ACC110 Final Exam

Who is responsible for the freight cost when the terms are FOB destination?

the seller

Free cash flow is a.cash flow from operations less cash used to purchase fixed assets to maintain productive capacity b.all cash in the bank c.cash from financing less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends d.cash from operations

A

How is treasury stock shown on the balance sheet? a.as a decrease in stockholders' equity b.treasury stock is not shown on the balance sheet c.as an increase in stockholders' equity d.as an asset

A

If the cost of an item of inventory is $52 and the current replacement cost is $65, the amount included in inventory according to the lower of cost or market is a.$52 b.$117 c.$13 d.$65

A

On October 1, Black Company receives a 8% interest-bearing note from Reese Company to settle a $21,800 account receivable. The note is due in six months. At December 31, Black should record interest revenue of a.$436 b.$433 c.$443 d.$446

A

On the statement of cash flows prepared by the indirect method, the cash flows from operating activities section would include a.amortization of premium on bonds payable b.receipts from the sale of investments c.receipts from the issuance of common stock d.payments for cash dividends

A

One of the main disadvantages of the corporate form is the a.double taxation of dividends b.charter c.requirement to stock d.inability to raise large amounts of capital

A

The Crafter Company has the following assets and liabilities: ASSETS Cash$28,000Accounts receivable 15,000 Inventory 20,000 Equipment 50,000 LIABILITIES Current portion of long-term debt10,000Accounts payable2,000Long-term debt25,000 Determine the quick ratio (rounded to one decimal point). a.3.6 b.3.3 c.5.3 d.2.3

A

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 10,000 were subsequently reacquired. What is the number of shares outstanding? a.30,000 b.40,000 c.50,000 d.10,000

A

The current period statement of cash flows includes the following: Cash balance at the beginning of the period$310,000Net cash flow from operating activities185,000Net cash flow used for investing activities43,000Net cash flow used for financing activities97,000 The cash balance at the end of the period is a.$355,000 b.$125,000 c.$635,000 d.$45,000

A

The current portion of long-term debt should a.be reclassified as a current liability b.be paid immediately c.not be separated from the long-term portion of debt d.be classified as a long-term liability

A

The date on which a cash dividend becomes a binding legal obligation is on the a.declaration date b.payment date c.last day of fiscal year d.date of record

A

The inventory method that assigns the most recent costs to cost of goods sold is a.LIFO b.FIFO c.specific identification d.weighted average

A

If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are

FOB shipping point

The journal entry to record the conversion of a $6,300 accounts payable to a note payable would be a.Accounts Payable 6,300 Notes Payable 6,300 b.Notes Receivable 6,300 Notes Payable 6,300 c.Cash 6,300 Notes Payable 6,300 d.Notes Payable 6,300 Cash 6,300

A

The units of an item available for sale during the year were as follows: January 10Inventory27 units @ $90February 27Purchase54 units @ $98July 11Purchase63 units @ $106November 13Purchase36 units @ $115 There are 50 units of the item in the physical inventory at December 31. The periodic inventory system is used. a. Determine the ending inventory cost by the first-in, first-out method. $fill in the blank 1 b. Determine the ending inventory cost by the last-in, first-out method.$fill in the blank 2 c. Determine the ending inventory cost by the average cost method.$fill in the blank 3

$5624 $4684 $5150

Dollar Co. sold merchandise to Pound Co. on account, $25,500, terms 2/15, net 45. Pound Co. paid the invoice within the discount period. What is the sales amount to be recorded in the above transactions?

24,990

A $220 petty cash fund has cash of $45 and receipts of $171. The journal entry to replenish the account would include a credit to a.Cash for $175. b.Cash for $45. c.Cash Short and Over for $4. d.Petty Cash for $216.

A

Cash paid for preferred stock dividends should be shown on the statement of cash flows under a.financing activities b.operating activities c.noncash investing and financing activities d.investing activities

A

For the year ended December 31, Depot Max's cost of goods sold was $56,900. Inventory at the beginning of the year was $6,540. Ending inventory was $7,250. Compute Depot Max's inventory turnover for the year. a.8.3 b.44.0 c.7.8 d.8.7

A

The number of days' sales in receivables a.is an estimate of the length of time the receivables have been outstanding b.is credit sales divided by average receivables c.measures the number of times the receivables turn over each year d.is not meaningful and therefore is not used

A

The par value per share of common stock represents the a.dollar amount assigned to each share b.minimum selling price of the stock established by the articles of incorporation c.minimum amount the stockholder will receive when the corporation is liquidated d.amount of dividends per share to be received each year

A

What is the major difference between a periodic and perpetual inventory system? a.Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the accounting period. b.Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory. c.Under the periodic inventory system, the purchase of inventory will be debited to the Purchases account. d.All of the answers are correct.

All of the answers are correct

Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases and indicate the ending balance in each case. a. Credit balance of $380 in Allowance for Doubtful Accounts just prior to adjustment. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $8,960. Amount added: Ending balance: b. Credit balance of $380 in Allowance for Doubtful Accounts just prior to adjustment. Bad debt expense is estimated at 1% of credit sales, which totaled $1,039,000 for the year. Amount added: Ending balance:

Amount added: 8,580 Ending Balance: 8,960 Amount added: 10,390 Ending Balance: 10,770

Cash paid to purchase long-term investments would be reported in the statement of cash flows in a.the cash flows from financing activities section b.the cash flows from investing activities section c.the cash flows from operating activities section d.a separate schedule

B

During a period of consistently rising prices, the method of inventory that will result in reporting the greatest cost of goods sold is a.average cost b.LIFO c.FIFO d.weighted average

B

Ending inventory is made up of the oldest purchases when a company uses a.average cost b.last-in, first-out c.retail method d.first-in, first-out

B

If a company values inventory at the lower of cost or market, which of the following is the value of inventory on the balance sheet? Apply the lower-of-cost-or-market method to inventory as a whole. item Inventory, Quantity Unit, Cost Price Unit Market Price Product C 420 $6 $5 Product D 370 $12 $14 a.$6,540 b.$6,960 c.$7,700 d.$7,280

B

If common stock is issued for an amount greater than par value, the excess should be credited to a.Retained Earnings b.Paid-In Capital in Excess of Par c.Cash d.Legal Capital

B

If inventory is being valued at cost and the price level is steadily rising, the method of costing that will yield the highest net income is a.periodic b.FIFO c.average cost d.LIFO

B

If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible? a.Accounts receivable b.Allowance for doubtful accounts c.Uncollectible accounts expense d.Interest expense

B

On July 8, Jones Inc. issued an $80,000, 6%, 120-day note payable to Miller Company. Assume that the fiscal year of Jones ends July 31. Using a 360-day year, what is the amount of interest expense recognized by Jones in the current fiscal year? When required, round your answer to the nearest dollar. a.$1,400 b.$307 c.$4,200 d.$700

B

Texas Inc. has 10,000 shares of 6%, $125 par value cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31. What is the annual dividend on the preferred stock? a.$60 per share b.$75,000 in total c.$10,000 in total d.$0.75 per share

B

The primary purpose of a stock split is to a.increase paid-in capital b.reduce the market price of the stock per share c.increase the market price of the stock per share d.increase retained earnings

B

Treasury stock shares are a.unissued shares that are held by the treasurer of the corporation b.issued shares that have been reacquired by a corporation c.part of the total outstanding shares but not part of the total issued shares of a corporation d.shares held by the U.S. Treasury Department

B

What is the type of account and normal balance of Allowance for Doubtful Accounts? a.asset, debit b.contra asset, credit c.contra asset, debit d.asset, credit

B

When a stock dividend is declared, which of the following accounts is credited? a.Retained Earnings b.Stock Dividends Distributable c.Common Sock d.Dividend Payable

B

When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when a.a sale is made b.management estimates the amount of uncollectibles c.a customer's account becomes past due d.an account becomes bad and is written off

B

Which of the following is the most desirable quick ratio? a.1.95 b.2.20 c.1.80 d.1.50

B

Assuming a 360-day year, when a $50,000, 90-day, 9% interest-bearing note payable matures, total payment will be a.$54,500 b.$1,125 c.$51,125 d.$4,500

C

Cash equivalents include a.stocks and short-term bonds b.coins and currency c.money market accounts and commercial paper d.checks

C

Earnings per share a.must be reported by public company b.is the earnings available to common shareholders c.all of the answers are correct d.helps compare companies of different sizes

C

If a company borrows money from a bank as an installment note, the interest portion of each annual payment will a.equal the interest rate on the note times the face amount b.remain constant over the term of the note c.equal the interest rate on the note times the carrying amount of the note at the beginning of the period d.increase over the term of the note

C

Taking a physical count of inventory a.is not necessary when a periodic inventory system is used b.has no internal control relevance c.should be done near year-end d.is not necessary when a perpetual inventory system is used

C

The accounts receivable turnover measures a.the fair market value of accounts receivable b.the number of days of accounts receivable outstanding c.how frequently during the year the accounts receivable are converted to cash d.the efficiency of the accounts payable function

C

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared? a.$20,000 b.$60,000 c.$100,000 d.$120,000

C

The journal entry a company uses to record the estimated product warranty liability expense is a.debit Product Warranty Payable; credit Product Warranty Expense b.debit Product Warranty Payable; credit Cash c.debit Product Warranty Expense; credit Product Warranty Payable d.debit Product Warranty Expense; credit Cash

C

Which of the following is a noncash investing and financing activity? a.payment of a six-month note payable b.purchase of inventory on account c.issuance of common stock to acquire land d.payment of a cash dividend

C

Which of the following taxes would be deducted in determining an employee's net pay? a.SUTA taxes b.FUTA taxes c.FICA taxes d.all are correct

C

Which one of the following would not be considered an advantage of the corporate form of organization? a.continuous life b.limited liability of stockholders c.government regulation d.separate legal existence

C

If the physical count of inventory revealed $158,000 of inventory on hand and the inventory records reported $163,000, what would be the necessary adjusting entry to record inventory shrinkage? a.debit Cost of Goods Sold, $163,000; credit Inventory, $158,000 b.debit Inventory, $5,000; credit Cost of Goods Sold, $5,000 c.debit Cost of Goods Sold, $5,000; credit Inventory, $5,000 d.debit Inventory, $158,000; credit Cost of Goods Sold, $158,000

C. debit Cost of Goods Sold, $5,000; credit Inventory, $5,000

Accompanying a bank statement for Marsh Land Properties is a credit memo for payment on a $15,000 1-year note receivable and $900 of interest collected by the bank. Marsh Land Properties had been notified by the bank at the time of collection, but had made no entries. Journalize the entry that should be made by Marsh Land to bring the accounting records up to date. If an amount box does not require an entry, leave it blank. Cash fill in the blank 2fill in the blank Notes Receivable fill in the blank Fill in the blank Interest Revenue fill in the blank

Cash- 15,900 Notes Receivable- 15,000 Interest Revenue- 900

A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows under a.noncash investing and financing activities b.operating activities c.financing activities d.investing activities

D

A ten-year bond was issued at par for $250,000 cash. This transaction should be shown on a statement of cash flows under a.investing activities b.noncash investing and financing activities c.operating activities d.financing activities

D

Cash dividends paid on common stock would be reported in the statement of cash flows in a.a separate schedule b.the cash flows from investing activities section c.the cash flows from operating activities section d.the cash flows from financing activities section

D

Hall Company sells merchandise with a one-year warranty. In the current year, sales consisted of 4,500 units. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in the current year and 70% in the next year. In the current year's income statement, Hall should show warranty expense of a.$31,500 b.$13,500 c.$0 d.$45,000

D

Martinez Co. borrowed $50,000 on March 1 of the current year by signing a 60-day, 9%, interest-bearing note. Assuming a 360-day year, when the note is paid on April 30, the entry to record the payment should include a a.credit to Cash for $50,000. b.credit to Cash for $54,500. c.debit to Interest Payable for $750. d.debit to Interest Expense for $750.

D

On January 1, Year 1, Zero Company obtained a $52,000, 4-year, 6.5% installment note from Regional Bank. The note requires annual payments of $15,179, beginning on December 31, Year 1. The December 31, Year 2 carrying amount in the allocation of periodic payments table for this installment note will be equal to a.$28,402 b.$21,642 c.$26,000 d.$27,635

D

The order of presentation of activities on the statement of cash flows is a.financing, investing, and operating b.operating, financing, and investing c.financing, operating, and investing d.operating, investing, and financing

D

Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited a.when a credit sale is past due b.at the end of each accounting period c.whenever a predetermined amount of credit sales have been made d.when an account is determined to be worthless

D

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a.preferred dividends declared and paid b.an increase in inventory c.a decrease in accounts payable d.a decrease in accounts receivable

D

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method? a.depreciation expense b.a loss on the sale of equipment c.dividends declared and paid d.gain on sale of land

D

Using the following information: The bank statement balance is $3,002. The cash account balance is $3,169. Outstanding checks amounted to $631. Deposits in transit are $691. The bank service charge is $98. A check for $38 for supplies was recorded as $29 in the ledger. Prepare a bank reconciliation for Miller Co. for August 31.

Miller Co.Bank ReconciliationAugust 31 Cash balance according to bank statement$3002 Adjustments: Deposits in transit not recorded by bank $691 Outstanding checks -631 Total adjustments-60 Adjusted balance$3062 Cash balance according to company's records$3169 Adjustments: Bank service charge $-98 Error in recording -9 Total adjustments-107 Adjusted balance$3062

Sampson Co. sold merchandise to Batson Co. on account, $25,400, terms 2/15, net 45. The cost of the goods sold is $19,050. The Batson Co. paid the invoice within the discount period. Assume both Sampson and Batson use a perpetual inventory system. If no entry is required, select "No entry required" and leave the amount boxes blank. Prepare the entries that Sampson Company would record for the information above. If an amount box does not require an entry, leave it blank.

Prepare the entries that Sampson Company would record for the information above. If an amount box does not require an entry, leave it blank. a.Accounts Receivable-Batson Co. 24892 Sales 24892 b.Cost of Goods Sold 19050 Inventory 19050 c.Cash 24892 Accounts Receivable-Batson Co. 24892 Prepare the entries that Batson Company would record for the information above. If an amount box does not require an entry, leave it blank. a.Inventory 24892 Accounts Payable-Sampson Co. 24892 b.No entry required No entry required c.Accounts Payable-Sampson Co. 24892 Cash 24892

Beginning inventory, purchases, and sales for an inventory item are as follows: Sep. 1Beginning Inventory24units@$155Sale15units17Purchase24units@$1830Sale18units Assuming a perpetual inventory system and the last-in, first-out method: a. Determine the cost of the goods sold for the September 30 sale.$fill in the blank 1 b. Determine the inventory on September 30.$fill in the blank 2

a. 324 b.243

Calculate the gross profit for Jefferson Company based on the following: Sales$764,000 Selling expenses42,500 Cost of goods sold538,000

a.$226,000

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 sales for the year total $3,000,000. An analysis of receivables indicates the uncollectible receivables are estimated to be $45,000. a. Determine the amount of the adjusting entry for bad debt expense: b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Adjusted Balance Accounts Receivable: Allowance for Doubtful Accounts: Bad Debt Expense: c. Determine the net realizable value of accounts receivable:

a.50,400 b.675,000 c. 45,000 d.50400 e. 630,000

At the end of the current year, Accounts Receivable has a balance of $133,740; Allowance for Doubtful Accounts has a debit balance of $3,748; and sales for the year total $1,075,000. Bad debt expense is estimated at 1/2 of 3% of sales. a. Determine the amount of the adjusting entry for bad debt expense: b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Adjusted Balance Accounts Receivable: Allowance for Doubtful Accounts: Bad Debt Expense: c. Determine the net realizable value of accounts receivable:

bad debt expense: 16,125 accounts receivable: 133,740 Allowance for doubtful accounts: 12,377 Bad debt expense: 16,125 Net realizable value:121,363

Using a perpetual inventory system, the entry to record the purchase of $30,000 of merchandise on account would include a

debit to inventory