ACC250 Final
An asset was purchased for $33,000 on January 1, 2019. The asset's estimated useful life was five years, and its residual value was $4,000. The straight-line method of depreciation was used. Calculate the gain or loss if the asset is sold for $26,000 on December 31, 2019, the last day of the accounting period.
$1,200 loss
Get Away Vacations signed a 14%, 10-year note for $157,000. The company paid an installment of $2,100 for the first month. What portion of the first monthly payment is interest expense?
$1,832
Get Away Vacations signed a 14%, 10-year note for $157,000. The company paid an installment of $2,100 for the first month. What portion of the first monthly payment is interest expense? (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)
$1,832
Tony's gross pay for the month is $2,700. Tony's deduction for federal income tax is based on a rate of 21%. Tony has no voluntary deductions. Tony's year-to-date pay is under the limit for OASDI. What is the amount of FICA tax withheld from Tony's pay? (Assume a FICA—OASDI Tax of 6.2% and FICA—Medicare Tax of 1.45%. Do not round any intermediate calculations, and round your final answer to the nearest cent.)
$206.55
The cost of an asset is $1,110,000, and its residual value is $110,000. Estimated useful life of the asset is eight years. Calculate depreciation for the second year using the double-declining-balance method of depreciation. (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)
$208,125
On August 14, Park Avenue Bank lent $210,000 to City Coffee Shop on a 75 day, 4% note. What is the maturity value of the note? (365 day year)
$211,726 Principal x (1 + Rate x Time) = Maturity Value
On January 1, 2018, Waller Sales issued $30,000 in bonds for $23,300. These are eight-year bonds with a stated rate of 11%, and pay semiannual interest. Waller Sales uses the straight-line method to amortize the bond discount. After the second interest payment on December 31, 2018, what is the bond carrying amount? (Round your intermediate answers to the nearest cent, and your final answer to the nearest dollar.)
$24,138
The cost of an asset is $1,090,000, and its residual value is $300,000. Estimated useful life of the asset is eight years. Calculate depreciation for the first year using the double-declining-balance method of depreciation. (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)
$272,500
Under the direct write-off method, which of the following is included in the entry to write off an uncollectible account? A. a credit to the customer's Account Receivable B. a debit to Allowance for Uncollectible Accounts C. a credit to the Allowance for Bad Debts D. No entry is made to write off uncollectible accounts.
A. a credit to the customer's Account Receivable
For the year ended December 31, 2019, Davidson Mart had sales of $800,000 and cost of goods sold of $600,000. Davidson estimates that approximately 2% of the merchandise sold will be returned. The adjusting journal entry on December 31, 2019, would include a _______. A. credit to Refunds Payable for $16,000 B. credit to Estmated Returns Inventory for $12,000 C. debit to Sales Revenue for $4,000 D. debit to Cost of Goods Sold for $12,000
A. credit to Refunds Payable for $16,000
Lack of mutual agency is best described as which of the following? A. Shares of stock can be readily purchased and sold by investors on an organized stock exchange. B. Stockholders are not authorized to sign contracts or make business commitments on behalf of the corporation. C. Corporations pay income tax on corporate earnings, and shareholders pay income tax on corporate dividends. D. The liabilities of the corporation cannot be extended to the personal assets of the stockholder.
B. Stockholders are not authorized to sign contracts or make business commitments on behalf of the corporation.
Lack of mutual agency is best described as which of the following? A. The liabilities of the corporation cannot be extended to the personal assets of the stockholder. B. Stockholders are not authorized to sign contracts or make business commitments on behalf of the corporation. C. Corporations pay income tax on corporate earnings, and shareholders pay income tax on corporate dividends. D. Shares of stock can be readily purchased and sold by investors on an organized stock exchange.
B. Stockholders are not authorized to sign contracts or make business commitments on behalf of the corporation.
Which of the following items should be amortized? A. tangible property, plant, and equipment, other than land B. patents, copyrights, trademarks C. goodwill D. natural resources
B. patents, copyrights, trademarks
Property, plant, and equipment are ________. A. either tangible or intangible assets B. easily converted to cash C. also called fixed or plant assets D. presented in order of the category name, with Land being presented last
C. also called fixed or plant assets
The Golden Company issues $539,000 of 7%, 10-year bonds at 104 on March 31, 2019. The bonds pay interest on March 31 and September 30. Assume that the company uses the straight-line method for amortization. The journal entry to record the issuance includes a: A. debit to Cash for $539,000 B. debit to Premium on Bonds Payable for $21,560 C. debit to Cash for $560,560 D. credit to Bonds Payable for $560,560
C. debit to Cash for $560,560
The materiality concept states that a company must ________. A. report enough information for outsiders to make knowledgeable decisions about the company B. use the same accounting methods and procedures from period to period C. perform strictly proper accounting only for significant items D. report only such information that enhances the financial position of the company
C. perform strictly proper accounting only for significant items
Danube Company purchased a used machine for $12,000. The machine required installation costs of $3,000 and insurance while in transit of $1,500. At which of the following amounts would the machine be recorded? A. $12,000 B. $13,500 C. $16,500 D. $15,000
C. $16,500
Wilson Furniture Company is a sole proprietorship. Wilson contributed $40,000 of cash in exchange for capital. Which of the following accounts will be debited? A. Wilson, Capital B. Accounts Receivable C. Accounts Payable D. Cash
D. Cash
Bentley Corporation received cash from issuing 17,000 shares of common stock at par on January 1, 2018. The stock has a par value of $0.05 per share. Which is the correct journal entry to record this transaction? A. Cash is debited for $17,000, Common Stock—$0.05 Par Value is credited for $850, and Paid−In Capital in Excess of Par−Common credited for $16,150. B. Paid-In Capital in Excess of Par—Common is debited for $16,150, and Common Stock—$0.05 Par Value is credited for $16,150. C. Cash is credited for $17,000 and Common Stock—$0.05 Par Value is debited for $17,000. D. Cash is debited for $850, and Common Stock—$0.05 Par Value is credited for $850.
D. Cash is debited for $850, and Common Stock—$0.05 Par Value is credited for $850.
Which of the following represents a privilege granted by a government to use public property in performing services?
License
A contingency was evaluated at year-end and considered to have a remote possibility of becoming an actual liability. What effect would this have on the financial reporting of the company?
There would be no effect *REMOTE* = No effect
A creditor who has loaned money to a business has a claim to some of the assets of the business until the debt is paid. True or False?
True
Bad Debt Expense is not debited when a company writes off an account receivable when using the allowance method because the company has already recorded the Bad Debt Expense as an adjusting entry. True or False?
True
External auditors evaluate company controls to ensure the financial statements are presented fairly, in accordance with Generally Accepted Accounting Principles. True or False?
True
Freight in is recorded in the Merchandise Inventory account if the purchaser uses the perpetual inventory system. True or False?
True
Given the same purchase and sales data, and assuming the cost of inventory is rising, the costing methods for inventory will result in different amounts for net income True or False?
True
If a contingency that is probable can be reasonably estimated, a liability is recorded and an expense is accrued. True or False?
True
In a period of rising costs, the last-in, first-out (LIFO) method results in a higher cost of goods sold and a lower net income than the first-in, first-out (FIFO) method. True or False?
True
In computing the lower-of-cost-or-market, under IFRS, the market value is defined as the net realizable value, which is essentially the sales price. True or False?
True
In the closing process, the Owner, Withdrawals account is closed to the Owner, Capital account True or False?
True
Legal capital refers to the portion of stockholders' equity that cannot be used for dividends. True or False?
True
Ordinary repairs to plant assets are referred to as revenue expenditures. True or False?
True
Paid-In Capital is externally generated capital and results from transactions with outsiders True or False?
True
The environment is the culture of a business, and it starts with the CEO or CFO and the top managers True or False?
True
The matching principle requires businesses to record Warranty Expense when the warranty costs are incurred True or False?
True
The trial balance is an internal document used only by employees of the company True or False?
True
When using the allowance method, the receipt of a payment on receivables that have been written-off requires an entry to reverse the write-off to the Allowance for Bad Debts account and an entry to record the receipt of cash. True or False?
True
The expense for warranty costs is recorded in the period ________.
When the product is sold
Which of the following would be included in the journal entry to record the payment of sales tax payable?
a debit to Sales Tax Payable
A chart of accounts is used to
organize a company's accounts
Under the perpetual inventory system, when a seller grants a sales allowance
A credit memo is issued
Mars Company had cash sales of $10,000. The state sales tax rate is 10.8%. What amount is debited to the Cashaccount?
$11,080
Valley, Inc. has 9,000 shares of preferred stock outstanding. The preferred stock has a $90 par value, a 14% dividend rate, and is noncumulative. If Valley has sufficient funds to pay dividends, what is the total amount of dividends that will be paid out to preferred stockholders?
$113,400
Celebrate Holidays Company signed a 7%, 10-year note for $161,000. The company paid an installment of $2,500 for the first month. What portion of the first monthly payment is principal? (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)
$1561
If bonds with a face value of $209,000 are issued at 93, the amount of cash proceeds is ________.
$194,370
A company purchased 200 units for $30 each on January 31. It purchased 220 units for $33 each on February 28. It sold a total of 350 units for $45 each from March 1 through December 31. What is the cost of ending inventory on December 31 if the company uses the first-in, first-out (FIFO) inventory costing method? (Assume that the company uses a perpetual inventory system.)
$2,310
Global Enterprises Company signed a one-year $48,000 note payable at 8% interest on April 1, 2018. If Global only adjusts its accounts once a year at year-end, how much interest expense was accrued on December 31, 2018?(Round any intermediate calculations to two decimal places, and your final answer to the nearest whole number.)
$2,880
Springer Company, a sole proprietorship, had the following transactions in August: Earned $4,000 of revenues on account; collected $3,000 from a customer for services provided last month; incurred $800 of repair expense & paid cash; paid $200 for rent that it owed from the previous month. What is the net income in August?
$3200 Revenues-Expenses
Adkins Bakery uses the modified half-month convention to calculate depreciation expense in the year an asset is purchased or sold. Adkins has a calendar year accounting period and uses the straight-line method to compute depreciation expense. On March 17, 2018, Adkins acquired equipment at a cost of $200,000. The equipment has a residual value of $45,000 and an estimated useful life of 3 years. What amount of depreciation expense will be recorded for the year ending December 31, 2018? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)
$38,750
Dynamic Production Services started the year with total assets of $130,000 and total liabilities of $50,000. The company is a sole proprietorship. The revenues and the expenses for the year amounted to $100,000 and $60,000, respectively. During the year, there were no new capital contributions and the owner withdrew $45,000. CalculateDynamic's net income for the year.
$40,000
Dynamic Production Services started the year with total assets of $130,000 and total liabilities of $50,000. The company is a sole proprietorship. The revenues and the expenses for the year amounted to $100,000 and $60,000, respectively. During the year, there were no new capital contributions and the owner withdrew $45,000. CalculateDynamic's net income for the year.
$40,000 Revenues - Expenses = Net Income
On July 7, University Bank lent $530,000 to Jazz Music Shop on a 60 day, 7% note. What is the maturity value of thenote? (Use a 365minus−day year. Do not round intermediate calculations, and round your final answer to the nearestdollar.)
$536,099
On June 30, 2018, Clooney Printers purchased a printer for $60,000. Expects printer to last 4 years with a residual value of $9,000. Compute depreciation expense for the year ended December 31, 2018, using the straight-line method.
$6,375 (Asset Cost - Residual Value) / Useful life of the asset
Jupiter Co. signed a one-year $36,000 note payable at 8% interest on March 1, 2019. How much interest expense must be accrued on May 31, 2019?
$720
Barron Company sold goods for $883,500 on account. The company operates in a state that imposes a 9% sales tax. What is the amount of the sales tax payable to the state?
$79,515
On January 1, 2018, Ling Services issued $168,000 of six-year, 12% bonds when the market interest rate was 11%. The issue price of the bonds was $177,110. Ling uses the effective-interest method to amortize the bond premium. Semiannual interest payments are made on June 30 and December 31 of each year. How much interest expense will be recorded when the first interest payment is made? (Round the final answer to the nearest dollar.)
$9741
Assume the following information for Western Sales, Inc.: *Common Stock, $1.00 par, 238,000 shares issued, 189,000 shares outstanding *Paid-In Capital in Excess of Par--Common: $1,780,000 *Retained Earnings: $2,500,000 *Treasury Stock: 49,000 shares purchased at $20 per share If Western Sales purchases an additional 12,000 shares of treasury stock at $22 per share, what number of shares will be shown as issued and outstanding?
238,000 issued; 177,000 outstanding
A business purchases equipment with $8,000 cash. Which of the following accounts is debited? A. Equipment B. Accounts Payable C. Cash D. Smith, Capital
A. Equipment
On a multi-step income statement, which of the following is added to operating income to arrive at net income? A. Sales discounts forfeited B. Sales Revenue C. Interest expense D. Operating expenses
A. Sales discounts forfeited
Revenue is earned when: A. The business has received cash from the customer B. (or as) the business satisfies each performance obligation C. the journal entry to record revenue has been prepared D. There is a binding agreement to provide goods or services
B. (or as) the business satisfies each performance obligation
Which of the following describes the risk assessment component of internal control? A. Risk assessment is designed to ensure that the business's goals are achieved. B. A company must identify its risks and take necessary steps to minimize them. C. Internal auditors monitor company controls to safeguard assets, and external auditors monitor the controls to ensure that the accounting records are accurate. D. Risk assessment is the "tone at the top" of the business.
B. A company must identify its risks and take necessary steps to minimize them.
Which of the following is used by both internal and external users? A. Chart of Accounts B. Balance Sheet C. Costing Reports D. Trial Balance
B. Balance Sheet
Which of the following is the most liquid asset? A. Accounts Receivable B. Cash C. Prepaid Expenses D. Building
B. Cash
Which of the following is an attribute of the internal control componentlong dash—monitoring of controls? A. Monitoring of controls deals with identification and assessment of business risks. B. Internal auditors monitor company controls to safeguard assets, and external auditors evaluate the controls to ensure that the accounting records are accurate. C. Monitoring of controls is designed to ensure that the business's goals are achieved. D. Monitoring of controls is the "tone at the top" of the business.
B. Internal auditors monitor company controls to safeguard assets, and external auditors evaluate the controls to ensure that the accounting records are accurate.
Which of the following is true of a contingent liability? A. It is a liability resulting from a lawsuit settled in court. B. It is a potential liability that depends on a future event. C. It is an actual liability that depends on a past event. D. It is an actual liability that is difficult to estimate.
B. It is a potential liability that depends on a future event.
The Statement of Owner's Equity lists the Capital amount at the beginning of the period + _________ + _________ - __________ = Capital account balance at the end of the period
Beginning Capital + Owner Contributions + Net Income - Withdrawals = Ending Capital Ending Capital used in balance sheet
When a plant asset is disposed of, the business must ________.
Bring the depreciation up to date
Which of the following statements is true of the Owner, Capital account? A. It is a liability account that has a normal credit balance. B. It is a liability account that has a normal debit balance. C. It is an equity account that has a normal credit balance. D. It is an equity account that has a normal debit balance.
C. It is an equity account that has a normal credit balance.
The goal of reporting realistic figures and never overstating assets or net income applies to the ________.
Conservatism principle
Assets that are expected to be converted to cash, sold, or used up during the next 12 months, or within the business's normal operating cycle if the cycle is longer than a year, are called _____ assets
Current
Which of the following is the correct order of subtotals that appear on a multi-step income statement? A. Operating income, Gross profit, Net income B. Gross profit, Net sales revenue, Net income C. Net income, Operating income, Net income D. Gross profit, Operating income, Net income
D. Gross profit, Operating income, Net income
Which of the following statements regarding vacation benefits is correct? A. When an employee takes a paid vacation, the account, Vacation Benefits Payable is credited. B. The account, Vacation Expense is debited when the employee takes a paid vacation. C. No entry is needed until the employee takes a paid vacation. D. Health and pension benefits are recorded in the same manner as vacation benefits.
D. Health and pension benefits are recorded in the same manner as vacation benefits.
The cash basis of accounting ignores ________. A. expenses B. revenue C. cash D. payables
D. payables
Which of the following assumes that the financial statements of a business can be prepared for specific periods? A. revenue recognition principle B. matching principle C. adjusting entry principle D. time period concept
D. time period concept
A corporation issues 16,000 shares of its $3 stated value common shares. The issue price is $9 per share. The credit to the Common Stock account is $144,000. True or False?
False
Accounting for stated value common stock is identical to accounting for par value stock True or False?
False
As a part of the closing process, revenues and expenses may be closed to a temporary account called the Net Income(Loss). True or False?
False
The income tax column in a payroll register includes the tax owed by the proprietor. True or False?
False
On the balance sheet, Merchandise Inventory is listed about Accounts Receivable. True or False?
False Accounts Receivable is listed above Merchandise Inventory
The percent-of-sales method, used to compute bad debt expense, is also known as the balance sheet approach
False Aging method is also known as the balance sheet approach
If a plant asset is sold for more than its book value, a loss is recorded True or False?
False If a plant asset is sold for more than its book value, a gain is recorded Sold for less than book value, loss is recorded
________ represents a debt owed for renting a building.
Rent Payable
The Income Statement lists:
Revenues and Expenses = Net Income Net Income is then listed in statement of owner's equity
A pharmaceutical company testing drugs to determine possible side effects is a part of
Risk assessment
The Owner, Capital account is a(n) ________ account that has a normal _____ balance
The Owner, Capital account is an equity account that has a normal credit balance
A ledger is a record holding
all the accounts of a business, the changes in those accounts, & their balances
The economic resources of a business such as furniture, building, & land are its
assets
The Balance Sheet lists:
assets, liabilities, owner's equity
Gross profit is calculated as the difference between net sales revenue and ________.
cost of goods sold
