The Modified Accelerated Cost Recovery System (MACRS) is a depreciation method
which
a. is used for tax purposes.
b. must be used for financial statement purposes.
c. is required by the SEC.
d. expenses an asset over a single year because capital acquisitions must be expensed in
the year purchased.
Answer:
If a company uses a multiple-column purchases journal, which of the following possible
headings for debit columns of the journal would not be appropriate?
a. Accounts Payable
b. Inventory
c. Supplies
d. Other Accounts
Answer:
The following exhibit is for Kmart bonds.
On the day of trading referred to above,
a. no Kmart bonds were traded.
b. bonds with market prices of $3,500 were traded.
c. at closing, the selling price of the bond was higher than the previous day’s price.
d. the bond sold for $100.25
Answer:
Sales revenues are usually considered recognized when
a. cash is received from credit sales.
b. an order is received.
c. goods have been transferred from the seller to the buyer.
d. adjusting entries are made.
Answer:
The market interest rate is often called the
a. stated rate.
b. effective rate.
c. coupon rate.
d. contractual rate.
Answer:
A corporation issues $500,000, 8%, 5-year bonds on January 1, 2015 for $479,000.
Interest is paid semiannually on January 1 and July 1. If the corporation uses the
straight- line method of amortization of bond discount, the amount of bond interest
expense to be recognized on July 1, 2015 is
a. $42,100.
b. $20,000.
c. $22,100.
d. $17,900.
Answer:
Cooke Corporation issues 10,000 shares of $50 par value preferred stock for cash at $60
per share. In the stockholders’ equity section, the effects of the transaction above will be
reported
a. entirely within the capital stock section.
b. entirely within the additional paid-in capital section.
c. under both the capital stock and additional paid-in capital sections.
d. entirely under the retained earnings section.
Answer:
Assuming that there is a net loss for the period, debits equal credits in all but which
section of the worksheet?
a. Income statement columns
b. Adjustments columns
c. Trial balance columns
d. Adjusted trial balance columns
Answer:
Perdue Company has purchased equipment that requires annual payments of $30,000 to
be paid at the end of each of the next 6 years. The appropriate discount rate is 12%.
What amount will be used to record the equipment?
a. $180,000
b. $123,342
c. $165,772
d. $115,650
Answer:
Presented below are three independent situations:
(a) Strike Corporation purchased $380,000 of its bonds on June 30, 2015, at 102 and
immediately retired them. The carrying value of the bonds on the retirement date was
$371,500. The bonds pay semiannual interest and the interest payment due on June 30,
2015, has been made and recorded.
(b) Worton, Inc. purchased $400,000 of its bonds at 96 on June 30, 2015, and
immediately retired them. The carrying value of the bonds on the retirement date was
$395,000. The bonds pay semiannual interest and the interest payment due on June 30,
2015, has been made and recorded.
(c) Mountain Company has $80,000, 10%, 12-year convertible bonds outstanding.
These bonds were sold at face value and pay semiannual interest on June 30 and
December 31 of each year. The bonds are convertible into 40 shares of Mountain $4 par
value common stock for each $1,000 par value bond. On December 31, 2015, after the
bond interest has been paid, $30,000 par value of bonds were converted. The market
value of Mountain’s common stock was $38 per share on December 31, 2013.
Instructions
For each of the independent situations, prepare the journal entry to record the retirement
or conversion of the bonds.
Answer:
All of the following are parties to a check except the
a. bank.
b. Federal Reserve.
c. maker.
d. payee.
Answer:
A 60-day note receivable dated July 13 has a maturity date of
a. September 12.
b. September 11.
c. September 10.
d. September 13.
Answer:
Cloud Manufacturing declared a 10% stock dividend when it had 700,000 shares of $3
par value common stock outstanding. The market price per common share was $12 per
share when the dividend was declared. The entry to record this dividend declaration
includes a credit to
a. Stock Dividends for $210,000.
b. Paid-in Capital in Excess of Par for $630,000.
c. Common Stock for $210,000.
d. Common Stock Dividends Distributable for $840,000.
Answer:
Christine Company had an increase in inventory of $55,000. The cost of goods sold was
$95,000. There was a $6,000 decrease in accounts payable from the prior period. What
were Christine’s cash payments to suppliers?
a. $156,000
b. $61,000
c. $144,000
d. $101,000
Answer:
Limited liability is not enjoyed by the owner(s) of a
a. corporation.
b. partnership.
c. proprietorship.
d. both partnership and proprietorship.
Answer:
The declining-balance method of computing depreciation expense involves multiplying
a _______________ book value by a _______________ percentage.
Answer:
The monetary unit assumption requires that all dollar amounts be rounded to the nearest
dollar.
Answer:
A common set of standards that provides guidelines to accountants and indicates how to
report economic events is called _________________.
Answer:
What criteria are used to determine how to record a factoring transaction?
Answer:
Answer:
If bonds are issued at a premium, the carrying value of the bonds will be greater than
the face value of the bonds for all periods prior to the bond maturity date.
Answer:
Remington Company had the following income statement at December 31, 2015:
Remington Company
Income Statement
For the Year Ended Dec. 31, 2015
No dividends were paid during the year.
Prepare the closing entries at December 31, 2015.
Answer:
A consolidated balance sheet reports the financial position of two or more legal entities
just as if they were one reporting unit. Explain why all the individual items appearing
on the separate balance sheets of each of the affiliated companies cannot be added
together to arrive at a consolidated total for each item.
Answer: