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On December 16, 2015, B. Darin Company received $3,600 from S. Dee Company for
rent of an office owned by B. Darin Company. The payment covers the period from
December 16, 2015 through February 15, 2016. B. Darin Company recorded this as
Unearned Rent when it was received on December 16. The adjusting entry on
December 31 would include a:
A) credit to Rent Revenue of $900.
B) credit to Unearned Rent Revenue of $900.
C) debit to Rent Revenue of $1,800.
D) debit to Unearned Rent Revenue of $1,800.
Which of the following statements most appropriately describes the purpose of
depreciating a long-lived tangible asset?
A) To indicate how the asset has physically deteriorated
B) To show that the asset will eventually and gradually become obsolete
C) To record that the asset's market value declines over time
D) To match the cost of the asset to the period in which it generates revenue
A company issues a 5-year bond with a $7,500 discount. Using straight-line
amortization, the company should:
A) debit Discount on Bonds Payable for $1,500 per year.
B) credit Discount on Bonds Payable for $1,500 per year.
C) debit Interest Payable for $1,500 per year.
D) credit Interest Expense for $1,500 per year.
Use the information above to answer the following question. In the T-account above:
Cash
Beg. Bal. 123,900
(a) 14,700 6,000 (c)
(b) 38,300 5,800 (d)
7,400 (e)
12,000 (f)
11,200 (g)
A) (a) and (b) are credits.
B) (c) through (g) are debits.
C) if the sum of (a) and (b) is less than the sum of (c) through (g), the Cash account
balance will increase.
D) (a) and (b) are increases.
Which of the following statements about receivables turnover analysis is correct?
A) The receivables turnover ratio indicates how many times, on average, the process of
selling to and collecting from customers occurs during the accounting period.
B) Companies of similar size in different industries tend to have similar receivables
turnover ratios.
C) A high turnover ratio may suggest the company is allowing too much time for
customers to pay.
D) The days to collect ratio is found by dividing the receivables turnover ratio by 365
days.
A company entered into the following transactions during April.
A. Signed a lease and made a payment of $4,500 to the landlord comprised of the
current month's rent of $1,500 and the required $3,000 security deposit.
B. Purchased equipment on account for $35,000.
C. Purchased supplies for $6,500 on account.
D. Performed services and received cash of $57,000.
E. Performed services on account for $28,000.
F. Received a payment of $24,000 for services to be performed in the future.
G. Collected $14,000 from customers on account.
H. Paid employees $11,000 for work done during the month.
I. Made a $35,000 payment on account for equipment that was purchased above.
J. Made a payment of $6,500 on account for the supplies purchased above.
K. Received bills for the current month from telephone and electricity companies
totaling $3,800; payments will be made next month.
Required:
Prepare journal entries for the transactions set forth above.
Carrington Company uses the allowance method for recording bad debts. On February
1, Carrington wrote off a $3,500 customer account balance when it became clear that
the particular customer would never pay. On May 29, Carrington unexpectedly received
a check for $3,500 from the customer. On May 29, Carrington will:
A) Debit Cash and credit Bad Debt Expense for $3,500; debit Accounts Receivable and
credit Allowance for Doubtful Accounts for $3,500.
B) Debit Allowance for Doubtful Accounts and credit Accounts Receivable for $3,500;
debit Cash and credit Bad Debt Expense for $3,500.
C) Debit Accounts Receivable and credit Allowance for Doubtful Accounts for $3,500;
debit Cash and credit Accounts Receivable for $3,500.
D) Debit Allowance for Doubtful Accounts and credit Bad Debt Expense for $3,500;
debit Cash and credit Accounts Receivable for $3,500.
Accrued liabilities could include all of the following except:
A) Wages and Salaries Payable.
B) Current Portion of Long-Term Debt.
C) Income Tax Payable.
D) Interest Payable.
Engstrom Company makes a sale and collects a total of $378, which includes an 8%
sales tax. What is the amount that will be credited to the Sales Revenue account?
A) $378
B) $350
C) $406
D) $348
On March 1, Preston Corporation loans $3,000 to an employee and receives a 5%,
three-month note. Interest will be paid when the note matures on May 31. Assuming
that interest on the note has not previously been accrued, what entry will Preston make
on April 30?
A) Debit Interest Revenue and credit Interest Receivable $25
B) Debit Interest Receivable and credit Interest Revenue $25
C) Debit Interest Receivable and credit Interest Revenue $50
D) Debit Cash and credit Interest Revenue for $50
A company reported the following data:
Required:
Part a. Calculate the company's inventory turnover for each of the three years. (Round
your answers to two decimal points.)
Part b. Calculate the days to sell for each of the three years. (Round your answers to
one decimal point.)
Part c. Comment on the company's inventory turnover ratio by describing what it
measures, how the changes over the past three years can be interpreted, and what may
have caused those changes.
Part d. Comment on the company's days to sell by describing what it measures and how
the changes over the past three years can be interpreted.
Choose the appropriate term to match the term and the definition. Not all definitions
will be used.
Term:
1) _____ Corporation
2) _____ Par Value
3) _____ Growth Investment
4) _____ LLC
5) _____ Current Dividend Preference
6) _____ Partnership
7) _____ Market Value
8) _____ Income Investment
9) _____ Cumulative Dividend Preference
10) _____ Sole Proprietorship
Definition:
A. When preferred stockholders are paid dividends before other stockholders.
B. When stockholders prefer to receive dividends at the end of the year rather than each
quarter.
C. The current stock price.
D. A company that issues stock on one of the major stock exchanges.
E. An unincorporated business that is owned by a single individual.
F. A stock that is currently selling for its original issue price.
G. A company that has a separate legal identity from its owners.
H. When companies are obligated to pay preferred stockholders past dividends not yet
distributed before paying dividends to owners of common stock.
I. The nominal value per share of stock set by the company's charter.
J. Stock of companies that tend to reinvest earnings to provide for greater future sales
and profits.
K. A company that is like a partnership in nature except that it has limited liability.
L. Stock of companies that tend to pay relatively high dividends compared to the stock
price.
M. An unincorporated business owned by two or more individuals.
Cash flows from investing activities include all of the following except a(n):
A) purchase of an automobile.
B) sale of a trademark.
C) purchase of stock of another company.
D) issuance of bonds.
Which of the following statements about financial statements and the trial balance is
correct?
A) Financial statements are prepared only after the adjusted trial balance has shown that
debits equal credits.
B) A post-closing trial balance should be prepared before temporary accounts are
closed.
C) An adjusted trial balance reflects the amount of Retained Earnings to be shown on
the Balance Sheet.
D) A post-closing trial balance lists the account balances of the accounts that are
reported the income statement.
Use the information above to answer the following question. How much financing did
the stockholders of Purrfect Pets, Inc. directly contribute to the company?
A) $117,900.
B) $662,100.
C) $780,000.
D) $1,398,100.
