A machine that was purchased on January 1 for $45,000 has an estimated salvage value
of $9,000. If the machine’s depreciation rate is 20%, its annual depreciation is
a.$9,000.
b.$36,000.
c.$7,200.
d.$10,800.
La Vida Corporation issued 24,000 shares of no-par value ordinary shares for 29.50 per
share. Which of the following statements is true?
a.Share Premium-Ordinary account will increase by 276,000.
b.The Cash account will increase by 24,000.
c.Retained Earnings account will increase by 684,000.
d.Share Capital-Ordinary account will increase by 708,000.
The following totals for the month of April were taken from the payroll records of Noll
Company.
The entry to record the payment of net payroll would include a
a.debit to Salaries and Wages Payable for $39,580.
b.debit to Salaries and Wages Payable for $40,660.
c.debit to Salaries and Wages Payable for $36,070.
d.credit to Cash for $45,250.
What occurs to stockholders’ equity when a company incurs a net loss for the current
period?
a.Total retained earnings is reduced before reporting the ending balance on the balance
sheet.
b.Paid-in capital is reduced with a debit amount.
c.A deficit is reported for retained earnings on the balance sheet.
d.Total retained earnings becomes restricted and dividends may not be distributed.
Wilson, Inc. issued bonds that are subject to retirement at a stated dollar amount prior to
maturity at the option of the issuer. What are these bonds called?
a.Convertible bonds
b.Early retirement bonds.
c.Callable bonds
d.Secured bonds
DynaTrue Industries reported net sales totaling $3,200,000 during the year. The
company’s gross profit rate was determined to be 41%. Which statement is true?
a.The company generated $1,312,000 of net income during the year.
b.The company generated 41 cents of net income out of each dollar of assets owned by
the company.
c.The company generated 41 cents out of every sales dollar that is available to cover its
operating expenses and contribute to profit.
d.The inventory cost is 41% of the sales price of the inventory items.
Scribner Company issued $400,000 of 8%, 5-year bonds at 106. Assuming straight-line
amortization and annual interest payments, how much bond interest expense is recorded
on the next interest date?
a.$32,000
b.$36,800
c.$27,200
d.$4,800
A petty cash fund of $200 is replenished when the fund contains $12 in cash and
receipts for $184. The entry to replenish the fund would
a.credit Cash Over and Short for $4.
b.credit Miscellaneous Revenue for $4.
c.debit Cash Over and Short for $4.
d.debit Miscellaneous Expense for $4.
A $600,000 bond was retired at 98 when the carrying value of the bond was $618,000.
The entry to record the retirement would include a
a.gain on bond redemption of $18,000.
b.loss on bond redemption of $18,000.
c.loss on bond redemption of $30,000.
d.gain on bond redemption of $30,000.
Hickory Hills Pro Shop had a balance in the Accounts Receivable account of $800,000
at the beginning of the year and a balance of $900,000 at the end of the year. Net credit
sales during the year amounted to $7,310,000. The average collection period of the
receivables in terms of days was
a.44 days.
b.42.4 days.
c.365 days.
d.41 days.
Ashley’s Accessory Shop started the year with total assets of $140,000 and total
liabilities of $80,000. During the year the business recorded $220,000 in revenues,
$110,000 in expenses, and dividends of $40,000. The net income reported by Ashley’s
Accessory Shop for the year was
a.$80,000.
b.$100,000.
c.$130,000.
d.$110,000.
On January 1, 2014, Hannigan Company issued bonds with a face value of $600,000.
The bonds carry a stated interest of 7% payable each January 1.
a.Prepare the journal entry for the issuance assuming the bonds are issued at 97.
b.Prepare the journal entry for the issuance assuming the bonds are issued at 102.
Greese Company purchased office supplies costing $4,000 and debited Supplies for the
full amount. At the end of the accounting period, a physical count of office supplies
revealed $1,500 still on hand. The appropriate adjusting journal entry to be made at the
end of the period would be:
a.debit Supplies Expense, $1,500; credit Supplies, $1,500.
b.debit Supplies, $2,500; credit Supplies Expense, $2,500.
c.debit Supplies Expense, $2,500; credit Supplies, $2,500.
d.debit Supplies, $1,500; credit Supplies Expense, $1,500.
Which internal control is demonstrated by assigning different individuals to be
responsible for related activities?
a.Documentation procedures
b.Segregation of duties
c.Establishment of responsibility
d.Independent internal verification
Barnett Company had the following records:
What is Barnett’s inventory turnover for 2013? (rounded)
a.7.6 times
b.8.1 times
c.0.1 times
d.7.8 times