At the beginning of January, 2014, Wise Company had a balance in its Retained
Earnings account totaling $42,000. At the end of the year, the balance totaled $47,000.
If $11,000 of dividends were declared and paid during the year, how much was net
income during 2014?
a.$5,000
b.$16,000
c.$53,000
d.$6,000
Use the following information regarding Black Company and Red Company to answer
the question “Which of the following is Red Company’s “cost of goods sold” for 2014
(to the closest dollar)?”
a.$222,684
b.$235,125
c.$224,580
d.$214,035
The policy at Adler Corporation is to expense all office supplies at the time of purchase.
On the last day of the accounting period, there are $1,100 of unused office supplies on
hand and the balance of supplies expense is $3,500. What should the accountant do?
a.Debit Supplies and credit Supplies Expense for $1,100.
b.Nothing, company policy says to expense supplies when purchased.
c.Convince management to change its policy to avoid problems in the future.
d.Debit Supplies Expense for $2,400 and credit Supplies for $2,400.
Norlan Company does not ring up sales taxes separately on the cash register. Total
receipts for October amounted to $29,400. If the sales tax rate is 5%, what amount must
be remitted to the state for October’s sales taxes?
a.$1,400
b.$1,470
c.$70
d.It cannot be determined.
The following information pertains to Marsh Company. Assume that all balance sheet
amounts represent average balance figures.
What is Marsh’s payout ratio?
a.60%.
b.36%.
c.24%.
d.7.5%.
Denson, Inc. has 10,000 shares of 7%, $100 par value, non-cumulative preferred stock
and 40,000 shares of $1 par value common stock outstanding at December 31, 2014.
There were no dividends declared in 2013. The board of directors declares and pays a
$120,000 dividend in 2014. What is the amount of dividends received by the common
stockholders in 2014?
a.$0.
b.$70,000.
c.$120,000.
d.$50,000.
The following information is available for Wallace Company for 2014. Wallace uses the
LIFO inventory method.
Instructions
(a)Calculate the inventory turnover and days in inventory for Wallace Company based
on LIFO.
(b)Calculate the inventory turnover and days in inventory after adjusting for the LIFO
reserve.
Use the following data to determine the total dollar amount of assets to be classified as
property, plant, and equipment.
a.$686,000
b.$516,000
c.$556,000
d.$376,000
On January 1, Ripken Corporation had 40,000 shares of $10 par value common stock
outstanding. On March 17 the company declared a 10% stock dividend to stockholders
of record on March 20. Market value of the stock was $13 on March 17. The stock was
distributed on March 30. The entry to record the transaction of March 30 would include
a
a.credit to Common Stock for $40,000.
b.debit to Common Stock Dividends Distributable for $52,000.
c.credit to Paid-in Capital in Excess of Par Value for $12,000.
d.debit to Stock Dividends for $12,000.
Pinson Company began the year with retained earnings of $570,000. During the year,
the company recorded revenues of $600,000, expenses of $380,000, and paid dividends
of $140,000. What was Pinson’s retained earnings at the end of the year?
a.$930,000
b.$650,000
c.$1,030,000
d.$500,000
The stockholders’ equity section of Patrick Corporation’s balance sheet at December 31
is presented here:
Instructions
From a review of the stockholders’ equity section, answer the following questions.
(a)How many shares of common stock are outstanding?
(b)Assuming there is a stated value, what is the stated value of the common stock?
(c)What is the par value of the preferred stock?
(d)If the annual dividend on preferred stock is $30,000, what is the dividend rate on
preferred stock?
(e)If dividends of $60,000 were in arrears on preferred stock, what would be the
balance reported for retained earnings?
A machine with a cost of $480,000 has an estimated salvage value of $30,000 and an
estimated useful life of 5 years or 15,000 hours. It is to be depreciated using the
units-of-activity method of depreciation. What is the amount of depreciation for the
second full year, during which the machine was used 5,000 hours?
a.$150,000.
b.$90,000.
c.$130,000.
d.$160,000.
Use the following information for Boxter, Inc., Clifford Company, Danforth Industries,
and Evans Services to answer the question “Using the LIFO reserve adjustment, which
company would has the strongest liquidity position for 2014 as expressed by the current
ratio?”
a.Boxter
b.Clifford
c.Danforth
d.Evans
a.A patent that was acquired for $800,000 at the beginning of the current year expires in
20 years and is expected to have value for 5 years. Present the adjusting entry to
amortize the patent for the current year.
b.Research and development costs of $300,000 were incurred during the current fiscal
year. Determine the minimum amount to be expensed for the current fiscal year.
Zoum Corporation had the following transactions during 2014:
1)Issued $125,000 of par value common stock for cash.
2)Recorded and paid wages expense of $60,000.
3)Acquired land by issuing common stock of par value $50,000.
4)Declared and paid a cash dividend of $10,000.
5)Sold a long-term investment (cost $3,000) for cash of $3,000.
6)Recorded cash sales of $400,000.
7)Bought inventory for cash of $160,000.
8)Acquired an investment in Zynga stock for cash of $21,000.
9)Converted bonds payable to common stock in the amount of $500,000.
10)Repaid a 6 year note payable in the amount of $220,000.
What is the net cash provided by operating activities?
a.$305,000.
b.$290,000.
c.$240,000.
d.$180,000.
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 credit before adjustment what is the amount of bad debt expense for
that period?
a.$30,000
b.$26,000
c.$34,000
d.$4,000
Two categories of expenses in merchandising companies are
a.cost of goods sold and financing expenses.
b.operating expenses and financing expenses.
c.cost of goods sold and operating expenses.
d.other expenses and cost of goods sold.
Jahnke Corporation issued 8,000 shares of 2 par value ordinary shares for 11 per share.
The journal entry to record the sale will include
a.a debit to Cash for 16,000.
b.a credit to Share Premium-Ordinary for 72,000.
c.a credit to Share Capital-Ordinary for 88,000.
d.a debit to Retained Earnings for 72,000.
The following information is provided for Nguyen Company and Northwest
Corporation.
What is Nguyen’s asset turnover ratio for 2014?
a.4.00 times
b.1.36 times
c.0.25 times
d.0.73 times
The framework used to record and summarize the economic activities of a business
enterprise is referred to as the accounting equation. State the basic accounting equation
and define its major components. How are financial statements related to the accounting
equation?
Sandy Lang and Mandy Starr, two salespersons in adjoining territories, regularly
compete for bonuses. During the last month, their dollar volume of sales, on which the
bonuses are based, was nearly equal. On May 30, 2014, each made a large sale. Both
orders were shipped on May 31, 2014, the last day of the month, and both were
received by the customers on June 5, 2014. Sandy’s sale was FOB shipping point
(ownership passes to buyer at time of shipping), and Mandy’s was FOB destination
(ownership passes to buyer at time of receipt). The printed policy of the company states
that sales “count” for purposes of calculating bonuses on the date that ownership passes
to the purchaser. Sandy’s sale was therefore counted in her May monthly total of sales
while Mandy’s sale was not. Mandy is quite upset. She has asked you to just include it,
or to take Sandy’s off as well. She also has told you that you are being unethical for
allowing Sandy to get a bonus just for choosing a particular shipping method.
As the accounting manager write a memo to Mandy on June 15, 2014, and explain your
position.
Additional data as of December 31, 2013: Inventory = $47,000; Total assets =
$390,000; Common stockholders’ equity = $110,000
Instructions: Compute the following listed ratios for 2014 showing supporting
calculations. Display answers to two decimal places.
1)Current ratio = .
2)Debt to assets ratio = .
3)Times interest earned = .
4)Inventory turnover = .
5)Profit margin = .
6)Return on common stockholders’ equity = .
7)Return on assets = .
Samson Company had the following transactions.
1)Issued 5,000 shares of $100 par preferred stock at $107 for cash.
2)Issued 8,000 share of common stock with a par value of $10 for $120,000.
3)Purchased 500 shares of treasury common stock for $12,000.
Instructions
Prepare the journal entries to record the above stock transactions.
Mohling Company typically sells subscriptions on an annual basis, and publishes eight
times a year. The magazine sells 45,000 subscriptions in January at $10 each. What
entry is made in January to record the sale of the subscriptions?
Instructions: Place a “D” (Debit) or “C” (Credit) in the space provided to indicate
whether the account has a normal debit balance (D) or normal credit balance (C).
The balance sheets of Palle’ Company include the following:
Instructions:
Calculate the following for 2014:
1>Cash received for interest.
2>Cash paid for supplies.
3>Cash paid for salaries and wages.
4>Cash received for service revenue.