Use the information below for Barton Shipping Corp. for 2015 and 2016 to answer the
following question.
How much cash did Barton Shipping pay for dividends during 2016?
a. $ 95,000
b. $105,000
c. $115,000
d. $140,000
Plant assets, current assets, property, plant and equipment, and fixed assets are all
tangible assets.
a. True
b. False
Which profitability ratio requires the use of earnings per share in its calculation?
a. Price/earnings ratio
b. Return on common stockholders’ equity
c. Dividend yield ratio
d. Profit margin
The following information is available from the balance sheets at the end of 2016 and
2015 for Kitchen Equipment Company.
Net income for 2016 and 2015 was $120,000 and $460,000, respectively. No stock was
issued during either year.
Answer the following: A) How many shares of stock are outstanding at the end of
2016? B) If a company has preferred stock, why are preferred dividends subtracted
when computing earnings per share? C) What is the amount of earnings per share for
the year ended December 31, 2016? D) Explain what information is provided with
earnings per share.
A company may prepare a statement of retained earnings instead of a statement of
stockholders’ equity if the only changes in the stockholders’ equity accounts that
occurred during the year are earnings and dividends.
a. True
b. False
A building with an appraisal value of $167,000 is made available at an offer price of
$162,000. The purchaser acquires the property for $25,000 in cash, a 90-day note
payable for $75,000, and a mortgage amounting to $65,000. The cost basis recorded in
the buyer’s accounting records to recognize this purchase is
a. $167,000
b. $162,000
c. $165,000
d. $140,000
Use the following codes to indicate how the cash flow effect, if any, of each transaction
would be reported on a statement of cash flows if the operating activities section is
prepared using the direct method.
a. Inflow from operating activity
b. Outflow from operating activity
c. Inflow from investing activity
d. Outflow from investing activity
e. Inflow from financing activity
f. Outflow from financing activity
g. Noncash investing and financing activity
h. Not reported on statement of cash flows
Issued common stock to acquire land and a building.
How would interest earned on a checking account be dealt with in a bank
reconciliation?
a. added to company’s book balance
b. deducted from company’s book balance
c. added to bank statement balance
d. deducted from bank statement balance
When bonds are sold for less than the face amount, this means that the
a. maturity value will be less than the face amount.
b. maturity value will be greater than the face amount.
c. bonds are sold at a premium.
d. face rate of interest is less than the market rate of interest.
Fellsmere Corporation Presented below are the condensed balance sheets of Fellsmere
Corporation at December 31, 2014 and 2013. Net income for the years ending
December 31, 2014 and 2013 is $346, 000 and $109,000, respectively.
Read the information about Fellsmere Corporation. Required:
(A) Explain the change in Fellsmere’s working capital from 2013 to 2014. Why do users
believe the current ratio provides more information than the dollar amount of working
capital? Explain. (B) Fellsmere Corporation’s creditors need to know whether its
working capital position improved during the year. How would you evaluate this?
When inventory is sold by a wholesaler or retailer, it is recorded in a different account
on the income statement than a manufacturer would use.
a. True
b. False
Sawaddee Enterprises began the year with total assets of $450,000 and total liabilities
of $230,000. If Sawaddee’s total assets doubled to $900,000 and its owners’ equity
remained the same during the year, what was the amount of its total liabilities at the end
of the year?
a. $670,000
b. $680,000
c. $440,000
d. $900,000
If the December 31, 2016, balance of accounts payable is higher than the January 1,
2016, balance, then the amount of cash payments will exceed the purchases on account
for the year.
a. True
b. False
The key to the classification of an amount as cash is that it be readily available to pay
debts.
a. True
b. False
When a note receivable has been discounted by a company
a. An account called discount on notes receivable is used.
b. It will be shown as an asset of the company.
c. It slows the collection process.
d. It may be shown as a contingent liability in the footnotes.
Stockton Corporation has made an accounting entry to record deferred taxes as a
liability resulting from temporary differences between accounting income and taxable
income. Which of the following statements is true?
a. Deferred tax will be decreased.
b. Stockholders’ equity will be increased.
c. Stockholders’ equity will be decreased.
d. Assets will be decreased.
Ramirez Stores purchased a trademark at the beginning of 2013 for $340,000.
Economic benefits were expected for 10 years, but the trademark’s legal life was 20
years. Also, during 2013, Ramirez incurred research and development costs of
$200,000. The book value of the trademarks at December 31, 2013, is
a. $506,000
b. $306,000
c. $323,000
d. $486,000
Refer to the data for Computech Industries. Based on this information, what is the
accounts receivable turnover for the current period?
a. 10.0 times
b. 12.5 times
c. 11.1 times
d. 14.3 times
Morton & Associates Use the following five transactions for Morton & Associates, Inc.
to answer the question(s).
See the transactions to Morton & Associates. The journal entry to record the May 1
transaction will include a debit of $800 to
a. Sales Revenue
b. Accounts Receivable
c. Cash
d. Retained Earnings
Explain the meaning of the terms contingent liabilities and provisions as they relate to
U.S. GAAP and IFRS?
Refer to the consolidated statements of income for Scenic View Foods Corporation.
Identify three specific accounts of Scenic View Foods that might include expenses
accrued as a result of adjusting journal entries. Show what these entries would look like
in journal format. Ignore amounts.
Cargo Corporation Listed below is information from the financial records of Cargo
Corporation at December 31, 2015:
Read the information about Cargo Corporation.
Prepare the current assets section of the balance sheet for Cargo Corp. at December 31,
2015. You may omit the heading. How does the concept of liquidity apply?
A(n)is a numerical list of all of the accounts used by an entity.
Explain the difference between IFRS and U.S. GAAP presentation for bonds that can be
converted by investors into stock.
At December 31, 2016, Forgione Company has the following:
Common Stock, $10 par, 10,000 shares authorized, 8,000 issued, 7,000 outstanding
Preferred Stock, $100 par, 7%, cumulative, 1,000 shares authorized, issued, and
outstanding
The company did not pay any dividend during 2015 or 2014. REQUIRED: 1> Compute
the amount of dividend to be received by the common and preferred stockholders in
2016 if the company declared a dividend of $50,000.
2> How many shares of treasury stock does Forgione have?
3> What are the dividends per share of common stock as a result of this distribution?
4> What are the dividends per share of Preferred stock as a result of this distribution?
The various methods, rules, practices, and other procedures that have evolved over time
in response to the need to regulate the preparation of financial statements are called
__________________________________________________.
On September 1, 2015, Fox Corp. accepted a six-month, 6%, $65,000 interest bearing
note from Rudy Company in payment of an accounts receivable. Fox’s yearÂend is
December 31. Rudy paid the note and interest on the due date. REQUIRED:
1> Who is the maker and who is the payee of the note?
2> What is the maturity date of the note?
3> Prepare all necessary journal entries that Fox needs to make in connection with this
note.
Which accounts are used by a sole proprietorship that are not used by a corporation?