Marvin Services Corporation had the following accounts and balances:
If total stockholder’s equity was $57,000, what would be the balance of the Buildings
Account?
a.$21,000
b.$81,000
c.$87,000
d.$27,000
Given the following data for the King Company:
How would common stock appear on a common size balance sheet?
a.25%
b.58%
c.33%
d.30%
At May 1, 2014, Heineken Company had beginning inventory consisting of 200 units
with a unit cost of $7. During May, the company purchased inventory as follows:
400 units at $7
600 units at $8
The company sold 1,000 units during the month for $12 per unit. Heineken uses the
average cost method. Heineken’s gross profit for the month of May is
a.$4,500
b.$7,500
c.$9,000
d.$12,000
Advantage Company’s ending inventory is overstated by $2,000. What is the effect of
this error on the current year’s cost of goods sold and net income, respectively?
a.Overstated and understated
b.Overstated and overstated
c.Understated and overstated
d.Understated and understated
Which of the following is not considered a measure of liquidity?
a.Current ratio
b.Working capital
c.Debt to assets ratio
d.Each of these answer choices are liquidity measures
Molina Corporation issues 4,000, 10-year, 8%, $1,000 bonds dated January 1, 2014, at
103. The journal entry to record the issuance will show a
a.debit to Cash of $4,000,000.
b.debit to Premium on Bonds Payable for $120,000.
c.credit to Bonds Payable for $4,000,000.
d.credit to Cash for $4,120,000.
Gomez Corporation issues 600, 10-year, 8%, $1,000 bonds dated January 1, 2014, at
96. The journal entry to record the issuance will show a
a.debit to Cash of $600,000.
b.credit to Discount on Bonds Payable for $24,000.
c.credit to Bonds Payable for $576,000.
d.debit to Cash for $576,000.
Use the following information regarding Black Company and Red Company to answer
the question “Which amount is equal to Black Company’s “days in inventory” for 2014
(to the closest decimal place)?”
a.35.1 days
b.34.1 days
c.82.5 days
d.29.5 days
A $100 petty cash fund has cash of $16 and receipts of $86. The journal entry to
replenish the account would include a
a.debit to Cash for $84.
b.credit to Petty Cash for $84.
c.credit to Cash Over and Short for $2.
d.credit to Cash for $86.
Instructions: Complete the requirements specified for each of the following
independent situations.
1)On January 1, 2014, Wicker World issued bonds with a face value of $200,000. The
bonds carry a stated interest of 6% payable each January 1. Prepare the journal entry for
the issuance of the bonds if the bonds are issued at 98.5.
2)Strike Zone Fishing purchased $50,000 of its own bonds on June 30, 2014, at 101 and
immediately retired them. The carrying value of the bonds on the retirement date was
$51,500. The bonds pay semiannual interest and the interest payment due on June 30,
2014, has been made and recorded. Prepare the entry for the retirement of the bonds.
3)On April 1, the Mactors Company borrows $80,000 from New National Bank by
signing a 6-month, 5%, interest-bearing note.
(a)Prepare the entry on April 1 when the note was issued.
(b)Prepare any adjusting entries necessary on June 30 in order to prepare the
semiannual financial statements. Assume no other interest accrual entries have been
made.
Elston Company compiled the following financial information as of December 31,
2014:
Elston’s assets on December 31, 2014 are
a.$1,175,000.
b.$850,000.
c.$400,000.
d.$475,000.
Eight transactions are recorded in the following T-accounts:
Indicate for each debit and each credit: (a) whether an asset, liability, common stock,
dividends, revenue, or expense account was affected and (b) whether the account was
increased (+) or (-) decreased. Answers should be presented in the following chart form:
Using the following balance sheet and income statement data, what is the earnings per
share?
Average common shares outstanding was 10,000.
a.$3.90
b.$6.00
c.$2.10
d.$0.48
Ervay Company has $875,000 of bonds outstanding. The unamortized premium is
$12,600. If the company redeemed the bonds at 101, what would be the gain or loss on
the redemption?
a.$3,850 gain
b.$3,850 loss
c.$8,750 gain
d.$8,750 loss
Nance Corporation’s December 31, 2014 balance sheet showed the following:
Nance’s total stockholders’ equity was
a.$55,140,000.
b.$46,860,000.
c.$54,510,000.
d.$53,880,000.
Nicholson Company purchased equipment on January 1, 2012, for €28,000 with an
estimated residual value of €7,000 and estimated useful life of 8 years. On January 1,
2014, Nicholson decided the equipment will last 12 years from the date of purchase.
The residual value is still estimated at €7,000. Using the straight-line method the new
annual depreciation will be:
a.€1,575.
b.€1,750.
c.€2,100.
d.€2,333.
Beta Corporation had net income of $325,000 and paid dividends to common
stockholders of $50,000 in 2014. The weighted average number of shares outstanding in
2014 was 50,000 shares. Beta Corporation’s common stock is selling for $45.50 per
share on the New York Stock Exchange. Beta Corporation’s price-earnings ratio is
a.14.0 times.
b.7.0 times.
c.6.1 times.
d.8.3 times.
Thayer Company purchased a building on January 2 by signing a long-term $2,520,000
mortgage with monthly payments of $23,100. The mortgage carries an interest rate of
10 percent. The entry to record the mortgage will include a
a.debit to the Cash account for $2,520,000.
b.credit to the Cash account for $2,520,000.
c.debit to the Mortgage Payable account for $2,520,000.
d.credit to the Mortgage Payable account for $2,520,000.
The financial statements of Elcamino Company appear below:
Additional information:
a.Cash dividends of $50,000 were declared and paid on common stock in 2014.
b.Weighted-average number of shares of common stock outstanding during 2014 was
50,000 shares.
c.Market value of common stock on December 31, 2014, was $16 per share.
d.Net cash provided by operating activities for 2014 was $70,000.
Instructions
Using the financial statements and additional information, compute the following ratios
for the Lewis Company for 2012. Show all computations.
Redeker Company purchased equipment on January 1, 2013, for $90,000. It is
estimated that the equipment will have a $5,000 salvage value at the end of its 5-year
useful life. It is also estimated that the equipment will produce 100,000 units over its
5-year life.
Instructions
Answer the following independent questions.
1)Compute the amount of depreciation expense for the year ended December 31, 2013,
using the straight-line method of depreciation.
2)If 16,000 units of product are produced in 2013 and 24,000 units are produced in
2014, what is the book value of the equipment at December 31, 2014? The company
uses the units-of-activity depreciation method.
3)If the company uses the double-declining-balance method of depreciation, what is the
balance of the Accumulated Depreciation – Equipment account at December 31, 2015?
Moss County Bank agrees to lend the Sadowski Brick Company $300,000 on January
1. Sadowski Brick Company signs a $300,000, 6%, 9-month note. The entry made by
Sadowski Brick Company on January 1 to record the proceeds and issuance of the note
is
Assume that Mitchell Company uses a periodic inventory system and has these account
balances: Purchases $620,000; Purchase Returns and Allowances $25,000; Purchases
Discounts $11,000; and Freight-In $19,000; beginning inventory of $45,000; ending
inventory of $55,000; and net sales of $750,000. Determine the amounts to be reported
for cost of goods sold and gross profit.
The trial balance of Active Fitness shows the following balances for selected accounts
on November 30, 2014:
Instructions: Using the additional information given below, prepare the appropriate
monthly adjusting entries at November 30. Show computations.
1)Revenue earned for fitness center fees, but not yet billed, totaled $2,700 on
November 30.
2)The note payable is a 9%, 1-year note issued October 1, 2014.
3)The equipment was purchased on January 2, 2012. It has an estimated life of 8 years
and an estimated salvage value of $6,000. Active Fitness uses the straight-line
depreciation method.
4)An insurance policy was acquired on June 30, 2014; the premium paid for 1 year had
a cost of $15,000.
5)Active Fitness received $22,800 in advance on November 1, 2014, from customers
who paid for 3 months of prepaid fitness fees.
The ledger accounts given below, with an identification number for each, are used by
Quality Clean Depot.
Instructions: Indicate the appropriate entries for the month of July by placing the
appropriate identification number(s) in the debit and credit columns provided. Item 0 is
given as an example. Write “none” if no entry is appropriate.
