Given the data below for a firm in its first year of operation, determine net income
under the accrual basis of accounting.
a.$8,750
b.$11,000
c.$6,500
d.$9,200
Use the following information regarding Black Company and Red Company to answer
the question “Which of the following is Black Company’s “cost of goods sold” for 2013
(to the closest dollar)?”
a.$300,830
b.$281,838
c.$319,823
d.$320,946
The following totals for the month of April were taken from the payroll records of Noll
Company.
The entry to record accrual of employer’s payroll taxes would include a
a.debit to Payroll Tax Expense for $1,240.
b.debit to Payroll Tax Expense for $5,830.
c.credit to FICA Taxes Payable for $9,180.
d.credit to Payroll Tax Expense for $1,240.
Ryan, Inc. purchased a delivery truck with a $42,000 list price. The company was given
a $4,200 cash discount by the dealer, and paid $2,100 sales tax. Annual insurance on the
truck is $1,050. As a result of the purchase, by how much will Ryan, Inc. increase its
truck account?
a.$42,000.
b.$37,800.
c.$40,950.
d.$39,900.
A plant asset acquired on October 1, 2014, at a cost of $800,000 has an estimated useful
life of 10 years. The salvage value is estimated to be $50,000 at the end of the asset’s
useful life.
Instructions
Determine the depreciation expense for the first two years using the:
(a)straight-line method.
(b)double-declining-balance method.
Casin Company sells $700 of merchandise on account to Delta Exploration with credit
terms of 2/10, n/30. If Delta Exploration remits a check taking advantage of the
discount offered, what is the amount of Delta Exploration’s check?
a.$490
b.$686
c.$630
d.$560
The accounts receivable turnover
a.Is computed by dividing net credit sales for the accounting period by the cash
realizable value of accounts receivable on the last day of the accounting period.
b.Can be used to compute the average collection period.
c.Is a method of evaluating the solvency of net accounts receivable.
d.Is only important to internal users of accounting information.
On January 1, 2014, Ermler Company, a calendar-year company, issued $1,000,000 of
notes payable, of which $250,000 is due on January 1 for each of the next four years.
The proper balance sheet presentation on December 31, 2014, is
a.Current liabilities, $1,000,000.
b.Long-term debt , $1,000,000.
c.Current liabilities, $500,000; Long-term Debt, $500,000.
d.Current liabilities, $250,000; Long-term Debt, $750,000.
Aber Company sells merchandise on account for $1,800 to Borth Company with credit
terms of 2/10, n/30. Borth Company returns $300 of merchandise that was damaged,
along with a check to settle the account within the discount period. What is the amount
of the check?
a.$1,464
b.$1,476
c.$1,470
d.$1,350
Peterson Company billed its customers a total of $840,000 for the month of November.
The total includes a 5% state sales tax.
Instructions
(a)Determine the proper amount of revenue to report for the month.
(b)Prepare the general journal entry to record the revenue and related liabilities for the
month.
Automobile Audio has the following inventory data:
A physical count of merchandise inventory on November 30 reveals that there are 100
units on hand. Ending inventory under FIFO is
a.$438
b.$846
c.$421
d.$863
Alykhan Industries provided the following information for the month of February.
1)Balance per bank on February 28€$31,080
2)Balance per books on February 28€$32,210
3)Total outstanding checks at February 28€$2,100
4)Debit memoranda:
5)Credit memorandum: EFT from customer for $1,450
6)A check written this month to City Utilities and cleared the bank at the correct
amount of $1,790, but was recorded at $1,870.
7)The bank charged a $270 check of ABC Company against Alykhan Industries€
account.
8)Deposit in transit on February 28€$1,800
Instructions
A.Prepare a bank reconciliation in proper format.
B.Record the necessary journal entries for the month of February for Alykhan
Industries.
1) Bank Reconciliation
2) Journal Entries:
Financial information is presented below:
The gross profit rate would be
a..40
b..60
c..44
d..45
Financial information is presented below:
The gross profit rate would be
a..33
b..35
c..65
d..27
Railsback Company purchased a machine on January 1, 2014, at a cost of $72,000. The
machine is expected to have an estimated salvage value of $4,000 at the end of its
5-year life. The company capitalized the machine and depreciated it in 2014 using the
double-declining-balance method of depreciation. The company has a policy of using
the straight-line method to depreciate equipment but the company accountant neglected
to follow company policy when he used the double-declining-balance method. Net
income for the year ended December 31, 2014, was $45,000 before taxes as the result
of depreciating the machine incorrectly.
Instructions
Using the method of depreciation that the company normally follows, prepare the
correcting entry and determine the corrected net income for 2014. (Show
computations.)
Notification by the bank that a deposited customer check was returned NSF requires
that the company make the following adjusting entry:
For each of the ratios listed below, indicate by the appropriate code letter, whether it is a
liquidity ratio, a profitability ratio, or a solvency ratio.
____1)Price-earnings ratio
____2)Return on assets
____3)Accounts receivable turnover ratio
____4)Earnings per share
____5)Payout ratio
____6)Current cash debt coverage
____7)Current ratio
____8)Debt to assets ratio
____9)Free cash flow
____10)Inventory turnover
Discount on Bonds Payable is ________________ (€deducted from€ or €added to€)
bonds payable on the balance sheet. Premium on Bonds Payable is ________________
(€deducted from€ or €added to€) bonds payable on the balance sheet.
Finney had the following transactions during March 2012.
1)Finney sold and delivered $14,000 of merchandise to LJ Enterprises, terms 2/10, n30.
2)LJ Enterprises also ordered an additional $5,000 worth of goods on the last day of the
month.
3)Finney lent $1,000 to its company president who promised to repay the loan on the
15th day of the next month.
4)Finney sold old storage sheds to Alt Traders on 3/31. Alt Traders gave a $2,500
promissory note to Finney agreeing to pay for the sheds in 3 months.
5)Other current assets totaled $50,000.
Finney received no cash arising from the above transactions during March. Based only
on the above transactions, and ingnoring beginning balances, compute the percentage
Accounts Receivable is of the total current assets as of month end.
Use the following accounts and information to prepare, in good form, an income
statement and a retained earnings statement, for the month of August and a balance
sheet at August 31, 2014 for Pierce Industries.
Young Company lends Dobson industries $40,000 on August 1, 2014, accepting a
9-month, 12% interest note. If Young accrued interest at its December 31, 2014
year-end, what entry must it make to record the collection of the note and interest at its
maturity date?
Sunkan Company prepares monthly financial statements. Below are listed some
selected accounts and their balances on the September 30 trial balance before any
adjustments have been made for the month of September.
(Note: Debit column does not equal credit column because this is a partial listing of
selected account balances.)
An analysis of the account balances by the company’s accountant provided the
following additional information:
1>A physical count of office supplies revealed $1,000 on hand on September 30.
2>A two-year life insurance policy was purchased on June 1 for $4,800.
3>Office equipment depreciates $3,000 per year.
4>The amount of rent received in advance that remains unearned at September 30 is
$300.
Instructions:
Using the information given, prepare the adjusting entries that should be made by
Sunkan Company on September 30.
The following are selected accounts and balances from the records of Doran
Corporation on June 30, 2014.
Instructions
Prepare in proper form the stockholders’ equity section of the balance sheet.
The Entertainment Center accumulates the following cost and market data at December
31
What is the lower-of-cost-or-market value of the inventory?