During periods when costs are rising and inventory quantities are stable, ending
inventory will be:
a. Higher under LIFO than FIFO.
b. Lower under average cost than LIFO.
c. Higher under average cost than FIFO.
d. Higher under FIFO than LIFO.
On July 1, 2016, Cromartie Furniture established a $150 petty cash fund. A check for
$150 was made out to the petty cash custodian. During July, the petty cash custodian
paid the following bills from the petty cash fund:
At the end of July the petty cash fund was replenished. The journal entry to replenish
the petty cash fund includes:
a. A credit to petty cash and a debit to various expenses for $126.
b. A debit to petty cash and a credit to cash for $150.
c. A credit to cash and a debit to various expenses for $126.
d. None of these answer choices are correct.
The annual interest rate on Note A is closest to:
a. 9.14%.
b. 8%.
c. 9.74%.
d. 9.44%.
At December 31, 2016 and 2015, G Co. had 50,000 shares of common stock and 5,000
shares of 5%, $100 par value cumulative preferred stock outstanding. No dividends
were declared on either the preferred or common stock in 2016 or 2015. Net income for
2016 was $500,000. For 2016, basic earnings per common share amounted to:
a. $ 5.00.
b. $ 9.50.
c. $ 9.00.
d. $10.00.
Defined contribution pension plans that link the amount of contributions to company
performance are often called:
a. Incentive savings plans.
b. Thrift plans.
c. Savings plans.
d. None of the above is correct.
Under IFRS, components of other comprehensive income:
a. Can be reported as part of a single statement of comprehensive income.
b. Are not permitted to be reported.
c. Must be reported in a separate statement of comprehensive income.
d. Can be reported as part of a statement of shareholders’ equity.
Investments in securities available for sale are reported at:
a. Discounted present value.
b. Lower of cost or market.
c. Historical cost.
d. Fair value on the reporting date.
First Financial Auto Loan Department wishes to know the payment required at the first
of each month on a $10,500, 48-month, 11% auto loan. To determine this amount, First
Financial would:
a. Multiply $10,500 by the present value of 1.
b. Divide $10,500 by the future value of an ordinary annuity of 1.
c. Divide $10,500 by the present value of an annuity due of 1.
d. Multiply $10,500 by the present value of an ordinary annuity of 1.
A series of equal periodic payments that starts more than one period after the agreement
is called:
a. An annuity due.
b. An ordinary annuity.
c. A future annuity.
d. A deferred annuity.
At times, businesses require advance payments from customers that will be applied to
the purchase price when goods are delivered or services provided. These customer
advances represent:
a. Liabilities until the product or service is provided.
b. A component of shareholders’ equity.
c. Long-term assets until the product or service is provided.
d. Revenue upon receipt of the advance payment.
Anthony Thomas Candies (ATC) reported the following financial data for 2016 and
2015:
ATC’s gross profit ratio (rounded) in 2016 is:
a. 53.4%.
b. 51.9%.
c. 50.3%.
d. None of the above is correct.
On January 1, 2016, Gerlach Inc. had the following account balances in its
shareholders’ equity accounts.
During 2016, Gerlach Inc. had several transactions relating to common stock.
Required:
Record the above transactions and events in journal entry format.
On January 1, 2016, Bishop Company issued 10% bonds dated January 1, 2016, with a
face amount of $20 million. The bonds mature in 2025 (10 years). For bonds of similar
risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and
December 31.
Required:
1> Determine the price of the bonds at January 1, 2016.
2> Prepare the journal entry to record the bond issuance by Bishop on January 1, 2016.
3> Prepare the journal entry to record interest on June 30, 2016, using the effective
interest method.
4> Prepare the journal entry to record interest on December 31, 2016, using the
effective interest method.
On July 1, Wiggins Associates enters into a contract to provide consulting services to
Pennsylvania University (PU). The contract is anticipated to last four months and is
intended to achieve significant cost savings at the university. The contract stipulates that
PU will pay Wiggins $25,000 at the end of each month, and, if total cost savings reach a
specific target, PU will pay an additional $20,000 to Wiggins at the end of the contract.
Wiggins estimates a 75% chance that cost savings will reach the target.
Assume that Wiggins estimates variable consideration as the expected value.
Under what circumstances can revenue on long-term construction contracts be
recognized over time according to percentage of completion?
The December 31, 2016 (pre-closing) adjusted trial balance for Kline Enterprises was
as follows:
Required: Assuming no income taxes, compute the following, and place your answer
in the space provided: Kline’s 12/31/16 total current liabilities:
The following information is taken from the accounting records of Rapid Runner Inc.
for the year 2016. Missing information has been left blank. Required: Compute the
missing amounts.
A company’s investment in receivables is affected by several related variables. Give an
example of this interrelationship.
Lindy Company’s auditor discovered two errors. No errors were corrected during 2015.
The errors are described as follows:
1) Merchandise costing $4,000 was sold to a customer for $9,000 on December 31,
2015, but it was recorded as a sale on January 2, 2016. The merchandise was properly
excluded from the 2015 ending inventory. Assume the periodic inventory system is
used.
2) A machine with a five-year life was purchased on January 1, 2015. The machine cost
$20,000 and has no expected salvage value. No depreciation was taken in 2015 or 2016.
Assume the straight-line method for depreciation.
Required:
Prepare appropriate journal entries (assume the 2016 books have not been closed).
Ignore income taxes.
Briefly explain the difference between the LIFO retail method and the dollar-value
LIFO retail method.