The Frozen Lake Company issues $503,000 of 10%, 10-year bonds at 107 on March 31,
2017. The bond pays interest on March 31 and September 30. Assume that the company
uses the straight-line method for amortization. The journal entry to record the first
interest payment on September 30, 2017 includes a ________.
A) debit to Cash for $25,150
B) debit to Interest Expense for $26,911
C) debit to Interest Expense for $23,389
D) credit to Premium on Bonds Payable for $1,761
Which of the following is the correct journal entry for a return of goods that were
purchased on account under the periodic inventory system?
A)
B)
C)
D)
When a job order costing system is used, actual manufacturing overhead costs are
debited to ________.
A) expense accounts
B) the Manufacturing Overhead account
C) the Cost of Goods Sold account
D) the Work-In-Process Inventory account
Which of the following is the correct journal entry for freight paid on goods purchased
by a merchandiser using the periodic inventory system?
A)
B)
C)
D)
Which of the following accounts decreases with a credit?
A) Cash
B) Common Stock
C) Accounts Payable
D) Notes Payable
Adams Bakery uses the modified half month convention to calculate depreciation
expense in the year an asset is purchased or sold. Adams has a calendar year accounting
period and uses the straight-line method to compute depreciation expense. On March
17, 2016, Adams acquired equipment at a cost of $200,000. The equipment has a
residual value of $40,000 and an estimated useful life of 6 years. What amount of
depreciation expense will be recorded for the year ending December 31, 2016? (Round
your answer to the nearest dollar.)
A) $26,667
B) $22,222
C) $20,000
D) $13,333
The accounting records of Marcus Service Company include the following selected,
unadjusted balances at June 30: Accounts Receivable, $2,700; Office Supplies, $1,800;
Prepaid Rent, $3,600; Equipment, $15,000; Accumulated Depreciation – Equipment,
$1,800; Salaries Payable, $0; Unearned Revenue, $2,400; Office Supplies Expense,
$2,800; Rent Expense, $0; Salaries Expense, $15,000; Service Revenue, $40,500.
The following data developed for adjusting entries are as follows:
a. Service revenue accrued, $1,400
b. Unearned Revenue that has been earned, $800
c. Office Supplies on hand, $700
d. Salaries owed to employees, $1,800
e. One month of prepaid rent has expired, $1,200
f. Depreciation on equipment, $1,500
Journalize the adjusting entries. Omit explanations.
The following transactions for March have been journalized and posted to the proper
accounts.
Mar. 1 The business received $8,000 cash and issued common stock to stockholders.
Mar. 2 Paid the first month’s rent of $600.
Mar. 3 Purchased equipment by paying $1,000 cash and executing a note payable for
$4,000.
Mar. 4 Purchased office supplies for $650 cash.
Mar. 5 Billed a client for $13,000 of design services completed.
Mar. 6 Received $7,000 on account for the services previously recorded.
What is the ending balance in the Service Revenue account?
A) $15,000
B) $8,000
C) $13,000
D) $7,000
The maturity value of a note is the ________.
A) principal amount minus interest due at maturity
B) principal amount plus interest due at maturity
C) face amount of the note
D) principal amount times the interest rate
The following information is provided by Doppler Systems:
Calculate the profitability index for Project A. (Round your answer to two decimal places.)
A) 1.01
B) 1.08
C) 1.37
D) 1.67
Which of the following statements is an accurate interpretation of the current ratio?
A) A current ratio of 1.5 or higher is considered a high-risk ratio.
B) A current ratio below 1.00 is considered a good and safe ratio.
C) A current ratio of 2.0 indicates strong ability to pay current liabilities.
D) A current ratio of 0.60 or lower is a good and safe ratio.
A merchandiser uses a perpetual inventory system. The beginning Retained Earnings
balance of the merchandiser was $110,000. During the year, Sales Revenue amounted
to $80,000, Sales Returns and Allowances were $2,000, Sales Discounts were $4,000,
Cost of Goods Sold was $40,000, and all other expenses totaled $12,000. The company
declared and paid $25,000 as dividends. The closing balance of Retained Earnings
would be ________.
A) $111,000
B) $107,000
C) $98,000
D) $110,000
A debt security ________.
A) represents a credit relationship with another company or governmental entity, and
typically pays interest for a fixed period
B) represents stock ownership in another company and sometimes pays dividends
C) is a standardized contract between two parties to buy or sell an underlying security at
a predetermined price on a specific date
D) is a cash market transaction in which the ownership of the underlying asset is
deferred until a specific date
The financial statements for Watertown Service Company include the following items:
Compute working capital for 2017.
A) $128,000
B) $78,000
C) $135,000
D) $27,000
The Perfect Fit Company sells hand sewn shirts at $58.00 per shirt. It incurs monthly
fixed costs of $8,000. The contribution margin ratio is calculated to be 30%. What is the
variable cost per shirt? (Round any intermediate calculations and your final answer to
two decimal places.)
A) $40.60 per shirt
B) $75.40 per shirt
C) $58.00 per shirt
D) $17.40 per shirt
To Go Company is preparing its statement of cash flows using the indirect method.
During the year, they purchased equipment for $15,000 cash. Which of the following
statements is true?
A) $15,000 would be shown as a negative cash flow in the operating activities section.
B) $15,000 would be shown as a negative cash flow in the investing activities section.
C) $15,000 would be shown as a positive cash flow in the investing activities section.
D) $15,000 would be shown as a positive cash flow in the financing activities section.
Which of the following would be included as manufacturing overhead for a
manufacturing company?
A) direct materials cost
B) indirect materials cost
C) direct labor
D) advertising
Which of the following statements is true?
A) The indirect method and the direct method will produce a different amount of net
cash flow from investing activities.
B) The indirect method starts with net income and adjusts it to cash provided by (used
for) operating activities.
C) The direct and indirect methods include different types of cash flows in the investing
activities section.
D) The indirect method includes all non-cash activities, whereas the direct method
includes only the cash activities.
The Income Summary account has a credit balance of $20,000 after the revenue and
expense accounts have been closed. Which of the following is to be credited to close the
Income Summary account?
A) Dividends
B) Sales Revenue
C) Cost of Goods Sold
D) Retained Earnings
When comparing several investments with the same initial cost, the decision should be
made on the basis of the ________.
A) highest total cash inflows
B) longest payback period
C) highest NPV
D) highest ARR
Delleate, Inc. has prepared the following direct materials purchases budget:
All purchases are paid for as follows: 40% in the month of purchase, 50% in the following
month, and 10% two months after purchase. Calculate total cash payments made in
October for purchases.
A) $67,080
B) $46,630
C) $35,710
D) $74,710
Custom Furniture manufactures a small table and a large table. The small table sells for
$900, has variable costs of $560 per table, and takes 10 direct labor hours to
manufacture. The large table sells for $1,500, has variable costs of $1,000, and takes
eight direct labor hours to manufacture. Calculate the contribution margin per direct
labor hour for the small table.
A) $340 per direct labor hour
B) $50 per direct labor hour
C) $34 per direct labor hour
D) $56 per direct labor hour
A coal mine cost $1,003,000 and is estimated to hold 50,000 tons of coal. There is no
residual value. During the first year of operations, 6,000 tons are extracted and sold.
Calculate depletion per unit. (Round your answer to the nearest cent.)
A) $10.03
B) $5.02
C) $20.06
D) $15.04
Perez Biofuels Company is preparing its statement of cash flows using the indirect
method. Refer to the following information:
1. Repayments on Long-term Notes Payable $58,000
2. New borrowing on Long-term Notes Payable $19,000
Which of the following statements is correct?
A) Net cash used for financing activities is $(39,000).
B) Net cash used for investing activities will is $58,000.
C) Net cash provided by financing activities is $39,000.
D) Net cash provided by investing activities is to $39,000.
Moonrays, Inc. manufactures both normal and premium tube lights. The company
allocates manufacturing overhead using a single plantwide rate with machine hours as
the allocation base. Estimated overhead costs for the year are $108,000. Additional
estimated information is given below.
Calculate the predetermined overhead allocation rate. (Round your answer to the nearest
cent.)
A) $3.72 per direct labor hour
B) $1.40 per machine hour
C) $2.25 per machine hour
D) $0.22 per direct labor hour
Which of the following steps must be completed before preparing the adjusted trial
balance?
A) preparing the post-closing trial balance
B) posting of journal entries to the accounts
C) preparation of the closing entries
D) preparation of the financial statements
Penny’s Pies, Inc. has provided the following financial information for the year:
What is the unit product cost for the year using variable costing?
A) $76
B) $15
C) $60
D) $62
At the beginning of the year, Joan Steel, Inc. purchased 10,000 shares of Smith Metals,
Inc. for $34,000 in exchange for cash and now holds 3.2% of the voting stock of Smith
Metals, Inc. The management of Joan Steel intends to hold this stock for two years.
Assuming no other transaction happened during the year, the ________ in the balance
sheet will increase.
A) long-term investments
B) cash
C) total assets
D) current assets
Prinkle Corporation purchased equipment for $60,000 on January 1, 2016. On
December 31, 2018, the equipment was sold for $28,000. Accumulated Depreciation as
of December 31, 2018 was $31,000.
Calculate gain or loss on the sale.
A) $1,000 gain
B) $1,000 loss
C) $31,000 loss
D) no gain no loss
Which of the following are NOT included in a post-closing trial balance?
A) Assets and liabilities
B) Retained Earnings and assets
C) Common Stock and liabilities
D) Revenues and expenses