1) on january 1, 2006, forbes company purchased equipment at a cost of $100,000. the
equipment was estimated to have a salvage value of $10,000 and it is being depreciated
over eight years under the sum-of-the-years’-digits method. what should be the charge
for depreciation of this equipment for the year ended december 31, 2013?
a.$2,500
b.$2,778
c.$5,000
d.$11,250
2) robertson corporation acquired two inventory items at a lump-sum cost of $60,000.
the acquisition included 3,000 units of product cf, and 7,000 units of product 3b. cf
normally sells for $18 per unit, and 3b for $6 per unit. if robertson sells 1,000 units of
cf, what amount of gross profit should it recognize?
a.$2,250
b.$6,750
c.$12,000
d.$14,250
3) a machine is purchased by making payments of $6,000 at the beginning of each of
the next five years. the interest rate was 10%. the future value of an ordinary annuity of
1 for five periods is 6.10510. the present value of an ordinary annuity of 1 for five
periods is 3.79079. what was the cost of the machine?
a.$40,294
b.$36,631
c.$25,019
d.$22,745
4) stine co. is a retail store operating in a state with a 6% retail sales tax. the retailer
may keep 2% of the sales tax collected. stine co. records the sales tax in the sales
revenue account. the amount recorded in the sales revenue account during may was
$222,600.
the amount of sales taxes payable (to the nearest dollar) to the state for the month of
may is
a.$12,826
b.$12,348
c.$13,089
d.$13,873
5) during 2012, eldred corporation acquired a mineral mine for $3,000,000 of which
$400,000 was ascribed to land value after the mineral has been removed. geological
surveys have indicated that 10 million units of the mineral could be extracted. during
2012, 1,500,000 units were extracted and 1,200,000 units were sold. what is the amount
of depletion expensed for 2012?
a.$260,000
b.$312,000
c.$360,000
d.$390,000
6) cash equivalents are
a.treasury bills, commercial paper, and money market funds purchased with excess cash
b.investments with original maturities of three months or less
c.readily convertible into known amounts of cash
d.all of these
7) stone company changed its method of pricing inventories from fifo to lifo. what type
of accounting change does this represent?
a.a change in accounting estimate for which the financial statements for prior periods
included for comparative purposes should be presented as previously reported
b.a change in accounting principle for which the financial statements for prior periods
included for comparative purposes should be presented as previously reported
c.a change in accounting estimate for which the financial statements for prior periods
included for comparative purposes should be restated
d.a change in accounting principle for which the financial statements for prior periods
included for comparative purposes should be restated
8) net cash flow from operating activities for 2013 for spencer corporation was
$450,000. the following items are reported on the financial statements for 2013:
based on the information above, spencers net income for 2013 was
a.$462,000
b.$446,000
c.$414,000
d.$406,000
9) barker pet supply uses the conventional retail method to determine its ending
inventory at cost. assume the beginning inventory at cost (retail) were $531,200
($653,800), purchases during the current year at cost (retail) were $2,137,200
($2,772,200), freight-in on these purchases totaled $127,800, sales during the current
year totaled $2,604,000, and net markups (markdowns) were $4,000 ($192,600). what
is the ending inventory value at cost?
a.$633,400
b.$516,222
c.$822,000
d.$493,334
10) sosa co.’s stockholders’ equity at january 1, 2012 is as follows:
during 2012, sosa had the following stock transactions:
acquired 6,000 shares of its stock for $270,000.
sold 3,600 treasury shares at $50 a share.
sold the remaining treasury shares at $41 per share.
no other stock transactions occurred during 2012. assuming sosa uses the cost method
to record treasury stock transactions, the total amount of all additional paid-in capital
accounts at december 31, 2012 is
a.$691,600
b.$670,000
c.$708,400
d.$727,600
11) in applying the treasury stock method to determine the dilutive effect of stock
options and warrants, the proceeds assumed to be received upon exercise of the options
and warrants
a.are used to calculate the number of common shares repurchased at the average market
price, when computing diluted earnings per share
b.are added, net of tax, to the numerator of the calculation for diluted earnings per share
c.are disregarded in the computation of earnings per share if the exercise price of the
options and warrants is less than the ending market price of common stock
d.none of these
12) winsor co. records purchases at net amounts. on may 5 winsor purchased
merchandise on account, $20,000, terms 2/10, n/30. winsor returned $1,500 of the may
5 purchase and received credit on account. at may 31 the balance had not been paid.
the amount to be recorded as a purchase return is
a.$1,350
b.$1,530
c.$1,500
d.$1,470
13) at the date of declaration of a small common stock dividend, the entry should not
include
a.a credit to common stock dividend payable
b.a credit to paid-in capital in excess of par
c.a debit to retained earnings
d.all of these are acceptable
14) in 2012, megastores reported net income of $5.7 billion, net sales of $164.7 billion,
and average total assets of $61.0 billion. what is megastores’ return on total assets?
a.9.3%
b.10.7%
c.37.0%
d.270%