1) these t accounts summarize the ledger of garner gardening company inc. at the end of
the first month of operations, april 2014 .
instructions
(a)prepare in the order they occurred the journal entries (including explanations) that
resulted in the amounts posted to the accounts.
(b)prepare a trial balance at april 30, 2014 .
2) a debit is not the normal balance for which account listed below?
a.dividends
b.cash
c.accounts receivable
d.service revenue
3) sales taxes collected by a retailer from a customer are expenses
a.of the retailer
b.of the customers
c.of the government
d.that are not recognized by the retailer until they are submitted to the government
4) the following items were taken from the financial statements of stine, inc., over a
three-year period:
instructions
using horizontal analysis and 2011 as the base year, compute the trend percentages for
net sales, cost of goods sold, and gross profit. explain whether the trends are favorable
or unfavorable for each item.
5) which of the following would not affect the balance of the retained earnings account?
a.net income
b.stock dividend
c.stock split
d.gains and losses of a company
6) a low number of days in inventory may indicate all of the following except
a.sales opportunities may be lost because of inventory shortages
b.there is less chance of having obsolete inventory items
c.the company has fewer funds tied up in inventory
d.management has achieved the best balance between too much and too little inventory
levels
7) a traditional definition of internal control specifically includes all of the following
features except
a.adherence to prescribed managerial policies
b.promotion of operational efficiency
c.reliability of accounting data
d.insistence that employees not take earned vacations
8) all of the following are true regarding bank statements except
a.the bank statement will show a credit for deposits received from a company
b.the bank statement balance will always agree with the company record balance
c.the bank statement is a copy of the bank’s records sent to the customer for periodic
review
d.the bank statement will show a debit if a check is paid for a company issuing the
check
9) hachey company has accounts receivable of $85,100 at march 31, 2012. an analysis
of the accounts shows these amounts.
credit terms are 2/10, n/30. at march 31, 2012, there is a $2,500 credit balance in
allowance for doubtful accounts prior to adjustment. the company uses the percentage
of receivables basis for estimating uncollectible accounts. the company’s estimates of
bad debts are as shown below
instructions
(a)determine the total estimated uncollectibles.
(b)prepare the adjusting entry at march 31, 2012, to record bad debts expense.
10) an aging of a company’s accounts receivable indicates that $4,000 are estimated to
be uncollectible. if allowance for doubtful accounts has a $1,600 debit balance, the
adjustment to record bad debts for the period will require a
a.debit to bad debts expense for $4,000
b.debit to bad debt expense for $5,600
c.debit to bad debts expense for $2,400.
d.credit to allowance for doubtful accounts for $5,000
11) if lantz company issues 3,000 shares of $5 par value common stock for $210,000,
the account
a.common stock will be credited for $15,000
b.paid-in capital in excess of par value will be credited for $15,000
c.paid-in capital in excess of par value will be credited for $210,000
d.cash will be debited for $195,000
12) which statement about long-term investments is not true?
a.they will be held for more than one year
b.they are not currently used in the operation of the business
c.they include investments in stock of other companies and land held for future use
d.they can never include cash accounts
13) the following information was taken from mitchell company cash budget for the
month of
if the company has a policy of maintaining end of the month cash balance of $75,000,
the amount the company would have to borrow is
a.$30,000
b.$15,000
c.$45,000
d.$18,000
14) deposits in transit
a.have been recorded on the company’s books but not yet by the bank
b.have been recorded by the bank but not yet by the company
c.have not been recorded by the bank or the company
d.are customers checks that have not yet been received by the company
15) forcum company reports the following information (in millions) during a recent
year: net sales, $12,408.5; net earnings, $304.9; total assets, ending, $4,312.6; and total
assets, beginning, $4,254.3.
instructions
(a)calculate the (1) return on assets, (2) asset turnover, and (3) profit margin ratios.
(b)prove mathematically how the profit margin and asset turnover ratios work together
to explain return on assets, by showing the appropriate calculations.
16) on january 1, 2012, eberle company purchased at face value, a $1,000 7%, bond
that pays interest on january 1 and july 1. eberle company has a calendar year end. the
adjusting entry on december 31, 2012, is
17) the following information is provided for nguyen company and northwest
corporation.
what is nguyen’s asset turnover ratio for 2012?
a.4.00 times
b.1.36 times
c.0.25 times
d.0.73 times
18) all of the following statements are true regarding the periodic inventory system
except:
a.under the periodic inventory system, the balance of cost of goods sold is calculated at
the end of the period
b.under the periodic inventory system, the balance in ending inventory is calculated at
the end of the period
c.using the periodic inventory system affects the balance sheet contents differently than
when the perpetual system is used
d.under the periodic system, a company uses separate accounts to record freight costs,
returns, and discounts
19) the following information is available from the annual reports of reser company and
trent company
instructions
(a)based on the preceding information, compute the following values for each
company:
1>asset turnover ratio
2>return on assets