1) a machine which cost $300,000 is acquired on october 1, 2012. its estimated salvage
value is $30,000 and its expected life is eight years.
instructions
calculate depreciation expense for 2012 and 2013 by each of the following methods,
showing the figures used.
(a)double-declining balance
(b)sum-of-the-years’-digits
2) in computing earnings per share, the equivalent number of shares of convertible
preferred stock are added as an adjustment to the denominator (number of shares
outstanding). if the preferred stock is cumulative, which amount should then be added
as an adjustment to the numerator (net earnings)?
a.annual preferred dividend
b.annual preferred dividend times (one minus the income tax rate)
c.annual preferred dividend times the income tax rate
d.annual preferred dividend divided by the income tax rate
3) net cash provided by operating activities divided by average total liabilities equals
the
a.current cash debt coverage ratio
b.cash debt coverage ratio
c.free cash flow
d.current ratio
4) carperter company has used the installment method of accounting since it began
operations at the beginning of 2013. the following information pertains to its operations
for 2013:
the amount to be reported on the december 31, 2013 balance sheet as deferred gross
profit should be
a.$ 252,000
b.$ 378,000
c.$ 504,000
d.$1,260,000
5) niles co. has the following data related to an item of inventory:
the value assigned to ending inventory if niles uses lifo is
a.$290
b.$276
c.$273
d.$292
6) an analysis of the machinery accounts of noller company for 2013 is as follows:
the information concerning noller’s machinery accounts should be shown in noller’s
statement of cash flows (indirect method) for the year ended december 31, 2013, as a(n)
a.subtraction from net income of $100,000 and a $200,000 decrease in cash flows from
financing activities
b.addition to net income of $100,000 and a $200,000 decrease in cash flows from
investing activities
c.$100,000 increase in cash flows from financing activities
d.$200,000 decrease in cash flows from investing activities
7) sue gray wants to invest a certain sum of money at the end of each year for five
years. the investment will earn 6% compounded annually. at the end of five years, she
will need a total of $40,000 accumulated. how should she compute her required annual
invest-ment?
a.$40,000 times the future value of a 5-year, 6% ordinary annuity of 1
b.$40,000 divided by the future value of a 5-year, 6% ordinary annuity of 1
c.$40,000 times the present value of a 5-year, 6% ordinary annuity of 1
d.$40,000 divided by the present value of a 5-year, 6% ordinary annuity of 1
8) on september 1, 2012, valdez company reacquired 16,000 shares of its $10 par value
common stock for $15 per share. valdez uses the cost method to account for treasury
stock. the journal entry to record the reacquisition of the stock should debit
a.treasury stock for $160,000
b.common stock for $160,000
c.common stock for $160,000 and paid-in capital in excess of par for $60,000
d.treasury stock for $240,000
9) dexter company uses special strapping equipment in its packaging business. the
equipment was purchased in january 2011 for $8,000,000 and had an estimated useful
life of 8 years with no salvage value. at december 31, 2012, new technology was
introduced that would accelerate the obsolescence of dexters equipment. dexters
controller estimates that expected future net cash flows on the equipment will be
$5,000,000 and that the fair value of the equipment is $4,400,000. dexter intends to
continue using the equipment, but it is estimated that the remaining useful life is 4
years. dexter uses straight-line depreciation.
instructions
(a)prepare the journal entry (if any) to record the impairment at december 31, 2012.
(b)prepare any journal entries for the equipment at december 31, 2013. the fair value of
the equipment at december 31, 2013, is estimated to be $4,600,000.
(c)repeat the requirements for (a) and (b), assuming that roland intends to dispose of the
equipment and that it has not been disposed of as of december 31, 2013.
10) when using the indirect method to prepare the operating section of a statement of
cash flows, which of the following is deducted from net income to compute cash
provided by/used by operating activities?
a.decrease in accounts receivable
b.gain on sale of land
c.amortization of patent
d.all of the above are deducted from net income to arrive at cash flow from operating
activities
11) one factor that is not considered in determining the useful life of an intangible asset
is
a. salvage value
b. provisions for renewal or extension
c. legal life
d. expected actions of competitors
12) if, at the end of a period, a company erroneously excluded some goods from its
ending inventory and also erroneously did not record the purchase of these goods in its
accounting records, these errors would cause
a.the ending inventory and retained earnings to be understated
b.the ending inventory, cost of goods sold, and retained earnings to be understated
c.no effect on net income, working capital, and retained earnings
d.cost of goods sold and net income to be understated
13) the balance sheet data of kohler company at the end of 2013 and 2012 follow:
land was acquired for $200,000 in exchange for common stock, par $200,000, during
the year; all equipment purchased was for cash. equipment costing $20,000 was sold for
$8,000; book value of the equipment was $16,000 and the loss was reported as an
ordinary item in net income. cash dividends of $40,000 were charged to retained
earnings and paid during the year; the transfer of net income to retained earnings was
the only other entry in the retained earnings account. in the statement of cash flows for
the year ended december 31, 2013, for naley company:
the net cash provided (used) by financing activities was
a.$ -0-
b.$(40,000)
c.$(80,000)
d.$120,000
14) korte company reported the following information for 2012:
for 2012, korte would report comprehensive income of
a.$351,000
b.$345,000
c.$291,000
d.$60,000