ACCT 2300 Final Exam Review

On the statement of cash​ flows, increases and decreases in​ long-term assets resulting from cash transactions are reported​ as:

investing activities.

Selling equipment for cash is reported on the statement of cash flows under

investing activities.

Bell Inc. buys some shares of stock of Borden Corporation. This transactions would be classified on Bell's Statement of Cash Flows as: A. investing cash inflow B. investing cash outflow C. financing cash inflow D. for financing cash outflow

investing cash outflow

The par value of a share of common stock

is stated in the charter.

The basic form of capital stock is

a share of common stock.

The Cone Corp. issues 20,000 shares of $10 par common stock for $16 per share. This transaction will result in additional paid-in capital for common stock of:

120,000

Photo Ease Camera Co. sold equipment with a cost of $18,000 and accumulated depreciation of $6,000 for an amount that resulted in a gain of $3,000. What amount should Photo Ease report on the statement of cash flows as "proceeds from sale of plant​assets"? > $18,000 - $6,000 = $12,000 > Cost - Accumulated depreciation = Book value > $12,000 + $3,000 = $15,000 > Book value + Gain on sale = Proceeds from sale

$15,000

On September 1, Tucker Inc. received $30,000 from a customer who would like Tucker to provide services evenly over the next five months. Using the revenue recognition principle, how much would Tucker record as revenue for the year from this job?

$24,000

In 2018​, Crowd Company repurchased its own stock at a cost of $53,000. During the​ year, the company purchased land with cash for $121,000 and issued bonds payable for $325,000. Net cash provided by financing activities for the year would have been > $325,000 - $53,000 = $272,000 > Proceeds from issuance of bonds - Purchase of treasury stock = Net cash provided by financing activities

$272,000.

A corporation has 35,000 shares of 10​% preferred stock outstanding.​ Also, there are 35,000 shares of common stock outstanding. Par value for each is​ $100. If $650,000 dividend is​ paid, how much goes to the preferred​ stockholders? > 35,000 x $100 x 10 = $350,000 > Number of preferred shares x Preferred stock par value x Annual dividend % = Preferred dividend

$350,000

In the current​ year, MLRC Company sold land for $76,000 ​cash, purchased a delivery van for $26,000 ​cash, and issued common stock for $101,000 cash. The net cash provided by investing activities is > $76,000 - $26,000 = $50,000 > Proceeds from sale of land - Acquisition of van = Net cash provided by investing activities

$50,000.

A corporation has 35,000 shares of 66​% preferred stock outstanding.​ Also, there are 35,000 shares of common stock outstanding. Par value for each is​ $100. If a $525,000 dividend is​ paid, what is the amount of dividends per share on common​ stock? > $525,000 - $210,000 = $315,000 > Total dividend - Preferred dividend = Common dividend > $315,000/35,000 = $9.00 > Common dividend / Common shares outstanding = Common dividends per share

$9.00

Operating cash flow's from Operating Activities

- Net income - Depreciation - Gain on sale of equipment - Increases on accounts receivable - Increase in inventory - Decrease in Accounts Payable - Increase in accrued liabilities

When a corporation repurchases its own common stock, the transaction is recorded as

. Cash Treasury stock Additional paid-in capital - Treasury Stock

A company uses the direct method to prepare the statement of cash flows. Select an activity for each of the following​ transactions:

1. Receiving cash dividends is an operating activity 2. Paying cash dividends is a financing activity

Tom, Inc. has the following stock issued as of December 2015: 5% Preferred Stock, $100 par, 10,000 shares issued and outstanding Common Stock, $5 par, 50,000 shares issued and outstanding The preferred stock dividend is cumulative. Dividends were paid in 2013, but were not paid during 2014. On December 15, 2015, Tommen declares dividends of $210,000. How much of this dividend will be distributed to Preferred Stock?

100,000

The Arya Corp. has the following balance sheet accounts for the years ending December 31st. Cash- 2015: $ 24,100, 2016: $ 19,100, Change: $ -5,000 Accounts receivable- 2015: 20,000, 2016: 26,000, Change: 6,000 Inventory- 2015: 25,000, 2016: 15,000, Change: -10,000 Prepaid advertising- 2015: 11,000, 2016: 13,000, Change: 2,000 Land- 2015: 100,000, 2016: 150,000, Change: 50,000 Plant and equipment- 2015: 400,000, 2016: 700,000, Change: 300,000 Accumulated depreciation- 2015: -60,000, 2016:-80,000, Change: -20,000 Totals- 2015: $520,100, 2016: $843,100 Accounts payable- 2015: $ 15,000, 2016: $ 28,000, Change: $ 13,000 Wages payable- 2015: 3,400, 2016: 2,400, Change:-1,000 Notes payable- 2015: 45,000, 2016: 30,000, Change: -15,000 Bonds payable- 2015: 120,000, 2016: 235,000, Change:115,000 Common stock- 2015: 200,000, 2016: 300,000, Change: 100,000 Retained earnings- 2015: 136,700, 2016: 247,700, Change: 111,000 Totals- 2015: $520,100, 2016: $843,100, Change: $323,000 During 2016, Arya earned net income of $175,000, paid $64,000 in cash dividends, paid on a loan, issued some bonds, and sold common stock for cash. Further, Arya bought some land and plant and equipment for cash. Depreciation expense of $20,000 was recorded. No gains or losses occurred. Cash flow from financing activities is $____ net cash ____.

136,000 Inflow

During 2016, Roy Ltd. had a beginning inventory of $45,000, ending inventory of $88,000, and a cost of goods sold of $105,000. What was Roy's 2016 cost of goods purchased?

148,000

At January 1, 2017, Jamie Lannister Corp. had a cash balance of $80,000. Lannister's 2017 net income was $67,000. Accounts receivable increased by $15,000, inventory decreased by $12,000 and accounts payable decreased by $10,000. Lannister sold land for $50,000, purchased equipment for $32,000, and paid dividends of $8,000. Depreciation expense for the year was $25,000. Based on this information, the cash balance at December 31, 2017 is

169,000

Pearl has put $150,000 in an investment that pays 4% compounded annually. What amount will Pearl have after 4 years? Use the time value of money tables on your scratch paper packet.

175,485

During 2016, LiLi Co. had the following information about inventory and purchases: January 1, 2016 inventory: 4000 units, price $2, amount $8000 March 8, 2016 purchase: 3000 units, price $4, amount $12,000 August 17, 2016 purchase: 2000 units, Price $6, amount $12,000 Total: 9000 units, amount $32,000 During 2016, LiLi sold 5,500 units for $9.00 each. LiLi has adopted the FIFO method with a periodic inventory system. Determine the dollar balance in the Inventory account on December 31, 2016.

18,000

The stockholders' equity section of Bleak, Inc. is as follows: Preferred stock, 7%, $100 par, 1,000 shares authorized, 300 shares issued and outstanding $40,000 Additional paid-in capital - preferred 5,000 Common stock, $10 par, 15,000 shares authorized, 4,000 shares issued and outstanding 50,000 Additional paid-in capital - common 30,000 Retained Earnings 512,000 Total Stockholders' Equity $637,000 Based only on this information, what was the average issue price of the commom stock?

20

Billy's Building Products provides the following information for 2017. What amount should Billy report as current liabilities on the December 31, 2017 Balance Sheet? Accumulated depreciation 93,000 Notes payable due Feb. 1, 2019 50,000 Accounts payable 78,000 Revenues 187,000 Allowance for doubtful accounts 8,200 Estimated warranty liability 18,000 Bonds payable due 2020 120,000 Wages payable 35,000 Interest payable 42,000 Unearned revenue 17,000 Purchases discounts 6,500 Retained earnings 254,000 Mortgage payable due in annual installments of $10,000 90,000 Common Stock 471,000

200,000

Kelley Corp. issued 250, $1,000 face value, 4-year bonds with a stated rate of 4%, paying interest annually when the market rate was 3%. What will be the selling price of this bond issue? Use the time value of money tables on your scratch paper packet.

259,296

Mountain, Inc. had the following accounts related to owners' equity on December 31, 2017: 6% Preferred stock, $50 par, 10,000 shares issued and outstanding $500,000 Cr. Additional paid-in capital, Preferred Stock 56,000 Cr. Common stock, $2 par, 1,000 shares issued and outstanding 2,000 Cr. Additional paid-in capital, Common stock 10,000 Cr. Retained earnings 882,000 Cr. On December 31, 2017, the Board of Directors declares a $200,000 cash dividend payable on January 18, 2018. The preferred stock dividends are non-cumulative. Dividends have not been paid for the past two years (2015 and 2016). Dividends that will be paid to preferred stockholders will be $

30,000

Monster Inc. has the following information for December 31, 2016: The balance per bank of $67,889, outstanding checks of $75,600, bank service charge of $1,409, and NSF checks of $4,668; a deposit in transit of $47,300, and a balance per the company records of $45,666. What is the adjusted cash balance? (Do Not enter dollar signs.)

39,589

Assume that on December 31, 2016, Stark Company has outstanding 10,000 shares of $25 par, 6% cumulative, preferred stock and 100,000 shares of $5 par common stock. Stark was unable to declare a dividend in 2014 or 2015 but wants to declare a $100,000 dividend for 2016. The amount of the cash dividend to be paid to the common stockholders in 2016 will be $

55,000

Godzilla Corp. has the following account balances on December 31st: Sales revenues (100% on credit): $3,450,000 Sales discounts: $44,000 Sales returns and allowances: 110,000 Accounts Receivable: 300,000 Allowance for Doubtful Accounts (credit balance before adjustment): 5,000 Godzilla estimates that their bad debt expense will be 2% of net credit sales. What is Godzilla Co bad debt expense for the year?

65,920

Guest Corporation issued 80,000 shares of $2.00 par value common stock. Later that ​year, Guest purchased 5,000 shares of its own common stock. Two months​later, it reissued 3,000 shares. How many shares are issued and​outstanding? > 80,000 - 5,000 + 3,000 = 78,000

80,000 issued and 78,000 outstanding

Assume that on December 31, 2016, Stark Company has outstanding 10,000 shares of $25 par, 6%,non-cumulative, preferred stock and 100,000 shares of $5 par common stock outstanding. Stark was unable to declare a dividend in 2014 or 2015 but wants to declare a $100,000 dividend for 2016. The amount of the cash dividend to be paid to the common stockholders in 2016 will be $

85,000

On November 1st, Chipotle Corp. received a $2,000 note from a customer with a rate of 9% interest that is due in six months. The adjusting entry on December 31st for this note receivable would be:

A Debit to Accrued Interest Receivable and a Credit to Interest Revenue for $30.

Which of the following statements is TRUE about capital and revenue expenditures related to the long-term operating assets of a company?

A capital expenditure will either increase the life or the productivity of the operating asset.

When treasury stock is sold for less than its​ cost, the entry should include a debit to

Retained Earnings.

Which of the following groups of accounts all DECREASE with debits?

Accounts Payable, Accumulated depreciation, Service revenue

The following balance sheet items, listed in alphabetical order, are available from the records of Breaking Bad Company as of December 31, 2015. Total total current liabilities is $_____ (Current Liabilities) Accounts payable Income taxes payable Interest payable Short term debt accrued liabilities income taxes payable Deferred revenue

Accounts payable 300,000 Income taxes payable 50,000 Interest payable 100,000 Total: 450,000

The Wonder Woman Co. purchased a small building in exchange for a five-year note payable and common stock. Using the following abbreviations to fill in the blanks, indicate whether this transaction would: increase, decrease, or not change the total of each of the elements of the accounting equation. Asset: Liabilities: Stockholder's Equity:

Asset: Increase Liabilities: Increase Stockholder's Equity: Increase

Which of the following classifications represents the most shares of common​ stock?

Authorized shares

Which of the following transactions does not affect cash during a​ period?

A​ write-off of an uncollectible account

On the statement of cash​ flows, which of the following items is classified as a financing​ activity?

Borrowing cash by signing a​ long-term note

Best PlayerBest Player​, ​Inc., issued 310,000 shares of ​no-par common stock for $15 per share. The journal entry to record the issuance would ​be:

Cash $4,650,000 Common stock. $4,650,000

Walter, Inc. issued $900,000 in 10-year, 12% debenture bonds paying interest annually at a price of 104. What would be the journal entry to record the bond issuance?

Cash 936,000 Bonds payable 900,000 Premium on bonds payable 36,000

On the statement of cash​ flows, which of the following items is classified as an investing​ activity?

Collecting cash on a​ long-term loan

If a corporation issues 1,200 shares of $2.60 par value common stock for $13,200​, the journal entry would include a credit to > 1,200 X 2.60 = 3,120

Common Stock for $3,120.

The quality of accounting information that allows a user to analyze two or more companies and look for similarities and differences is called

Comparability

How is "Accumulated Depreciation" classified and on what statement does it appear?

Contra-asset on Balance Sheet

Rick Inc. uses an allowance method to account for their Bad Debts. On September 30th, Rick had a balance in Accounts Receivable of $432,000 and a balance of $25,400 in Allowance for doubtful accounts. During October, Rick decided to write off the account of Carl, Inc. of $3,400. The journal entry to recognize this write-off would be:

Debit Allowance for Doubtful Accounts and Credit Accounts Receivable

Allnet, Inc. paid $5,000 of dividends to EACH of its FOUR stockholders. The journal to record this transaction is: Debit ____ and credit ____

Debit Dividends Payable and credit Cash

The Roy Co. received a 12%, 12-month, $12,000 note receivable from a customer on October 1, 2017. Roy's year end is December 31st. The note and interest will be paid on September 30, 2018. Roy's adjusting journal entry for December 31, 2017 will be:

Debit Interest Receivable and Credit Interest Revenue

On November 1st, the Pinta Corp. credited a liability account, Unearned Revenues, for $8,800. This sum represents an amount that a customer paid in advance and that will be recognized evenly by Pinta over a 8-month period. Pinta makes annual adjusting entries. The adjusting entry required for Pinta on December 31st would be:

Debit Unearned Revenues and Credit Sales Revenues for $2,200

Little Finger, Inc. had the following accounts related to owners' equity on June 30, 2017: Common stock, $1 par, 150,000 shares issued $150,000 Cr. Additional paid-in capital, common stock 300,000 Cr. Additional paid-in capital, treasury stock 100,000 Cr. Retained earnings 900,000 Cr. Treasury stock (50,000 shares) 400,000 Dr. On July 1, 2017, Little Finger reissues 20,000 shares of treasury stock. The market price of the common stock is $6 per share on July 1, 2017. Little Finger's journal entry for reissuance of the treasury shares will include:

Debit to Additional paid-in capital-treasury stock of $40,000

If assets decreased by $80,000 and owners' equity decreased by $10,000, what was the change in liabilities? Liabilities would ____ by $____.

Decrease 70,000

Karson Company called in its $100,000 par value bonds at 101. The carrying value of the bonds was $103,000. Which of the following is the correct presentation of this transaction on the statement of cash flows?

Deduct a $2,000 gain from net income in the operating activities section and show a $101,000 cash outflow in the financing activities section.

If the indirect method is​ used, which of the following items appears on a statement of cash​ flows?

Depreciation expense

Which of the following is not considered to be an advantage of a​ corporation?

Double taxation

Spidey Inc. sold an old truck on April 1, 2015, for $26,000 cash. The following data were available when the truck sold: Acquisition cost on 1/1/2010, $77,000 Estimated residual value at time of acquisition, $7,000 Estimated useful life, 7 years Straight-line depreciation method Spidey should record a ____ of $____ on the sale of the truck.

Gain 1,500

Marjan, Inc. has the following selected balances as of December 31, 2016 8% Debenture bonds payable, due Dec. 2040, $100,000 Premium on debenture bonds payable, $8,000 On January 2, 2017, the bondholders redeemed all of the debentures at 104. Based on this information, Majan should recored a ____ of $____ on the redemption of the bonds.

Gain 4,000

Which of the following would NOT be added to the net income in the operating activities section of a Statement of cash flows when using the indirect method?

Gain on sale of equipment

An allowance method of accounting for bad debts expense:

Is the required method when the uncollectible amounts are expected to be material.

Which of the following is a financing activity that results in a cash inflow?

Issuing bonds

How does the declaration of a cash dividend affect a​ company's assets,​ liabilities, and​ equity?

It results in an increase to liabilities and a decrease to​ stockholders' equity, while assets remain the same.

On March 25, its first day of operations, Ladybug Inc. purchased $1,200 of office supplies. On March 31st, Ladybug had $800 of office supplies on hand. On April 5th Ladybug paid for the supplies it had purchased on account on March 5th. Under accrual accounting which of the following statements about recognizing supplies expense is correct?

Ladybug should recognize $400 of supplies expense in March.

Michael Scott, Inc. issued 9,000 shares of $8 par common stock on December 1, 2015 to acquire land from the David Wallas Company. David had acquired the land in 2002 for $30,000. Michael estimated the land was worth $90,000 on December 1, 2015. The entry to record Michael's transaction would be:

Land 90,000 Common Stock 72,000 Additional Paid-in Capital 18,000

Which of the following is a characteristic of a​ corporation?

Limited liability of stockholders

For cash​ dividends, the journal entry on the date of record

No journal entry is required on the date of record.

Which of the three types of activities reported on the statement of cash flows is the most important to evaluate when analyzing a​ company's long-term​ survival?

Operating activities

In preparing a bank reconciliation, all of the following would be used to adjust the balance per books, EXCEPT:

Outstanding checks.

Preferred stock is least likely to have which of the following​ characteristics?

Preference as to voting

Treasury stock has all the following characteristics EXCEPT:

Receives dividends after preferred stock.

On the day of declaration, which of the following journal entries should be made?

Retained Earnings Dividends Payable

Sam's Foods has outstanding 200 shares of 44​% preferred​stock, $100 par​value; and 1,700 shares of common​stock, $1 par value. SimoneSimone​'s declares dividends of $14,300. Which of the following is the correct​entry? > 200 x $100 x 4 = $800 > $14,300 - $800 = $13,500

Retained Earnings. $14,300 Dividends Payable, Preferred $800 Dividends Payable, Common $13,500

Jack Sparrow, Inc. has a customer, Barbosa Products Corp. The customer has complained about a shipment of goods that arrived late and which had lower quality than desired. Jack Sparrow offered Barbosa an invoice reduction of $18,000. Sparrow would refer to this invoice reduction as a:

Sales allowance.

Neffie Corporation acquired land by signing a long-term note for $150,000. Which of the following is the correct presentation of this transaction on the Statement of Cash Flows?

This transaction would not affect the Statement of cash flows.

Which of the following statements is not true about a​ 3-for-1 stock​ split?

Total​ stockholders' equity increases.

Quintar Corporation paid $27 per share to purchase 800 shares of its common stock as treasury stock. The stock was originally issued at $11 per share. Which of the following would be the journal entry that Quintar would make to record the purchase of the treasury​ stock?

Treasury​ stock 21,600 Cash 21,600

Badger, Inc. has the following account balances related to its 2016 operations: Repair Revenues $840,000 Prepaid Expenses $85,000 Wages and Salaries 240,000 Dividends 1,500 Depreciation Expense 13,000 Unearned Revenue 120,000 Interest Revenue 6,000 Accum. Depreciation 25,000 Which of these accounts would be credited in the closing entries?

Wages and Salaries, Depreciation Expense, and Dividends only

A numerical list of all the accounts an entity uses is called

a chart of accounts.

A type of liability resulting from the receipt of cash before the recognition of revenue is

a deferred revenue

On an indirect method statement of cash​ flows, an increase in accounts payable is

added to net income in the operating activities section.

If the indirect method is used to calculate net cash provided by operating​ activities, a decrease in accounts receivable is

added to net income.

Stockholders of a corporation directly elect the

board of directors.

Soda Corporation purchased 3,400 shares of its own $1.50 par value common stock for $145,000. As a result of this​transaction, the​company's stockholders' equity

decreased by $145,000.

On an indirect method statement of cash​ flows, a gain on the sale of plant assets is

deducted from net income in the operating activities section.

On an indirect method statement of cash​ flows, an increase in a prepaid insurance is

deducted from net income.

Cash received from the issuance of common stock is reported on a statement of cash flows under

financing activities.

Paying off bonds payable is reported on the statement of cash flows under

financing activities.

The issuance of stock for cash is reported on the statement of cash flows under

financing activities.

stock split

has no effect on total​ stockholders' equity.

Preferred stock

has the right to receive dividends before common stockholders.

A company might purchase treasury stock for all of the following reasons except

management wants to decrease the earnings per share of common stock.

When using the indirect method of preparing the statement of cash​ flows, the starting point to determine net cash provided by operating activities is

net income.

Stockholders are eligible for a dividend if they own the stock on the date of

record.

The two main categories of​ stockholders' equity are

retained earnings and​ paid-in capital.

The statement of cash flows does not report

revenues and expenses for the current year.

A company declares a​ 5% stock dividend. The debit to Retained Earnings is an amount equal to

the market value of the shares to be issued.

The statement of cash flows is designed for all of the following purposes except

to list all revenues and expenses.