Given the following information, compute the amount of cash finally remitted by the
customer.
Oct. 22’”Sale on credit, terms of 2/10, n/30’”$6,000
Oct. 27’”Allowance granted due to some items being damaged’”$600
Oct. 31’”Payment in full received from customer’”$?
a. $5,292.
b. $6,000.
c. $5,280.
d. $5,628.
Answer:
A measure that describes the cash remaining from operations after adjustment for
capital expenditures and dividends is
a. adjusted cash from operations.
b. cash provided by operations.
c. free cash flow.
d. net cash provided by operating activities.
Answer:
The total assets and liabilities of Company at January 1 and December 31, 2015 are
presented below.
Instructions:
1> Assume dividends of $10,800 were paid and no additional stock was issued during
the year. Revenues were $110,000. Compute (a) net income, and (b) expenses.
2> Assume additional stock was issued for $4,800 and no dividends were paid during
the year. Expenses were $42,000. Compute (a) net income, and (b) revenues.
3> Assume additional stock was issued for $62,000 and dividends of $15,600 were paid
during the year. Compute net income.
4> Assume additional stock was issued for $6,000 and net income was $51,000.
Compute dividends paid.
Answer:
The current assets of Myers Company are $250,000. The current liabilities are
$100,000. The current ratio expressed as a proportion is
a. 250%.
b. 2.5 : 1
c. .25 : 1
d. $250,000 ÷ $100,000.
Answer:
(a) What is meant by trading on the equity?
(b) How would you determine the profitability of trading on the equity?
Answer:
If the board of directors authorizes a $100,000 restriction of retained earnings for a
future plant expansion, the effect of this action is to
a. decrease total assets and total stockholders’ equity.
b. increase stockholders’ equity and decrease total liabilities.
c. decrease total retained earnings and increase total liabilities.
d. reduce the amount of retained earnings available for dividend declarations.
Answer:
Flite Company reported income before taxes of $900,000 and an extraordinary loss of
$250,000. Assume that the company’s tax rate is 35%. What amounts will be reported
on the income statement for income before irregular items and extraordinary items,
respectively?
a. $585,000 and $250,000
b. $585,000 and $162,500
c. $650,000 and $250,000
d. $650,000 and $162,500
Answer:
For each of the following, describe a transaction that will have the stated effect on the
elements of the accounting equation.
(a) Increase one asset and decrease another asset.
(b) Increase an asset and increase a liability.
(c) Decrease an asset and decrease a liability.
(d) Increase an asset and increase stockholders’ equity.
(e) Increase one asset, decrease one asset, and increase a liability.
Answer:
Eight transactions are recorded in the following T-accounts:
Indicate for each debit and each credit: (a) whether an asset, liability, stockholders’
equity, revenue, or expense account was affected and (b) whether the account was
increased (+) or (‘“) decreased. Answers should be presented in the following chart
form:
Answer:
The December 31, 2014 balance sheet of Barone Company had Accounts Receivable of
$400,000 and a credit balance in Allowance for Doubtful Accounts of $32,000. During
2015, the following transactions occurred: sales on account $1,500,000; sales returns
and allowances, $50,000; collections from customers, $1,250,000; accounts written off
$36,000; previously written off accounts of $6,000 were collected.
Instructions
(a) Journalize the 2015 transactions.
(b) If the company uses the percentage-of-sales basis to estimate bad debt expense and
anticipates 3% of net sales to be uncollectible, what is the adjusting entry at December
31, 2015?
(c) If the company uses the percentage of receivables basis to estimate bad debt expense
and determines that uncollectible accounts are expected to be 8% of accounts
receivable, what is the adjusting entry at December 31, 2015?
(d) Which basis would produce a higher net income for 2015 and by how much?
Answer:
(a) On January 6, Whitson Co. sells merchandise on account to Garcia Inc. for $7,000,
terms 2/10, n/30. On January 16, Garcia Inc. pays the amount due. Prepare the entries
on Whitson’s books to record the sale and related collection.
(b) On January 10, Jill Hoyle uses her Berkman Co. credit card to purchase
merchandise from Berkman Co. for $9,000. On February 10, Hoyle is billed for the
amount due of $9,000. On February 12, Hoyle pays $4,000 on the balance due. On
March 10, Hoyle is billed for the amount due, including interest at 2% per month on the
unpaid balance as of February 12. Prepare the entries on Berkman Co.’s books related to
the transactions that occurred on January 10, February 12, and March 10.
Answer:
The following information pertains to Ortiz Company. Assume that all balance sheet
amounts represent both average and ending balance figures. Assume that all sales were
on credit.
What is the inventory turnover for Ortiz?
a. 3,2 times
b. 5.5 times
c. 11 times
d. 0.18 times
Answer:
Bright Eyes Downtown Diner received a bill of $600 from the Jronand Wine
Advertising Agency. The owner, A. A. Bondy, is postponing payment of the bill until a
later date. The effect on specific items in the basic accounting equation is
a. a decrease in Cash and an increase in Accounts Payable.
b. a decrease in Cash and an increase in Retained Earnings.
c. an increase in Accounts Payable and a decrease in Retained Earnings.
d. a decrease in Accounts Payable and an increase in Retained Earnings.
Answer:
Which of the following statements is false?
a. Revenues increase stockholders’ equity.
b. Revenues have normal credit balances.
c. Revenues are a positive factor in the computation of net income.
d. Revenues are increased by debits.
Answer:
On January 1, Jorge Inc. issued $3,000,000, 8% bonds for $2,817,000. The market rate
of interest for these bonds is 9%. Interest is payable annually on December 31. Jorge
uses the effective-interest method of amortizing bond discount. At the end of the first
year, Jorge should report unamortized bond discount of:
a. $164,700.
b. $169,470.
c. $157,467.
d. $153,000.
Answer:
The following items are taken from the financial statements of the Postal Service for the
year ending December 31, 2015:
What is the book value of the equipment at December 31, 2015?
a. $170,000
b. $182,000
c. $210,000
d. $238,000
Answer:
Marion, Inc. has 5,000 shares of 5%, $100 par value, noncumulative preferred stock
and 20,000 shares of $1 par value common stock outstanding at December 31, 2015.
There were no dividends declared in 2014. The board of directors declares and pays a
$65,000 dividend in 2015. What is the amount of dividends received by the common
stockholders in 2015?
a. $0
b. $25,000
c. $65,000
d. $40,000
Answer:
Shane Company gathered the following reconciling information in preparing its April
bank reconciliation:
The adjusted cash balance per books on April 30 is
a. $12,930.
b. $14,190.
c. $23,730.
d. $24,990.
Answer:
Romanoff Industries had the following inventory transactions occur during 2015:
The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a
periodic inventory system is used, what is the company’s after-tax income using FIFO?
(rounded to whole dollars)
a. $2,322
b. $2,486
c. $3,318
d. $3,552
Answer:
The Inventory account balance appearing in a perpetual inventory worksheet represents
the
a. ending inventory.
b. beginning inventory.
c. cost of merchandise purchased.
d. cost of merchandise sold.
Answer:
GAAP, compared to IFRS, tends to be more
a. simple in accounting requirements.
b. rules-based.
c. principles-based.
d. simple in disclosure requirements.
Answer:
If no-par stock is issued without a stated value, then
a. the par value is automatically $1 per share.
b. the entire proceeds are considered to be legal capital.
c. there is no legal capital.
d. the corporation is automatically in violation of its state charter.
Answer:
Under IFRS, which of the following is not an acceptable way of displaying
the components of other comprehensive income?
a. Combined statement of retained earnings
b. One-statement approach
c. Two-statement approach
d. All of these answer choices are correct.
Answer:
If total liabilities decreased by $30,000 and stockholders’ equity decreased by $20,000
during a period of time, then total assets must change by what amount and direction
during that same period?
a. $50,000 decrease
b. $10,000 decrease
c. $10,000 increase
d. $50,000 increase
Answer:
Prepaid expenses are
a. paid and recorded in an asset account before they are used or consumed.
b. paid and recorded in an asset account after they are used or consumed.
c. incurred but not yet paid or recorded.
d. incurred and already paid or recorded.
Answer:
Rhodes National purchased software on October 1, 2015 for $14,400. The company
expects to use the software for 3 years. It has no salvage value.
1> What adjusting journal entry should the company make at the end of each month if
monthly financials are prepared? (annual depreciation is $4,800)
2> What balance will be reported on the December 31, 2015 balance sheet for
Accumulated Depreciation?
Answer:
The operating cycle of a company is determined by the number of years the company
has been operating.
Answer:
The process of determining the present value is referred to as _________________ the
future amount.
Answer:
Mandy How plans to buy an automobile and can deposit $3,000 toward the purchase
today. If the annual interest rate is 8%, how much can Mandy expect to have as a down
payment in 3 years?
Answer:
A note which is not paid on the maturity date is said to be ______________.
Answer: