ACG FINAL

In what denomination are bonds typically issued?

$1,000 (or multiples of $1,000)

If 1,000 shares of $5 par common stock are reacquired by a corporation for $12 a share, by how much will total stockholders' equity change?

$12,000 decrease

A company's unadjusted trial balance includes the following balances (assume normal balances): Accounts Receivable, $3,357,000 Allowances for Doubtful Accounts (credit balance), $63,900 Uncollectible accounts are estimated to be 6% of outstanding accounts receivables. What amount of bad debt expense will the company record?

$137,520

A company began the year with $85,000 in its common stock account and a credit balance in retained earnings of $24,000. During the year, the company earned net income of $35,000 and declared and paid $5,000 of dividends. In addition, the company sold additional common stock amounting to $15,000. Based on this information, what is the ending total of stockholders' equity?

$154,000

A corporation has 10,000 shares of 7%, $100 par value, cumulative preferred stock outstanding since its inception. No dividends were declared in the first two years of business. The company declares and pays $375,000 of dividends in its third year. How much of the third year's dividend will be paid to common stockholders?

$165,000

A corporation issues a $250,000, 7%, 30-year mortgage note. The terms provide for annual installment payments of $20,147. What is the remaining unpaid principal balance of the mortgage payable account after the second annual payment?

$244,522

Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $30,000. If the balance of the Allowance for Doubtful Accounts is $4,000 credit before adjustment what is the amount of bad debt expense for that period?

$26,000

On September 1, a company purchased equipment for $40,000. The equipment's estimated salvage value is $4,000. The machine will be depreciated using straight-line depreciation and a four year life. If the company prepares annual financial statements on December 31, the appropriate adjusting journal entry to make on December 31 of the first year would be a

$3,000 debit to Depreciation Expense and a $3,000 credit to Accumulated Depreciation.

At December 31, Moore Company's inventory records indicated a balance of $420,000. Upon further investigation it was determined that this amount included the following: (1) $54,000 in inventory purchases made by Moore shipped from the seller December 29 terms FOB destination, but not due to be received until January 2. (2) $25,000 in inventory purchases made by Moore shipped from the seller December 29 terms FOB shipping point, but not due to be received until January 2. (3) $6,000 in goods sold by Moore with terms FOB shipping point on December 29. The goods are not expected to reach their destination until January 4. (4) $7,000 in goods sold by Moore with terms FOB destination on December 29. The goods are not expected to reach their destination until January 5. (5) $15,000 of goods received on consignment from Dollywood Company. What is Moore's correct ending inventory balance at December 31?

$345,000

At the start of the current year, a company paid for the following in cash: Copyrights, $2,000,000 Equipment, $25,000,000 Goodwill, $4,500,000 Inventory, $1,500,000 Land, $15,000,000 Patents, $1,500,000 Prepaid rent, $500,000 Research and development, $500,000 Supplies, $4,000,000 Trademarks, $1,000,000 It amortizes its intangibles over 10 years. Determine its current year amortization expense.

$350,000

Financial information for Edwards Company is presented below: Operating expenses , $35,000 Sales returns and allowances, $12,000 Sales discounts, $3,000 Sales revenue, $140,000 Cost of goods sold, $85,000 What is the company's gross profit?

$40,000

The maturity value of a $40,000, 9%, 40-day note receivable is

$40,400

A company has the following: Cash balance per bank, Dec. 31, $48,200. Note receivable of $3,800 plus $200 of interest collected, $4,000. Outstanding checks, $7,100. Deposits in transit, $2,700. Bank service charges, $50. NSF check, $500. How much is the adjusted cash balance on Dec. 31?

$43,800

A company received proceeds of $455,000 on 10-year, 8% bonds issued on January 1, 2021. The bonds had a face value of $400,000, pay interest annually on December 31st, and have a call price of 101. The company uses the straight-line method of amortization. What is the carrying value of the bonds on January 1, 2024?

$438,500

A corporation's December 31, 2021 balance sheet showed the following: 8% preferred stock, $20 par value, cumulative, 40,000 shares authorized; 20,000 shares issued $ 400,000 Common stock, $10 par value, 4,000,000 shares authorized; 2,600,000 shares issued, 2,560,000 shares outstanding 26,000,000 Paid-in capital in excess of par value - preferred stock 80,000 Paid-in capital in excess of par value - common stock 36,000,000 Retained earnings 10,200,000 Treasury stock (30,000 shares) 840,000 The corporation declared and paid a $100,000 cash dividend on December 15, 2021. If the company's dividends in arrears prior to that date were $24,000, the corporation's common stockholders would receive

$44,000

On September 1, a corporation paid $15,000 to its landlord for 3 months' rent beginning September 1. It debited prepaid rent when it recorded the payment. If the corporation prepares financial statements on September 30, the appropriate adjusting journal entry to make on September 30 would be a

$5,000 debit to Rent Expense and a $5,000 credit to Prepaid Rent.

A company's retained earnings at the start of the year was $300,000. At the end of the current year, its accounts had the following balances: Accounts payable, $80,000 Accounts receivable, $60,000 Cash, $140,000 Common stock, $120,000 Dividends, $40,000 Equipment, $300,000 Retained earnings, Not given Salaries expense, $500,000 Service revenue, $560,000 Supplies, $20,000 Determine the company's total assets at year-end.

$520,000

A company has the following: Units Cost per unit Dec. 1 Beginning balance 72 $90 Dec. 14 Purchase 124 $94 Dec. 21 Purchase 88 $98 The company sold 204 units at $126 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's gross profit using FIFO? (rounded to whole dollars)

$6,784

On March 1 of the current year,a company purchases and places into service new equipment. The cost of the equipment is $55,000. The equipment has an estimated 5-year life and $10,000 salvage value at the end of its useful life. What is the depreciation expense for the current year ending December 31 if the company uses the straight-line method of depreciation?

$7,500

A corporation's December 31, balance sheet shows the following: 8% preferred stock, $10 par value, cumulative,40,000 shares authorized; 18,000 shares issued $180,000Common stock, $1 par value, 4,000,000 shares authorized;2,700,000 shares issued, 2,460,000 shares outstanding, $2,700,000Paid-in capital in excess of par value - preferred stock, $180,000Paid-in capital in excess of par value - common stock, $51,500,000Retained earnings, $23,000,000Treasury stock (40,000 shares), $1,050,000 The company's total stockholders' equity is

$76,510,000.

A corporation sells bonds with a face value of $1,000,000 and a contractual interest rate of 10% for $1,200,000. The bonds will mature in 10 years. Using the straight-line method of amortization, how much interest expense will be recognized in year 1?

$80,000

A corporation issues a $900,000, 10%, 25-year mortgage note. The terms provide for annual installment payments of $99,151. What is the remaining unpaid principal balance of the mortgage payable account after the first annual payment?

$890,849

A check correctly written by a company for $1,340 was incorrectly recorded on its books as $1,430. As a result, the company's next monthly bank reconciliation should include

$90 added to the cash balance per books.

When equipment is sold for cash in an amount that is greater than its book value, the company debits the following

(i) Accumulated Depreciation and (ii) Cash

A corporation issues 10%, 10-year bonds with a face value of $100,000 for $98,000. Using the effective-interest amortization method, how much is the interest expense for the first year if the effective interest rate is 10.53%?

10319

A company has the following: Cash balance per books on Dec. 31, $9,400. Deposits in transit, $1,100. Notes receivable with interest collected by bank, $2,500. Bank service charges, $50. Outstanding checks, $1,450. NSF check, $400. How much is the adjusted cash balance per books on Dec. 31?

11450

On January 5, a company sold merchandise on account to a customer for $1,500 with terms 3/10, n/30. On January 10, the customer returns merchandise worth $300. On January 14, the customer pays the balance due. What is the amount of cash received by the company on January 14?

1164

A company uses straight-line depreciation. It purchased a truck for $40,000. The truck's salvage value is $4,000. The truck's annual depreciation expense is $3,000. What is the truck's useful life?

12 years

A company purchased merchandise with an invoice price of $1,000 and credit terms of 1/10, n/40. Assuming a 360 day year, what is the implied annual interest rate inherent in the credit terms?

12%

A corporation reported net income of $300,000 and paid dividends of $25,000 on its common stock and $80,000 on its preferred stock. Common stockholders' equity was $1,500,000 at the start of the year and $1,750,000 at the end of the year. Total assets was $2,000,000 at the start of the year and $2,500,000 at the end of the year. What is the company's return on common stockholder's equity?

13.54%

A company has bonds with a principal value of $500,000 outstanding. The unamortized premium on the bonds is $12,000. The company redeemed the bonds at 102. What is the company's gain or loss on the redemption?

2000 gain

A company began the year with total assets of $200,000 and total liabilities of $160,000. During the year, the company did the following: Recognized revenues, $420,000 Incurred expenses, $220,000 Declared and paid dividends, $40,000 Issued common stock, $10,000 What is the stockholders' equity at the end of the year?

210000

Based on the following year-end account balances, what amount would the company report on its balance sheet as intangible assets? Trademarks$14,000,000Research and development8,000,000Copyrights1,500,000Patents2,000,000Goodwill5,000,000

22,500,000.

In the current year, a corporation has a times interest earned ratio of 12.00. Its interest expense is $25,000 and its tax expense is $40,000. Its net sales were $500,000 and its cost of goods sold was $200,000. What was the company's net income?

235000

The following data is available for a certain corporation: Common stock, par $10 (authorized 30,000 shares), $250,000 Treasury stock (at cost $15 per share), $1,200 Based on the data, how many shares of common stock are outstanding?

24,920

A company borrows $92,500 on September 1 from a bank. It signs a $92,500, 11%, 18-month note. How much interest expense should the company record on December 31 if the company uses a calendar year-end and records adjusting entries only at year-end?

3,392

A company purchased equipment for $60,000 on January 1 of its first year. The equipment's original estimated useful life is 8 years and its estimated salvage value is $12,000. The company uses the straight-line method of depreciation. On December 31 of its fourth year, before year-end adjusting entries have been recorded, the company decides to extend the estimated useful life 3 years giving it a total life of 11 years. The company did not change the salvage value and continues to use the straight-line method. How much depreciation expense should be recorded for the fourth year?

3,750

A company's accounting records show the following account balances: Purchase Discounts $ 5,000 Purchases 330,000 Beginning Inventory 33,000 Ending Inventory 41,000 Sales 690,000 Using the periodic system, the cost of goods sold is

317,000

At the start of the year, a company's Allowance for Doubtful Accounts had a credit balance of $22,000. During the year, it had credit sales of $1,100,000. It also wrote-off $50,000 of uncollectible accounts receivable during the year. Past experience indicates that the allowance should be 2% of the balance in receivables. If the accounts receivable balance at December 31 was $250,000, what is the bad debt expense for the year?

33,000

A company's accounting records show the following account balances at the end of the year: Purchase Discounts, $6,200 Freight-In, $9,300 Freight-Out, $6,500 Purchases, $350,010 Beginning Inventory, $23,800 Ending Inventory, $30,800 Purchase Returns and Allowances, $4,600 Using the periodic system, the cost of goods sold is

341,510

Based on the following accounts and year-end account balances for a certain corporation, determine the amount of property, plant, and equipment to be reported on its classified balance sheet.

350,000

A company purchased machinery for $125,000 on July 1, 2021. The company also paid freight charges of $10,000 and installation costs of $15,000. It is estimated that the machinery will have a $20,000 salvage value at the end of its 5-year useful life. What is the amount of accumulated depreciation at December 31, 2022 if the straight-line method of depreciation is used?

39,000

The financial statements of a company reports net credit sales of $560,000. It also reports net accounts receivable of $76,000 and $52,000 at the beginning of the year and end of year, respectively. Its average inventory is $60,000. What is the average collection period for accounts receivable in days (rounded)?

41.7 days

A corporation issues a $500,000, 7%, 15-year mortgage note. The terms provide for annual installment payments of $54,897. What is the remaining unpaid principal balance of the mortgage payable account after the second annual payment?

458,813

A company has the following data: Dec. 1 Inventory 40 units for $4.40 per unit Dec. 8 Purchase 80 units for $4.10 per unit Dec. 17 Purchase 110 units for $4.00 per unit Dec. 25 Purchase 60 units for $4.20 per unit There are 110 units of ending inventory on hand at December 31. What is the company's ending inventory using LIFO and a periodic inventory system?

463

The financial records for a corporation included the following information: Accounts receivable, $55,000 Accounts payable, $20,000 Cash, $25,000 Common stock, $25,000 Dividends, $15,000 Sales revenue, $90,000 Salaries and wages expense, $30,000 Supplies expense, $10,000 Retained earnings is not given. Based on this information, how much is its net income?

50000

A company has the following inventory data: July 1 Beginning inventory 20 units at $20 $ 400 7 Purchases 70 units at $21 1,470 22 Purchases 10 units at $22 220 $2,090 A physical count of merchandise inventory on July 30 reveals that there are 25 units on hand. Using the FIFO inventory method and a periodic inventory system, the amount allocated to ending inventory for July is

535

A company has the following: 2022 2021 Ending inventory $37,650 $30,490 Cost of goods sold 225,250 261,300 Sales revenue 480,000 500,000 Net income 100,000 80,000 What is the company's days in inventory for 2022? (rounded)

55.1 days

On January 1, a corporation issued $5,300,000, 13%, 6-year bonds for $6,251,015. Interest is payable annually on January 1. The effective interest rate on the bonds is 9%. Use the effective-interest method to determine the amount of interest expense for the first year.

562,591

At the beginning of the current year, a company purchased machinery for $60,000. It has a salvage value of $6,000 and an estimated useful life of 9 years. How much is depreciation expense for the first year under the straight-line method?

6000

A company has the following accounts balances: Sales revenue $90,000; Sales Returns and Allowances $25,000; Sales Discounts $10,000; Cost of Goods Sold $20,000; and Net Income $7,000. How much is the gross profit rate?

63.6%

A company purchases $7,400 of merchandise on April 11, with credit terms of 2/15, n/30. If the company pays on April 27, how much does it pay?

7400

For which of the following errors should the appropriate amount be added to the cash balance per bank statement on a company's bank reconciliation?

A check written by the company for $890 was incorrectly recorded by the bank as $980.

During its first year, a corporation earned revenues of $135,000 and incurred expenses of $87,000. The corporation also paid cash dividends of $10,000 and purchased $25,000 of equipment in exchange for cash during the first year. What is the balance in the company's retained earnings account at the end of its first year?

A credit balance of $38,000

For which of the following errors should the appropriate amount be subtracted from the cash balance per bank statement on a company's bank reconciliation?

A deposit of $470 was incorrectly recorded by the bank as a deposit of $740.

Which one of the following is not a justification for adjusting entries?

Adjusting entries are necessary to conform with the requirements of the cash basis of accounting.

Which one of the following is not a control procedure used for over-the-counter receipts?

All of these are control procedures used for over-the-counter receipts

In December, a company sold merchandise on account for $300 with terms 1/15, n/30. It uses the percentage of receivables basis for estimating uncollectible accounts at year-end. On May 1 of the next year, the company determines that it will not collect the amount due from the customer. Prepare the journal entry to record the write-off on May 1.

Allowance for Doubtful Accounts 300 Accounts Receivable 300

Which of the following would affect the gross profit rate if sales remain constant?

An increase in cost of goods sold

If the ending inventory is overstated, what occurs?

Assets are overstated and stockholders' equity is overstated.

Which one of the following would not result in a bank issuing a debit memorandum?

Collection of a note receivable.

Which of the following statements is false with regards to internal controls?

Companies must develop a system of internal control even if they are not publicly-traded.

Which of the following is not one of the main factors that contributes to fraudulent activity and is also known as part of the fraud triangle?

Company size

A corporation uses a perpetual inventory system. It purchased $2,000 of merchandise on July 5 on account with terms 2/10, n/30. It returned $400 of the merchandise on July 9. It pays on July 21. Which of the following is part of the journal entry it records when it pays on July 21?

Credit to Cash for $1,600

A corporation issued 3,000 shares of $6 par value common stock for $7 per share. Which of the following is included in the journal entry to record the issuance?

Credit to Common Stock for $18,000

A company holds a $10,000, 120-day, 6% note issued by a corporation. What is the journal entry recorded by the company that holds the note when it matures assuming no interest has previously been accrued?

Debit Cash for $10,200, credit Notes Receivable for $10,000, and credit Interest Revenue for $200

A corporation uses the perpetual inventory system. On April 1, it purchased merchandise on account for $15,000 with terms 1/15, n/30. It pays a shipping company $250 to transport the merchandise from the seller. It returns merchandise with an invoice price of $1,000 to the seller on April 7. On April 10, it pays for the merchandise it retains. How would it record the payment on April 10 for the merchandise it retained?

Debit accounts payable for $14,000; credit cash for $13,860; and credit inventory for $140.

A company sold $7,000 of merchandise to customers who charged their purchases with a bank credit card. The company's bank charges it a 5% fee. Which one of the following is part of the journal entry to record this transaction?

Debit to Cash for $6,650

If a company fails to record its estimated bad debts expense then its

Equity is overstated

Ownership passes to the buyer when purchased goods are received by the buyer from a public carrier if the goods are shipped

FOB destination.

Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods purchased as inventory has increased during the period, then the company using

LIFO will have the highest cost of goods sold.

Which of the following is considered an advantage of the corporate form of organization?

Limited liability of stockholders

Which one of the following costs will not be included in the cost of equipment?

Maintenance costs

A corporation declared a cash dividend of $1.00 per share on 20,000 shares of common stock on January 15. The dividend is to be paid one month later on February 15 to stockholders of record on January 31. Which of the following summarizes the effects of the journal entry recorded on the date of record on January 31?

No journal entry is recorded on the date of record

Which of the following does not affect the company's current ratio?

Paying the next month's rent one month in advance.

The procedure of transferring journal entries to the ledger accounts is called

Posting

Which one of these statements is true?

Research and development costs are expensed in the year incurred

Which one of the following is not a physical control?

Segregation of duties

Companies prepare various types of trial balances. Which trial balance lists all of a company's permanent and temporary accounts?

The adjusted trial balance

Which statement is incorrect concerning the adjusted trial balance?

The adjusted trial balance lists the account balances sorting them in order of their dollar magnitude.

If a corporation incurred a net loss in the current year, which of the following is true?

The company debited Retained Earnings in a closing entry

A corporation issues 10-year bonds with a maturity value of $200,000. If the bonds are issued at a premium, what does this indicate?

The contractual interest rate exceeds the market interest rate.

A corporation issued 1,000 shares of its $3.00 par value common stock for $12.00 per share and later repurchased 50 of those shares for $9.00 per share. Which of the following will be debited when the repurchase of the shares is journalized?

Treasury Stock for $450

A trial balance will not balance if

a $500 payment of an account payable was debited to Accounts Payable for $50 and credited to Cash for $500.

The closing entry process consists of closing

all temporary accounts

What type of account or account classification is prepaid insurance?

asset

If a company fails to adjust for accrued revenues:

assets will be understated and revenues will be understated.

Which of the following financial statements is concerned with the company at a point in time?

balance sheet

Obtaining insurance protection against dishonest employees an example of

bonding

Selling or issuing bonds at a premium has the effect of

causing the total cost of borrowing to be lower than the bond interest paid.

Publicly traded U.S. companies must provide shareholders with an annual report. Which of the following is not part of the annual report provided to shareholders?

chart of accounts

A corporation issues 30,000 shares of $100 par value preferred stock for cash at $110 per share. The entry to record the transaction will include a

credit to Preferred Stock for $3,000,000 and a credit to Paid-in Capital in Excess of Par Value for $300,000.

A company borrowed money from a bank by signing a four-month note payable in the amount of $20,000 on October 1. The note requires the company to pay interest at an annual rate of 6%. The company records adjusting entries on December 31. The adjusting entry that the company should record for accrued interest on December 31 would include

debit to Interest Expense for $300.

A corporation declared a cash dividend of $2.00 per share on 50,000 shares of common stock on July 15. The dividend is to be paid one month later on August 15 to stockholders of record on July 31. The correct entry to be recorded on the date of declaration of July 15 will include a

debit to the Dividends account and a credit to the Dividends Payable account.

The year-end trial balance for Garnet & Gold Corporation appears as follows: Garnet & Gold Corporation Trial Balance December 31 Debit Credit Cash $ 300 Accounts Receivable 500 Prepaid Insurance 60 Supplies 140 Equipment 4,000 Accumulated Depreciation, Equipment $ 800 Unearned Revenues 300 Common Stock 1,000 Retained Earnings 1,400 Service Revenue 3,000 Salaries and Wages Expense 1,000 Rent Expense 500 $ 6,500 $ 6,500 If, at year-end, supplies on hand were $30, the company should record an adjusting entry that

debits Supplies Expense for $110 and credits Supplies for $110.

When a company performs a service but has not yet received payment, it

debits accounts receivable and credits service revenue

When an account is written off using the allowance method, accounts receivable

decreases and the allowance account decreases.

Employees have worked for one week and have earned wages. The company does not record wages until they are paid at the end of the following week. Recording the payment of wages

decreases assets and decreases stockholders' equity

Which of the following would not appear on an income statement?

dividends

The direct write-off method of accounting for bad debts

does not require estimates of bad debt expense.

A company pays the current month's rent. This transaction will immediately affect the

income statement, retained earnings statement, cash flows statement, and balance sheet.

issuing new shares of common stock will

increase common stock

Borrowing cash by signing a note payable

increases the payer's assets and liabilities.

A company's system of internal control

is expected to provide reasonable assurance of the reliability of a company's accounting records.

The amortization of a bond premium will result in reporting an amount of interest expense for an interest period that

is less than the amount of cash to be paid for interest for the period

An adjusted trial balance

is prepared to prove the equality of the total debit balances and total credit balances of ledger accounts after all of the adjusting entries have been recorded.

Stockholders have certain rights. One of these rights is called preemptive right. The term preemptive right refers to a stockholders' right to

keep the same percentage ownership when new shares of stock are issued

A corporation sold equipment for $32,000. The equipment had an original cost of $96,000 and accumulated depreciation of $48,000. Ignoring the tax effect, as a result of the sale

net income will decrease $16,000.

The custodian of a company asset should

not have access to the accounting records for that asset.

If a year-end adjusting entry is not recorded for unearned revenues the result will be to

overstate liabilities and understate revenues.

Certain computer programs are used to limit unauthorized access to certain files. This is an example of

physical controls

amounts earned on the sale of products or services to customers is known as revenue

revenue

During the adjusting process two transactions were neglected or omitted. The first is for unearned rent revenue of which $415 was earned during the period, the second was for accrued interest payable of which $275 is owed for the period. As a result of these omissions

revenue is understated by $415.

Which of the following would be deducted from the balance per books on a bank reconciliation?

service charges

The book value of equipment owned by a business and used in its operations is equal to

the asset's cost minus its accumulated depreciation.

If a company issues a note payable for $40,000 and pays $30,000 of cash to purchase equipment, the company's

total liabilities will increase by $40,000

All of the following are advantages for choosing a sole proprietorship for a business organizational form except:

transfer of ownership is easiest if the business is organized as a sole proprietorship.

The sale or issuance of bonds for more than their face value

will cause the total cost of borrowing to be less than the bond interest paid.