
Instructions
Compute Ann Hech's gross earnings and net pay for the pay period showing each
payroll deduction in arriving at net pay.
Answer:
The following information is available for Sally Corporation for the year ended
December 31, 2015:
In addition, the following information is available from the comparative balance sheet
for Sally at the end of 2014 and 2015:
Instructions
Prepare Sally's statement of cash flows for the year ended December 31, 2015 using the
indirect method.
Answer:
In computing cash payments for income taxes, a decrease in income taxes payable is
______________ to (from) income tax expense.
Answer:
Employees of a company who evaluate the effectiveness of the company's system of
internal controls on a year-round basis are called ______________.
Answer:
The following accounts appear in the ledger of Fall Inc. after the books are closed at
December 31, 2015.
Instructions
Prepare the stockholders' equity section at December 31, 2015, assuming that retained
earnings is restricted for plant expansion in the amount of $200,000.
Answer:
Prepare the necessary journal entries to record the following transactions in 2015 for
Jano Company.
March 1 Exchanged old store equipment and $60,000 cash for new store equipment.
The old store equipment originally cost $72,000 and had a book value of $48,000 on the
date of exchange. The old store equipment had a fair value of $57,000 on the date of
exchange. Assume depreciation on the old equipment has already been recorded for the
current year. The exchange had commercial substance.
July 31 Exchanged a delivery truck and $100,000 cash for a new delivery truck. The old
delivery truck originally cost $108,000 and had accumulated depreciation of $76,000 on
the date of exchange. The fair value of the old delivery truck on the date of exchange
was $24,000. Assume the depreciation on the truck has already been recorded for the
current year. The exchange had commercial substance.
Aug. 31 Equipment with a 4-year useful life was purchased on January 1, 2012, for
$80,000 and was sold for $28,000 on September 1, 2015. The equipment had been
depreciated using the straight-line method with an estimated salvage value of $14,000.
Depreciation Expense was last recorded on December 31, 2014.
Answer:
When plant assets are exchanged, the cost of the new asset is the book value of the old
asset plus any cash paid.
Answer:
