Use the information above to answer the following question. What adjusting entry
should Brickyard make on June 30 before preparing its annual financial statements?
A) Debit Interest Expense and credit Interest Payable for $4,000
B) Debit Interest Expense and credit Interest Payable for $4,000
C) Debit Interest Payable and credit Interest Expense for $4,000
D) Debit Interest Payable and credit Interest Expense for $4,000
Use the information above to answer the following question. What is the total of the
credit balance accounts?
A company reported the following information at December 31, Year 1:
A) $111,040.
B) $104,090.
C) $113,540.
D) $108,590.
Wrangler Inc. uses the percentage of credit sales method to estimate Bad Debt Expense.
At the end of the year, the company’s unadjusted trial balance includes the following:
Wrangler has experienced bad debt losses of 0.5% of credit sales in prior periods. What
is the Bad Debt Expense to be recorded for the year?
A) $4,500
B) $4,300
C) $4,700
D) $45,000
The expense recognition principle indicates:
A) where expenses should be presented on the income statement.
B) how expenses should be split between the income statement and the balance sheet.
C) the ordering of current assets and current liabilities on the balance sheet.
D) when costs are recognized as expenses on the income statement.
Which of the following would be listed as a current liability?
A) Cash
B) Notes Payable (due in two years)
C) Supplies
D) Accounts Payable
For a merchandiser, inventory turnover refers to how many times:
A) during the period the company replaces its raw materials inventory.
B) the company purchases and sells its inventory of goods.
C) the company produces and delivers its inventory of goods to customers.
D) the company orders merchandise.
If total debits are not equal to total credits in an adjusted trial balance, which of the
following errors may have occurred?
A) Posting an entry to Salaries and Wage Expense to Administrative Expenses
B) Debiting Interest Payable instead of debiting Interest Expense
C) Recording a transaction twice
D) Posting a credit to Salaries and Wages Payable as a debit to that account
The Retained Earnings account has a beginning balance of $321,975 and an ending
balance of $356,413. Net income is $40,251. Which of the following statements is
correct?
A) $5,813 would be subtracted when determining cash flows from financing activities.
B) $40,251 would be added when determining cash flows from financing activities.
C) $34,438 would be added when determining cash flows from financing activities.
D) $321,975 would be added when determining cash flows from operating activities.
The return on equity ratio is calculated as:
A) dividends paid divided by the average book value of stockholders’ equity.
B) net income divided by the average number of outstanding common shares.
C) dividends divided by the average number of total shares.
D) (net income less preferred dividends) divided by average common stockholders’
equity.
The process of allocating the cost of buildings, vehicles, and equipment to the
accounting periods in which they are used. is called:
A) accumulated allocation.
B) unearned revenue.
C) depreciation.
D) prepaid expense.
During the current year, a company paid $4,500 which it owed from its prior year
income tax liability and $30,000 for its current year tax liability. The company still
owes $6,000 at the end of the current year. How much should the company report as
cash paid for income taxes on its statement of cash flows for the current year?
A) $34,500
B) $40,500
C) $30,000
D) $3,500
The objectives of a company’s system of internal control include all of the following
except:
A) completing work efficiently and effectively and protecting assets by reducing the
risk of fraud.
B) producing reliable and timely accounting information for use by people internal and
external to the organization.
C) ensuring the company’s stock price provides a reasonable return to investors.
D) adhering to laws and regulations.
A company issued $100,000 5-year, 7% bonds and received $101,137 in cash. The
market rate of interest when the bonds were issued was 6.5%. What is the amount of
interest expense to be recorded for the first annual interest period if the company uses
simplified effective-interest amortization?
A) $6,573.91
B) $7,000.00
C) $6,500.00
D) $7,079.59
Two different companies, Ripper and Berners, entered into the following inventory
transactions during December. Both companies use a perpetual inventory system.
December 3 – Ripper Corporation sold inventory on account to Berners Corp. for
$480,000, terms 2/10, n/30. This inventory originally cost Ripper $320,000.
December 8 – Berners Corp. returned inventory to Ripper Corporation for a credit of
$30,000. Ripper returned this inventory to inventory at its original cost of $20,000.
December 12 – Berners Corp. paid Ripper Corporation for the amount owed.
Required:
Part a. Prepare the journal entries to record these transactions on the books of Ripper
Corporation.
Part b. What is the amount of net sales to be reported on Ripper Corporation’s income
statement?
Part c. What is the Ripper Corporation’s gross profit percentage?