Based on the following data, what is the amount of current assets?
a.$212,000
b.$370,000
c.$232,000
d.$230,000
Stetson Company’s financial information is presented below.
How much is gross profit?
a.$190,000
b.$147,000
c.$195,000
d.$179,000
Ferguson Company is preparing a cash budget for September. The company€s cash
balance on September 1 is $23,200. The company anticipates cash receipts of $111,800
and cash disbursements of $117,320. If Ferguson desires a cash balance of $24,000, it
must
a.acquire financing of $800.
b.acquire financing of $6,320.
c.acquire financing of $4,720.
d.acquire financing of $18,480.
Looper, Inc. has 30,000 shares of 6%, £100 par value, noncumulative preference shares
and 50,000 ordinary shares with a £1 par value outstanding at December 31, 201 There
were no dividends declared in 2013. The board of directors declares and pays a
£250,000 dividend in 201 What is the amount of dividends received by the common
shareholders in 2014?
a.£0
b.£180,000
c.£250,000
d.£70,000
All of the following statements are true regarding the LIFO reserve except:
a.Companies using LIFO are required to report the LIFO reserve.
b.The equation (LIFO inventory – LIFO reserve = FIFO inventory) adjusts the inventory
balance from LIFO to FIFO.
c.The financial statement differences of using LIFO normally increase the longer a
company uses LIFO.
d.Current ratios and the inventory turnover can be significantly affected if a company
has material LIFO reserves.
Use the following data to determine the total amount of working capital.
a.$130,000
b.$120,000
c.$80,000
d.$210,000
Warner Company issued $4,000,000 of 6%, 10-year bonds on one of its interest dates
for $3,454,800 to yield an effective annual rate of 8%. The effective-interest method of
amortization is to be used. What amount of discount (to the nearest dollar) should be
amortized for the first interest period?
a.$112,710
b.$54,520
c.$72,770
d.$36,384
De Meaning Corporation issued a one-year 6% $300,000 note on April 30, 2014.
Interest expense for the year ended December 31, 2014 was:
a.$18,000.
b.$13,500.
c.$12,000.
d.$10,500.
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. Stockholders’ equity at the end of the
year was
a.$120,000.
b.$110,000.
c.$130,000.
d.$70,000.
Snug-As-A-Bug Blankets has the following inventory data:
Assuming that a perpetual inventory system is used, what is the cost of goods sold on a
LIFO basis for July?
a.$5,802
b.$5,772
c.$5,796.
d.$5,916
Using the percentage-of-receivables method for recording bad debt expense, estimated
uncollectible accounts are $30,000. If the balance of the Allowance for Doubtful
Accounts is $4,000 debit before adjustment what is the balance after adjustment?
a.$30,000
b.$34,000
c.$26,000
d.$4,000
On January 1, 2013, M. Johanson Company purchased equipment for $36,000. The
company is depreciating the equipment at the rate of $500 per month. The book value
of the equipment at December 31, 2013 is:
a.$0.
b.$6,000.
c.$30,000.
d.$36,000.
The following amounts were taken from the financial statements of R.Dodd Company:
The cash debt coverage for 2014 is
a.13.8%.
b.33.2%.
c.9.6%.
d.23.6%.
Orange-Aide Company has the following inventory data:
A physical count of merchandise inventory on July 30 reveals that there are 25 units on
hand. Using the average cost method, the value of ending inventory is
a.$535
b.$523
c$525
d$550
The following information was available for Camara Company at December 31, 2014:
beginning inventory $80,000; ending inventory $120,000; cost of goods sold $560,000;
and sales $800,000. Camara’s days in inventory in 2014 was
a.45.6 days.
b.54.5 days.
c.65.2 days.
d.77.7 days.
If a company fails to adjust an Unearned Rent Revenue account for rent that has been
earned, what effect will this have on that month’s financial statements?
a.Assets will be understated and revenues will be understated.
b.Liabilities will be understated and revenues will be understated.
c.Liabilities will be overstated and revenues will be understated.
d.Assets will be overstated and revenues will be understated.
Phill Co. has equipment that cost $50,000 and has been depreciated $30,000.
Instructions
Record entries for the disposal under the following assumptions.
(a)It was scrapped as having no value.
(b)It was sold for $23,000.
(c)It was sold for $18,000.
The following partial amortization schedule is available for Courtney Company who
sold $500,000, five-year, 10% bonds on January 1, 2014 for $520,000 and uses annual
straight-line amortization.
Which of the following amounts should be shown in cell (v)?
a.$524,000
b.$522,000
c.$516,000
d.$518,000
A review of the ledger of Wilde Co. at December 31, 2014, produces the following data
pertaining to the preparation of annual adjusting entries:
(a)Salaries and Wages Payable $0: Salaries are paid every Friday for the current week.
Five employees receive a weekly salary of $800, and three employees earn a weekly
salary of $700. December 31 is a Tuesday. Employees do not work weekends. All
employees worked the last 2 days of December.
(b)Unearned Rent Revenue $58,000: The company had several lease contracts during
the year as shown below:
(c)Notes Receivable $90,000: This is a 6-month note, dated November 1, 2014, with a
6% interest rate.
Instructions:
Prepare the adjusting entries at December 31, 2014. Show all computations.
The following information is available from the annual reports of Nite and Day
Companies.
(In millions)
Instructions
(a) Based on the preceding information, compute the following for each company:
1. Accounts receivable turnover. (Assume all sales were credit sales.)
2. Average collection period.
(b) What conclusion concerning the management of accounts receivable can be drawn
from these data?
The transactions of the Speedy Delivery Service are recorded in the general journal
below. You are to post the journal entries to the accounts in the general ledger. After all
entries have been posted, you are to prepare a trial balance on the form provided.
General Ledger
Selected information from the financial statements of Joe’s Coffee Brewers for the year
ended December 31, 2014, appears below:
Instructions: Calculate the amounts indicated below relating to the year ended
December 31, 2014. The number of shares outstanding at the end of the year was
40,000. Show computations.
1)The current ratio for 2014 is __________.
2)The debt to assets ratio for 2014 is __________.
3)The working capital for 2014 is __________.
4)The earnings per share for 2014 is __________.
The accounts receivable turnover is calculated by dividing ________________ by
average ___________________.
Schmidt Company received a letter from Deborah Stine, a customer. Deborah had
purchased $325 worth of clothing from Schmidt on credit. She has made two payments
of $50 each. She has missed the last two payments, and has received a collection letter
from Schmidt. Her total debt presently, with interest and late fees, is $251.13.
Deborah sent a letter to Schmidt in which she asked for her debt to be forgiven. She
said she had heard that companies make allowances for accounts they are doubtful
about collecting, and that Schmidt certainly should have been doubtful about her – that
as a college student she had changed her major three times. She also said that she could
not enjoy a high quality of life when making such high payments, but that she didn’t
want to be embarrassed by bill collectors, either. She especially didn’t want her parents
to find out that she had not paid her debts. Having Schmidt write off her account
seemed to her the best solution in the circumstances. She added that the clothes she
bought at Schmidt were among the best she had ever owned, and that she “told
everybody” that Schmidt was definitely the best place to get clothes.
Required:
You are the accounting manager for Schmidt. Write a short letter to Deborah explaining
why her debt cannot be written off.