Refer to Art Shoes. How much interest revenue will the company recognize for the year
ended December 31, 2013?
Art Shoes
This company received a promissory note from a customer on July 1, 2013. The face
amount of the note is $45,000; the terms are 12 months and 10% annual interest. a. $ 0
b. $9,000
c. $2,250
d. $4,500
Assets classified as property, plant, and equipment are reported at
a. each asset’s estimated market value at the balance sheet date less depreciation.
b. each asset’s estimated market value at the balance sheet date.
c. the estimated salvage value at the balance sheet date.
d. each asset’s original cost less depreciation since acquisition.
Cash
From the list of accounts, determine whether the account is a temporary or permanent
account. (Choices may be used more than once.)
Which of the following would not appear on a bank statement for a checking account?
a. service charges
b. outstanding checks
c. credit memos
d. interest earned
Tidewater Management, Inc. had no investments in short-term marketable securities
prior to 201 During 2013, the company engaged in the following investment
transactions:
At the end of 2013, the Toucan Taxi stock had a market value of $15 per share. A)
Prepare journal entries for each of the three transactions assuming they are
available-for-sale securities.
B) Prepare journal entries, if required, to recognize the year-end market value. What is
the income statement effect of the entry, if any?
C) How will this investment be reported on the company’s balance sheet at December
31, 2013?
The preferred stock feature which provides for the sharing of dividends above the stated
amount.
Kid Karate issued $100,000 of 6%, 10 year bonds when the market rate of interest was
5%. The proceeds from this bond issue were $107,000. Using the effective interest
method of amortization, which of the following statements is true? Assume interest is
paid annually.
a. Interest payments to bondholders each period will be $5,000.
b. Interest payments to bondholders each period will be $5,350.
c. Amortization of the premium for the first interest period will be $5,000.
d. Amortization of the premium for the first interest period will be $650.
Situation where the investor owns 20% to 50% of the outstanding common stock of the
investee and is therefore assumed to possess significant influence over the operating
and financial policies of the investee
Match the following terms to their correct definition:
a. equity security j. held-to-maturity securities
b. debt security k. amortized cost method
c. passive l. fair value method
d. significant influence m. unrealized gains and losses
e. control n. equity method
f. parent o. consolidation worksheet
g. subsidiary p. minority interest
h. trading securities q. business combination
i. available-for-sale securities r. Goodwill
Discount Muffler Company is preparing its bank reconciliation for June 30, 2013. Its
bank statement and general ledger T-account for its checking account are presented
below:
A) Prepare a bank reconciliation in proper form for June. Note that the beginning
balance was correctly reconciled at the end of the previous month, and that all
outstanding checks (numbered 1983, 1984, and 1985) and deposits in transit from the
previous month cleared the bank during May.
B) How much cash will the company report on its June 30 balance sheet?
C) What adjusting entries will the company record as a result of this bank reconciliation
process? Assume that the bank correctly recorded all transactions, and that any errors
noted in the reconciliation process involve transactions on credit.
The time span during which purchase discounts are available.
Match the terms with the descriptions provided.
a. Consignment f. Purchase allowance
b. Discount period g. Purchase discounts
c. Inventory h. Purchase returns
d. LIFO Reserve i. Purchases
e. Lower of cost or market rule
Liquidating dividends must be charged against the capital stock accounts because the
corporation’s retained earnings are appropriated for future business expansion.
For a capital lease, the lessee must record both an asset and a liability. The amount of
the asset is subsequently reduced by the process of ____________________.
Refer to California Condos. The company reported interest receivable of $2,500 at
December 31, 2013, and $0 at the beginning of 2013. How much cash did the company
collect for interest during the year?
California Condos California Condos uses the accrual basis of accounting, and had the
following account balances on its financial statements at December 31, 2013.
If the bank credits a customer’s account, then that customer’s cash account balance
increases.
The par value of stock is reduced when stock dividends are issued.
The cash ratio is calculated as follows: (Cash + Marketable Securities) / Current
Liabilities.
With the perpetual inventory system, the inventory account is updated after each sale or
purchase.
The Future Value is the amount to which an account may grow when interest is
compounded.