The Scarlet Pages, a semi-professional hockey team, prepare financial statements on a
monthly basis. Their season begins in October, but in September the team engaged in
the following transactions:
(a)Paid $150,000 to Oklahoma City as advance rent for use of Oklahoma City Arena for
the six-month period October 1 through March 31.
(b)Collected $450,000 cash from sales of season tickets for the team’s 30 home games.
This amount was credited to Unearned Ticket Revenue.
(c)During the month of October, the Scarlet Pages played five home games.
Instructions:
Prepare the adjusting entries required at October 31 for the transactions above.
Which one of the following is provided by the cash budget?
a.It can indicate the profitability of a company.
b.It can identify projected expenses.
c.It can identify when a company will need additional financing.
d.It can identify if a company has adequate internal controls.
Use the following data to determine the total dollar amount of assets to be classified as
investments.
a.$0
b.$350,000
c.$170,000
d.$310,000
Henson Company began the year with retained earnings of $330,000. During the year,
the company recorded revenues of $500,000, expenses of $380,000, and paid dividends
of $40,000. What was Henson’s retained earnings at the end of the year?
a.$490,000
b.$410,000
c.$790,000
d.$450,000
Parks Blair invested $5,000 at 8% annual interest and left the money invested without
withdrawing any of the interest for 15 years. At the end of the 15 years, Parks decided
to withdraw the accumulated amount of money. Parks has found the following values in
various tables related to the time value of money.
Which factor would he use to compute the amount he would withdraw, assuming that
the investment earns interest compounded annually?
a.0.31524
b.3.17217
c.8.55948
d.27.15211
A company returned goods for credit to the supplier. Which one of the following is a
portion of the journal entry required if a perpetual inventory system is used?
a.Credit Accounts Payable
b.Credit Purchase Returns and Allowances
c.Debit Accounts Receivable
d.Credit Inventory
Dominic’s Salon has total receipts for the month of $30,210 including sales taxes. If the
sales tax rate is 6%, what are Dominic’s sales for the month?
a.$28,398.30
b.$32,023.20
c.$28,500.00
d.It cannot be determined.
Days of Slumber sells mattress for cash and on credit. At the end of 2014, the following
appeared in the company’s balance sheet:
Which one of the following statements for Days of Slumber is correct?
a.Customers owe $168,660 to Days of Slumber
b.Days of Slumber expects to collect $163,470 from customers.
c.Days of Slumber wrote off $2,460 of uncollectible accounts during 2014.
d.The net realizable value of Days of Slumber’s accounts receivable totals $163,740.
Farwell Company purchased merchandise with an invoice price of $2,000 and credit
terms of 1/10, n/30. Assuming a 360 day year, what is the implied annual interest rate
inherent in the credit terms?
a.2%
b.12%
c.18%
d.36%
Adjusting entries are made to ensure that:
a.expense are recognized in the period in which they are incurred.
b.revenues are recorded in the period in which the performance obligation is satisfied.
c.balance sheet and income statement accounts have correct balances at the end of an
accounting period.
d.All of these answer choices are correct.
Akers Corporation reported net income $48,000; net sales $480,000; and average assets
$800,000 for 2014. What is the 2014 profit margin?
a.6%
b.10%
c.48%
d.60%
Hogan Industries had the following inventory transactions occur during 2014:
The company sold 102 units at $63 each and has a tax rate of 30%. Assuming that a
periodic inventory system is used, what is the company’s gross profit using LIFO?
(rounded to whole dollars)
a.$4,882
b.$4,730
c.$1,696
d.$1,544
Leyland Realty Company received a check for $15,000 on July 1, which represents a
6-month advance payment of rent on a building it rents to a client. Unearned Rent
Revenue was credited for the full $15,000. Financial statements will be prepared on
July 31. Leyland Realty should make the following adjusting entry on July 31:
a.debit Unearned Rent Revenue, $2,500; credit Rent Revenue, $2,500.
b.debit Rent Revenue, $2,500; credit Unearned Rent Revenue, $2,500.
c.debit Unearned Rent Revenue, $15,000; credit Rent Revenue, $15,000.
d.debit Cash, $15,000; credit Rent Revenue, $15,000.
In its first year of operations, Martinez Corporation had the following transactions
pertaining to its $10 par value preferred stock.
Instructions
(a)Journalize the transactions.
(b)Indicate the amount to be reported for (1) preferred stock, and (2) paid-in capital in
excess of par value – preferred stock at the end of the year.
Ramos Company has a 90-day note that carries an annual interest rate of 8%. If the
amount of the total interest on the note is equal to $700, then what is the principal of the
note?
a.$8,750
b.$35,000
c.$50,400
d.$22,400