ACC-120 Prin of Financial Accounting

Heatherbrae Co. uses the units-of-production method to estimate depreciation. The company purchased a new machine for $46,000 that will produce an estimated 310,000 units over its useful life. The estimated residual value of the machine is $2,000. What is the depreciation rate per unit?

$0.14

A company purchased land for its natural resources at a cost of $1,610,000. It expects to mine 2,275,000 tons of ore from this land. The residual value of the land is estimated to be $415,000. What is the amount of depletion per ton of ore?

$0.525

On June 15, Oakley Inc. sells inventory on account to Sunglass Hut (SH) for $2,000, terms 1/10, n/30. On June 20, SH returns to Oakley inventory that SH had purchased for $500. On June 24, SH completely fulfills its obligation to Oakley by making a cash payment. What is the amount of cash paid by SH to Oakley?

$1,485

A company has gross profit of $58,400 and a gross profit percentage of 50%. What were the company's net sales?

$116,800.

Holly, Inc. has a building that originally cost $460,000. Holly expects to be able to sell the facility for $306,000 at the end of its useful life. The balance of the related Accumulated Depreciation account is $113,000. The depreciable cost of the facility is:

$154,000.

Marshall Company purchases a machine for $800,000. The machine has an estimated residual value of $40,000. The company expects the machine to produce two million units. The machine is used to make 420,000 units during the current period.If the units-of-production method is used, the depreciation expense for this period is:

$159,600.

Monte Vista uses the perpetual inventory system. At the beginning of the quarter, Monte Vista has $41,000 in inventory. During the quarter the company purchases $9,550 of new inventory from a vendor, returned $1,050 of inventory to the vendor, and took advantage of discounts from the vendor of $310. At the end of the quarter the balance in inventory is $32,000. What is the cost of goods sold?

$17,190

Sheridan's beginning inventory is $40,000, goods purchased during the period cost $125,000, and the cost of goods sold for the period is $145,000. What is the amount of its ending inventory?

$20,000

Holly, Inc. has a building that originally cost $425,000. Holly expects to be able to sell the facility for $278,000 at the end of its useful life. The balance of the related Accumulated Depreciation account is $113,000. The residual value of the facility is:

$278,000.

Pebble Beach Co. buys a piece of equipment for $54,000. The equipment has a useful life of three years. No residual value is expected at the end of the useful life. Using the double-declining-balance method, what is the company's depreciation expense in the first year of the equipment's useful life? (Do not round intermediate calculations.)

$36,000

Seasons has sales of $69,000, beginning inventory of $13,000, purchases of $44,000, and ending inventory of $11,000. The cost of goods sold is:

$46,000.

Elm Corporation is a merchandising company. The year began with inventory of $17,000, Purchases for the year were $42,000, and the Ending Inventory was $4,000. What is the Cost of Goods Sold that would be reported on the income statement?

$55,000

Tidy Limited purchased a new van on January 1, 2018. The van cost $40,000. It has an estimated life of ten years and the estimated residual value is $3,500. Tidy uses the double-declining-balance method to compute depreciation.What is the depreciation expense for 2018?

$8,000.

Avalon Industries buys equipment for $120,000, expects to use it for Twelve years, and then sell it for $12,000. Using the straight-line method, the company should report annual depreciation for the equipment of:

$9,000.

Hayward Co. reported net sales revenues of $21.2 billion and cost of goods sold of $4.0 billion. Its gross profit percentage was:

81.1%.

The following account balances are taken from the December 31, 2018, financial statements of ABZ Advertising Company. The company uses accrual basis accounting. Advertising Revenue $ 52,402 Cash 46,638 Accounts Receivable 7,861 Interest Expense 2,415 Accounts Payable 5,250 Operating Expenses 42,446 Deferred Revenue 1,326 Equipment 20,437 Income Tax Expense 2,620 The following activities occurred in 2019: Performed advertising services on account, $62,000. Received cash payments on account, $11,900. Received deposits from customers for advertising services to be performed in 2020, $3,500. Made payments to suppliers on account, $5,250. Incurred $50,700 of operating expenses; $43,950 was paid in cash and $6,750 was on account and unpaid as of the end of the year. What is the balance in the Cash account at December 31, 2019?

Explanation Ending Cash balance = Beginning Cash balance + Receipts of payments on account + Receipts of deposits - Payments on account - Cash paid for operating expenses incurred = $46,638 + $11,900 + $3,500 − $5,250 − $43,950 = $12,838

Quartz Instruments had Retained Earnings of $133,000 at December 31, 2018. Net income for 2019 was $83,000, and dividends for 2019 were $23,000. What amount of Retained Earnings should be reported at December 31, 2019?

Explanation Ending Retained Earnings = Beginning Retained Earnings + Net income - Dividends = $133,000 + $83,000 - $23,000 = $193,000

During January 2018, the first month of operations, a consulting firm had following transactions: Issued common stock to owners in exchange for $16,000 cash. Purchased $4,000 of equipment, paying $800 cash and signing a promissory note for $3,200. Received $7,200 in cash for consulting services performed in January. Purchased $1,200 of supplies on account; all of the supplies were used in January. Provided consulting services on account in the amount of $12,800. Paid $600 on account. Paid $2,400 to employees for work performed during January. Received a bill for utilities for January of $2,700; the bill remains unpaid. What is the total expenses that will be reported on the income statement for the month ended January 31?

Explanation Expenses are costs of operating the business, incurred to generate revenues in the period covered by the income statement. Expenses are reported when the company uses something.Total expenses = Supplies Expense + Salaries and Wages Expense + Utilities Expense = $1,200 + $2,400 + $2,700 = $6,300.

On June 30, Sugar Co. received a bill for $1,150 for running a newspaper ad in June. The bill will be paid in July. Which of the following statements is correct for June?

Explanation In the accounting period that an expense is incurred, a company has to record the expense, which increases expenses. Since this expense is not going to be paid until the following month, a liability must also be recorded, which increases liabilities. Expenses are increased by $1,150.

During January 2018, the first month of operations, a consulting firm had following transactions: Issued common stock to owners in exchange for $36,000 cash. Purchased $9,000 of equipment, paying $1,800 cash and signing a promissory note for $7,200. Received $16,200 in cash for consulting services performed in January. Purchased $2,700 of supplies on account; all of the supplies were used in January. Provided consulting services on account in the amount of $28,800. Paid $1,350 on account. Paid $5,400 to employees for work performed during January. Received a bill for utilities for January of $6,100; the bill remains unpaid. What is the amount to be reported as total liabilities on the balance sheet at the end of January?

Explanation Liabilities are obligations or debts of the business.Accounts Payable = (Purchases on account - Payments on account) + Unpaid utility bill = ($2,700 - $1,350) + $6,100 = $7,450 Total liabilities = Accounts Payable + Notes payable = $7,450 + $7,200 = $14,650

Melody's Piano School operations for the month of May were limited to the following transactions: Provided $450 of piano lessons to students who paid in cash. Provided $340 of piano lessons on account. Collected $255 from students who took piano lessons during April. Paid April's piano rental bill of $150. Received May's piano rental bill of $200 and set it aside for payment in June. Assuming the company uses accrual basis accounting, what is net income for May?

Explanation Net income = Revenues - Expenses= ($450 + $340) - $200 = $590

During January 2018, the first month of operations, a consulting firm had following transactions: Issued common stock to owners in exchange for $10,000 cash. Purchased $2,500 of equipment, paying $750 cash and signing a promissory note for $1,750. Received $4,500 in cash for consulting services performed in January. Purchased $750 of supplies on account; all of the supplies were used in January. Provided consulting services on account in the amount of $8,000. Paid $375 on account. Paid $1,500 to employees for work performed during January. Received a bill for utilities for January of $1,700; the bill remains unpaid. What is the amount of total revenue to be reported on the income statement for the month of January?

Explanation The income statement would report the revenues earned of $12,500 ($4,500 + $8,000).

During 2019, Ocean Consulting had the following transactions with it clients (customers): On February 1, 2019, the company received cash of $5,600 from clients in payment of their account balances as of December 31, 2018. On November 1, 2019, the company received $2,600 cash as payments in advance for services to be performed in 2020. The company received a total of $16,000 in cash for services that were performed during 2019. The company sent bills totaling $4,600 to clients for services performed during 2019; this amount was unpaid as December 31, 2019. What is the amount of Service Revenue that will be reported on the income statement for the year 2019?

Explanation The requirement under accrual basis accounting is to record revenues when the performance obligation is satisfied. This basically means the company has done what it promised to do. Total revenue earned in 2019 = $16,000 + $4,600 = $20,600.

Swift Company paid $11,600 in advance for six months of rent. What journal entry will Swift prepare to record this transaction?

Explanation This transaction involves paying for the right to use the rented building for six months following the payment. This payment provides an economic resource to Swift (building space for six months), so it will be initially reported as an asset called Prepaid Rent. Prepaid Rent, an asset, increases while Cash, another asset, decreases. The entry includes a debit to Prepaid Rent and a credit to Cash for $11,600

Consider the following information from a company's unadjusted trial balance at December 31, 2018. All accounts have normal balances.

Explanation Total debit balances (listed in the order in which they appear above) = Accounts Receivable + Cash + Equipment + Insurance Expense + Land + Notes Receivable + Prepaid Insurance + Rent Expense + Salaries and Wages Expense= $6,100 + $1,860 + $6,500 + $480 + $5,400 + $1,360 + $480 + $1,480 + $3,860 = $27,520

The following is a listing of some of the balance sheet accounts and all of the income statement accounts for Northview Company as they appear on the company's adjusted trial balance. Accounts Payable $ 10,000 Accounts Receivable 20,000 Inventory 21,800 Advertising Expense 16,500 Cost of Goods Sold 125,000 Delivery Expense 6,900 Income Tax Expense 2,800 Insurance Expense 1,000 Rent Expense 15,600 Sales Revenue 250,000 Sales Discounts 10,100 Sales Returns & Allowances 32,500

Income from Operations would be: $42,400.

The company has net sales revenue of $3.6 million during 2018. The company's records also included the following information: Assets 12/31/17 12/31/18 Property, plant and equipment $ 2.3 million $ 2.5 million Licensing agreements $ 0.5 million $ 0.4 million Goodwill $ 0.3 million $ 0.3 million Investments $ 0.4 million $ 0.5 million What is the company's fixed asset turnover ratio for 2018?

NOT 1.33

The following is a listing of some of the balance sheet accounts and all of the income statement accounts for Northview Company as they appear on the company's adjusted trial balance. Accounts Payable $ 16,000 Accounts Receivable 17,000 Inventory 21,200 Advertising Expense 15,000 Cost of Goods Sold 113,000 Delivery Expense 6,600 Income Tax Expense 2,000 Insurance Expense 1,000 Rent Expense 14,400 Sales Revenue 220,000 Sales Discounts 10,400 Sales Returns & Allowances 28,000 Net income would be:

Net income would NOT be: $37,100. (NOT)

The following is a listing of some of the balance sheet accounts and all of the income statement accounts for Northview Company as they appear on the company's adjusted trial balance. Accounts Payable $ 9,000 Accounts Receivable 19,000 Inventory 21,600 Advertising Expense 16,000 Cost of Goods Sold 121,000 Delivery Expense 6,800 Income Tax Expense 3,700 Insurance Expense 1,000 Rent Expense 15,200 Sales Revenue 240,000 Sales Discounts 10,200 Sales Returns & Allowances 31,000 The gross profit percentage would be closest to:

The gross profit percentage would (NOT) be closest to: 33.2%. (NOT)

On January 1, 2018, Dunbar Echo Co. sells a machine for $23,800. The machine was originally purchased on January 1, 2016 for $41,700. The machine was estimated to have a useful life of 5 years and a residual value of $0. Dunbar Echo uses straight-line depreciation. In recording this transaction:

a loss of $1,220 would be recorded.