Use the following data to determine the total dollar amount of assets to be classified as
investments.
a.$0
b.$310,000
c.$170,000
d.$390,000
Davies Company purchased merchandise inventory with an invoice price of $9,000 and
credit terms of 2/10, n/30. What is the net cost of the goods if Davies Company pays
within the discount period?
a.$9,000
b.$8,856
c.$8,820
d$7,200
The historical cost principle requires that when assets are acquired, they be recorded at
a.market value.
b.the amount paid for them.
c.selling price.
d.list price.
The Golden Petting Zoo operates a drive-through tourist attraction in Colorado. The
company adjusts its accounts at the end of each month. The selected accounts appearing
below reflect balances after adjusting entries were prepared on April 30. The adjusted
trial balance shows the following:
Other data:
1>Three months’ rent had been prepaid on April 1
2>The buildings are being depreciated at $6,000 per year.
3>The unearned ticket revenue represents tickets sold for future zoo visits. The tickets
were sold at $4.00 each on April 1. During April, twenty of the tickets were used by
customers.
Instructions:
(a)Calculate the following:
1>Monthly rent expense.
2>The age of the fencing in months.
3>The number of tickets sold on April 1.
(b)Prepare the adjusting entries that were made by the Golden Petting Zoo on April 30.
Equipment costing $40,000 with a salvage value of $8,000 and an estimated life of 8
years has been depreciated using the straight-line method for 2 years. Assuming a
revised estimated total life of 5 years and no change in the salvage value, the
depreciation expense for Year 3 would be
a.$4,800.
b.$10,667.
c.$8,000.
d.$6,400.
Assume that the Quinn Corporation uses the indirect method to depict cash flows.
Indicate where, if at all, dividends received on securities held would be classified on the
statement of cash flows.
a.Operating activities section.
b.Investing activities section.
c.Financing activities section.
d.Does not represent a cash flow.
Financial information is presented below:
The profit margin would be
a..40
b..09
c..16
d..10
Common Ground Corporation issued $8,000,000, 10-year bonds and agreed to make
annual sinking fund deposits of $620,000. The deposits are made at the end of each year
into an account paying 6% annual interest. Common Ground has the following values
related to the time value of money and compounded interest decisions.
To the closest dollar, what amount will be in the sinking fund at the end of 10 years?
a.$4,467,120
b.$4,563,256
c.$8,172,090
d.$12,800,000
Using the percentage-of-receivables method for recording bad debt expense, estimated
uncollectible accounts are $34,000. If the balance of the Allowance for Doubtful
Accounts is $9,000 debit before adjustment what is the amount of bad debt expense for
that period?
a.$34,000
b.$ 9,000
c.$43,000
d.$25,000
Alpha First Company just began business and made the following four inventory
purchases in June:
A physical count of merchandise inventory on June 30 reveals that there are 210 units
on hand. Using the LIFO inventory method, the value of the ending inventory on June
30 is
a.$1,092
b.$1,131
c.$1,386
d.$1,368
Which of the following is one reason that companies estimate uncollectible accounts?
a.To identify which customers€ accounts will become uncollectible
b.To write off the amounts which will not be collected from customers
c.To match the expense associated with receivables against the related revenues
d.To determine the total amount owed by customers
Using the following information, which company appears to be most liquid?
a.Jones Company
b.Parksh Company
c.Brady Company
d.Chambers Company
What is the total stockholders’ equity based on the following account balances?
a.$1,000,000.
b.$975,000.
c.$950,000.
d.$800,000.
To be relevant, what characteristic must accounting information exhibit?
a.It must be capable of making a difference in a decision.
b.It must be compared with other companies.
c.It must be verifiable.
d.It must be based on the U.S. monetary unit.
A corporation issues $200,000, 10%, 5-year bonds on January 1, 2014, for $191,600.
Interest is paid annually on January 1. If the corporation uses the straight-line method of
amortization of bond discount, the amount of bond interest expense to be recognized in
December 31, 2014’s adjusting entry is
a.$21,680.
b.$20,000.
c.$18,320.
d.$1,680.
Using the allowance method, the uncollectible accounts for the year are estimated to be
$40,000. If the balance for the Allowance for Doubtful Accounts is a $9,000 credit
before adjustment, what is the balance after adjustment?
a.$9,000
b.$31,000
c.$40,000
d.$49,000
A $900,000 bond was retired at 98 when the carrying value of the bond was $888,000.
The entry to record the retirement would include a
a.gain on bond redemption of $12,000.
b.loss on bond redemption of $6,000.
c.loss on bond redemption of $12,000.
d.gain on bond redemption of $6,000.
Parker Company issued ten-year, 9%, bonds payable in 2014 at a premium. During
2014, the company’s accountant failed to amortize any of the bond premium. The
omission of the premium amortization will
a.not affect net income for 2014.
b.cause retained earnings at the end of 2014 to be overstated.
c.cause net income for 2014 to be overstated.
d.cause net income for 2014 to be understated.
Nance Corporation’s December 31, 2014 balance sheet showed the following:
Nance declared and paid a $75,000 cash dividend on December 15, 2014. If the
company’s dividends in arrears prior to that date were $18,000, Nance’s common
stockholders received
a.$57,000.
b.$27,000.
c.$33,000.
d.no dividend.
Petersen Company is preparing a cash budget for September. The company€s cash
balance on September 1 is $17,400. The company anticipates cash receipts of $83,850
and cash disbursements of $87,990. If Petersen desires a cash balance of $18,000, it
must
a.acquire financing of $600.
b.acquire financing of $4,740.
c.acquire financing of $3,540.
d.acquire financing of $13,860.
The ledger accounts given below, with an identification number for each, are used by
Lowe’s Lawn Care.
Instructions: Prepare appropriate adjusting entries for the year ended December 31,
2014, by replacing the appropriate identification number(s) in the debit and credit
columns provided and the dollar amount in the adjoining column. Item 0 is given as an
example.
On October 31 the stockholders’ equity section of Eaton Company’s balance sheet
consists of common stock $600,000 and retained earnings $400,000. Eaton is
considering the following two courses of action: (1) declaring a 10% stock dividend on
the 60,000 $10 par value shares outstanding or (2) affecting a 2-for-1 stock split that
will reduce par value to $5 per share. The current market price is $15 per share.
Instructions
Prepare a tabular summary of the effects of the alternative actions on the company’s
stockholders’ equity and outstanding shares. Use these column headings: Before Action,
After Stock Dividend, and After Stock Split.
Instructions
Show how each item should be reported in the statement of cash flows. Use parentheses
for deductions.
The percentage of receivables approach to estimating bad debts expense is used by
Hayes Company. On February 28, the firm had accounts receivable in the amount of
$585,000 and Allowance for Doubtful Accounts had a credit balance of $370 before
adjustment. Net credit sales for February amounted to $3,000,000. The credit manager
estimated that uncollectible accounts would amount to 5% of accounts receivable. On
March 10, an accounts receivable from Mark Dole for $2,100 was determined to be
uncollectible and written off. However, on March 31, Dole received an inheritance and
immediately paid his past due account in full.
On January 1, 2014, the Black Corporation had $2,000,000 of $10 par value common
stock outstanding that was issued at par and Retained Earnings of $1,000,000. The
company issued 140,000 shares of common stock at $15 per share on July 1. On
December 15, the board of directors declared a 10% stock dividend to stockholders of
record on December 31, 2014, payable on January 15, 2015. The market value of Black
Corporation stock was $17 per share on December 15 and $16 per share on December
31. Net income for 2014 was $500,000.
Instructions
(1)Journalize the issuance of stock on July 1 and the declaration of the stock dividend
on December 15.
(2)Prepare the stockholders’ equity section of the balance sheet for Black Corporation at
December 31, 2014.
On January 1, 2014, Hauke Corporation issued $900,000, 6%, 10-year bonds at face
value. Interest is payable annually on January 1. Hauke Corporation has a calendar year
end.
Instructions
Prepare all entries related to the bond issue for 2014.