Expected direct materials purchases in Wade Company are $525,000 in the first quarter
and $675,000 in the second quarter. Forty percent of the purchases are paid in cash as
incurred, and the balance is paid in the following quarter. The budgeted cash payments
for purchases in the second quarter are:
a.$720,000.
b.$675,000.
c.$585,000.
d.$540,000.
Laser Listening has the following inventory data:
A physical count of merchandise inventory on November 30 reveals that there are 100
units on hand. Assuming that the specific identification method is used and that ending
inventory consists of 30 units from each of the three purchases and 10 units from the
November 1 inventory, cost of goods sold is
a.$427
b.$857
c.$854
d.$836
What do solvency ratios measure?
a.The level of full and transparent information provided to users of the financial
statements
b.The profitability of a company
c.The ability of a company to survive over a long period of time
d.The ability of a company to pay its debts as they come due
Assume that the Fitzgerald Corporation uses the indirect method to depict cash flows.
Indicate where, if at all, long-term debt retired with cash 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.
A company receives $176, of which $16 is for sales tax. The journal entry to record the
sale would include a
a.debit to Sales Taxes Expense for $16.
b.credit to Sales Taxes Payable for $16.
c.debit to Sales Revenue for $176.
d.debit to Cash for $160.
Rodgers Company purchased equipment and these costs were incurred:
Rodgers will record the acquisition cost of the equipment as
a.$45,000.
b.$48,600.
c.$49,240.
d.$50,100.
The market rate of interest is higher than the stated rate of interest on bonds issued by
Dax, Inc. At what amount will the bonds be issued?
a.At a premium
b.More information is needed to determine the answer.
c.At an amount lower than face value
d.At an amount higher than face value
Which one of the following ratios would not likely be used by a short-term creditor in
evaluating whether to sell on credit to a company?
a.Current ratio
b.Inventory turnover
c.Asset turnover
d.Accounts receivables turnover
The interest charged on a $70,000 note payable, at the rate of 6%, on a 90-day note
would be
a.$4,200.
b.$2,100.
c.$1,050.
d.$700.
Marvin Services Corporation had the following accounts and balances:
If the balance of the Buildings account was $45,000 and the equipment was sold for
$21,000, what would be the total of stockholders’ equity?
a.$39,000
b.$54,000
c.$69,000
d.$75,000
For what purpose is the current ratio used?
a.To assess profitability
b.To determine the composition of a company’s assets
c.To measure the short-term ability of a company to pay its obligations
d.To measure the profitability of operations
In 2014, Blanchard Corporation has plant equipment that originally cost $90,000 and
has accumulated depreciation of $36,000. A new processing technique has rendered the
equipment obsolete, so it is retired. Which of the following entries should Blanchard
use to record the retirement of the equipment?
In the first month of operations, Dieker Company made three purchases of merchandise
in the following sequence: (1) 200 units at $6, (2) 300 units at $7, and (3) 400 units at
$8. Assuming there are 250 units on hand, compute the cost of the ending inventory
under (1) the FIFO method and (2) the LIFO method. Dieker uses a periodic inventory
system.
On April 30, the bank reconciliation of Baxter Company shows three outstanding
checks: no. 354, $650, no. 355, $920, and no. 357, $615. The May bank statement and
the May cash payments journal show the following.
Instructions
Using step 2 in the reconciliation procedure, list the outstanding checks at May 31.
The trial balance of Rachel Company at the end of its fiscal year, August 31, 2014,
includes these accounts: Inventory $29,200; Purchases $144,000; Sales Revenue
$190,000; Freight-In $8,000; Sales Returns and Allowances $3,000; Freight-Out
$1,000; and Purchases Returns and Allowances $5,000. The ending inventory is
$25,000.
Instructions
Prepare a cost of goods sold section for the year ending August 31
Before month-end adjustments are made, the September 30 trial balance of Horton
Enterprise contains revenue of $9,200 and expenses of $6,500. Adjustments are
necessary for the following items:
-Depreciation for September is $300.
-Revenue earned but not yet billed is $2,100.
-Accrued interest expense is $800.
-Revenue collected in advance that is now earned is $3,400.
-Portion of prepaid insurance expired during September is $300.
Instructions:
Calculate the correct net income for Horton’s Enterprise for September.
As part of a Careers in Accounting program sponsored by accounting organizations and
supported by your company, you will be taking a group of high-school students through
the accounting department in your company. You will also provide them with various
materials to explain the work of an accountant. One of the materials you will provide is
the Stockholders’ Equity section of a recent balance sheet.
Prepare a short response explaining each major section: Common Stock, Additional
Paid-in Capital, and Retained Earnings. You should try to be brief but clear.
Kinney Company purchased a truck for $66,000. The company expected the truck to
last four years or 100,000 miles, with an estimated residual value of $8,000 at the end
of that time. During the second year the truck was driven 27,000 miles. Compute the
depreciation for the second year under each of the methods below and place your
answers in the blanks provided.
The following information is available from the annual reports of Flynn Company and
Tolan Inc.
(Amounts in millions)
Instructions
1>Calculate the profit margin and gross profit rate for each company.
2>What conclusion concerning the relative profitability of the two companies can be
drawn from these data?
Prepare adjusting entries for the following transactions. Omit explanations.
1>Depreciation on equipment is $800 for the accounting period.
2>There was no beginning balance of supplies and purchased $600 of office supplies
during the period. At the end of the period $120 of supplies were on hand.
3>Prepaid rent had a $1,000 normal balance prior to adjustment. By year end $300 was
unexpired.