1) the per share amount normally assigned by the board of directors to a large stock
dividend is
a.the market value of the stock on the date of declaration
b.the average price paid by stockholders on outstanding shares
c.the par or stated value of the stock
d.zero
2) the following transactions are for kale company.
(1)on december 3 kale company sold $400,000 of merchandise to thomson co., terms
1/10, n/10. the cost of the merchandise sold was $320,000.
(2)on december 8 thomson co. was granted an allowance of $20,000 for merchandise
purchased on december 3.
(3)on december 13 kale company received the balance due from thomson co.
instructions
(a)prepare the journal entries to record these transactions on the books of kale company.
kale uses a perpetual inventory system.
(b)assume that kale company received the balance due from thomson co. on january 2
of the following year instead of december 13. prepare the journal entry to record the
receipt of payment on january 2.
3) a corporation has which of the following set of characteristics?
a.shared control, tax advantages, increased skills and resources
b.simple to set up and maintains control with founder
c.easier to transfer ownership and raise funds, no personal liability
d.harder to raise funds and gives owner control
4) using the following balance sheet and income statement data, what is the current
ratio?
a.1.75 : 1
b.2.00 : 1
c.0.44 : 1
d.2.25: 1
5) copyrights are granted by the federal government
a.for the life of the creator or 70 years, whichever is longer
b.for the life of the creator plus 70 years
c.for the life of the creator or 70 years, whichever is shorter
d.and therefore cannot be amortized
6) depreciation is the process of:
a.valuing an asset at its fair market value
b.increasing the value of an asset over its useful life in a rational and systematic manner
c.allocating the cost of an asset to expense over its useful life in a rational and
systematic manner
d.writing down an asset to its real value each accounting period
7) which of the following would be deducted from the balance per books on a bank
reconciliation?
a.outstanding checks
b.deposits in transit
c.notes collected by the bank
d.service charges
8) allowance for doubtful accounts on the balance sheet
a.is offset against total current assets
b.increases the cash realizable value of accounts receivable
c.appears under the heading “other assets.”
d.is deducted from accounts receivable
9) the trial balance for greenway corporation appears as follows:
if the estimated depreciation for office equipment were $800, the adjusting entry would
contain a:
a.credit to accumulated depreciation, office equipment for $800
b.credit to depreciation expense, office equipment for $800
c.debit to accumulated depreciation, office equipment for $800
d.credit to office equipment for $800
10) in the first month of operations, the total of the debit entries to the cash account
amounted to $1,200 and the total of the credit entries to the cash account amounted to
$900. the cash account has a
a.$900 credit balance.
b.$300 debit balance.
c.$1,200 debit balance.
d.$300 credit balance.
11) adjusting entries are made to ensure that:
a.expense are recognized in the period in which they are incurred
b.revenues are recorded in the period in which they are earned
c.balance sheet and income statement accounts have correct balances at the end of an
accounting period
d.all of the above
12) in the balance sheet, the account premium on bonds payable is
a.added to bonds payable
b.deducted from bonds payable
c.classified as a stockholders’ equity account
d.classified as a revenue account
13) on january 1, 2012, keisler company, a calendar-year company, issued $500,000 of
notes payable, of which $125,000 is due on january 1 for each of the next four years.
the proper balance sheet presentation on december 31, 2012, is
a.current liabilities, $500,000
b.long-term debt , $500,000
c.current liabilities, $125,000; long-term debt, $375,000
d.current liabilities, $375,000; long-term debt, $125,000
14) the current carrying value of kennetts $800,000 face value bonds is $797,000. if the
bonds are retired at 102, what would be the amount kennett would pay its bondholders?
a.$797,000
b.$800,000
c.$804,000
d.$816,000
15) briefly distinguish between a deferral and an accrual.
16) on january 5, 2012, jensen company purchased the following stock investments:
300 shares glenn corporation common stock for $4,800.
500 shares kiley corporation common stock for $10,000.
600 shares riggs corporation common stock for $18,000.
assume that jensen company cannot exercise significant influence over the activities of
the investee companies and that the cost method is used to account for the investments.
on june 30, 2012, jensen company received the following cash dividends:
on november 15, 2012, jensen company sold 100 shares of riggs corporation common
stock for $3,600.
on december 31, 2012, the fair value of the securities held by jensen company is as
follows:
instructions
prepare the appropriate journal entries that the jensen company should make on the
following dates:
17) the income statement of decker 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, 2012, for decker company, using the direct method.
18) assume the indirect method is used to compute cash flows from operations. for each
item listed below, indicate the effect on net income in arriving at cash flows from
operations by choosing one of the following code letters.
1>increase in accounts receivable
2>increase in inventory
3>decrease in prepaid expenses
4>decrease in accounts payable
5>increase in accrued liabilities
6>increase in income taxes payable
7>depreciation expense
8>loss on sale of investment
9>gain on disposal of equipment
10>amortization expense
19) the following transactions were made by white company. assume all investments
are short-term.
instructions
journalize the transactions.
20) the adjusted trial balance of nicks financial planners appears below and using the
information from the adjusted trial balance, you are to prepare for the month ending
december 31:
1>an income statement;
2>a retained earnings statement; and
3>a balance sheet.
21) vineyard company sold the following two pieces of equipment in 2012:
instructions
journalize all entries required to update depreciation and record the sales of the two
assets in 2012. the company has recorded depreciation on the equipment through
december 31, 2011.
22) on january 1, 2012, hauke corporation issued $800,000, 6%, 10-year bonds at face
value. interest is payable annually on january hauke corporation has a calendar year
end.
instructions
prepare all entries related to the bond issue for 2012.