1) orange-aide company has the following inventory data:
a physical count of merchandise inventory on july 30 reveals that there are 30 units on
hand. using the average cost method, the value of ending inventory is
a.$600
b.$627
c$630
d$660
2) when a company owns more than 50% of the common stock of another company
a.consolidated financial statements are usually prepared
b.the cost method of accounting is used
c.they are referred to as the subsidiary
d.they recognize revenue when dividends are received
3) if bonds are issued at a premium, the stated interest rate is
a.higher than the market rate of interest
b.lower than the market rate of interest
c.too low to attract investors
d.adjusted to a higher rate of interest
4) when the cost method is used to account for a stock investment the carrying value of
the investment is affected by
a.the earnings of the investee
b.the dividend distributions of the investee
c.the earnings and dividend distributions of the investee
d.neither the earnings nor the dividends of the investee
5) the following items were shown on the balance sheet of martin corporation on
december 31, 2012:
instructions
complete the following statements and show your computations.
(a)the number of shares of common stock issued was _______________.
(b)the number of shares of common stock outstanding was ____________.
(c)the total sales price of the common stock when issued was $____________.
(d)how much did the treasury stock cost per share? $_______________
(e)what was the average issue price of the common stock? $______________
6) sweet candy company sold its lollipop division resulting in a loss of $50,000.
assuming a tax rate of 25%, the loss on this disposal will be reported on the income
statement at what amount?
a.$62,500
b.$12,500
c.$50,000
d.$37,500
7) tomlinson packaging corporation began business in 2010 by issuing 20,000 shares of
$5 par common stock for $8 per share and 5,000 shares of 6%, $10 par preferred stock
for par. at year end, the common stock had a market value of $10. on its december 31,
2012 balance sheet, tomlinson packaging would report
a.common stock of $200,000
b.common stock of $100,000
c.common stock of $160,000
d.paid-in capital of $150,000
8) the information in the following table is from the statement of cash flows for a
company at four different points in time (period 1, period 2, period 3, and period 4).
negative values are presented in parentheses.
based on this information, which of the following answers most likely corresponds with
the introductory phase, growth phase, maturity phase, or decline phase?
a.period 2, period 1, period 3, period 4
b.period 1, period 4, period 3, period 2
c.period 3, period 4, period 1, period 2
d.period 4, period 3, period 2, period 1
9) cerner corporation began business by issuing 150,000 shares of $5 par value
common stock for $24 per share. during its first year, the corporation sustained a net
loss of $30,000. the year-end balance sheet would show
a.common stock of $750,000
b.common stock of $3,600,000
c.total paid-in capital of $3,570,000
d.total paid-in capital of $2,850,000
10) lowe inc.’s bank statement from western bank at august 31, 2012, gives the
following information.
a summary of the cash account in the ledger for august shows the following: balance,
august 1, $19,100, receipts $81,000; disbursements $73,570; and balance, august 31,
$26,530. analysis reveals that the only reconciling items on the july 31 bank
reconciliation were a deposit in transit for $7,000 and outstanding checks of $4,500. in
addition, you determine that there was an error involving a company check drawn in
august: a check for $400 to a creditor on account that cleared the bank in august was
journalized and posted for $40.
instructions
(a)determine deposits in transit.
(b)determine outstanding checks.
(c)prepare a bank reconciliation at august 31
11) closing entries:
a.are prepared before the financial statements
b.reduce the number of permanent accounts
c.cause the revenue and expense accounts to have zero balances
d.summarize the activity in every account