1) The balance in Premium on Bonds Payable should be reported as a deduction from
Bonds Payable on the balance sheet.
2) Any difference between the fair market values of the securities and their cost is a
realized gain or loss.
3) When an account receivable that has been written off is subsequently collected, the
account receivable is said to be reinstated.
4) A staff department has no direct authority over a line department.
5) A remittance advice is the notification accompanying the check issued to a creditor
that states the specific invoice being paid.
6) The direct method of preparing the operating activities section of the statement of
cash flows reports major classes of gross cash receipts and gross cash payments.
7) In net present value analysis for a proposed capital investment, the expected future
net cash flows are averaged and then reduced to their present values.
8) A cost object indicates how costs are related or identified.
9) Amounts withheld from each employee for Social Security and Medicare varies by
state.
10) After a bank reconciliation is completed, adjusting entries are prepared for items in
the balance per company’s records as well as items in the balance per bank statement.
11) The recording of cash payments from the cash account is done by entering the
amount as a credit.
12) Dickerson Co. is evaluating a project requiring a capital expenditure of $810,000.
The project has an estimated life of four years and no salvage value. The estimated net
income and net cash flow from the project are as follows:
The company’s minimum desired rate of return is 12%. The present value of $1 at
compound interest of 12% for 1, 2, 3, and 4 years is .893, .797, .712, and .636,
respectively.
13) Greyson Company produced 8,300 units of their product that required 4.25 standard
hours per unit. Determine the standard fixed overhead cost per unit at 27,000 hours,
which is 100% of normal capacity, if the favorable fixed factory overhead volume
variance is $14,895.
14) Name and describe the four primary financial statements for a corporation.
15) Lamar Corporation purchased land for $150,000. Later in the year the company
sold land with a book value of $190,000 for $200,000. Show how the effects of these
transactions are reported on the statement of cash flows using the indirect method.
16) Prepare an amortization schedule for the 1st 2 years (effective method) using the
following data:
1> On January 1, 2010, ABC Co. issued $2,000,000, 5%, 10 year bonds, interest
payable on June 30th and December 31st to yield 6%. Use the following format and
round to nearest dollar (may have small rounding error). The bonds were issued for
$1,851,234.
2> Show how this bond would be reported on the balance sheet at 12/31/11.