Use the following worksheet to answer the following questions.
Based on the preceding trial balance, the entry to close income summary would be:
A.debit C. Finley, Capital $50,000; credit Income Summary $50,000
B.debit Income Summary $155,000; credit C. Finley, Capital $155,000
C.debit Income Summary $50,000, credit C. Finley, Capital $50,000
D.debit C. Finley, Capital $9,000; credit Income Summary $9,000
Answer:
At the end of the current year, Accounts Receivable has a balance of $675,000;
Allowance for Doubtful Accounts has a debit balance of $5,400; and net sales for the
year total $3,000,000. An analysis of receivables indicates the uncollectible receivables
are estimated to be $45,000.
Determine (a) the amount of the adjusting entry for bad debt expense; (b) the adjusted
balances of Accounts Receivable, Allowance of Doubtful Accounts; and Bad Debt
Expense; and (c) the net realizable value of accounts receivable.
Answer:
A corporation issues for cash $10,000,000 of 8%, 30-year bonds, interest payable
annually, at a time when the market rate of interest is 9%. The straight-line method is
adopted for the amortization of bond discount or premium. Which of the following
statements is true?
A.The amount of annual interest paid to bondholders remains the same over the life of
the bonds.
B.The amount of annual interest expense decreases as the bonds approach maturity.
C.The amount of annual interest paid to bondholders increases over the 30-year life of
the bonds.
D.The carrying amount decreases from its amount at issuance date to $10,000,000 at
maturity.
Answer:
Which of the following represents the factory overhead applied to a product?
A.Predetermined factory overhead rate times estimated activity base.
B.Actual factory overhead rate times estimated activity base.
C.Predetermined factory overhead rate times actual activity base.
D.Actual factory overhead rate times actual activity base.
Answer:
Derek Company gathered the following reconciling information in preparing its
September bank reconciliation:
A.$5,150.
B.$3,710.
C.$3,060.
D.$1,610.
Answer:
The proper journal entry to record the purchase of $30,000 of raw materials on account
would be:
A.Raw Material Inventory 30,000
Accounts Receivable 30,000
B.Raw Material Inventory 30,000
Accounts Payable 30,000
C.Inventory 30,000
Accounts Receivable 30,000
D.Inventory 30,000
Cash 30,000
Answer:
The basis for recording direct and indirect labor costs incurred is a summary of the
period’s:
A.job order cost sheets
B.time tickets
C.employees’ earnings records
D.clock cards
Answer:
The following information has been condensed from the December 31 balance sheets of
Hanson Co.:
(a) Determine the ratio of fixed assets to long-term liabilities for 2012 and 2011.
(b) Determine the ratio of liabilities to stockholders’ equity for 2012 and 2011.
(c) Comment on the year-to-year changes for both ratios.
Round your answers to two decimal place.
Answer:
Consider the cash account below.
Additional Information: cash disbursements were 80% of collections.
How much was the Beginning Balance of the Cash Account?
A.$57,200
B.$92,300
C.$103,350
D.$35,100
Answer:
a) The aging of Torme Designs shown below. Calculate the amount of each periodicity
range that is deemed to be uncollectible.
b) If the Allowance for Doubtful Accounts has a credit balance of $1,135.00, record the
adjusting entry for the bad debt expense for the year.
Answer:
Determine the total value of the merchandise using Net Realizable Value:
A.$35
B.$80
C.$115
D.$25
Answer:
The comparative balance sheet of Barry Company, for 2011 and the preceding year
ended December 31, 2010, appears below in condensed form:
Additional data for the current year are as follows:
(a) Net income, $75,800.
(b) Depreciation reported on income statement, $38,000.
(c) Fully depreciated equipment costing $60,000 was scrapped, no salvage, and
equipment was purchased for $150,000.
(d) Bonds payable for $75,000 were retired by payment at their face amount.
(e) 2,500 shares of common stock were issued at $30 for cash.
(f) Cash dividends declared and paid, $40,000.
(g) Investments of $100,000 were sold for $125,000.
Prepare a statement of cash flows using the indirect method.
Answer:
The amount of federal income taxes withheld from an employee’s gross pay is recorded
as a(n)
A.payroll expense
B.contra account
C.asset
D.liability
Answer:
Hampton Co. took a physical count of its inventory on December 31. In addition, it had
to decide whether or not the following items should be added to this count.
(a) Merchandise on hand had been sold earlier in the year but had been returned by
customers for various warranty repairs.
(b) Hampton Co. sent merchandise on a consignment basis on December 31 just prior to
the physical count.
(c) On December 22, Hampton Co. ordered merchandise on FOB destination terms. The
merchandise was shipped by the supplier on December 30 but had not been received by
December 31.
(d) On December 27, Hampton Co. ordered merchandise on FOB shipping point terms.
The merchandise was shipped on December 29 but had not been received by December
31.
(e) Merchandise sold FOB shipping point on December 31 was picked up by the freight
company just before closing on December 31.
(f) Merchandise shipped to a customer FOB destination was picked up by the freight
company on December 28 but had not arrived at its destination as of December 31.
Indicate which items should be added to (
Answer:
If $1,000,000 of 8% bonds are issued at 105, the amount of cash received from the sale
is
A.$1,080,000
B.$950,000
C.$1,000,000
D.$1,050,000
Answer:
A cost that will not be affected by later decisions is termed a(n):
A.period cost
B.differential cost
C.sunk cost
D.replacement cost
Answer:
Accrued revenues would appear on the balance sheet as
A.assets
B.liabilities
C.capital
D.prepaid expenses
Answer:
For the year ending December 31, 2010, Nathan Clinical Supplies Co. mistakenly
omitted adjusting entries for (1) $8,900 of unearned revenue that was earned, (2) earned
revenue that was not billed of $10,200, and (3) accrued wages of $7,000. Indicate the
combined effect of the errors on (a) revenues, (b) expenses, and (c) net income for
2010.
Answer:
The best measure of managerial efficiency in the use of investments in assets is:
A.rate of return on stockholders’ equity
B.investment turnover
C.income from operations
D.inventory turnover
Answer:
If fixed costs increased and variable costs per unit decreased, the break-even point
would:
A.increase
B.decrease
C.remain the same
D.cannot be determined from the data provided
Answer:
When the corporation issuing the bonds has the right to repurchase the bonds prior to
the maturity date for a specific price, the bonds are
A.convertible bonds
B.unsecured bonds
C.debenture bonds
D.callable bonds
Answer:
Tanya Inc.’s static budget for 10,000 units of production includes $60,000 for direct
materials, $44,000 for direct labor, fixed utilities costs of $5,000, and supervisor
salaries of $20,000. A flexible budget for 12,000 units of production would show:
A.the same cost structure in total
B.direct materials of $72,000, direct labor of $52,800, utilities of $5,000, and supervisor
salaries of $20,000
C.total variable costs of $154,800
D.direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and
supervisor salaries of $20,000
Answer:
Production and sales estimates for June are as follows:
The number of units expected to be manufactured in June is:
A.10,000
B.11,500
C.14,500
D.12,500
Answer:
When management seeks to achieve personal departmental objectives that may work to
the detriment of the entire company, the manager is experiencing:
A.budgetary slack
B.padding
C.goal conflict
D.cushions
Answer:
On November 15th, Great Designs Company purchased an advertising campaign for the
month of December. Great Designs paid cash of $2,700 in advance. The advertising
campaign ran in December.
(a) Prepare all necessary journal entries for the advertising campaign for November and
December .
(b) Explain why you prepared this/these journal entries.
Answer:
On December 31, Strike Company has decided to discard one of its batting cages. The
initial cost of the equipment was $310,000 with an accumulated depreciation of
$260,000. Depreciation has been taken up to the end of the year. The following will be
included in the entry to record the disposal.
A.Accumulated Depreciation Dr. $310,000
B.Loss on Disposal of Asset Dr. $260,000
C.Equipment Cr. $310,000
D.Gain on Disposal of Asset Cr. $50,000
Answer:
The adjusting entry to record the amortization of a discount on bonds payable is
A.debit Discount on Bonds Payable, credit Interest Expense
B.debit Interest Expense, credit Discount on Bonds Payable
C.debit Interest Expense, credit Cash
D.debit Bonds Payable, credit Interest Expense
Answer:
From the following list of accounts taken from Lamar’s accounting records, identify
those that would appear on the Income Statement.
(a) Rent Expense
(b) Land
(c) Capital
(d) Fees Earned
(e) Withdrawal
(f) Wages Expense
(g) Investment
(
Answer:
When the market rate of interest on bonds is higher than the contract rate, the bonds
will sell at
A.a premium
B.their face value
C.their maturity value
D.a discount
Answer:
Paul and Roger are partners who share income in the ratio of 3:2. Their capital balances
are $90,000 and $130,000 respectively. Income Summary has a credit balance of
$50,000. What is Roger’s capital balance after closing Income Summary to Capital?
A.$155,000
B.$150,000
C.$110,000
D.$115,000
Answer:
A manufacturing company applies factory overhead based on direct labor hours. At the
beginning of the year, it estimated that factory overhead costs would be $360,000 and
direct labor hours would be 30,000. Actual manufacturing overhead costs incurred were
$377,200, and actual direct labor hours were 36,000. What is the predetermined
overhead rate per direct labor hour?
A.$12.00
B.$10.00
C.$12.57
D.$10.48
Answer:
Marcye Co. manufactures office furniture. During the most productive month of the
year, 3,500 desks were manufactured at a total cost of $84,400. In its slowest month, the
company made 1,100 desks at a cost of $46,000. Using the high-low method of cost
estimation, total fixed costs are:
A.$56,000
B.$28,400
C.$17,600
D.cannot be determined from the data given
Answer: