1) hudson, inc. is a calendar-year corporation. its financial statements for the years 2013
and 2012 contained errors as follows:
assume that no correcting entries were made at december 31, 2012, or december 31,
2013 and that no additional errors occurred in 2014. ignoring income taxes, by how
much will working capital at december 31, 2014 be overstated or understated?
a.$0
b.$3,000 overstated
c.$3,000 understated
d.$7,500 understated
2) what is consigned inventory?
a.goods that are shipped, but title transfers to the receiver
b.goods that are sold, but payment is not required until the goods are sold
c.goods that are shipped, but title remains with the shipper
d.goods that have been segregated for shipment to a customer
3) which of the following is the process of converting assets received or held into cash
or claims to cash?
a.recognition
b.measurement
c.realization
d.allocation
4) boxer inc. uses the conventional retail method to determine its ending inventory at
cost. assume the beginning inventory at cost (retail) were $196,500 ($297,000),
purchases during the current year at cost (retail) were $1,704,000 ($2,596,800),
freight-in on these purchases totaled $79,500, sales during the current year totaled
$2,433,000, and net markups were $207,000. what is the ending inventory value at
cost?
a.$667,800
b.$523,098
c.$426,723
d.$456,924
5) which of the following best describes the ifrs requirement for applying the same cost
formula to all inventories?
a.when they are purchased from different suppliers
b.when they are purchased from the same geographic region
c.when they are similar in nature or use
d.when they sell for the same price
6) cash dividends are paid on the basis of the number of shares
a.authorized
b.issued
c.outstanding
d.outstanding less the number of treasury shares
7) a company buys an oil rig for $3,000,000 on january 1, 2012. the life of the rig is 10
years and the expected cost to dismantle the rig at the end of 10 years is $600,000
(present value at 10% is $231,330). 10% is an appropriate interest rate for this
company. what expense should be recorded for 2012 as a result of these events?
a.depreciation expense of $360,000
b.depreciation expense of $300,000 and interest expense of $23,133
c.depreciation expense of $300,000 and interest expense of $60,000
d.depreciation expense of $323,133 and interest expense of $23,133
8) ventura corporation purchased machinery on january 1, 2012 for $840,000. the
company used the sum-of-the-years-digits method and no salvage value to depreciate
the asset for the first two years of its estimated six-year life. in 2013, ventura changed
to the straight-line depreciation method for this asset. the following facts pertain:
the amount that ventura should report for depreciation expense on its 2014 income
statement is
a.$160,000
b.$140,000
c.$100,000
d.none of the above
9) financial statements for kiner company are given below:
kiner company
balance sheet
january 1, 2013
kiner company
balance sheet
january 1, 2013
total assets on the balance sheet at december 31, 2013 are $2,216,000. accumulated
deprecia-tion on the equipment sold was $112,000.
the balance in the retained earnings account at december 31, 2013 was
a.$360,000
b.$880,000
c.$760,000
d.$1,000,000
10) under the completed-contract method
a.revenue, cost, and gross profit are recognized during the production cycle
b.revenue and cost are recognized during the production cycle, but gross profit
recognition is deferred until the contract is completed
c.revenue, cost, and gross profit are recognized at the time the contract is completed
d.none of these
11) financial statements for kiner company are given below:
kiner company
balance sheet
january 1, 2013
total assets on the balance sheet at december 31, 2013 are $2,216,000. accumulated
deprecia-tion on the equipment sold was $112,000.
kiner company
balance sheet
january 1, 2013
capital stock (plus any additional paid-in capital) at december 31, 2013 was
a.$800,000
b.$920,000
c.$520,000
d.$1,240,000
12) when a customer purchases merchandise inventory from a business organization,
she may be given a discount which is designed to induce prompt payment. such a
discount is called a(n)
a.trade discount
b.nominal discount
c.enhancement discount
d.cash discount
13) an item of inventory purchased this period for $15.00 has been incorrectly written
down to its current replacement cost of $10.00. it sells during the following period for
$30.00, its normal selling price, with disposal costs of $3.00 and normal profit of
$12.00. which of the following statements is not true?
a.the cost of sales of the following year will be understated
b.the current year’s income is understated
c.the closing inventory of the current year is understated
d.income of the following year will be understated
14) on june 1, 2011, everly bottle company sold $1,000,000 in long-term bonds for
$877,600. the bonds will mature in 10 years and have a stated interest rate of 8% and a
yield rate of 10%. the bonds pay interest annually on may 31 of each year. the bonds are
to be accounted for under the effective-interest method.
instructions
(a)construct a bond amortization table for this problem to indicate the amount of
interest expense and discount amortization at each may 31. include only the first four
years. make sure all columns and rows are properly labeled. (round to the nearest
dollar.)
(b)the sales price of $877,600 was determined from present value tables. specifically
explain how one would determine the price using present value tables.
(c)assuming that interest and discount amortization are recorded each may 31, prepare
the adjusting entry to be made on december 31, 2013. (round to the nearest dollar.)
15) putnam, inc.
comparative balance sheets
additional information:
a.accounts receivable and accounts payable relate to merchandise held for sale in the
normal course of business. the allowance for bad debts was the same at the end of 2013
and 2012, and no receivables were charged against the allowance. accounts payable are
recorded net of any discount and are always paid within the discount period.
b.the proceeds from the note payable were used to finance the acquisition of property,
plant, and equipment. capital stock was sold to provide additional working capital.
what amount of cash was collected from 2013 accounts receivable?
a.$7,500,000
b.$7,020,000
c.$6,540,000
d.$3,270,000