Preferred stockholders receive a dividend preference over common stockholders.
Sales on account are recorded in a cash receipts journal.
The income from continuing operations helps investors make predictions about the
company’s past performance.
Metro Auto Parts recently traded in store fixtures. The exchange had commercial
substance. The old fixtures had a cost of $47,000 and accumulated depreciation of
$15,000. Metro paid $102,000 for the new store fixtures. These new fixtures had a
market value of $120,000. There is a loss of $14,000 on this exchange.
The operating cycle of a merchandiser begins when the company purchases inventory
from a vendor and ends when the company collects cash from customers.
The party who issues a check is the maker.
The revenue, expenses, Sales Returns and Allowances, and Sales Discounts will be
closed via the ________ account.
A) Income Summary
B) Retained Earnings
C) Dividend
D) Stockholders’ Equity
Accounts Receivable has a balance of $32,000, and the Allowance for Bad Debts has a
credit balance of $3,500. The allowance method is used. What is the net realizable value
of Accounts Receivable before and after a $2,100 account receivable is written off?
A) $28,500; $28,500
B) $26,400; $26,400
C) $28,500; $26,400
D) $26,400; $30,600
On a statement of cash flows prepared using the direct method, cash received from
selling merchandise is considered a ________.
A) cash inflow from investing activities
B) cash inflow from operating activities
C) cash outflow from financing activities
D) cash outflow for financing activities
Katie Pereira and Ferro Schwartz are employees of Free Star, Inc. In February 2017,
Katie’s gross pay was $6,000, and Ferro’s gross pay was $7,400. All earnings are subject
to FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%. Which of the
following would be included in the entry to record the salaries expense for February?
A) a debit to Salaries Payable to employees for $830.80
B) a debit to FICA-Medicare Taxes Payable for $830.80
C) a credit to FICA-OASDI Taxes Payable for $830.80
D) a credit to Salaries Expense for $830.80
The entries that transfer the revenue, expense, and dividends balances to the Retained
Earnings account to prepare the company’s books for the next period are called
________.
A) closing entries
B) opening entries
C) adjusting entries
D) temporary accounts
Kelemen, Inc. provides the following information for 2017:
The company has no preferred stock outstanding. Calculate the price/earnings ratio of
common stock. (Round any intermediate calculations and your final answer to two
decimal places.)
A) 40.32 times
B) 50.00 times
C) 34.72 times
D) 28.90 times
Kostner Financial Services, Inc. performed accounting services for a client in
December. A bill was mailed to the client on December 30. The company received the
client’s check by mail on January 5. Which of the following accounts should appear on
the income statement for the year ended December 31 as related to the services
performed?
A) Service Revenue
B) Unearned Revenue
C) Accounts Payable
D) Prepaid Expense
On January 1, 2017, Ahrens Services issued $169,000 of six-year, 12% bonds when the
market interest rate was 11%. The bonds were issued for $172,000. Ahrens uses the
effective-interest method to amortize the bond premium. Semiannual interest payments
are made on June 30 and December 31 of each year. Which of the following is the
correct journal entry to record the first interest payment? (Round your answers to the
nearest dollar number.)A)
B)
C)
D)
Green Services, Inc. invests its excess cash in Creative Technologies, Inc. and acquires
6,000 shares for $61.75 per share. Green Services, Inc. owns less than 2% of Creative’s
voting stock and plans to hold the stock for two years. While preparing the journal entry
to record this transaction, ________.
A) Long-term Investments-Available-for-Sale is debited for $370,500
B) Long-term Investments-Held-to-Maturity is debited for $370,500
C) Long-term Investments-Trading Investments is credited for $370,500
D) Long-term Investments-Significant Interest Investments is debited for $370,500
On January 1, 2017, Toland Sales issued $30,000 in bonds for $22,300. These are
eight-year bonds with a stated interest rate of 12% pay semiannual interest. Toland
Sales uses the straight-line method to amortize the bond discount. What is the bond
carrying amount after the first interest payment on June 30, 2017? (Round your
intermediate answers to the nearest dollar.)
A) $30,000
B) $18,931
C) $22,781
D) $26,631
Which of the following accounts increases with a credit?
A) Cash
B) Common Stock
C) Accounts Receivable
D) Prepaid Expense
Which of the following is the result of the maker of a promissory note failing to pay the
note on the due date?
A) a discounted note
B) a depreciated note
C) an amortized note
D) a dishonored note
Gideon Electronics paid $200,000 to acquire Tabletz, Inc., an electronic
gadget-advertising website. At the time of the acquisition, Tabletz’s balance sheet
reported total assets of $200,000 and liabilities of $100,000. The fair market value of
Tabletz’s assets was $200,000. The fair market value of its liabilities was $100,000.
Journalize the acquisition of Tabletz in the books of Gideon Electronics.
The following information is available for Ashland Company for the month ending June
30, 2017.- Balance as per the bank statement is $11,240.
– Balance as per books is $10,200.
– Check #506 for $1,200 and check #510 for $900 were not shown on the June 30 bank
statement.
– A deposit in transit of $3,110 had not been received by the bank when the bank
statement was generated.
– A bank debit memo indicated an NSF check for $85 written by Maddie Wolfe to
Ashland Company on June 13.
– A bank credit memo indicated a note collected by the bank of $2,100 and interest
revenue of $55 on June 20.
– The bank statement indicated service charges of $20.Prepare bank reconciliation for
Ashland Company for June 30, 2017.
Clear Cleaning Services pays out wages every week on Friday. Payroll expense totals
$4,000 per week, based on a five-day week. The month of June ended on a Thursday.
On Thursday, June 30, Clear made the following accrual adjustment:
At the same time, they prepared the following reversing entry to be booked on July 1:
On Friday afternoon, when wages were paid, what journal entry was made?
On December 31, 2016, Thompson Hardware Company purchases $300,000 of
property by paying $50,000 in cash and signing a 10-year mortgage note at 13% for the
balance. The amortization schedule shows that the company will pay $46,072 per year.
Journalize the first yearly payment on December 31, 2017.
During July 2017, Bridgeport Enterprises recorded the following:Sales of $86,400
($64,500 on account, $21,900 for cash)
Collections on account, $58,950
Write-offs of uncollectible receivables, $2,560
Recovery of receivable previously written off, $1,000Journalize Bridgeport’s
transactions during July, assuming Bridgeport uses the allowance method.
Blake, Inc. purchased a van on January 1, 2015, for $800,000. Estimated life of the van
was five years, and its estimated residual value was $90,000. Blake uses the
straight-line method of depreciation. Give the journal entry to record the purchase of
van for cash.
Journalize the following purchase transactions for ABC Swimming Pool Supply
Company using the periodic inventory system. Explanations are not required.
Calculate the debt ratio using the following trial balance of Harmony Instruments, Inc.
as of December 31, 2017.
