Classic Floors has the following inventory data:
Assuming that a perpetual inventory system is used, what is the value of ending
inventory on a LIFO basis for July?
a.$465.60
b.$702.00
c.$354.00
d.$236.40
The interest charged on a $250,000 note payable, at the rate of 6%, on a 60-day note
would be
a.$15,000.
b.$7,500.
c.$3,750.
d.$2,500.
The Mac Company has four plants nationwide that cost $350 million. The current fair
value of the plants is $300 million. The plants will be reported as assets at
a.$350 million.
b.$700 million.
c.$300 million.
d.$600 million.
Which of the following items may cause the cash balance per bank to differ from the
cash balance per books?
a.Time lags and bank errors
b.Bank errors and the existence of multiple bank accounts
c.Time lags and the existence of multiple bank accounts
d.Existence of amounts not yet paid by customers and time lags
Delightful Discs 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 LIFO is
a.$438
b.$421
c.$846
d.$863
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 amount owed on the mortgage after the first payment will be
a.$2,520,000.
b.$2,517,900.
c.$2,499,000.
d.$2,496,900.
The Harris Company purchased equipment for $9,000 on December 1. It is estimated
that annual depreciation on the computer will be $1,800. If financial statements are to
be prepared on December 31, the company should make the following adjusting entry:
a.debit Depreciation Expense, $1,800; credit Accumulated Depreciation, $1,800.
b.debit Depreciation Expense, $150; credit Accumulated Depreciation, $150.
c.debit Depreciation Expense, $7,200; credit Accumulated Depreciation, $7,200.
d.debit Equipment, $9,000; credit Accumulated Depreciation, $9,000.
DeNova Real Estate signed a four-month note payable in the amount of $8,000 on
September 1. The note requires interest at an annual rate of 6%. The amount of interest
to be accrued at the end of September is:
a.$480.
b.$120.
c.$40.
d.$90.
What is the proper adjusting entry at June 30, the end of the fiscal year, based on a
prepaid insurance account balance before adjustment, 20,500, and unexpired amounts
per analysis of policies of 4,000?
a.Debit Insurance Expense, 4,000; Credit Prepaid Insurance, 4,000.
b.Debit Insurance Expense, 20,500; Credit Prepaid Insurance, 20,500.
c.Debit Prepaid Insurance, 16,500; Credit Insurance Expense, 16,500.
d.Debit Insurance Expense, 16,500; Credit Prepaid Insurance, 16,500.
A buyer borrows money at 6% interest to pay a $6,000 invoice with terms 1/10, n/30 on
the 10th day of the discount period. The loan is repaid on the 30th day of the invoice.
What is the buyer’s net savings for this total event?
a.$0
b.$40.00
c.$40.80
d.$80.00
The following totals for the month of March were taken from the payroll records of
Kern Company.
The journal entry to record the monthly payroll on March 30 would include a
a.debit to Salaries and Wages Payable for $34,074.
b.credit to Salaries and Wages Payable for $37,206.
c.debit to Salaries and Wages Expense for $54,000.
d.debit to Salaries and Wages Expense for $34,074.
Condensed financial data of Gorni Company appear below:
Additional information:
1)New plant assets costing $85,000 were purchased for cash in 2014.
2)Old plant assets costing $25,000 were sold for $5,000 cash when book value was
$13,000.
3)Bonds with a face value of $20,000 were converted into $20,000 of common stock.
4)A cash dividend of $24,000 was declared and paid during the year.
5)Accounts payable pertain to merchandise purchases.
Instructions
1)Prepare a statement of cash flows for the year using the direct method.
2)Compute the following cash basis ratios:
a.Current cash debt coverage
b.Cash debt coverage
M. Cornett is a corporation that sells breakfast cereal. Based on the accounts listed
below, what are M. Cornett’s total trade receivables?
a.$8,000
b.$10,000
c.$9,000
d.$10,900
Characteristics associated with faithfully representative accounting information are
a.verifiable and timely.
b.verifiable and neutral.
c.complete and neutral.
d.relevance and verifiable.
Information is _________ if independent measures, using the same methods, obtain
similar results.
a.Verifiable
b.Consistent
c.Understandable
d.Relevant
A $750,000 bond was retired at 103 when the carrying value of the bond was $777,500.
The entry to record the retirement would include a
a.gain on bond redemption of $22,500.
b.loss on bond redemption of $5,000.
c.loss on bond redemption of $22,500.
d.gain on bond redemption of $5,000.
Use the following information for Boxter, Inc., Clifford Company, Danforth Industries,
and Evans Services to answer the question “What is Danforth’s LIFO reserve for 2013?”
a.$535
b.$85
c.$42
d.$58
Elston Company compiled the following financial information as of December 31,
2014:
Elston’s stockholders’ equity on December 31, 2014 is
a.$525,000.
b.$550,000.
c.$400,000.
d.$600,000.
On January 1, Swanson Corporation had 80,000 ordinary shares with a 10 par value
outstanding. On March 17, the company declared a 15% share dividend to shareholders
of record on March 20. Market value of the shares was 13 on March 1 The entry to
record the transaction of March 17 would include a
a.credit to Cash Dividends for 36,000.
b.credit to Cash for 156,000.
c.credit to Ordinary Share Dividends Distributable for 120,000.
d.debit to Ordinary Share Dividends Distributable for 120,000.
The following information is provided for Nguyen Company and Northwest
Corporation.
If Nguyen and Northwest are in the same industry and the industry average for the asset
turnover ratio is equal to 1.20 times, which of the following statements is true?
a.Nguyen is operating more efficiently than the industry.
b.Northwest is operating more efficiently than Nguyen.
c.Both Nguyen and Northwest are operating more efficiently than the average company
in their industry.
d.The asset turnover ratio does not address the question of efficient operations.
The three accounts shown below appear in the general ledger of Hale Corp. during 2014
Instructions
From the postings in the accounts, indicate how the information is reported on a
statement of cash flows using the indirect method. The loss on sale equipment was
$7,000.
Manuel Company had cash sales of $86,800 (including taxes) for the month of June.
Sales are subject to 8.5% sales tax. Prepare the entry to record the sale.
Prepare year-end adjustments for the following transactions. Omit explanations.
1>Accrued interest on notes receivable is $30.
2>$1,000 of unearned service revenue has been recognized.
3>Three years’ rent, totaling $45,000, was paid in advance at the beginning of the year.
4>Services totaling $2,900 had been performed but not yet billed at the end of the year.
5>Depreciation on equipment totaled $6,500 for the year.
6>Supplies purchased totaled $850. By year end, only $250 of supplies remained.
7>Salaries owed to employees at the end of the year total $960
Instructions: Match the account titles given below with the appropriate balance sheet
classification. An individual classification may be used more than once, or not at all. An
account may also not appear in the balance sheet.
Match the items below by entering the appropriate code letter in the space provided.