On June 3, 2013, Alpine Corporation sold merchandise with a gross price of $45,000
with terms of 2/10, n/30. Prepare the journal entries to: A) Record the sale using the
gross method.
B) Assume the payment is received on June 10, 2013.
C) Assume payment is not received until June 21, 2013.
Issued long term mortgage to acquire land and a building.
Use the following codes to indicate how the cash flow effect, if any, of each transaction
would be reported on a statement of cash flows if the operating activities section is
prepared using the direct method. (Choices may be used more than once.)
a. Inflow from operating activity
b. Outflow from operating activity
c. Inflow from investing activity
d. Outflow from investing activity
e. Inflow from financing activity
f. Outflow from financing activity
g. Noncash investing and financing activity
h. Not reported on statement of cash flows
The primary purpose of the statement of cash flows is to provide information about
a. the financial position of the company.
b. the profitability of the company.
c. the investing and financing activities of the company.
d. the cash inflows and outflows of the company.
General term for companies who sell goods to other companies as well as to the final
consumer.
Match the terms with the descriptions provided.
a. Manufacturers d. Wholesalers
b. Merchandisers e. Service companies
c. Retailers
Cost of ingredients used to make a product.
Match the inventory-related accounts to costs that may be included in inventories for
retailers and manufacturers.
a. merchandise inventory d. finished goods
b. raw materials e. cost of goods sold
c. work-in-process
Certified Electronics operates five days per week with a daily payroll of $40,000.
Employees are paid every Saturday for the work week just completed (Monday through
Friday). The last day of the month is Wednesday, May 31. The correct adjusting entry at
May 31 is
a. Wages Expense 40,000 Wages Payable 40,000
b. Wages Payable 40,000 Cash 40,000
c. Wages Expense 120,000 Cash 120,000
d. Wages Expense 120,000 Wages Payable 120,000
Customer’s NSF check returned with the bank statement
The accountant for a local manufacturing company is reconciling the company’s bank
account for May. For each item listed, state how it would be handled on a bank
reconciliation. (Choices may be used more than once.)
a. Addition to bank balance
b. Subtraction from bank balance
c. Addition to company balance
d. Subtraction from company balance
e. Not included on the reconciliation
Refer to Hesson Properties. What journal entry is required to record the purchase of the
carts?
Hesson Properties, Inc.
The following transactions occurred during June:
a. Equipment 1,500 Accounts Payable 1,500
b. Equipment 1,500 Cash 1,500
c. Cash 1,500 Equipment 1,500
d. Accounts Payable 1,500 Equipment 1,500
Homevestors purchased land for $400,000 in 2001. In 2013, an independent appraiser
assessed the value of the land at 900,000. At what amount should the land be recorded
on the company’s 2013 financial statements?
a. at its cost of $400,000
b. at its $900,000 appraised value
c. at $500,000, the difference between the land’s cost and assessed value
d. whichever amount the company considers to be the best indicator of the land’s true
value
Fanatics Company purchased a patent at the beginning of 2013 for $450,000. Economic
benefits were expected for only 10 years, but the patent’s legal life is 20 years. Also
during 2013, the company incurred research and development costs of $185,000.
Karuna Consulting leased a building on January 2, 2013. The lease qualifies as an
operating lease. The annual payments are $25,000 at the beginning of each year, and the
life of the lease is 10 years. What entry would the company make on January 2, 2013?
a. Machine 250,000 Lease Obligation 250,000
b. Prepaid Rent 250,000 Lease Obligation 250,000
c. Prepaid Rent 25,000 Lease Obligation 25,000
d. No entry is necessary.
Payments are received from customers to whom merchandise was sold on credit.
Select the choice that describes the type of transaction and whether it should be
recorded in the accounting system. (Choices may be used more than once.)
a. External event to be recorded as a transaction
b. Internal event to be recorded as a transaction
c. Event which should not be recognized in the accounting system
Represents a departure from reporting assets at their historical cost.
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
The purchase of office equipment on credit has what effect on the accounting equation?
a. assets and stockholders’ equity decrease
b. liabilities increase and stockholders’ equity decreases
c. assets and liabilities increase
d. assets and liabilities decrease
Refer to General Lighting. Sales taxes are required to be paid to the state taxing
authority at the end of the quarter. Which of the following records the sale of the
batteries?
General Lighting During the first quarter of 2013, the company sold 4,000 batteries on
credit for $150 each plus state sales tax of 6%. a. Accounts Receivable 636,000 Sales
Revenue 600,000 Sales Tax Payable 36,000
b. Accounts Receivable 600,000 Sales Revenue 600,000
c. Accounts Receivable 600,000 Sales Revenue 564,000 Sales Tax Payable 36,000
d. Accounts Receivable 636,000 Sales Revenue 636,000
Which of the following statements is true pertaining to participating preferred stock?
a. Its issuance provides no flexibility to the issuing company because its terms always
mandate a regular, annual dividend.
b. There is a legal requirement for a corporation to declare a regular, annual dividend.
c. It includes the right to share in dividends in excess of the regular, annual dividend.
d. It includes the right to participate in management decisions through voting privileges.
A measure of net income measured by each share of common stock. Match the terms to
the definitions.
Items should be included as part of the company’s inventory if they are
a. purchased from a creditor, although not paid for by year end.
b. held in anticipation of an increase in market value.
c. determined to be part of cost of goods sold.
d. sold during the period.
Term referring to the date that a bond’s principal has to be repaid.
Match these terms with their definitions.
a. Bond i. Lessor
b. Contract, coupon, stated rate j. Leverage
c. Discount k. Long-term debt
d. Effective interest rate method l. Market rate, yield
e. Face value, par value, principal m. Maturity
f. Interest amortization n. Premium
g. Lease o. Straight-line method
h. Lessee
Dividend-related dates follow this chronological order: declaration date, record date,
and payment date.
What is the significance of the timing in which cash is paid or received as it relates to
the adjusting process?
____________________ shares are the maximum number of shares a corporation may
issue in accordance with its corporate charter.
Refer to Maritime Marine Services. What was the amount paid to retire long-term debt
during 2014?
Maritime Marine Services
Selected data from the financial statements for the years ended December 31, 2014 and
2013, are presented below:
The following additional information was obtained from the company’s records:
During periods of rising prices, the ____________________ method results in the cost
of goods sold expense on the income statement being a close approximation of the
replacement cost of the goods sold.
Cash flows from selling machinery would be classified as investing activities.