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1) a.a patent that was acquired for $600,000 at the beginning of the current year expires
in 20 years and is expected to have value for 5 years. present the adjusting entry to
amortize the patent for the current year.
b.research and development costs of $300,000 were incurred during the current fiscal
year. determine the minimum amount to be expensed for the current fiscal year.
2) the garvey sign company uses the allowance method in accounting for uncollectible
accounts. past experience indicates that 5% of accounts receivable will eventually be
uncollectible. selected account balances at december 31, 2011, and december 31, 2012,
appear below:
(a)record the following events in 2012.
(b)prepare the adjusting journal entry to record the bad debt provision for the year
ended december 31, 2012.
(c)what is the balance of allowance for doubtful accounts at december 31, 2012?
3) which of the following is not a step for solving an ethical dilemma?
a.identifying the alternatives and weighing the impact of each alternative on various
stakeholders
b.certifying the ethical accuracy of the financial information
c.identifying and analyzing the principal elements in the situation
d.recognizing the ethical situation and issues involved
4) the debt to total assets ratio is computed by dividing
a.long-term liabilities by total assets
b.long-term liabilities by average assets
c.total liabilities by total assets
d.total liabilities by average assets
5) at the end of the fiscal year, the usual adjusting entry for depreciation on equipment
was omitted. which of the following statements is true?
a.net income will be overstated for the current year
b.total assets will be understated at the end of the current year
c.the balance sheet and income statement will be misstated but the retained earnings
statement will be correct for the current year
d.total expenses will be overstated at the end of the current year
6) the major ifrs requirements related to accounting for and reporting inventories are
a.the same as gaap
b.the same as gaap with a couple of exceptions
c.completely different fom gaap
d.not comparable to gaap
7) on january 1, 2012, botkin corporation purchased 25% of the common stock
outstanding of hanson corporation for $100,000. during 2012, hanson corporation
reported net income of $40,000 and paid cash dividends of $20,000. the balance of the
stock investmentshanson account on the books of botkin corporation at december 31,
2012, is
a.$100,000
b.$105,000
c.$110,000
d.$95,000
8) downs company issued $800,000 of 8%, 5-year bonds at 106, which pays interest
annually. assuming straight-line amortization, what is the total interest cost of the
bonds?
a.$368,000
b.$272,000
c.$224,000
d.$320,000
9) rodgers company purchased equipment and these costs were incurred:
rodgers will record the acquisition cost of the equipment as
a.$22,500
b.$24,300
c.$24,620
d.$25,050
10) generally, the most important category on the statement of cash flows is cash flows
from
a.operating activities
b.investing activities
c.financing activities
d.significant noncash activities
11) the times interest earned ratio is computed by dividing
a.net income by interest expense
b.income before income taxes by interest expense
c.income before interest expense by interest expense
d.income before interest expense and income taxes by interest expense
12) on january 14, decker industries purchased supplies of $500 on account. the entry to
record the purchase will include
a.a debit to supplies and a credit to accounts payable.
b.a debit to supplies expense and a credit to accounts receivable.
c.a debit to supplies and a credit to cash.
d.a debit to accounts receivable and a credit to supplies.
13) the interest charged on a $50,000 note payable, at the rate of 6%, on a 60-day note
would be
a.$3,000
b.$1,500
c.$750
d.$500
14) the following information is available from the annual reports of marin
company and nance company.
(amounts in millions)
marin nance
sales$26,510$34,512
gross profit6,6108,887
net income5651,271
current assets11,71228,447
beginning total assets17,10233,130
ending total assets22,08836,167
current liabilities7,96613,950
total liabilities16,13631,222
average common shares outstanding 250480
preferred stock dividends paid-0--0-
instructions
(a)for each company, compute the following ratios:
1>current ratio
2>debt to total assets ratio
3>earnings per share
(b)based on your calculations, discuss the relative liquidity
solvency, and profitability of the two companies.
