The following totals for the month of March were taken from the payroll records of
Kern Company.
The entry to record the payment of net payroll would include a
a.debit to Salaries and Wages Expense for $34,074.
b.debit to Salaries and Wages Payable for $37,206.
c.debit to Salaries and Wages Payable for $34,074.
d.credit to Cash for $34,074.
If Lantz Company issues 5,000 shares of $5 par value common stock for $210,000, the
account
a.Common Stock will be credited for $25,000.
b.Paid-in Capital in Excess of Par Value will be credited for $25,000.
c.Paid-in Capital in Excess of Par Value will be credited for $210,000.
d.Cash will be debited for $185,000.
Which statement is incorrect?
a.The sales revenue account is used to record the sales of goods held for resale to
customers.
b.Sales discounts are recorded as debits to the sales revenue account.
c.The sales revenue account is a revenue account.
d.The sales revenue account has a normal credit balance and is closed at the end of the
accounting period.
A $200 petty cash fund has cash of $32 and receipts of $171. The journal entry to
replenish the account would include
a.debit to Cash for $171.
b.credit to Petty Cash for $171.
c.credit to Cash over and Short for $3.
d.credit to Cash for $171.
Presented below is information for 2014 and 2013 related to the operations of Zyr
Electronics.
Additional information:
a.In 2014, Zyr declared and paid a cash dividend of $17,200.
b.The company issued $35,000 of bonds at a discount for cash.
c.Equipment with a cost of $17,000 and a book value of $4,300 was sold for cash. New
equipment was acquired for cash.
d.The company issued stock for cash.
e.Prepaid expenses pertain to operating expenses; accounts payable is only used for
merchandise purchases.
Instructions:
Prepare a statement of cash flows in proper form for 2014, using the indirect method.
June4Deere Company purchased $3,500 worth of merchandise, terms n/30 from Gilbert
Company. The cost of the merchandise was $2,500.
Deere returned $600 worth of goods to Gilbert for full credit. The goods had a cost of
$400 to Johnson.
Deere paid the account in full.
Instructions
Prepare the journal entries to record these transactions in (a) Deere’s records and (b)
Gilbert’s records. Assume use of the periodic inventory system for both companies.
A company uses LIFO to cost its inventory. Which statement is true?
a.The company must sell its newer inventory items before its older items.
b.The company will pay less income taxes in periods of rising prices compared to using
FIFO.
c.The cost of the company€s older inventory items are transferred to cost of goods sold
prior to the cost of the newly acquired items.
d.One way to think about the ending inventory under LIFO is the LISH assumption.
Vickers Company uses the units-of-activity method in computing depreciation. A new
plant asset is purchased for $36,000 that will produce an estimated 100,000 units over
its useful life. Estimated salvage value at the end of its useful life is $3,000. What is the
depreciation cost per unit?
a.$3.30.
b.$3.60.
c.$0.33.
d.$0.36.
Which of the following is not a reason one set of international accounting standards are
needed?
a.Multinational corporation.
b.Financial markets.
c.Information technology.
d.All of these answer choices are reasons one set of international accounting standards
are needed.
James & Younger Corporation purchased a one-year insurance policy in January 2013
for $48,000. The insurance policy is in effect from March 2013 through February 2014.
If the company neglects to make the proper year-end adjustment for the expired
insurance:
a.net income and assets will be understated by $40,000.
b.net income and assets will be overstated by $40,000.
c.net income and assets will be understated by $8,000.
d.net income and assets will be overstated by $8,000.
Marsh Company purchased a factory building by issuing long-term notes payable. How
will Marsh report this purchase?
a.As a cash outflow in the financing section and a cash inflow in the investing activities
section of the statement of cash flows
b.As a cash outflow in the investing section of the statement of cash flows
c.As a cash outflow in the operating section of the statement of cash flows
d.As a significant noncash activity
When sales of merchandise are made for cash, the transaction may be recorded by the
following entry:
a.Debit Sales Revenue, credit Cash
b.Debit Cash, credit Sales Revenue
c.Debit Sales Revenue, credit Cash Discounts
d.Debit Sales Revenue, credit Sales Returns and Allowances
Oakville Inc. purchased a 12-month insurance policy on March 1, 2014 for $1,800. At
March 31, 2014, the adjusting journal entry to record expiration of this asset will
include:
a.a debit to Prepaid Insurance and a credit to Cash for $1,800.
b.a debit to Prepaid Insurance and a credit to Insurance Expense for $180.
c.a debit to Insurance Expense and a credit to Prepaid Insurance for $150.
d.a debit to Insurance Expense and a credit to Cash for $150.
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. What is the adjusting
entry required if Sadowski Brick Company prepares financial statements on June 30?
Mark’s Repair Service uses the straight-line method of depreciation. The company’s
fiscal year end is December 31. The following transactions and events occurred during
the first three years.
Instructions
Prepare the necessary entries. (Show computations.)
Listed below are items that may be useful in preparing the March 2014, bank
reconciliation for the Carrinton Machine Works.
Using the code letters below, insert in the space before each item the letter where the
amount would be located or otherwise treated in the bank reconciliation process.
Alpha Corporation is an established company and does not experience any financial
difficulties or have any cash flow problems. Discuss at least two items that are
questionable as long-term liabilities.
Instructions: Complete the requirements specified for each of the following
independent situations.
1)During 2013, Sunbolt Corporation incurred $120,000 of research and development
costs to produce a solar cell for motorcycles. It then paid filing fees of $6,800 to
register a patent on this product and $23,000 to an attorney who helped obtain the
patent. In late 2013 shortly before Sunbolt put the solar cell into production, it was sued
by another company claiming to own the rights to the patent. Sunbolt paid $40,700 to
defend the patent against infringement by the competitor and won the suit. Production
of solar computers began on January 1, 2014. The patent has a legal life of 20 years and
a useful life of 15 years. How much is patent amortization expense for 2014?
2)Super Tech Industries purchased Jones, Inc. on June 30, 2014 and recorded goodwill
of $62,000 on this purchase. The useful life of the goodwill is estimated to be 20 years.
How much is goodwill amortization expense for 2014?
Hobson Corporation had net sales for the year of $300,000 and average total assets of
$200,000. The asset turnover is ____________ times.
Faster Company uses the periodic inventory method and had the following inventory
information available:
A physical count of inventory on December 31 revealed that there were 55 units on
hand.
Instructions
Answer the following independent questions and show computations supporting your
answers.
1>Assume that the company uses the FIFO method. The value of the ending inventory
at December 31 is $__________.
2>Assume that the company uses the Average Cost method. The value of the ending
inventory on December 31 is $__________.
3>Assume that the company uses the LIFO method. The value of the ending inventory
on December 31 is $__________.
4>Assume that the company uses the FIFO method. The value of the cost of goods sold
at December 31 is $__________.
Cesar Ruiz was reviewing his company’s activities at the end of the year (2014) and
decided to prepare a retained earnings statement. At the beginning of the year his assets
were $530,000, liabilities were $140,000, and common stock was $120,000. The net
income for the year was $250,000. Dividends of $220,000 were paid during the year.
Prepare a retained earnings statement in good form.
On October 1, Sam’s Painting Service borrows $100,000 from National Bank on a
3-month, $100,000, 4% note. What entry must Sam’s Painting Service make on
December 31 before financial statements are prepared?