A corporation has the following account balances: Common Stock, $1 par value,
$80,000; Paid-in Capital in Excess of Par Value, $2,700,000. Based on this information,
the
a.legal capital is $2,780,000.
b.number of shares issued is 80,000.
c.number of shares outstanding is 2,780,000.
d.average price per share issued is $3.48.
Which of the following is included as part of property, plant, and equipment but does
not decline in service potential?
a.Land on which a company warehouse is built
b.Fixed assets used in production
c.A patent that provides a superior product compared to competitors
d.Parking lots and sidewalks providing access for a company′s employees
Fleet Services Company purchased equipment for $9,000 on January 1, 2014. The
company expects to use the equipment for 5 years. It has no salvage value. What
balance would be reported on the December 31, 2014 balance sheet for Accumulated
Depreciation?
a.$0 because Accumulated Depreciation is reported on the Income Statement.
b.$1,800
c.$7,200
d.$9,000
On January 1, Swanson Corporation had 80,000 ordinary shares with a 10 par value
outstanding. On March 17, the company declared a 15% share dividend to shareholders
of record on March 20. Market value of the shares was 13 on March 17. The shares
were distributed on March 30. The entry to record the transaction of March 30 would
include a
a.credit to Cash for 120,000.
b.debit to Ordinary Share Dividends Distributable for 120,000.
c.credit to Share Premium-Ordinary for 36,000.
d.debit to Cash Dividends for 36,000.
Nice Corporation issues 30,000 shares of $100 par value preferred stock for cash at
$110 per share. The entry to record the transaction will consist of a debit to Cash for
$3,300,000 and a credit or credits to
a.Preferred Stock for $3,300,000.
b.Preferred Stock for $3,000,000 and Paid-in Capital in Excess of Par Value – Preferred
Stock for $300,000.
c.Preferred Stock for $3,000,000 and Retained Earnings for $300,000.
d.Paid-in Capital from Preferred Stock for $3,300,000.
Accounts receivable arising from sales to customers amounted to $120,000 and
$105,000 at the beginning and end of the year, respectively. Income reported on the
income statement for the year was $407,000. Exclusive of the effect of other
adjustments, the cash flows from operating activities to be reported on the statement of
cash flows is
a.$407,000.
b.$422,000.
c.$512,000.
d.$392,000.
Brewer Inc. has 5,000 shares of 8%, $50 par value, cumulative preferred stock and
100,000 shares of $1 par value common stock outstanding at December 31, 2014, and
December 31, 2013. The board of directors declared and paid a $15,000 dividend in
2013. In 2014, $60,000 of dividends are declared and paid. What are the dividends
received by the preferred stockholders in 2014?
a.$35,000.
b.$30,000.
c.$25,000.
d.$20,000.
Which of the following items are reported on a multiple-step income statement and on a
single-step income statement?
a.Cost of goods sold and sales
b.Gross profit and operating expenses
c.Operating expenses and total expenses
d.Sales and income from operations
Olympus Climbers Company has the following inventory data:
A physical count of merchandise inventory on July 30 reveals that there are 32 units on
hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for
July is
a.$620.
b.$660.
c.$1,340.
d.$1,380.
Jensen Company purchased a new machine on October 1, 2014, at a cost of $104,000.
The company estimated that the machine has a salvage value of $8,000. The machine is
expected to be used for 80,000 working hours during its 8-year life.
Instructions
Compute depreciation using the following methods in the year indicated.
(a)Straight-line for 2014 and 2015, assuming a December 31 year-end.
(b)Declining-balance using double the straight-line rate for 2014 and 2015.
(c)Units-of-activity for 2014, assuming machine usage was 2,900 hours. (Round
depreciation per unit to the nearest cent.)
Mitchell Corporation bought equipment on January 1, 2014 .The equipment cost
$180,000 and had an expected salvage value of $30,000. The life of the equipment was
estimated to be 6 years. The depreciable cost of the equipment is
a.$180,000.
b.$150,000.
c.$30,000.
d.$25,000.
A cash register tape shows cash sales of $2,500 and sales taxes of $200. The journal
entry to record this information is
The income statement is an important financial statement used by individuals who are
interested in the operations of a business enterprise. Explain how the periodicity
assumption and the revenue recognition and expense recognition principles provide
guidance to accountants in preparing an income statement.
The periodicity assumption assumes that the financial and operating life of an
accounting entity, such as a business enterprise, can be broken up into arbitrary time
periods. The revenue recognition and expense recognition principles are the basic rules
for allocating revenues and expenses to these arbitrary time periods under the accrual
basis of accounting. The revenue recognition principle dictates the time period to which
revenue is to be allocated and recognized, that is, on which income statement the
revenue is to be reported. The expense recognition principle dictates the time period to
which costs are allocated and recognized as expenses, that is, on which income
statement the expenses are to be reported and matched against revenues in the
determination of net income.
As a recent graduate in accounting, and the financial director of a political candidate in
a current election, you have been asked to explain many questions concerning how
governmental accounting differs from corporate accounting.
Required:
(a) Discuss the differences between cash basis and accrual-basis accounting.
(b) Prepare a memo to your candidate explaining why governmental entities favor the
cash basis of accounting.
Presented below is information related to plant assets and intangible assets at year end
on December 31, 2014, for Looper Company:
Instructions
Prepare a partial balance sheet for Looper Company that shows how the above listed
items would be presented.
Nichols Company uses the percentage of receivables method for recording bad debts
expense. The accounts receivable balance is $200,000 and credit sales are $1,000,000.
Management estimates that 4% of accounts receivable will be uncollectible. What
adjusting entry will Nichols Company make if the Allowance for Doubtful Accounts
has a credit balance of $2,000 before adjustment?
Grier Food Store used the following information in recording its bank reconciliation for
the month of April.
Instructions
Prepare a bank reconciliation at April 30.
On September 1, Hendricks Supply had an inventory of 18 backpacks at a cost of $20
each. The company uses a periodic inventory system. During September, the following
transactions and events occurred.
Sept.4Purchased 50 backpacks at $20 each from Neufeld, terms 2/10, n/30.
6Received credit of $100 for the return of 5 backpacks purchased on Sept. 4 that were
defective.
9Sold 30 backpacks for $30 each to Brewer Books, terms 2/10, n/30.
13Sold 10 backpacks for $30 each to Stoner Office Supply, terms n/30.
14Paid Neufeld in full, less discount.
Instructions
Journalize the September transactions for Hendricks Supply.