ACCOUNTING II, Acct. 18, Chp. 17 + 16 lol, ACCT 5/6, Chapter 21 PVC Analysis Practice, quizlet acct 2, ACCT Chap 1 PRACTICE, Chapter 1: Accounting and the Business Environment
Tan's gross pay for the week is $1,900. His year−to−date pay is under the limit for OASDI. Assume that the rate for state and federal unemployment compensation taxes is 6% and that Tan's year−to−date pay has previously exceeded the $7,000 cap. What is the amount of state and federal unemployment tax that his employer must record as payroll tax expense and pay to the federal and state governments?
$0
The following information has been provided by Crosby Corporation: Direct Labor $6,200 Direct Materials Used 2,300 Direct Materials Purchased 7,000 Cost of Goods Manufactured 18,000 Ending Work−in−Process Inventory 1,300 Corporate Headquarters' Property taxes 400 Manufacturing Overhead Incurred 490 The beginning balance of Work−in−Process Inventory account was ________.
10,310
Sunshine Blender Company sold 4,000 units in October at a sales price of $45 per unit. The variable cost is $20 per unit. Calculate the total contribution margin.
100,000 4,000 x 45 = 180,000 4,000 x 20 = 80,000 180,000 - 80,000 = 100,000
Sunshine Blender Company sold 3,000 units in October at a sales price of $50 per unit. The variable cost is $15 per unit. Calculate the total contribution margin.
105,000 50 x 3,000 = 150,000 15 x 3,000 = 45,000 150,000 - 45,000 = 105,000
Valley, Inc. has 11,000 shares of preferred stock outstanding. The preferred stock has a $140 par value, a 5% 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?
11000 x .05 = 550 550 x 140 = 77000
Carrabelle Company has provided the following information: Sales price per unit $50 Variable cost per unit 18 Fixed costs per month $14,000 Calculate the contribution margin ratio. (Round your answer to two decimal places.)
64% 18 - 50 = 32 32 / 50 = .64
Advantage, Inc., a tennis equipment manufacturer, has variable costs of $0.80 per unit of product. In August, the volume of production was 27,000 units, and units sold were 20,500. The total production costs incurred were $30,200. What are the fixed costs per month?
8,600
Which of the following accounts will be included in a post−closing trial balance?
Accumulated Depreciation—Building
Which of the following correctly describes the accounting for administrative expenses of a manufacturing company?
Administrative expenses are period costs and are expensed as incurred.
A business settles a liability by making a payment in cash. How does paying this liability affect the accounting equation of the business? A) Assets decrease; liabilities decrease. B) Liabilities decrease; equity increases. C) Assets increase; liabilities increase. D) Assets increase; equity decreases.
Answer: A
Managerial accounting provides information to: A) internal decision makers. B) outside investors and lenders. C) auditors. D) taxing authorities.
Answer: A
Which of the following is an external user of a business' financial information? A) customers B) cost accountant C) company manager D) the board of directors
Answer: A
Which of the following statements helps analyze the business performance in terms of profitability? A) income statement B) balance sheet C) statement of cash flows D) statement of owner's equity
Answer: A
Scott's Camera Shop started the year with total assets of $80,000 and total liabilities of $40,000. During the year, the business earned revenues of $120,000 and incurred expenses of $70,000. Scott made no additional capital contributions during the year, but did make withdrawals of $60,000. Calculate Scott's net income for the year. A) $50,000 B) $120,000 C) $70,000 D) $80,000
Answer: A Explanation: A) Net income = Revenues - Expenses Net income = $120,000 - $70,000 = $50,000
A business collects $5,000 from its customer which was owed since a previous month. How does this affect the accounting equation of the business? A) Assets increase by $5,000; liabilities decrease by $5,000. B) Assets increase by $5,000; assets decrease by $5,000. C) Assets increase by $5,000; liabilities increase by $5,000. D) Assets increase by $5,000; equity increases by $5,000.
Answer: B
Which of the following is the correct accounting equation? A) Assets + Liabilities = Equity B) Assets = Liabilities + Equity C) Assets + Revenues = Equity D) Assets + Revenues = Liabilities + Expenses
Answer: B
Which of the following is shown on the balance sheet as well as the statement of cash flows? A) Owner's equity (ending balance) B) Net income C) Total assets D) Cash (ending balance)
Answer: D
The assets of Sunlight Company are $270,000 and equity is $90,000. Liabilities will be: A) $60,000. B) $360,000. C) $270,000. D) $180,000.
Answer: D Explanation: D) Assets - Equity = Liabilities $270,000 - $90,000 = $180,000
The assets of Moon Company are $150,000 and liabilities are $90,000. The equity will be: A) $180,000. B) $300,000. C) $240,000. D) $60,000.
Answer: D Explanation: D) Assets - Liabilities = Equity $150,000 - $90,000 = $60,000
IFRS is the main U.S. accounting rule book and is currently created and governed by the FASB.
Answer: FALSE
The balance sheet shows whether or not a business is earning profits.
Answer: FALSE
The income statement is also called the statement of financial position.
Answer: FALSE
The income statement shows whether or not a business can generate enough cash to pay its liabilities.
Answer: FALSE
The statement of cash flows informs users about how much of the earnings were kept and reinvested in the company.
Answer: FALSE
The total of amount of assets that a business possesses, may or may not equal the total of liabilities and equity of the business.
Answer: FALSE
A business can be organized as a sole proprietorship, partnership, corporation, or limited-liability company (LLC).
Answer: TRUE
Business owners use accounting information to set goals, evaluate progress toward those goals, and make adjustments when needed.
Answer: TRUE
By looking at a statement of owner's equity, the effect of withdrawals on the ending balance in owner's equity can be evaluated.
Answer: TRUE
Different users of financial statements focus on the different parts of the financial statements for the information they need.
Answer: TRUE
The left side of the accounting equation measures the amount that the business owes to creditors and to the owner.
Answer: TRUE
The relative proportion of economic resources and obligations would be shown by the balance sheet.
Answer: TRUE
Regarding a classified balance sheet, which of the following statements is correct?
Assets are listed in the order of their liquidity.
Which of the following will most likely be considered an indirect material cost for a bakery?
B.spices (CORRECT) A. eggs C. flour D. milk
Use the following information to calculate the cost of goods sold for The Emmet Company for the month of June:
Beginning Finished Goods Inventory +PLUS+ Cost of Goods Manufactured =EQUALS= Cost of Goods Available for Sale -MINUS- Ending Finished Goods Inventory () =EQUALS= Cost of Goods Sold
Suppose Price Point Furniture issued 150,000 shares of $0.05 par common stock at $5 per share. Which journal entry correctly records the issuance of this stock?
Cash 750,000 CREDIT Common Stock—$0.05 Par Value 7,500 CREDIT Paid-In Capital in Excess of Par-Common 742,500
Received payment from Small, less discount.
Cash 1,169 Accounts Receivable—Small 1,169
Received payment from Jex Company.
Cash 2,900 Accounts Receivable—Jex Company 2,900
Journalize the sales transactions. Explanations are not required. (Record debits first, then credits. Exclude explanations from journal entries.) Apr. 1: Frank sold $30,000 of men's sportswear for cash. Cost of goods sold is $18,000. Begin by preparing the entry to journalize the sale portion of the transaction. Do not record the expense related to the sale. We will do that in the following step.
Cash 30,000 Sales Revenue 30,000
Which item does not appear on a statement of cash flows prepared by the indirect method?
Collections from customers
more steps
Cost of Goods Manufactured (59,100) / Total Units Produced (17,800) = Unit Product Cost (3.32)
Which of the following describes working capital?
Current assets minus current liabilities
Lauren and Elizabeth are partners. Lauren has a capital balance of $125,000 and Elizabeth has a capital balance of $110,000. Harry invested $100,000 to acquire an ownership interest of 30%. The journal entry to record the receipt of Harry's contribution will ________.
D. decrease Lauren, Capital
Requirement 1. Compute the predetermined overhead allocation rate per direct labor dollar. Requirement 2 . Prepare the journal entry to allocate overhead costs for the year.
Estimated overhead cost ÷ Estimated direct labor cost = Predetermined overhead allocation rate 125,000 ÷ $78,125 = 160 Work-in-Process Inventory 107,200 Manufacturing Overhead 107,200 Allocated overhead to WIP.
Purchase of treasury stock.
F-
Cash sale of land (no gain or loss).
I+
Purchase of equipment
I-
Which of the following is true of the statement of cash flows?
It covers a span of time and is dated the same as the income statement.
Mitchell Company receives a bill from one of its suppliers for advertising services received and will pay the supplier next month. How does the receipt of the bill from the supplier affect the accounting equation of Mitchell?
Liabilities increase and equity decreases.
Regarding liabilities, which of the following statements is incorrect? _?_
Liabilities represent one of the two claims to assets. B. Liabilities are economic resources that are expected to benefit the business in the future. This is the correct answer. C. Many, but not all, liabilities have the word payable in their titles. Your answer is not correct. D. A creditor who has loaned money to a business has a claim to some of the business's assets until the business pays the debt. B. Liabilities are economic resources that are expected to benefit the business in the future. IS THE CORREC T ANSWER FOR THIS WRONG QUESTION :)
Purchase merchandise inventory for cash of $2,200.
Merchandise Inventory $2,200 cash $2,200
Acquisition of building by issuance of common stock.
NIF
Decrease in Merchandise Inventory.
O+
Decrease in accounts receivable
O+
Depreciation Expense.
O+
Edwin and Darren have decided to form a partnership. Edwin contributes $82,000 cash and merchandise inventory with a current market value of $15,000. Darren contributes $2,200 cash and office furniture with a current market value of $2,700. When journalizing these transactions ________.
Office Furniture will be debited for $2,700
Purchased raw materials on account, $22,000.
Raw Materials Inventory 22,000 Accounts Payable 22,000
Which of the following accounts will be closed by crediting the Income Summary account?
Service Revenue
Accounting is referred to as the language of business because it is the method of communicating business information to stakeholders.
TRUE
Manufacturing overhead costs allocated to a job amounted to $493,000. The actual manufacturing overhead costs incurred during the year were $530,000. Overhead costs have been underallocated.
TRUE
Manufacturing overhead includes indirect manufacturing costs, such as insurance and depreciation on the factory building.
TRUE
Which of the following is true of a corporation?
The earnings of a corporation may be subject to double taxation.
Which of the following is NOT an assumption of cost−volume−profit (CVP) analysis?
The price per unit changes as volume changes.
Which of the following is a disadvantage of partnership firms?
They have mutual agency which creates personal obligations for each partner.
Benefits are extra compensation items that are not paid directly to an employee.
True
Medicare taxes are a required column in a payroll register.
True
________ is a pay amount stated at an hourly rate.
Wage
Managerial accounting focuses on information for external decision makers.
_ FALSE
Metropolitan Casting Services started the year with total assets of $80,000 and total liabilities of $65,000. The revenues and the expenses for the year amounted to $120,000 and $60,000, respectively. During the year, the company did not receive any additional capital, but the owner did withdrawal $50,000. Calculate the amount of increase or decrease in equity for the year.
a $10,000 increase
Which of the following is most likely a service company?
a law firm
Analysts look for red flags in financial statements that may signal financial trouble. Which of the following is a red flag that suggests that a company may be in trouble?
a significant decrease in net income for several years in a row
In a partnership, mutual agency means that ________.
any partner can bind the business to a contract within the scope of its regular business operations
Cost−volume−profit analysis is NOT useful in________.
calculating operating expenses
Which of the following entries is necessary to close the appropriate depreciation account at the end of the year?
debit Income Summary and credit Depreciation Expense
Which of the following is a prime cost and a conversion cost?
direct labor
A contribution margin income statement classifies costs by function; that is, costs are classified as either product costs or period costs.
false
A corporation is a business organized under federal law that is a separate legal entity.
false
A high times−interest−earned ratio indicates difficulty in paying interest expense.
false
A profitable corporation may make distributions to stockholders in the form of bonuses.
false
A transaction is any event that affects the financial position of the business and can be easily estimated. _?_
false
Capital deficiency occurs when a partner's capital account has a credit balance.
false
During the current year, Dubois, Inc. incurred $7,000 in fixed costs and $13,000 in variable costs. If the number of units produced is halved next year, the company will incur $3,500 as fixed costs and $6,500 as variable costs.
false
Profits and losses in a partnership must be shared based on each partner's capital balances.
false
The sales required to achieve a target profit can be determined by using the contribution margin, contribution margin ratio, or breakeven approaches.
false
The third section presented on the statement of cash flows is the non−cash operating activities section.
false
Printed Q 10 out
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Printed Q 22 out
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Printed Q 23 out
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Printed Q 24 out
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Printed Q 25 out
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Printed Q 8 out
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Printed Q 9 out
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All assets that will not be converted to cash or used up within the business's operating cycle or one year, whichever is greater, are called
long−term assets
net cost of inventory purchased =
net cost of inventory purchased = purchase cost of inventory - purchase returns and allowances - purchase discounts + freight in
The first step in a liquidation is to __________.
sell the assets
Costs are transferred from the balance sheet to the income statement as cost of goods sold when ________.
. finished goods are sold
Blythe Company has provided the following information: Sales price per unit $45 Variable cost per unit 20 Fixed costs per month $12,000 What is the amount of sales in dollars required for Blythe to break even? (Round any percentages to two decimal places and your final answer to the nearest dollar.)
21,598
Nancy and Peter enter into a partnership and decide to share profits and losses as follows: 1. The first allocation is a salary allowance with Nancy receiving $11,000 and Peter receiving $9,000. 2. The second allocation is 15% of the partners' capital balances at year end. On December 31, 2025, the capital balances for Nancy and Peter are $82,000 and $23,000, respectively. 3. Any remaining profit or loss is allocated equally. For the year ending December 31, 2025, the partnership reported a net loss of $83,000. What is Peter's share of the net loss?
46,925
The purposes of the statement of cash flows are to
A. determine ability to pay debts and dividends. B. evaluate management decisions. C. predict future cash flows.
________ represent(s) a short−term liability created by purchasing "on account."
Accounts Payable
Which of the following accounts will have an ending balance after the closing process is completed?
Accumulated Depreciation
Star Homes Inc. just recorded a transaction in its books of accounts. If this transaction increased the total liabilities by $7,000: A) assets must increase, or equity must decrease by $7,000. B) assets or equity must decrease by $7,000. C) both assets and equity must each decrease by $3,500. D) assets must decrease by $7,000.
Answer: A
A sole proprietor makes a cash withdrawal from his company. How does this transaction affect the accounting equation? A) Assets, liabilities, and equity remain the same. B) Assets decrease; equity decreases. C) Assets increase; liabilities decrease. D) Assets decrease; equity increases.
Answer: B
Caleb Brown is the sole owner of a bicycle sales and repair shop from several years. Which of the following business types would limit Caleb's personal liability exposure to the entity's debts? A) Partnership B) Limited-liability company C) Sole proprietorship D) Limited-liability partnership
Answer: B
Martin Supply Service received $1,000 cash from a customer which was owed to the business from the previous month. What is the effect of the cash receipt on the accounts of the business? A) Accounts Receivable decreases; Martin, Capital decreases. B) Cash account increases; Accounts receivable decreases. C) Accounts Payable increases; Martin, Capital decreases. D) Cash increases; Accounts Payable decreases.
Answer: B
The field of accounting that focuses on providing information for external decision makers is: A) managerial accounting. B) financial accounting. C) cost accounting. D) nonmonetary accounting.
Answer: B
Which of the following financial statements shows the changes in owner's capital during a period of time? A) income statement B) statement of owner's equity C) statement of cash flows D) balance sheet
Answer: B
Which of the following statements would be most useful if an analyst wants to know the likelihood of repayment of his debts? A) income statement B) balance sheet C) statement of owner's equity D) statement of cash flows
Answer: B
As per the ________, the entity will remain in operation for the foreseeable future. A) economic entity concept B) monetary unit assumption C) going concern assumption D) cost principle
Answer: C
From a legal perspective, a sole proprietorship: A) is an entity separate from its proprietor. B) must have at least two owners. C) is not a distinct entity from its proprietor. D) is subject to strict regulation of the SEC.
Answer: C
Hamilton Lawn Service incurred $500 as labor expense and promised to pay the labor agency within 30 days. Which of the following accounts would increase as a result of this transaction? A) Accounts Receivable B) Cash C) Accounts Payable D) Owner's Capital
Answer: C
The balance sheet is a snapshot of the entity. Which of the following items are included on the balance sheet? A) revenues B) expenses C) assets D) withdrawals
Answer: C
The formation of a partnership firm requires a minimum of: A) four partners. B) three partners. C) one partner. D) two partners.
Answer: D
The income statement presents a summary of an entity's revenues and expenses for a period of time. Which of the following statements is true of an income statement? A) There is net income when total revenues are lesser than total expenses. B) There is a net loss when total expenses are lesser than total revenue. C) There is a net loss when total expenses are greater than total liabilities. D) There is net income when total revenues are greater than total expenses.
Answer: D
Sharon Samson owns Reliable Waterworks which provides plumbing service. Transactions of Reliable Waterworks during the first year of operations are given below: A) Sharon contributed $14,000 into a new checking account for the business and recorded capital contribution. B) Paid $2,000 for equipment to be used for plumbing repairs. C) Borrowed $15,000 from a local bank and deposited the money in the checking account. D) Paid $600 as rent for the year. E) Paid $500 for plumbing supplies to be used on various jobs in the future. F) Completed a plumbing repair project for a local lawyer and received $3,500. Calculate the amount of total assets balance at the end of the first year. A) $2,500 B) $2,000 C) $29,000 D) $31,900
Answer: D Explanation: D) Bank ($14,000 + $15,000) $29,000 Cash ($3,500 - $2,000 - $600 - $500) 400 Equipment 2,000 Supplies 500 Total assets $31,900
Glorious Gloria, a florist, had the following transactions in August: Earned $2,000 as revenues on account; collected $4,000 from a customer for goods sold last month; incurred $600 of repair expense and paid cash; paid $200 to a supplier that it owed from the previous month. What is the net income in August? A) $500 B) $5,700 C) $2,700 D) $1,400
Answer: D Explanation: D) Net income = Revenue - Expenses = $2,000 - $600 = $1,400.
Sharon Samson starts a plumbing service named Reliable Waterworks. Selected transactions are described as follows: A) Sharon deposited $8,000 into a new checking account for the business and recorded the capital contribution. B) Paid $5,000 cash for equipment to be used for plumbing repairs. C) Borrowed $10,000 from a local bank and deposited the money in the checking account. D) Paid $800 rent for the year. E) Paid $300 cash for plumbing supplies to be used in future. F) Completed a plumbing repair project for a local lawyer and received $4,000 cash. Calculate the net income. A) $2,900 B) $3,700 C) $4,000 D) $3,200
Answer: D Explanation: D) Net income = Revenues - Expenses Net income = $4,000 - $800 = $3,200
Equity increases when revenues are earned.
Answer: TRUE
Mulberry Company collected $16,000 from one of its customers, the amount owed from the previous month. How does this affect the accounting equation for Mulberry? _?_
Assets increase by $16,000; assets decrease by $16,000.
Candle Shop, Inc. has net sales on account of $1,600,000. The average net accounts receivable are $640,000. Calculate the days' sales in receivables.(Use 365 days for any calculations. Round any intermediate calculations and your final answer to two decimal places.)
Days' Sales in Inventory = 365 / inventory turnover 365 / 1,600,000 (net sales on account) = 2.275 E -4 2.275 E -4 * 640,000 (average net accounts receivable) = 145.6 146 DAYS!
Issuance of common stock
F+
Issuance of common stock.
F+
Issuance of long-term note payable to borrow cash.
F+
Payment of cash dividend.
F-
Payment of dividends
F-
Payment of long-term debt.
F-
Overallocated manufacturing overhead is adjusted by debiting the Cost of Goods Sold account.
FALSE
When a previously declared dividend is paid, which of the following occurs?
Liabilities decrease.
Which of the following statements is true?
Neither a stock dividend nor a stock split will result in net gains or losses.
54) Perez Biofuels Company is preparing its statement of cash flows using the indirect method. Refer to the following information.1) Repayments on Long-Term Notes Payable $58,0002) New borrowing on Long-Term Notes Payable $19,000 Which of the following statements is accurate regarding the statement of cash flows?
Net cash used for financing activities will amount to $(39,000). 58,000 - 19,000 = -39,000
Depreciation expense
O+
Increase in Accounts Payable.
O+
Net income.
O+
Materiality concept
Principle that states significant items must conform to GAAP.
Requirement 1. What is the purpose of the statement of cash flows?
The purpose of the statement of cash flows is to show where cash came from and how cash was spent during the period.
Dominic and Morgan are partners. Dominic has a capital balance of $370,000 and Morgan has a capital balance of $235,000. Morgan sells $85,000 of his ownership to Lance. Which of the following is TRUE of the items in the balance sheet?
The total equity remains unchanged.
Last-in, first-out (LIFO)
Treats the most recent/newest purchases as the first units sold.
First-in, first-out (FIFO)
Treats the oldest inventory purchases as the first units sold.
Requirement 1. Compute the trend analysis for net sales and net income (use 2020 as the base year).
Trends in net sales and net income are both upward, which is positive.
Employer FICA is paid by the employer and recorded as a payroll tax expense.
True
Mutual agency means that any partner can legally bind the other partners and the partnership to business contracts within the scope of the business's regular operations.
True
No single ratio tells the whole picture of any company's performance.
True
State unemployment compensation tax (SUTA) is paid by the employer and is not deducted from an employee's gross earnings.
True
The cash paid for the purchase of equipment will typically be shown in the investing activities section of the statement of cash flows.
True
The direct method restates the income statement in terms of cash.
True
Philadelphia Acoustics builds innovative speakers for music and home theater systems. Identify each cost as variable (V), fixed (F), or mixed (M), relative to number of speakers produced and sold.
Units of production depreciation on routers used to cut wood enclosures. V Wood for speaker enclosures. V Patents on crossover relays. F Total compensation to salesperson who receives a salary plus a commission based on meeting sales goals. M Crossover relays. V Straight-line depreciation on manufacturing plant. F Grill cloth. V Insurance on the corporate office. F Glue V Quality inspector's salary F
Which of the following is an advantage of a limited liability company compared to a partnership?
Unlike a partnership, the members of a limited liability company are not personally liable for the business's debts.
Requirement 6. Should you invest in the common stock of WRS Athletic Supply, Inc.? Fully explain your final decision.
WRS's trend of netsales, netincome, inventoryturnover, earnings pershare, andtimes-interest-earned have improved. All other measures have held steady or improved. There are no apparent trouble spots in WRS's data.Therefore, invest in WRS for increasing dividends and steady growth.
Incurred and paid Web site expenses, $2,700.
Website Expenses 2,700 Cash 2,700
Allocated manufacturing overhead to jobs, 220% of direct labor costs.
Work-in-Process Inventory 17,160 Manufacturing Overhead 17,160
Used in production: direct materials, $5,500; indirect materials, $4,500.
Work-in-Process Inventory 5,500 Manufacturing Overhead 4,500 Raw Materials Inventory 10,000
Incurred manufacturing wages of $13,000, 60% of which was direct labor and 40% of which was indirect labor.
Work-in-Process Inventory 7,800 Manufacturing Overhead 5,200 Wages Payable 13,000
Which of the following companies is most likely to use process costing?
a breakfast cereal company
A company sold merchandise with a cost of $240 for $410 on account. The seller uses the perpetual inventory system. The entry to record the cost of merchandise sold would include ________.
a debit to Cost of Goods Sold and a credit to Merchandise Inventory for $240
Which of the following is a period cost?
administrative cost
Virginia Company uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet: Virginia Company Comparative Balance Sheet December 31, 2024 and 2023 2024 2023 Increase /(Decrease) Accounts Payable $4,000 $6,000 $(2,000) Accrued Liabilities 2,000 1,000 1,000 Long−term Notes Payable 84,000 90,000 (6,000) Total Liabilities $90,000 $97,000 $(7,000) How will the change in Accounts Payable be shown on the statement of cash flows?
as a deduction from Net Income in the operating activities section
Contribution margin ratio is equal to ________.
contribution margin divided by net sales revenue
On June 30, Caroline, Inc. finished Job 750 with total job costs of $4,500 and transferred the costs to Finished Goods Inventory. On July 6, Caroline sold goods from Job 750 to a customer for $5,600 cash. Which of the following is the correct entry needed to record the revenue earned? Assume the perpetual inventory system is used.
debit Cash $5,600 and credit Sales Revenue
At the beginning of the year, Judge Manufacturing had the following account balances: Work−in−Process Inventory 20,000 Finished Goods Inventory 8,000 Manufacturing Overhead 0 Cost of Goods Sold 0 Sales Revenue 0 The following additional details are provided for the year: Direct materials placed in production $82,500 Direct labor incurred 191,600 Manufacturing overhead incurred 301,600 Manufacturing overhead allocated to production 297,100 Cost of jobs completed and transferred to finished goods 501,000 Cost of Goods Sold 500,000 The ending balance in the Finished Goods Inventory account is a ________.
debit of 9,000
The entry to record the purchase of raw materials on account would include a ________.
debit to the Raw Materials Inventory account
Kenny and Jeff form a partnership. During the year, Kenny and Jeff withdraw $33,000 and $22,000, respectively. Which of the following will be included in the journal entry to record the withdrawals?
debit to Kenny, Withdrawals for $33,000
The relationship between total liabilities and total assets is the ________.
debt ratio
Accounting for stated value common stock is identical to accounting for par value stock.
false
California Corp. uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet: California Corp. Comparative Balance Sheet December 31, 2024 and 2023 2024 2023 Increase /(Decrease) Accounts Payable $8,000 $9,000 $(1,000) Accrued Liabilities 3,000 1,500 1,500 Long−term Notes Payable 56,000 60,000 (4,000) Total Liabilities $67,000 $70,500 $(3,500) The change in Accrued Liabilities is shown as a negative cash flow in the adjustments to net income.
false
Fixed cost per unit is assumed to be constant within a particular relevant range of activity.
false
For the accounting equation to balance, a transaction must affect both sides of the equation. _?_
false
If a new partner is admitted by giving more cash than he or she received in interest, then there will be a bonus to the new partner.
false
Sunshine Blender Company sold 3,000 units in October at a sales price of $50 per unit. The variable cost is $15 per unit. Calculate the total contribution margin.
false
The Salaries Payable account is a permanent account.
false
The asset turnover ratio is a way to evaluate how well a company can pay its short−term liabilities.
false
The beginning balance in the capital account of Woodlands Technologies Company was $88,000. The revenues and expenses amounted to $55,000 and $43,000, respectively. The owner made no additional investments and no withdrawals during the year. The total owner's equity at the end of the year will be $143,000.
false
The breakeven point is the point where the sales revenues are equal to the fixed costs.
false
The cash flows from investing activities is completed by reviewing the long−term liabilities section of the balance sheet.
false
The cost of direct materials cannot be easily traced to the manufactured product, and therefore, it is a component of manufacturing overhead.
false
The declaration of a cash dividend does not create an obligation for the corporation.
false
The financing activities section of the statement of cash flows is often considered the most important section because it details the day-to-day cash receipts and payments of a company.
false
The gross profit percentage is an indicator of how well a company is positioned to pay off its short−term liabilities
false
Normally, companies with low gross profit percentages will have low asset turnover.
false Just because a company has a low gross profit percentage does not mean that they have a low asset turnover.
Unexpected or inconsistent movements among sales, merchandise inventory, and receivables reflect normal market conditions and do not pose red flags in financial statements.
false Unexpected or inconsistent movements among sales, merchandise inventory, and receivables reflect normal market conditions and DO POSE RED FLAGS in financial statements.
Which of the following is paid by the employer only?
federal unemployment tax
based on most recent purchase
first−in, first−out FIFO
gross profit percentage =
gross profit / net sale revenue
Petrous Company incurs both fixed and variable production costs. Assuming that production is within the relevant range, if volume goes up by 24%, then the total variable costs would ________.
increase by 24%
Jeong Company incurs both fixed and variable production costs. Assuming that production is within the relevant range, if volume goes up by 26%, then the total costs would ________.
increase by an amount less than 26%
Manufacturing overhead is also referred to as ________.
indirect manufacturing costs
Which of the following would be included as manufacturing overhead for a manufacturing company?
indirect materials cost
One of the assumptions of cost−volume−profit (CVP) analysis is that there are no changes in the ________.
inventory levels
The ________ section of the statement of cash flows includes increases and decreases in long−term assets.
investing activities
In preparing a statement of cash flows using the indirect method, the Depreciation Expense ________.
is added back as an adjustment to Net Income in the operating activities section
Which of the following is an advantage of the corporate form of business?
limited liability of stockholders
A(n) ________ must carry large insurance policies to protect the public in case the partnership is found guilty of malpractice.
limited liability partnership
Notes Payable due in two years are classified as ________.
long−term liabilities
Selected data for three companies are given below. All inventory amounts are ending balances and all amounts are in millions. Using the above data, determine the company type. Identify each company as a service company, merchandising company, or manufacturing company.
manufacturing company. service company. merchandising company. *SEE GOOGLE DOC FOR THE INFO*
The price/earnings ratio shows the ________.
market price of $1 of earnings EQUATION IS = market price per share of common stock / earnings per share
adjustment entry
merch inv. balance before - actual merch inv. on hand
Canada Company needs to purchase a property to build their headquarters. An investor is willing to exchange land with a market value of $700,000 for shares of common stock. On the statement of cash flows, this transaction would be shown as part of ________.
non−cash investing and financing activities
Allen Services purchased 20 delivery vehicles by issuing a 20−year installment note payable for $720,000. On the statement of cash flows, this transaction would be shown in the ________.
non−cash investing and financing activities section
Which of the following is a period cost for a manufacturing company?
office rent
Which of the following sections of the statement of cash flows is presented differently between the direct method and indirect method?
operating activities
Period costs are the ________.
operating costs that are expensed in the accounting period in which they are incurred.
A(n) ________ does NOT require any permission from the state to be set up.
partnership
The following data are adapted from the financial statements of Beth's Shops, Inc.: Prepare Beth's condensed balance sheet as of December 31, 2024
photo
Which of the following is a cash outflow for a financing activity on the statement of cash flows?
purchase of treasury stock
Preferred stockholders ________.
receive a dividend preference over common stockholders
Variable cost per unit, within the relevant range, will ________.
remain the same as production levels change
Which of the following would be considered a product cost for a manufacturing company?
salary of the production manager
Which of the following actions will increase the Common Stock account?
stock dividend declared and distributed
When a job order costing system is used, actual manufacturing overhead costs are debited to ________.
the Manufacturing Overhead account
Which of the following would most likely be accounted for using a job order costing system?
the creation of wedding photography portraits
Which of the following correctly describes the term cost driver?
the primary factor that causes a cost to be incurred
Which of the following is a reason for a company to announce a stock split?
to decrease the market price at which the stock is trading
Contribution margin is the difference between net sales revenue and variable costs.
true
Ending inventory is calculated by multiplying the number of units on hand by the unit cost.
true
Establishing controls for efficiency of the payroll process is one of the main key controls for payroll.
true
Factory rent, as well as factory property taxes and insurance, are included in manufacturing overhead.
true
Financing activities on the statement of cash flows affect the long−term liability and equity accounts.
true
Stockholders of a corporation are not personally liable for the corporation's debt.
true
The non−cash investing and financing activities section of the statement of cash flows appears as a separate schedule of the statement of cash flows or in the notes to the financial statements.
true
The post−closing trial balance shows the updated Owner, Capital balance.
true
The times−interest−earned ratio measures the number of times earnings before interest and taxes can cover interest expense.
true
The Accounts Receivable account is a permanent account.
true
The Depreciation Expense account is a temporary account.
true
The acid−test ratio measures a company's ability to pay all its current liabilities if they came due immediately.
true
The statement of partners' equity shows the changes in each partner's capital account for a specific period of time.
true
The Owner, Capital account is a permanent account.
true
Total variable costs change in direct proportion to changes in the volume of production.
true
Upon liquidation, if there is a sale of assets at a loss, the loss must be allocated to the partners' capital accounts based on their profit−and−loss−sharing ratio.
true
When a corporation issues no−par stock, it debits the asset received and credits the stock account.
true
When a corporation issues stock at par value, the Cash account is debited and the Common Stock account is credited for an amount equal to the number of shares issued times the par value per share.
true
Which of the following costs change in total in direct proportion to a change in volume?
variable costs
Connecticut, Inc. Comparative Balance Sheet December 31, 2025 and 2024 2025 2024 Increase/(Decrease) Cash $28,000 $19,000 $9,000 Accounts Receivable 35,000 39,000 (4,000) Merchandise Inventory 56,000 26,000 30,000 Plant and Equipment 126,000 90,000 36,000 Accumulated Depreciation−Plant and Equipment (46,000) (41,000) (5,000) Total Assets $199,000 $133,000 $66,000 Additional information provided by the company includes the following: 1. Equipment was purchased for $70,000 with cash. 2. Equipment with a cost of $34,000 and accumulated depreciation of $7,500 was sold for $46,000. What was the amount of net cash provided by (used for) investing activities?
$(24,000) 1. Equipment was purchased for $70,000 with cash. 2. Equipment with a cost of $34,000 and accumulated depreciation of $7,500 was sold for $46,000. 46,000 - 70,000 = -24,000 since the 70,000 was purchased with cash and only sold for 46,000, so the 24,000 has got to come from investing to make up for the loss difference.
McCoy Company provides plumbing services. Transactions during the first year of operations are provided below. a) Received $13,000 cash from the owner Sharon McCoy. b) Paid $1,100 cash for equipment to be used for plumbing repairs. c) Borrowed $14,000 from a local bank and deposited the money in the checking account. d) Paid $300 rent for the year. e) Purchased $200 of office supplies by cash. f) Completed a plumbing repair project for a local lawyer and received $3,200 cash. Calculate the amount of total liabilities at the end of the first year.
$14,000
The equity of Alliance Company is $100,000 and the total liabilities are $90,000. The total assets are ________.
$190,000
Hank earns $18.50 per hour with time−and−a−half for hours in excess of 40 per week. He worked 44 hours at his job during the first week of March, 2024. Hank pays income taxes at 15% and 7.65% for OASDI and Medicare. All of his income is taxable under FICA. Determine Hank's net pay for the week. (Do not round any intermediate calculations, and round your final answer to the nearest cent.)
$658.25 40 x $18.50 = $740 1.5 x $18.50 = $27.75 10 overtime x $27.75 = $277.5 $740 + $277.5 = $1,017.5 income taxes -> $1,017.5 x 7.65% = 77.84 $1,017.5 x 15% = 152.63 $1,017.5 - 77.84 - 152.63 = 787.03
The formula for calculating the cash ratio is ________.
(Cash + Cash equivalents) / Total current liabilities
A 15% increase in production volume will result in a ________.
15% increase in total variable costs
John and Anne are partners. John has a capital balance of $48,000 and Anne has a capital balance of $35,000. John sells $13,000 of his ownership to Bailey. Which of the following is TRUE of the journal entry to admit Bailey?
Bailey, Capital will be credited for $13,000.
The Sarbanes-Oxley Act (SOX) requires companies to review internal control and take responsibility for the accuracy and completeness of their financial reports.
Answer: TRUE
The guidelines for accounting information are called Generally Accepted Accounting Principles (GAAP).
Answer: TRUE
The heading of a balance sheet will show the date as a specific date, not a period of time.
Answer: TRUE
The statement of owner's equity informs users about how much of the earnings were kept and reinvested in the company.
Answer: TRUE
Granger Cards is a manufacturer of greeting cards. Classify its costs by matching the costs to the terms.
Artists' wages ----- Direct labor Wages of materials warehouse workers---- Indirect labor Paper ------ Direct materials Depreciation on manufacturing equipment----- Other manufacturing overhead Manufacturing plant manager's salary---- Indirect labor Property taxes on manufacturing plant---- Other manufacturing overhead Glue for envelopes--- Indirect materials
Stock issued at amounts in excess of par value results in a gain that is reported on the income statement.
false
The inventory of a merchandising company consists of Raw Materials Inventory, Work−in−Process Inventory, and Finished Goods Inventory.
false
The last−in, first−out (LIFO) costing system is permitted under International Financial Reporting Standards (IFRS).
false
The permanent accounts—assets, liabilities, and Owner, Capital accounts—are closed at the end of each accounting period.
false
When computing investing cash flows, it is helpful to evaluate the T−accounts for each long−term liability.
false
When stock is issued for assets other than cash, the transaction is always recorded at the market value of the stock issued.
false
While preparing a statement of cash flows using the indirect method, an increase in current assets is added to net income to arrive at net cash provided by operating activities.
false
For the year ended December 31, 2025, the Statement of Cash Flows for Mississippi Family Auto Supply shows the following information: Net Cash Used by Operating Activities, $(70,000); Net Cash Provided by Investing Activities, $49,000; and Net Cash Provided by Financing Activities, $41,000. Cash has increased by $160,000.
false ----- 49,000 + 41,000 = 90,000 90,000 - 70,000 = 20,000
Days' sales in inventory measures how quickly a company can collect its receivables.
false Days sales of inventory (DSI) is the average number of days it takes for a firm to sell off inventory.
A general partner in a limited partnership ________.
has unlimited personal liability in the partnership
purchase discount
the amount of the invoice - the returns and allowances.
Which of the following sections of the statement of cash flows includes activities that increase and decrease long−term liabilities and stockholders' equity?
the financing activities section
When an existing partner sells his interest to another party in a personal transaction ________.
the journal entry simply debits the withdrawing partner's capital account and credits the new partner's capital
Which of the following sections of the statement of cash flows include activities that affect current assets and current liabilities on the balance sheet? (Assume the indirect method is used.)
the operating activities section
If a partner's capital account is credited with the amount that he or she contributed in cash, which of the following financial statements will be affected?
the statement of partners' equity
Which of the following is a reason why many companies require a photo ID when employees pick up their paychecks?
to avoid writing a paycheck to a fictitious person
A law firm provides legal services for clients who do not pay immediately. As a result of this transaction, assets and revenues increase.
true
A small stock dividend, a large stock dividend and a stock split have no effect on total assets.
true
A stock split decreases par value per share, whereas stock dividends do not affect par value per share.
true
Admission of a new partner to a partnership, by purchasing an existing partner's interest, simply transfers capital from one partner's account to another.
true
An S corporation is a corporation with 100 or fewer stockholders that can elect to be taxed as a partnership.
true
Assets are something of value that the business owns or has control of.
true
CVP analysis assumes that the sales price per unit does not change as volume changes.
true
In a manufacturing company, advertising and marketing costs are examples of period costs.
true
In a manufacturing company, the salary of the sales staff is an example of a period cost.
true
In a manufacturing company, wages and benefits of factory managers are treated as product costs.
true
In a partnership, a person can become a partner by purchasing an existing partner's interest.
true
Liabilities represent creditors' claims on the business's assets.
true
Manufacturing companies produce their own products, but merchandising companies do not.
true
Merchandise inventory and prepaid expenses are excluded from the acid−test ratio.
true
Repair and maintenance costs for manufacturing equipment are product costs.
true
Selling and administrative expenses are subtracted from gross profit to obtain operating income.
true
Stated value stock is no−par stock that has been assigned an amount similar to par value.
true
Stock dividends have no effect on the total amount of stockholders' equity.
true
The closing process helps in measuring each period's net income separately from all other periods.
true
The current ratio is calculated as total current assets divided by total current liabilities.
true
The declaration date is the date the corporation prepares a journal entry to record that stockholders will receive dividend checks.
true
The dividend yield can be calculated for both common and preferred stockholders.
true
The four types of events that affect equity are owner's capital, owner's withdrawals, revenues, and expenses.
true
The issue price is the price the stock initially sells for the first time it is sold.
true
The par value of a stock has no relation to the market value.
true
The perpetual inventory system keeps a running computerized record of inventory and cost of goods sold.
true
The process of going out of business by selling the entity's assets, paying its liabilities, and distributing any remaining cash to the partners based on their equity balances is known as liquidation.
true
The sales level at which operating income is zero is called the breakeven point.
true
Washington Company is preparing its statement of cash flows using the indirect method. Refer to the following portion of the comparative balance sheet: Washington Company Comparative Balance Sheet December 31, 2025 and 2024 2025 2024 Increase/(Decrease) Accounts Payable $9,000 $5,000 $4,000 Accrued Liabilities 4,000 1,300 2,700 Long−term Notes Payable 58,000 67,000 (9,000) Total Liabilities $71,000 $73,300 $(2,300) Additional information provided by the company includes the following: 1. During 2025, the company repaid $37,000 of long−term notes payable. 2. During 2025, the company borrowed $28,000 on a new long−term note payable. Based on the above information only, what amount of net cash flow would be shown in the financing section of the statement of cash flows?
$(9,000) because Long−term Notes Payable goes with financial ----------------------------------- 1. During 2025, the company repaid $37,000 of long−term notes payable. 2. During 2025, the company borrowed $28,000 on a new long−term note payable. 37,000 - 28,000 = 9,000 ALSO the question tells us (9,000) where it says Long-term Notes payable.
Performed services for $3,000 on account; received cash on account, $6,000; paid $900 for repair expense; paid $1,900 to a supplier that it owed from the previous month. What is the combined effect on Cash of these June transactions? _?_
$3,200 increase
Tim's gross pay for this month is $8,850. His gross year−to−date pay, prior to this month, totaled $127,000. What is the amount of FICA tax withheld from Tim's pay for this month? (Assume an OASDI rate of 6.2%, applicable on the first $132,900 earnings, and a Medicare rate of 1.45%, applicable on all earnings. Do not round any intermediate calculations, and round your final answer to the nearest cent.)
$494.13
Brad's gross pay for the month is $8,400. His deduction for federal income tax is based on a rate of 24%. He has no voluntary deductions. His year−to−date pay is under the limit for OASDI. What is Brad's net 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 dollar.)
$5,741 Gross Pay $8,400 Less: OASDI 520.8 Less: Medicare 121.8 Less: Federal Income Tax 2,016 Net Pay $5,741.4
Aaron, Inc. estimates direct labor costs and manufacturing overhead costs for the coming year to be $750,000 and $510,000, respectively. Aaron allocates overhead costs based on machine hours. The estimated total labor hours and machine hours for the coming year are 20,000 hours and 8,000 hours, respectively. What is the predetermined overhead allocation rate? (Round your answer to the nearest cent.)
$63.75 per machine hour 510,000 / 8,000
Sybil, Inc. uses a predetermined overhead allocation rate to allocate manufacturing overhead costs to jobs. The company recently completed Job 300X. This job used 15 machine hours and 3 direct labor hours. The predetermined overhead allocation rate is calculated to be $46 per machine hour. What is the amount of manufacturing overhead allocated to Job 300X using machine hours as the allocation base?
$690
Mezine, Inc. sells a product with a contribution margin of $15 per unit. Fixed costs are $2,850 per month. How many units must Mezine sell to breakeven? begin by showing the formula and then entering the amounts to calculate the units Mezine must sell to break even.
(Fixed costs 2580 + Target profit. 0 ) ÷ CM per unit. 15 = Required sales in units. 190
Requirement 1. Compute earnings per share (EPS) for 2024 for Excel's. Round to the nearest cent. Begin by selecting the formula to calculate Excel's Companies' EPS. Then enter the amounts and calculate the EPS for 2024 Requirement 2. Compute Excel's Companies' price/earnings ratio for 2024. The market price per share of Excel's stock is $17.50. Begin by selecting the formula to calculate Excel's Companies' price/earnings ratio. Then enter the amounts and calculate the EPS for 2024. Requirement 3. What do these results mean when evaluating Excel's Companies' profitability?
(Net income - Preferred dividends) ÷ Weighted avg number of CSO COMMON SHARES OUTSTANDING = EPS EARNINGS PER SHARE ($14,100 - $0) ÷ $15,000 = $0.94 Market price per share of CS ÷ Earnings per share = Price/earnings ratio $17.50 ÷ $0.94 = 18.62 's Companies' price/earnings ratio for 2024 means that thecompany's stock is selling at 18.62 TIMES ONE YEAR'S EARNINGS PER SHARE. This is HIGH. This indicates that investors are paying a HIGHER PRICE for the stock compared to itsearnings, EVEN MORE SO than the industry average. EXPLAINED: Net income - preferred dividends / weighted average number of common shares outstanding
Which of the following would be considered cash inflows from financing activities?
- Cash received from the issuance of common stock - Cash received from issuing long-term bonds
LIFO Facts
- The last units in are assumed to be the first units sold. - This method leaves the oldest costs in ending inventory. - LIFO is an assumption about how costs flow.
Q−dot Manufacturing uses a predetermined overhead allocation rate based on direct labor hours. It has provided the following information for the year: Manufacturing overhead costs allocated to production $189,000 Actual direct materials cost $560,000 Actual direct labor cost $2,470,000 Actual direct labor hours 9,090 direct labor hours Estimated machine hours 180,000 machine hours Based on the above information, calculate Q−dot's predetermined overhead allocation rate. (Round your answer to two decimal places.)
. $20.79 per direct labor hour Manufacturing overhead costs allocated to production / Actual direct labor hours= 189,000 / 9,090 = 20.79
The journal entry to issue $600 of direct materials and $30 of indirect materials to production involves debit(s) to the ________.
. Work−in−Process Inventory account for $600 and Manufacturing Overhead account for
Rios Corporation reports costs for the year as follows: Direct Materials Used $370,000 Wages to Line Workers 145,000 Office Rent 62,500 Indirect Materials Used 640,000 How much is the total product costs for the year?
1,155,000 add all butdontaddRENT
Gardner Machine Shop estimates manufacturing overhead costs for the coming year at $307,000. The manufacturing overhead costs will be allocated based on direct labor hours. Gardner estimates 5,000 direct labor hours for the coming year. In January, Gardner completed Job A33, which used 70 machine hours and 24 direct labor hours. What was the amount of manufacturing overhead allocated to Job A33? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)
1,474 307,000 / 24 = 12791.67 + 5000 = close?
Disadvantages of a partnership compared to a sole proprietorship and a corporation
1. Mutual agency and unlimited liability create personal obligations for each partner 2. Partnership agreement may be difficult to formulate 3. Relations among partners may be fragile
Seven items that would need to be incorporated into the written partnership agreement
1. Name, location, and nature of business 2. Name, capital contribution, and duties of each partner 3. Procedures for admitting a new partner 4. Method of sharing profits and losses among the partners 5. Procedures for withdrawal of assets by the partners 6. Procedures for withdrawal of a partner from the partnership 7. Procedures for liquidating the partnership
Advantages of a partnership over a sole proprietorship and a corporation
1. Partnerships bring together the abilities of more than one person 2. Less expensive to organize than a corporation 3. Partners working well together can add more value than by working alone 4. No double taxation of partnerships 5. Partnerships can raise more money than a sole proprietor
The financial statements for Stephens' Electric Company include the following items: 2025 2024 Cash $56,000 $54,000 Cash Equivalents 24,500 15,000 Net Accounts Receivable 27,000 36,000 Merchandise Inventory 83,000 66,000 Total Assets 525,000 548,000 Accounts Payable 37,500 32,000 Salaries Payable 25,000 18,000 Long−term Note Payable 63,000 59,000 Income From Operations 132,500 119,000 Interest Expense 34,000 32,000 Compute the 2024 cash ratio. (Round your answer to two decimal places.)
1.38
Hernando Manufacturing, Inc. reported the following information for the year: Number of Units Produced 150,000 Number of Units Sold 63,000 Cost of Goods Manufactured $270,000 Cost of Goods Sold 53,500 Sales Revenue 130,000 Gross Profit 72,400 Operating Expense 726,000 What was the unit product cost? (Round your answer to the nearest cent.)
1.80 Cost of Goods Manufactured $270,000 / Number of Units Produced 150,000 = 1.8
A cellphone service provider charges $6 per month and $0.40 per minute per call. If a customer's current bill is $55.00, how many minutes did the customer use? (Round any intermediate calculations and your final answer to the nearest whole minute.)
123 mins
The financial statements for Uptown Service Company include the following items: 2025 2024 Cash $45,500 $41,000 Short−term Investments 28,000 20,000 Net Accounts Receivable 56,000 55,000 Merchandise Inventory 161,000 49,000 Total Assets 531,000 554,000 Accounts Payable 134,500 126,000 Salaries Payable 17,000 12,000 Long−term Note Payable 56,000 60,000 Compute working capital for 2025.
139,000
A company reports total assets of $930,000 and stockholders' equity of $540,000. Calculate the debt ratio. (Round your answer to two decimal places.)
14.94%
fire Cat, Inc. selected cost data for the year are shown below: Cost of Goods Manufactured $146,400 Work−in−Process Inventory, Jan. 1 18,500 Work−in−Process Inventory, Dec. 31 22,500 Direct Materials Used 15,600 What is the total of manufacturing costs incurred by Fire Cat, Inc. during the year?
1500,400 Work−in−Process Inventory, Jan. 1 18,500 MINUS Work−in−Process Inventory, Dec. 31 22,500 = 4000 4000 + Cost of Goods Manufactured $146,400 = 1500,400
Elephant, Inc.'s cost of goods sold for the year is $2,200,000, and the average merchandise inventory for the year is $129,000. Calculate the inventory turnover ratio of the company. (Round your answer to two decimal places.)
17.05 times
Belstone, Inc. is a merchandiser of stone ornaments. It sold 15,000 units during the year. The company has provided the following information: Sales Revenue $515,000 Purchases (excluding Freight In) 327,000 Selling and Administrative Expenses 33,500 Freight In 15,900 Beginning Merchandise Inventory 41,500 Ending Merchandise Inventory 56,000 How much is the gross profit for the year?
186,600 Total Revenue - Total Expenses = Profit. Profit Sales Revenue $515,000 - Purchases (excluding Freight In) 327,000 = 188000 188000 - Freight In 15,900 = 172100 Beginning Merchandise Inventory 41,500 - Ending Merchandise Inventory 56,000 = 14500 172100 + 14500 = 186600
Harry, Tony, and Liza run a partnership firm and share in the profits 1:3:2, respectively. In the process of liquidation, the partnership sells non−cash assets, having a book value of $78,000, for $93,000. What would be the amount credited to Harry's capital account from his share of the gain on sale of assets? (Do not round intermediary calculations and round the final answer to the nearest whole dollar.)
2,500
Kim Airedale, a manager of Waggers, Inc., was reviewing the water bills of a dog daycare and spa. She determined that its highest and lowest bills of $3,800 and $2,800 were incurred in the months of May and November, respectively. If 500 dogs were washed in May and 100 dogs were washed in November, what was the variable cost per dog associated with the company's water bill? (Round your answer to the nearest cent.)
2.50 (3,800 - 2,800 = 1,000) / (500-100= 400) = 1,000 / 400 = 2.5
McLeod, Inc. incurred fixed costs of $350,000. Total costs, both fixed and variable, are $500,000 when 51,000 units are produced. It sold 34,000 units during the year. Calculate the variable cost per unit. (Round your answer to the nearest cent.)
2.94
A corporation used $34,000 of direct materials. It incurred $73,000 in direct labor costs and $113,500 in manufacturing overhead costs during the period. What is the cost of goods manufactured if the beginning and ending Work−in−Process Inventories were $28,500 and $20,000, respectively?
229,000 sub 28,500 - 20,000 = 8,500 now add all numbers :)
Sanchez Company reports the following costs for the year: Direct Materials Used $150,000 Direct Labor Incurred 200,000 Manufacturing Overhead Incurred 125,000 Selling and Administrative Expenses 235,000 How much are Sanchez's period costs?
235,000 Selling and Administrative Expenses 235,000
Closet Links Clothing Company provided the following manufacturing costs for the month of June: Direct labor cost $138,000 Direct materials cost 89,000 Equipment depreciation (straight−line) 24,000 Factory insurance 14,000 Factory manager's salary 12,400 Janitor's salary 5,000 Packaging costs 18,200 Property taxes 15,000 From the above information, calculate Closet Link's total variable costs.
245,000 Direct material cost + direct labour cost + package cost = total variable costs Direct labor cost $138,000 Direct materials cost 89,000 Packaging costs 18,200
Albert, Billy, and Cathy share profits and losses of their partnership in a 2:5:3, ratio respectively. If the net income is $50,000, calculate Billy's share of the profits. (Do not round any intermediate calculations. Round the final answer to the nearest dollar.)
25,000
The following information relates to Carried Away Hot Air Balloons, Inc.: Advertising Costs $15,600 Sales Salary 13,000 Sales Revenue 490,000 President's Salary 56,000 Administrative Office Rent 61,500 Manufacturing Equipment Depreciation 2,000 Indirect Materials Used 8,200 Indirect Labor 14,600 Factory Repair and Maintenance 760 Direct Materials Used 28,280 Direct Labor 33,000 Delivery Vehicle Depreciation 960 Administrative Salaries 24,600 How much was Carried Away's manufacturing overhead?
25,560 Indirect Materials Used 8,200 Indirect Labor 14,600 Factory Repair and Maintenance 760 Delivery Vehicle Depreciation 960 *close to the # may have to round up a little lol
Harmony Company sells hand−knit scarves. Each scarf sells for $30. The company pays $40 to rent vending space for one day. The variable costs are $11 per scarf. How many scarves should the company sell each day in order to break even? (Round your answer up to the nearest whole scarf.)
3 30- 40 = 10 10/ 40 =.25 .25 x 11 = 2.75?????
Hometown Grocery, Inc. has 43,000 shares of common stock outstanding and 3,000 shares of preferred stock outstanding. The common stock is $8 par value; the preferred stock is 5% noncumulative with a $100 par value. On October 15, 2024, the company declares a total dividend payment of $48,000. What is the amount of dividend that will be paid for each share of common stock? (Round your answer to the nearest cent.)
3,440.00
The phone bill for a corporation consists of both fixed and variable costs. Refer to the four−month data below and apply the high−low method to answer the question. Minutes Total Bill January 470 $4,000 February 220 $2,690 March 170 $2,630 April 310 $2,855 If the company uses 380 minutes in May, how much will the total bill be? (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar.)
3,589
Louisiana Company uses the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance sheet: Louisiana Company Comparative Balance Sheet December 31, 2025 and 2024 2025 2024 Increase/(Decrease) Common Stock $34,000 $2,300 $31,700 Retained Earnings 123,000 77,000 46,000 Treasury Stock (12,000) (8,300) (3,700) Total Equity $145,000 $71,000 $74,000 Note: 1. There were no stock retirements during the year. 2. There were no sales of treasury stock during the year. Compute the cash flow from transactions involving treasury stock
3,700 negative cash flow because Treasury Stock is in () meaning -
Nancy and Betty enter into a partnership agreement where they decide to share profits according to the following rules: (a) Nancy and Betty will receive salaries of $1,600 and $11,500 respectively as the first allocation. (b) The next allocation is based on 20% of each partner's capital balances. (c) Any remaining profit or loss is to be allocated completely to Betty. The partnership's net income for the first year is $50,000. Nancy's capital balance is $91,000 and Betty's capital balance is $9,000 at the end of the year. Calculate the share of profit/loss to be allocated to Betty.
30,200
At the beginning of the year, Berkshire Manufacturing had the following account balances: Work−in−Process Inventory 2,000 Finished Goods Inventory 8,000 Manufacturing Overhead 0 Cost of Goods Sold 0 Sales Revenue 0 The following additional details are provided for the year: Direct materials placed in production $83,000 Direct labor incurred 190,000 Manufacturing overhead incurred 300,000 Manufacturing overhead allocated to production 295,000 Cost of jobs completed and transferred 503,000 Sales revenue 759,000 Cost of goods sold (before adjustment) 442,700 Calculate the gross profit Berkshire will report for the year. A.
311,300
Emeka Company has provided the following information: Sales price per unit $46 Variable cost per unit 14 Fixed costs per month $16,000 Calculate the contribution margin per unit.
32 46- 14 = 32
Zander Company has fixed costs of $16,000. The company's contribution margin ratio is 46%. What is the breakeven point in sales dollars? (Round your answer to the nearest dollar.)
34,783 16,000 / .46 = 34,783
Titus Manufacturing, Inc. provided the following information for the year: Purchases — Direct Materials $90,000 Plant Utilities and Insurance 66,500 Indirect Materials 11,760 Indirect Labor 4,970 Direct Materials Used in Production 96,000 Direct Labor 119,000 Depreciation on Factory Plant & Equipment 7,000 The inventory account balances as of January 1 are given below. Direct Materials $41,000 Work−in−Progress Inventory 13,000 Finished Goods Inventory 50,000 What is the ending balance in the Direct Materials account?
35,000
The balance sheet of Ryan and Peter's partnership as of December 31, 2024, is given below. Assets Liabilities Cash $11,000 Accounts Payable $15,000 Accounts Receivable 12,000 Other liabilities 25,000 Furniture 29,000 Partners' Equity Equipment 40,000 Ryan, Capital 30,000 Other assets 8,000 Peter, Capital 30,000 Total assets $100,000 Total liabilities and partners' equity $100,000 Ryan and Peter share profits in the ratio 3:2. They liquidate the partnership. The furniture and equipment sold at a loss of $57,000. The accounts receivable were collected in full and the other assets were written off as worthless. The cash balance remaining to pay the liabilities is ________.
35,000 (just add the liabilities to get this number)
The records at Smith and Jones, Inc. show that Job 110 is charged with $13,000 of direct materials and $12,000 of direct labor. Smith and Jones, Inc. allocates manufacturing overhead at 85% of direct labor cost. What is the total cost of Job 110?
35,200 13,000 + 12,000 = 25,000 12,000 x .85 = 10200 10200 + 25,000 = 35,200
Venus Manufacturing uses a predetermined overhead allocation rate based on direct labor cost. At the beginning of the year, it estimated the manufacturing overhead rate to be 30% of the direct labor cost. In the month of June, Venus completed Job 13C and its details are as follows: Direct materials cost $6,600 Direct labor cost $23,000 Direct labor hours 33 hours Units of product produced 210 What is the total cost incurred for Job 13C
36,500
From its inception through the year of 2023, First Mart, Inc. was profitable and made strong dividend payments each year including all payments to preferred shareholders. In the year 2024, First Mart had major losses and paid no dividends. In 2025, the company started making large profits again, and they were able to pay dividends to all shareholders—both common and preferred. There are 1,500 shares of cumulative, 13% preferred stock outstanding. The preferred stock has a par value of $100. What is the total amount of dividends that should be paid to the preferred stockholders in December 2025?
39,000
The following information is from the December 31, 2024 balance sheet of Millner Corporation. Preferred Stock, $100 par $580,000 Paid−In Capital in Excess of Par—Preferred 45,000 Common Stock, $1 par 190,000 Paid−In Capital in Excess of Par—Common 590,000 Retained Earnings 161,500 Total Stockholders' Equity $1,566,500 What was the average issue price of the common stock shares? (Round your answer to the nearest cent.)
4.11
Archangel Manufacturing calculated a predetermined overhead allocation rate at the beginning of the year based on direct labor costs. The production details for the year are given below: Total manufacturing overhead costs estimated at the beginning of the year $140,000 Total direct labor costs estimated at the beginning of the year $350,000 Total direct labor hours estimated at the beginning of the year 10,000 direct labor hours Actual manufacturing overhead costs for the year $150,000 Actual direct labor costs for the year $370,000 Actual direct labor hours for the year 11,400 direct labor hours Calculate the manufacturing overhead allocation rate for the year based on the above data. (Round your final answer to two decimal places.)
40% Total manufacturing overhead costs estimated at the beginning of the year $140,000 DIVIDED Total direct labor costs estimated at the beginning of the year $350,000 = 40
Ketchen, Inc. provides the following information for 2024: Net income $250,000 Market price per share of common stock $65 per share Dividends paid $180,000 Common stock outstanding at Jan. 1, 2024 150,000 shares Common stock outstanding at Dec. 31, 2024 220,000 shares The company has no preferred stock outstanding. Calculate the price/earnings ratio of common stock. (Round any intermediate calculations and your final answer to two decimal places.)
48.15%
Sunlight Design Corporation sells glass vases at a wholesale price of $4.50 per unit. The variable cost to manufacture is $2.00 per unit. The monthly fixed costs are $7,500. Its current sales are 28,000 units per month. If the company wants to increase its operating income by 20%, how many additional units must it sell? (Round any intermediate calculations to two decimal places and your final answer up to the nearest whole unit.)
5,000 glasses
Leonardo was a professional classical guitarist until a motorcycle accident left him disabled. After long months of therapy, he hired an experienced luthier (a maker of stringed instruments) and started a small shop to make and sell Spanish guitars. The guitars sell for $900, and the fixed monthly operating costs are as follows: Rent and utilities $800 Wages and benefits to luthier $2,000 Other expenses 470 Leonardo's accountant told him about contribution margin ratios, and Leonardo understood clearly that for every dollar of sales, $0.65 went to cover his fixed costs, and anything above that point was profit. What is the amount of revenue Leonardo should earn each month to break even? (Round your answer to the nearest dollar.)
5,031
The following information has been provided by New Age, Inc.: Direct Labor $25,100 Direct Materials Used 10,000 Direct Materials Purchased 16,750 Cost of Goods Manufactured 48,300 Ending Work−in−Process Inventory 11,900 Corporate Headquarters' Property Taxes 2,000 Manufacturing Overhead 19,800 Calculate the beginning balance of the Work−in−Process Inventory account.
5,300
Given the following information, determine the cost of goods sold. Direct Labor Incurred $63,000 Manufacturing Overhead Incurred 175,000 Direct Materials Used 153,000 Finished Goods Inventory, Jan. 1 198,000 Finished Goods Inventory, Dec. 31 98,500 Work−in−Process Inventory, Jan. 1 220,000 Work−in−Process Inventory, Dec. 31 110,000
600,500 Finished Goods Inventory, Jan. 1 198,000 - Finished Goods Inventory, Dec. 31 98,500 = 99500 99500 + Direct Materials Used 153000 = 252500 252500 + Direct Labor Incurred $63,000 = 315500 315500 + Manufacturing Overhead Incurred 175,000 = 490500 Work−in−Process Inventory, Jan. 1 220,000 - SUB Work−in−Process Inventory, Dec. 31 110,000 = 110000 490500 + 110000 = 600,500
Walton, Inc. provides the following data: 2025 2024 Cash $48,000 $25,000 Accounts Receivable, Net 100,000 62,000 Merchandise Inventory 75,000 50,000 Property, Plant, and Equipment, Net 181,000 120,000 Total Assets $404,000 $257,000 Additional information for the year ending December 31, 2025: Net Credit Sales $520,000 Cost of Goods Sold 150,000 Interest Expense 23,000 Net Income 180,000 Calculate the rate of return on total assets for 2025. (Round your answer to two decimal places.)
61.42%
Jezebel, Inc. completed Job 12 and several other jobs in the last week. The cost details of Job 12 are shown below. Direct labor cost $720 Direct materials cost $120 Machine hours 7 hours Direct labor hours 16 hours Predetermined overhead allocation rate per machine hour $90 Number of units of finished product 23 units What is the cost per unit of finished product produced under Job 12? (Round your answer to the nearest cent.)
63.91
Clay Earth Company sells ceramic pottery at a wholesale price of $5.00 per unit. The variable cost of manufacturing is $2.25 per unit. The fixed costs are $5,400 per month. It sold 4,700 units during this month. Calculate Clay Earth's operating income (loss) for this month.
7,525
Oklahoma Corp. uses the indirect method to prepare its statement of cash flows. Refer to the following information for 2024 1. Long−Term Notes Payable, beginning balance, $84,000 2. Long−Term Notes Payable, ending balance, $75,000 3. Common Stock, beginning balance, $3,400 4. Common Stock, ending balance, $29,000 5. Retained Earnings, beginning balance, $75,000 6. Retained Earnings, ending balance, $120,000 7. Treasury Stock, beginning balance, $5,600 8. Treasury Stock, ending balance, $10,300 9. No stock was retired. 10. No treasury stock was sold. 11. During 2024, the company repaid $38,000 of long−term notes payable. 12. During 2024, the company borrowed $29,000 on new long−term notes payable. 13. Net income for the year was $49,000. 14. Assume all dividends declared during the year were paid. 15. Common Stock was issued for cash. What is the net cash provided by financing activities?
7,900
The highest value of total cost was $90,000 in June for Acai Beverages, Inc. Its lowest value of total cost was $53,000 in December. The company makes a single product. The production volume in June and December were 13,000 and 8,000 units, respectively. What is the variable cost per unit? (Round your answer to the nearest cent.
7.40 per unit
August, Inc. had the following transactions in 2024, its first year of operations: • Issued 27,000 shares of common stock. The stock has a par value of $1.00 per share and was issued at $18.00 per share. • Issued 1,300 shares of $170 par value preferred stock at par. • Earned net income of $35,000. • Paid no dividends. At the end of 2024, what is total stockholders' equity?
742,000
Valley, Inc. has 11,000 shares of preferred stock outstanding. The preferred stock has a $140 par value, a 5% 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?
77,000
On January 1, Jackson, Inc.'s Work−in−Process Inventory account showed a balance of $66,900. During the year, materials requisitioned for use in production amounted to $70,200, of which $66,000 represented direct materials. Factory wages for the period were $209,000 of which $186,100 were for direct labor. Manufacturing overhead is allocated on the basis of 60% of direct labor cost. Actual overhead was $116,170. Jobs costing $353,290 were completed during the year. The December 31 balance in Work−in−Process Inventory is ________.
77,370
The Quadrangle Fabrication Plant suffered a fire incident at the beginning of the year, which resulted in the loss of property including the accounting records. Some data for the year were retrieved, and extracts from it are shown below: Total manufacturing overhead costs estimated at the beginning of the year $101,500 Total direct labor costs estimated at the beginning of the year $186,000 Total direct labor hours estimated at the beginning of the year 3,600 direct labor hours Actual manufacturing overhead costs for the year $98,480 Actual direct labor costs for the year $150,000 Actual direct labor hours for the year 3,000 direct labor hours The company's manufacturing overhead allocation is based on direct labor hours. How much manufacturing overhead was allocated to production during the year? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)
84,570 $101,500 - $186,000 = close
What does "2/10" mean, with respect to "credit terms of 2/10, n/30"?
A discount of 2 percent will be allowed if the invoice is paid within 10 days of the invoice date.
________ represents the right to receive cash in the future from customers for goods sold or for services performed. A) Accounts receivable B) Accounts payable C) Equity D) Expenses
Answer: A
Paid−in capital consists of________.
A. amounts received from stockholders in exchange for stock
a. The long-term debt is payable in annual installments of $42,000, with the next installment due on July 31. On that date, Seal−N−Ship will also pay one year's interest at 9%. Interest was paid on July 31 of the preceding year. Make the adjusting entry to accrue interest expense at year-end. b. Gross unpaid salaries for the last payroll of the fiscal year were $4,700. Assume that employee income taxes withheld are $910 and that all earnings are subject to OASDI. (Round amounts to the nearest dollar.) c. Record the associated employer taxes payable for the last payroll of the fiscal year, $4,700. Assume that the earnings are not subject to unemployment compensation taxes. d. On February 1, the company collected one year's rent of $7,200 in advance.
A. Interest Expense 17,325 Interest Payable 17,325 To accrue interest expense at year-end. (Accrued Interest ($210,000 × 9% × 11÷12) = $17,325) B. Salaries Expense 4,700 Salaries Payable 3,431 CREDIT FICA-OASDI Taxes Payable 291 CREDIT FICA-Medicare Taxes Payable 68 CREDIT Employee Income Taxes Payable 910 CREDIT To record salaries expense and payroll withholdings. (FICA-OASDI Taxes Payable = ($4,700 × 6.2%) = $291 FICA-Medicare Taxes Payable = ($4,700 × 1.45%) = $68 Salaries Payable ($4,700 - $910 - $291 - $68) = $3,431) C. Payroll Tax Expense 359 FICA-OASDI Taxes Payable 291 CREDIT FICA-Medicare Taxes Payable 68 CREDIT To record employer's payroll tax expense. D. Unearned Rent Revenue 3,000 Rent Revenue 3,000 CREDIT To record rent revenue earned at year-end. (Rent Revenue ($7,200 × 5÷12) = 3,000)
Would the following companies most likely use job order costing or process costing? A. A manufacturer of refrigerators would use b. A manufacturer of specialty wakeboards would use c. A manufacturer of luxury yachts would use d. A professional services firm would use e. A landscape contractor would use f. A custom home builder would use g. A cell phone manufacturer would use h. A manufacturer of frozen pizzas would use i. A manufacturer of multivitamins would use j. A manufacturer of tennis shoes would use
A. process costing. B. job order costing. C. job order costing. D. job order costing. E. job order costing. F. job order costing. G. process costing. H. process costing. I. process costing. J. process costing.
A company that uses a perpetual inventory system purchased inventory on account and later returned goods worth $900 to the vendor (prior to payment). Which of the following would be the correct journal entry to record these returns?
Accounts Payable 900 Merchandise Inventory
paid the amount due, less the return and discount.
Accounts Payable—MegoBlock 151,100 Cash 148,078 Merchandise Inventory 3,022
returned $16,700 of the merchandise to MegoBlock due to damage during shipment.
Accounts Payable—MegoBlock 16,700 Merchandise Inventory 16,700
Journalize the return on Wheeler's books on September 28, 2024, of the D39-X4 Radials, which were ordered by mistake. Do not round numbers to the nearest whole dollar. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)
Accounts Payable—Otis Distribution 39.88 Merchandise Inventory 39.88 Returned inventory to seller (vendor).
Journalize the payment on October 1, 2024, to Otis Distribution, Inc. Do not round numbers to the nearest whole dollar. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. Round all calculations to the nearest cent.)
Accounts Payable—Otis Distribution 683.66 Cash 676.82 Merchandise Inventory 6.84 Paid within discount period.
Made payment to Sherry Wholesalers for goods purchased on September 3, less return and discount.
Accounts Payable—Sherry Wholesalers 4,800 Cash 4,704 Merchandise Inventory 96
Returned $400 of inventory from September 3 purchase.
Accounts Payable—Sherry Wholesalers 400 Merchandise Inventory 400
Made payment, less allowance, to Teaton Wholesalers for goods purchased on September 9.
Accounts Payable—Teaton Wholesalers 10,600 Cash 10,600
After negotiations, received a $400 allowance from Teaton Wholesalers.
Accounts Payable—Teaton Wholesalers 400 Merchandise Inventory 400
Green Lawns Company earned $500 for landscaping services rendered. The customer promised to pay at a later time. Which of the following accounts increased as a result of this transaction? _?_
Accounts Receivable
Sale of merchandise inventory on account. Begin by preparing the entry to journalize the sale portion of the transaction. Do not record the expense related to the sale. We will do that in the following step.
Accounts Receivable Sales Revenue To record sale on account.
A company that uses the perpetual inventory system purchased 500 pallets of industrial soap for $10,000and paid $1,000for the freight−in. The company sold the whole lot to a supermarket chain for $14,000 on account. Which of the following entries correctly records the sale?
Accounts Receivable 14,000 Sales Revenue Cost of Goods Sold 11,000 Merchandise Inventory
h. Sold inventory on account, $28,000; cost of goods sold, $12,000. Begin by recording the revenue from the sales on account. Do not record the expense related to the sale in this journal entry. We will do that in the next step.
Accounts Receivable 28,000 Sales Revenue 28,000
Sold merchandise inventory to Herman Company, $5,800, on account. Terms 2/15, n/35. Cost of goods, $2,320. Begin by preparing the entry to journalize the sale portion of the transaction. Do not record the expense related to the sale. We will do that in the following step.
Accounts Receivable—Herman Company 5,684 Sales Revenue 5,684
Sold merchandise inventory to Jex Company, $2,900, on account. Terms n/EOM. Cost of goods, $1,334. Begin by preparing the entry to journalize the sale portion of the transaction. Do not record the expense related to the sale. We will do that in the following step.
Accounts Receivable—Jex Company 2,900 Sales Revenue 2,900
25: Sold merchandise inventory to Small for $1,100 on account that cost $429. Terms of 1/10, n/30 was offered, FOB shipping point. As a courtesy to Small, $80 of freight was added to the invoice for which cash was paid by Faucet. Begin by preparing a compound journal entry to journalize the sale and the full amount of the receivable from this transaction. Do not record the expense related to the sale. We will do that in the following step. (Prepare a compound journal entry.)
Accounts Receivable—Small 1,169 Sales Revenue 1,089 Cash 80
Requirement 4. Evaluate the ability to pay debts. Begin by selecting the appropriate measurements that should be used to measure the ability to pay debts.
Acid-test ratio Current ratio Debt ratio Debt to equity ratio Times-interest-earned ratio The current and acid-test ratios are fairly high. This indicates that the company can pay its liabilities. The company's debt to total assets (its debt ratio) is not extraordinarily high, which will facilitate the company making all payments for debt. The times-interest-earned ratio has increased from 2020 to 2024 which is favorable.
Corporate ownership is a very popular type of ownership in the United States. Which of the following is a major reason that corporate ownership is popular? A) Stockholders have limited liability for the debts of the corporation. B) Most corporations are small or medium-sized. C) The life of a corporation is limited by the death of the owner. D) A corporation is usually managed by the owners.
Answer: A
Financial statements are prepared after an entity's transactions are analyzed and recorded. Which of the following reports is one of the required financial statements? A) Statement of cash flows B) Statement of return on assets C) Statement of withdrawals D) Expense statement
Answer: A
Hamilton Lawn Service incurred $800 as repair expense and paid the repair company in cash. This will: A) decrease the Owner's capital. B) increase the assets of the business. C) increase the liabilities of the business. D) decrease the liabilities of the business.
Answer: A
If a transaction increased an asset of a business. Which of the following can be an effect of the transaction for the accounting equation to balance? A) There is an equal decrease in another asset. B) There is an equal decrease in equity. C) There is an equal decrease in a liability account. D) Both liabilities and equity decreases.
Answer: A
Lorna Smith decided to start her own CPA practice as a professional corporation, Smith CPA PC. Her corporation purchased an office building for $35,000 that her real estate agent said was worth $50,000 in the current market. The corporation records the building as a $50,000 asset because Lorna believes that is the real value of the building. Which of the following concepts or principles of accounting is being violated? A) cost principle B) economic entity assumption C) monetary unit assumption D) going concern assumption
Answer: A
The Public Company Accounting Oversight Board (PCAOB) was created by the: A) Sarbanes-Oxley Act (SOX) B) International Accounting Standards Board (IASB) C) Institute of Management Accountants (IMA) D) American Institute of Certified Public Accountants (AICPA)
Answer: A
The amount of net income is transferred from ________ to ________. A) the income statement; the statement of owner's equity B) the balance sheet; the statement of cash flow C) the balance sheet; the income statement D) the income statement; the statement of expenditures
Answer: A
The field of accounting that focuses on providing information for internal decision makers is: A) managerial accounting. B) financial accounting. C) nonmonetary accounting. D) governmental accounting.
Answer: A
The taxable income of a sole proprietorship is: A) combined with the personal income of the proprietor. B) not combined with the proprietor's personal income. C) not taxable. D) handled similarly to that of a corporation.
Answer: A
Viva Inc. produces and sells coffee beans. This month it earned $500 by selling coffee beans to Jeffery Inc. The $500 received by Viva is its: A) revenue. B) equity. C) gain. D) debt.
Answer: A
Which of the following amounts appears on both the statement of owner's equity and the balance sheet? A) ending owner's equity B) total assets C) total revenues D) net income
Answer: A
Which of the following financial statements lists the entity's assets, liabilities, and owner's equity as of a specific date? A) balance sheet B) statement of owner's equity C) income statement D) statement of cash flows
Answer: A
Which of the following financial statements reports cash receipts and cash payments during a period of time? A) statement of cash flows B) balance sheet C) cash receipts budget D) statement of owner's equity
Answer: A
Which of the following is a characteristic of a corporation? A) A corporation is owned by stockholders. B) Lenders of a corporation do not have the right to claim the corporation's assets to satisfy their obligations. C) All shares of a corporation must be held by a single individual. D) Each stockholder has the authority to commit the corporation to a binding contract through his actions.
Answer: A
Which of the following is the correct order of preparation of financial statements? A) income statement → statement of owner's equity → balance sheet → statement of cash flows B) statement of owner's equity → balance sheet → income statement → statement of cash flows C) balance sheet → statement of owner's equity → income statement → statement of cash flows D) balance sheet → income statement → statement of owner's equity → statement of cash flows
Answer: A
Which of the following organizations is responsible for the creation and governance of accounting standards in the United States? A) Financial Accounting Standards Board B) Institute of Management Accountants C) American Institute of Certified Public Accountants D) Securities and Exchange Commission
Answer: A
Which of the following organizations requires publicly owned companies to be audited by independent accountants (CPAs)? A) Securities and Exchange Commission (SEC) B) Public Company Accounting Oversight Board (PCAOB) C) Financial Accounting Standards Board (FASB) D) American Institute of Certified Public Accountants (AICPA)
Answer: A
Which of the following statements would be most useful if an analyst wants to know the profitability of a company? A) income statement B) balance sheet C) statement of owner's equity D) statement of cash flows
Answer: A
________ are professional accountants who serve the general public, not one particular company. A) Certified public accountants B) Certified management accountants C) Cost accountants D) Controllers
Answer: A
The Public Company Accounting Oversight Board is a watchdog agency that monitors the work of independent accountants who audit public companies.
Answer: TRUE
Sharon Samson starts a plumbing service called Reliable Waterworks. Transactions of Reliable Waterworks during the first year of operations are given below: A) Sharon deposited $14,000 into a new checking account for the business and recorded the capital contribution. B) Paid $2,000 cash for equipment to be used for plumbing repairs. C) Borrowed $15,000 from a local bank and deposited the money in the checking account. D) Paid $600 rent for the year. E) Purchased $900 of office supplies by cash. F) Completed a plumbing repair project for a local lawyer and received $3,500 cash. Calculate the amount of total liabilities at the end of the first year. A) $15,000 B) $14,000 C) $27,000 D) $3,500
Answer: A Explanation: A) Borrowings from bank = $15,000
Ace Inc. had the following transactions in June: Sold goods for $4,000 on account; received cash on account, $5,000; paid $800 for repair expense; paid $2,000 to a supplier that it owed from the previous month. What is the combined effect on Cash of the June transactions? A) $2,200 increase B) $2,200 decrease C) $5,000 increase D) $2,800 decrease
Answer: A Explanation: A) Cash = $5,000 - $800 - $2,000 = $2,200 increase
Scott's Camera Shop started the year with total assets of $100,000 and total liabilities of $50,000. During the year, the business earned revenues of $200,000 and incurred expenses of $60,000. Scott made no capital contributions during the year, but did make withdrawals of $75,000. Calculate the amount of increase/decrease in Scott's equity for the year. A) $65,000 increase B) $115,000 increase C) $50,000 decrease D) $75,000 increase
Answer: A Explanation: A) Equity (at the beginning of the year) = $100,000 - $50,000 = $50,000 Equity (at the end of the year) = Owner's Capital - Owner's withdrawals + Revenues - Expenses Equity (at the end of the year) = $50,000 - $75,000 + $200,000 - $60,000 = $115,000 Change in owner's equity for the year = $50,000 - $115,000 = $65,000 increase
Robinson starts a plumbing service named Crusoe Waterworks. Transactions of Crusoe Waterworks during the first year of operations are given below: A) Robinson deposited $7,000 into a new checking account for the business and recorded the capital contribution. B) Paid $4,000 cash for equipment to be used for plumbing repairs. C) Borrowed $30,000 from a local bank and deposited the money in the checking account. D) Paid $800 rent for the year. E) Purchased $900 of office supplies on account. F) Completed a plumbing repair project for a local lawyer and received $3,500 cash. Calculate the amount of total owner's equity after recording the transactions. A) $9,700 B) $3,500 C) $7,000 D) $30,000
Answer: A Explanation: A) Equity (at the end of the year) = Owner's Capital - Owner's withdrawals + Revenues - Expenses Equity $7,000 + $3,500 - $800 = $9,700
30 years ago, Star Grocer Corporation had purchased a building for its grocery store by paying $30,000. Based on inflation estimates, the amount of the building has been adjusted in the accounting records. The building is now reported at $75,000 in the financial statements of Star Grocer. Which of the following concepts or principles of accounting is being violated? A) going concern assumption B) monetary unit assumption C) economic entity assumption D) cost principle
Answer: B
A business receives a bill from one of its suppliers for services received. The business will pay the supplier next month. How does the receipt of the bill from the supplier affect the accounting equation of the business? A) Assets decrease; equity decrease. B) Liabilities increase; equity decrease. C) Assets increase; liabilities increase. D) Liabilities increase; equity increase.
Answer: B
A debt that a business owes to an outside party is called: A) an asset. B) a liability. C) stockholders' equity. D) revenue.
Answer: B
John contributes cash in exchange for capital for his business, Bubble Wraps Inc. The two accounts involved in this transaction are: A) Bubble Wraps, Capital account and the Cash account. B) the Cash account and John, Capital account. C) John, Payables account and the Capital account. D) Bubble Wraps, Capital account and John, Payables account.
Answer: B
Joshua Thomas is the owner of Nexus Inc., a manufacturer and retailer of computer hardware. Joshua recently bought a new car as a gift for his daughter. Since Joshua paid for the car from the earnings of the business, he recorded it in the books of Nexus as an asset. Which of the following concepts or principles of accounting is Joshua violating? A) monetary unit assumption B) economic entity assumption C) cost principle D) going concern assumption
Answer: B
Lush Lawns incurred $1,500 labor expense and promised to pay the labor agency within 30 days. Which of the following would decrease as a result of this transaction? A) Assets B) Owner's Capital C) Liabilities D) Revenues
Answer: B
Lush Lawns performs lawn mowing services for its customers. The payments for the current month's services are expected to be received next month. How does this transaction affect the accounting equation of Lush Lawn? A) Liabilities increase; equity decreases. B) Assets increase; equity increases. C) Assets decrease; equity decreases. D) Liabilities increase; equity increases.
Answer: B
Martin Supply Service paid $350 cash to a materials supplier that it owed from the previous month. Which of the following accounts decreases? A) Accounts Receivable B) Accounts Payable C) Owner's Capital D) Office Supplies
Answer: B
The statement of owner's equity shows the changes in Owner's capital. Which one of these statements is true? A) Decreases in Owner's equity result from additional owner investments. B) Decreases in Owner's equity result from net losses. C) Decreases in Owner's equity result from net income. D) Decreases in Owner's equity result from revenues earned.
Answer: B
Venus Inc. paid $5,000 for account payable. How does this transaction affect the accounting equation of Venus? A) Assets decrease by $5,000 and equity increases by $5,000. B) Assets decrease by $5,000 and liabilities decrease by $5,000. C) Assets increase by $5,000 and equity decreases by $5,000. D) Assets increase by $5,000 and liabilities increase by $5,000.
Answer: B
Which of the following financial statements is used to analyze the economic resources, debt, and overall financial position of a company? A) income statement B) balance sheet C) statement of cash flows D) statement of owner's equity
Answer: B
Which of the following financial statements reports expenses in decreasing order of their amounts, by stating the largest expense first? A) statement of cash flows B) income statement C) statement of owner's equity D) balance sheet
Answer: B
Which of the following is a characteristic of a limited-liability company (LLC)? A) An LLC's life is terminated at any member's choice or death. B) Each member of an LLC is liable only for his or her own actions. C) An LLC must have more than five members. D) The income of members from an LLC is not taxed.
Answer: B
Which of the following statements is true of a sole proprietorship? A) A sole proprietorship joins two or more individuals as co-owners. B) The sole proprietor is personally liable for the liabilities of the business. C) A sole proprietorship is taxed separately from the owner. D) A sole proprietorship does not terminate at the choice or death of the owner.
Answer: B
Which of the following will be categorized as an investing activity on the statement of cash flows? A) depreciation expense on production equipment for the year B) cash paid for purchase of new machinery C) cash paid for purchase of raw materials D) cash received from issue of shares
Answer: B
The net income of a business is $29,000. The beginning and ending capital balances were $34,000 and $55,000, respectively. No capital contributions were made by the owner during the year. Calculate the amount of owner's withdrawals. A) $18,000 B) $8,000 C) $5,000 D) $60,000
Answer: B Explanation: B) Equity (at the beginning of the year) = $34,000 Equity (at the end of the year) = Owner's Capital (beginning balance) - Owner's withdrawals + Revenues - Expenses $55,000 = $34,000 - Owner's withdrawals + $29,000 Owner's withdrawals = $34,000 + $29,000 - $55,000 = $8,000
According to the ________, the acquired assets should be recorded at the amount actually paid rather than at the estimated market value. A) going concern assumption B) economic entity concept C) cost principle D) monetary unit assumption
Answer: C
The economic resources of a business such as furniture, building, and land are its: A) liabilities. B) revenues. C) assets. D) withdrawals.
Answer: C
The owner's claim to the assets of the business is called: A) return on assets. B) expenses. C) equity. D) debt.
Answer: C
The return on assets is calculated by: A) subtracting net income from average total assets. B) adding net income and average total assets. C) dividing net income by average total assets. D) multiplying net income and average total assets.
Answer: C
Which of the following amounts appears on both the income statement and statement of owner's equity? A) ending capital B) total revenues C) net income D) withdrawals
Answer: C
Which of the following financial statements reports an increase or decrease in net cash during the time period covered? A) income statement B) statement of owner's equity C) statement of cash flows D) cash budget
Answer: C
Which of the following statements best defines financial statements? A) Financial statements are the information systems that record monetary and nonmonetary business transactions. B) Financial statements are the verbal statements made to business news organizations by chief financial officers. C) Financial statements are documents that report on a business in monetary terms, providing information to help people make informed business decisions. D) Financial statements are plans and forecasts for future time periods based on information from past financial periods.
Answer: C
Which of the following will be categorized as an operating activity on the statement of cash flows? A) cash received by selling old equipment B) cash paid for purchase of new machinery C) cash paid for purchase of raw materials D) cash received from issue of shares
Answer: C
Scott's Camera Shop started the year with total assets of $80,000 and total liabilities of $40,000. During the year, the business earned revenues of $120,000 and incurred expenses of $70,000. Scott made no additional capital contributions during the year, but did make withdrawals of $60,000. What is the amount of owner's equity at the end of the year? A) $70,000 B) $120,000 C) $30,000 D) $60,000
Answer: C Explanation: C) Equity (ending balance) = Owner's Capital (beginning balance) - Owner's withdrawals + Revenues - Expenses Equity = ($80,000 - $40,000) - $60,000 + $120,000 - $70,000 = $30,000
Assume MetAmbit Inc. had net income of $2,500 for the year ending December, 2014. Its beginning and ending total assets were $35,500 and $20,500, respectively. Calculate MetAmbit's return on assets (ROA). (Round your percentage answer to two decimal places.) A) 12.57% B) 5.85% C) 8.93% D) 9.50%
Answer: C Explanation: C) Return on assets (ROA) = $2,500 ÷ [($35,500 + $20,500) ÷ 2] = 8.93%
David has decided to open an auto-detailing business. He will pick up an automobile from the client, take it to his parents' garage, detail it, and return it to the client. If he does all of the work himself and takes no legal steps to form a special organization, which type of business organization, in effect, has he chosen? A) Limited-liability company B) Partnership C) Corporation D) Sole proprietorship
Answer: D
GAAP are the rules that govern accounting in the United States. The acronym GAAP in this statement refers to: A) Globally Accepted and Accurate Policies. B) Global Accommodation Accounting Principles. C) Generally Accredited Accounting Policies. D) Generally Accepted Accounting Principles.
Answer: D
Gunnie Inc., located in Texas, records business transactions in dollars and disregards changes in the value of a dollar over time. Which of the following accounting assumptions does this represent? A) economic entity assumption B) going concern assumption C) accounting period assumption D) monetary unit assumption
Answer: D
In a limited-liability company: A) the members are personally liable to pay the entity's debts. B) tax on earnings is paid by the business. C) the members are liable for each other's actions. D) the members pay tax on their share of earnings.
Answer: D
Land is purchased by a business for $100,000. The company pays for the land by a cash payment of $20,000 and promised to pay the remaining amount at a later period. What is net effect of this transaction on the business's accounting equation? A) Assets increase by $100,000; liabilities decrease by $20,000. B) Assets increase by $100,000; liabilities decrease by $80,000. C) Assets increase by $80,000; equity increases by $80,000. D) Assets increase by $80,000; liabilities increase by $80,000.
Answer: D
Land was originally purchased for $20,000. It is sold for $20,000 in cash. How does the sale affect the accounting equation? A) Assets increase by $20,000; liabilities decrease by $20,000. B) Assets increase by $20,000; liabilities increase by $20,000. C) Assets increase by $20,000; equity increases by $20,000. D) Assets increase by $20,000; assets decrease by $20,000.
Answer: D
Lush Lawns earned $1,000 for lawn mowing services rendered. The customer promised to pay at a later time. Which of the following accounts increased as a result of this transaction? A) Accounts payable B) Supplies C) Cash D) Accounts receivable
Answer: D
Martin Supply Service received $1,000 cash from a customer which was owed to the business from the previous month. Which of the following accounts would decrease as a result of this transaction? A) Cash B) Equity C) Accounts Payable D) Accounts Receivable
Answer: D
The Sarbanes-Oxley Act (SOX) made it a criminal offense to: A) transfer shares of stock. B) issue debentures. C) declare bankruptcy. D) falsify financial information.
Answer: D
The explanation of why the net income differs from the change in cash balance for the period is explained in the: A) income statement. B) balance sheet. C) statement of owner's equity. D) statement of cash flows.
Answer: D
Which of the following financial statements reports that total assets are equal to total liabilities plus total owner's equity? A) statement of owner's equity B) statement of cash flows C) income statement D) balance sheet
Answer: D
Which of the following formulae is used to calculate average total assets for the return on assets ratio? A) Average total assets = (Beginning total assets + Ending total assets) × 2 B) Average total assets = (Beginning total assets - Ending total assets) × 2 C) Average total assets = (Beginning total assets - Ending total assets) ÷ 2 D) Average total assets = (Beginning total assets + Ending total assets) ÷ 2
Answer: D
Which of the following items is included in the headings of the financial statements? A) date and time of filing tax returns B) place and time of preparation of the statement C) name of the preparer of the statement D) name of the business
Answer: D
Which of the following users would rely on management accounting information for decision-making purposes? A) potential investors B) creditors C) customers D) company managers
Answer: D
Which of the following will be categorized as a financing activity on the statement of cash flows? A) cash received by selling old equipment B) cash paid for purchase of new machinery C) cash paid for purchase of raw materials D) cash received from issue of shares
Answer: D
The equity of Autumn Company is $150,000 and the total liabilities are $90,000. Its total assets would be: A) $300,000. B) $180,000. C) $60,000. D) $240,000.
Answer: D Explanation: D) Assets = Liabilities + Equity Assets = $90,000 + $150,000 = $240,000
A creditor is a person who owes money to the business.
Answer: FALSE
A creditor is any person who has an ownership interest in a business.
Answer: FALSE
A publicly traded company in the United States does not come under SEC regulations as long as it follows the rules of GAAP.
Answer: FALSE
As per the economic entity assumption, an organization and its owner should be seen as the same entity.
Answer: FALSE
Equity decreases with expenses and revenues.
Answer: FALSE
For an accounting equation to balance, a transaction must affect both the sides of the equation.
Answer: FALSE
IFRS are comparatively more specific and more rule based than U.S. GAAP.
Answer: FALSE
In a limited-liability company (LLC), the members are personally liable for the debts of the business.
Answer: FALSE
Outside investors would ordinarily use managerial accounting information to decide whether or not to invest in a business.
Answer: FALSE
Owner's withdrawals are the expenses of a business.
Answer: FALSE
The balance sheet of a business summarizes an entity's revenues and expenses.
Answer: FALSE
The most that the owner of a sole proprietorship can lose, as a result of business debts or lawsuits, is the amount he/she has invested in the business.
Answer: FALSE
A business owner starts a new business and invests $6,000 of capital. This transaction results in an increase in the assets of the business.
Answer: TRUE
An examination of a company's financial statements and records is called an audit.
Answer: TRUE
Any person or business to whom a business owes money is called the business's creditor.
Answer: TRUE
Financial accounting focuses on information for decision makers outside of the business, such as creditors and taxing authorities.
Answer: TRUE
Financial statements are business documents that are used to communicate information needed to make business decisions.
Answer: TRUE
In a sole proprietorship, the owner is personally liable for the debts of the business.
Answer: TRUE
International Financial Reporting Standards (IFRS) are the international accounting rules that U.S. companies must follow for their international operations.
Answer: TRUE
Liabilities represent creditors' claims on the business's assets.
Answer: TRUE
Local, state, and federal governments use accounting information to calculate income tax.
Answer: TRUE
Members of a limited-liability company (LLC) are not personally liable for the debts of the business.
Answer: TRUE
Use the following information for The Glass Doctor, a retail merchandiser of auto windshields, to compute the cost of goods sold:
Beginning Merchandise Inventory PLUS ++++++ Purchases PLUS +++++++ Freight In EQUALS ======== Cost of Goods Available for Sale :) MINUS ---------- Ending Merchandise Inventory EQUALS ========== Cost of Goods Sold
Which of the following formulas represent cost of goods sold for a merchandising business?
Beginning Merchandise Inventory + Purchases and Freight In − Ending Merchandise Inventory = Cost of Goods Sold
Overall:
Beginning Merchandising Inventory + Purchases and Freight In = Cost of Goods Available for Sale - Ending Merchandising Inventory = Cost of Goods Sold
Shaun and Rick are partners. Shaun has a capital balance of $9,000 and Rick has a capital balance of $7,000. Edwin contributes a building with a current market value of $5,000 to acquire an interest in the new partnership. Which of the following is TRUE of the effect of the transaction on the balance sheet? (Assume no bonus to any partner.)
Both assets and equity will increase by $5,000.
Consistency principle
Businesses should use the same accounting methods from period to period.
Weighted-average
Calculates a weighted-average cost based on the cost of goods available for sale and the number of units available.
Floyd and Merriam start a partnership business on June 12, 2025. Their capital account balances as of December 31, 2026 stood as follows: Floyd $31,000 Merriam 20,000 They agreed to admit Ramelow into the business for a one−third interest in the new partnership. Ramelow contributes $24,000 cash in exchange for the partnership interest. Assume that Floyd and Merriam shared profits and losses equally before the admission of Ramelow. Which of the following is the correct journal entry to record the above admission?
Cash 24,000 Merriam, Capital 500 Floyd, Capital 500 CREID Ramelow, Capital 25,000
Requirement 3. Evaluate the ability to sell merchandise inventory. Begin by selecting the appropriate measurements that should be used to measure the ability to sell inventory and the profitablilty of each sales dollar above the cost of goods sold.
Gross profit percentage Days' sales in inventory Inventory turnover Inventory turnover has increased over the period examined, which is a positive sign. The company is selling inventory more rapidly.
Corporation has two classes of stock: common, $3 par value; and preferred, $25 par value. Requirements 1. Journalize California's issuance of 4,000 shares of common stock for $11 per share. 2. Journalize California's issuance of 4,000 shares of preferred stock for a total of $100,000. Requirement 1. Journalize California's issuance of 4,000 shares of common stock for $11 per share. Requirement 2. Journalize California's issuance of 4,000 shares of preferred stock for a total of $100,000
Cash 44,000 CREDIT Common Stock—$3 Par Value 12,000 CREDIT Paid-In Capital in Excess of Par—Common 32,000 Issued common stock at a premium. Cash 100,000 CREDIT Preferred Stock—$25 Par Value 100,000 Issued preferred stock at par.
Suppose Price Point Furniture issued 150,000 shares of $0.05 par common stock at $5 per share. Which journal entry correctly records the issuance of this stock?
Cash 750,000 Common Stock—$0.05 Par Value 7,500 Paid-In Capital in Excess of Par-Common 742,500
Harry, Tony, and Liza run a partnership firm and share in the profits 1:3:2, respectively. In the process of liquidation, the partnership sells non−cash assets, having a book value of $82,000, for $81,000. What would be the journal entry for the sale for cash of the non−cash assets?
Cash 81,000 Loss on Disposal 1,000 CREDIT Non−cash Assets
Rodriguez and Ying start a partnership on July 1, 2025. Rodriguez contributes $4,200 cash, furniture with a current market value of $45,000, accounts payable with a current market value of $13,000 and equipment with a current market value of $25,000. Which of the following is the correct journal entry to record Rodriguez's partnership investment?
Cash 4,200 Furniture 45,000 Equipment 25,000 CREDIT Accounts Payable 13,000 CREDIT Rodriguez, Capital 61,200
Requirement 2. Assume the non-cash assets are sold for $120,000. Journalize the liquidation transactions. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Journalize the sale of the non-cash assets for $120,000. ----- Journalize the allocation of the gain or loss to the partners' capital accounts. --- Journalize the payment of the liabilities --- Journalize the distribution of remaining cash to the partners.
Cash 120,000 Loss on Disposal 15,000 Non-cash Assets 135,000 CREDIT To record the sale of non-cash assets at liquidation. --- Sully, Capital 2,250 Parkerson, Capital 11,250 Mitchell, Capital 1,500 Loss on Disposal 15,000 CREDIT To allocate the loss on liquidation of non-cash assets. --- Accounts Payable 62,000 Cash 62,000 To record the payment of outstanding liabilities. --- Mitchell, Capital 29,500 Sully, Capital 14,750 Parkerson, Capital 36,750 Cash 81,000 CREDIT To distribute remaining cash based on partners' capital balances.
Journalize the sale of the non-cash assets for $15,000. --- Journalize the allocation of any gain or loss on the sale of the non-cash assets. ---- Journalize the payment of the liabilities. --- Journalize the payment to the partners.
Cash 15,000 Loss on Disposal 7,000 Non-cash Assets 22,000 CREDIT To record the sale of Non-cash Assets at liquidation. ---- Murphy, Capital 4,200 Kent, Capital 2,800 Loss on Disposal 7,000 CREDIT To allocate loss on liquidation of Non-cash Assets. --- Accounts Payable 15,000 Cash 15,000 CREDIT To record the payment of the outstanding liabilities. --- Murphy, Capital 4,800 Kent, Capital 5,200 Cash 10,000 CREDIT To distribute remaining cash based on partners' capital balances.
The financial statements of Denison Furniture Company include the following items: 2025 2024 Cash $60,500 $57,000 Short−term Investments 34,000 10,000 Net Accounts Receivable 99,000 103,000 Merchandise Inventory 161,000 147,000 Total Assets 535,000 553,000 Total Current Liabilities 225,000 212,000 Long−term Note Payable 54,000 59,000 What is the 2025 cash ratio? (Round your answer to two decimal places)
Cash ratio = Cash + Cash equivalents / total current liabilities. Don't put cash equivalents as cash equivalents NO CLUE DUDE LOL
Disclosure principle
Requires that a company report enough information for outsiders to make knowledgeable decisions.
Which of the following are NOT included in a post−closing trial balance?
Revenues and expenses
Requirement 1. Assume the non-cash assets are sold for $155,000. Journalize the liquidation transactions. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Journalize the sale of the non-cash assets for $155,000. --- Journalize the allocation of the gain or loss to the partners' capital accounts. --- Journalize the payment of the liabilities. --- Journalize the distribution of remaining cash to the partners.
Cash 155,000 Non-cash Assets 135,000 CREDIT Gain on Disposal 20,000 CREDIT To record the sale of non-cash assets at liquidation. --- Gain on Disposal 20,000 Sully, Capital 3,000 CREDIT Parkerson, Capital 15,000 CREDIT Mitchell, Capital 2,000 CREDIT To allocate the gain on liquidation of non-cash assets. ---- Accounts Payable 62,000 Cash 62,000 To record the payment of outstanding liabilities. --- Sully, Capital 20,000 Parkerson, Capital 63,000 Mitchell, Capital 33,000 Cash 116,000 CREDIT To distribute remaining cash based on partners' capital balances. ----
The charter of Magnolia Corporation authorizes the issuance of 900 shares of preferred stock and 3,500 shares of common stock. During a two-month period, Magnolia completed these stock-issuance transactions: Requirement 1. Record the transactions in the general journal. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Mar. 23: Issued 250 shares of $1 par value common stock for cash of $12 per share. ---- 12: Received inventory with a market value of $24,000 and equipment with a market value of $18,000 for 350 shares of the $1 par value common stock --- 17: Issued 900 shares of 5%, $30 par value preferred stock for $30 per share. --- Requirement 2. Prepare the stockholders' equity section of the Magnolia balance sheet as of April 30, 2024, for the transactions given in this exercise. Retained Earnings has a balance of $74,000 at April 30, 2024.
Cash 3,000 Common Stock—$1 Par Value 250 Paid-In Capital in Excess of Par—Common 2,750 Issued common stock for cash. ----- Inventory 24,000 Equipment 18,000 Common Stock—$1 Par Value 350 Paid-In Capital in Excess of Par—Common 41,650 Issued common stock for inventory and equipment. --- Cash 27,000 Preferred Stock—$30 Par Value 27,000 Issued preferred stock for cash. - Magnolia Corporation Balance Sheet (Partial) April 30, 2024 Stockholders' Equity Paid-In Capital: Preferred Stock—5%, $30 Par Value; 900 shares authorized, issued, and outstanding $27,000 Common Stock—$1 Par Value; 3,500 shares authorized, 600 shares issued and outstanding 600 Paid-In Capital in Excess of Par—Common 44,400 Total Paid-In Capital 72,000 Retained Earnings 74,000 Total Stockholders' Equity $146,000
Received payment from Herman Company, less discount.
Cash 5,684 Accounts Receivable—Herman Company 5,684
Requirement 1. Journalize the contributions of Demetrius and Garnett to the partnership. (Record debits first, then, credits. Select explanations on the last line of the journal entry table.) Journalize the contribution of Demetrius. Journalize the contribution of Garnett.
Cash 9,000 Accounts Receivable 21,000 Merchandise Inventory 43,000 Plant Assets 108,000 Accounts Payable 23,000 CREDIT Other Accrued Payables 13,000 CREDIT Notes Payable 53,000 CREDIT Demetrius, Capital 92,000 CREDIT To record Demetrius' contribution. Cash 3,000 Accounts Receivable 14,000 Merchandise Inventory 40,000 Plant Assets 58,000 Accounts Payable 12,000 CREDIT Garnett, Capital 103,000 CREDIT To record Garnett's contribution.
Carmel Company earned net income of $105,000 during the year ended December 31, 2024. On December 15, Carmel declared the annual cash dividend on its 6% preferred stock(par value, $110,000) and a $0.75 per share cash dividend on its common stock (62,000 shares). Carmel then paid the dividends on January 4, 2025. Requirement 1. Journalize for Carmel the entry declaring the cash dividends on December 15, 2024. Requirement 2. Journalize for Carmel the entry paying the cash dividends on January 4, 2025.
Cash Dividends 53,100 CREDIT Dividends Payable—Preferred 6,600 CREDIT Dividends Payable—Common 46,500 Declared a cash dividend. Dividends Payable—Preferred 6,600 Dividends Payable—Common 46,500 CREDIT Cash 53,100 Payment of cash dividend.
Requirements 1. How much are cash dividends? 2. What was the amount of the cash receipt from the sale of plant assets? a. Beginning and ending Retained Earnings are $41,000 and $67,000, respectively. Net income for the period is $62,000. b. Beginning and ending Plant Assets are $121,500 and $129,500, respectively. c. Beginning and ending Accumulated Depreciation—Plant Assets are $21,500 and $26,500, respectively. d. Depreciation Expense for the period is $15,000, and acquisitions of new plant assets total $29,000. Plant assets were sold at a $3,000 gain.
Cash dividends are $36,000 beginning balance of retained earnings + net income - ending balanceof retained earnings = dividens -------------- The cash receipt from the sale plant assets is $14,000 beginning balance plant assets + acquisition - ending balance plant assets = cost of assets sold beginning balance of accumulated depreciation + depreciation expense - ending balance accumulated depreciation = accumulated depreciation fo assets sold cost of assets sold - accumlated depreciation of assets sold = book value of assets sold book value of assets sold + gain = cash receipt from sale of plant assets
Anna and Naomi are partners. Anna has a capital balance of $48,000 and Naomi has a capital balance of $40,000. Gary invested $33,000 to acquire an ownership interest of $19,000. Which of the following is TRUE of the partnership journal entry to record the receipt of Gary's contribution? (Assume the existing partners equally divide the bonus.)
Cash is debited for $33,000 and Gary, Capital is credited for $19,000
Hillary, Bruce, and Cindy own a partnership firm. Hillary has an ownership interest of $26,000; Bruce has an ownership interest of $38,000; and Cindy has an ownership interest of $29,000. In the process of liquidation, the partnership sells non−cash assets and registers a gain of $29,000. The profit−loss sharing agreement is 1/6 to Hillary; 2/6 to Bruce; and 3/6 to Cindy. Which of the following is TRUE when a journal entry for the allocation of gain is recorded?
Cindy, Capital is credited for $14,500.
Worldwide's relevant range is between sales of $253,000 and $368,000. First prepare the contribution margin income statement at the $253,000 sales level. Worldwide Travel Contribution Margin Income Statement Three Months Ended March 31, 2024 Now prepare the contribution margin income statement at the $368,000 sales level Worldwide Travel Contribution Margin Income Statement Three Months Ended March 31, 2024
Contribution margin ÷ Net sales revenue = Contribution margin ratio $180,405 ÷ $316,500 = 57 % Net Sales Revenue $253,000 Variable Costs 108,790 Contribution Margin 144,210 Fixed Costs 173,000 Operating Income (Loss) $(28,790) Net Sales Revenue $368,000 Variable Costs 158,240 Contribution Margin 209,760 Fixed Costs 173,000 Operating Income (Loss) $36,760
Which of the following formulas is the right formula for calculating contribution margin ratio?
Contribution margin ratio = Contribution margin / Net sales revenue
Which of the following would appear as a line item on the income statements of both a merchandiser and a manufacturer?
Cost of Goods Sold
Adjusted for overallocated or underallocated overhead.
Cost of Goods Sold 10,140 Manufacturing Overhead 10,140
Now journalize the expense related to the January 31 sale.
Cost of Goods Sold Merchandise Inventory To record cost of goods sold.
Now journalize the expense related to the September 15 sale—Cost of goods, $1,334.
Cost of Goods Sold 1,334 Merchandise Inventory 1,334
Now record the expense related to the sale.
Cost of Goods Sold 12,000 Finished Goods Inventory 12,000
Now journalize the expense related to the April 1 sale—Cost of goods sold is $18,000.
Cost of Goods Sold 18,000 Merchandise Inventory 18,000
Now journalize the expense related to the September 8 sale—Cost of goods, $2,320.
Cost of Goods Sold 2,320 Merchandise Inventory 2,320
Now journalize the expense related to the September25 sale—Cost of goods, $429.
Cost of Goods Sold 429 Merchandise Inventory 429
Use the following ratio data to complete Heirloom Mills' income statement: 1. Inventory turnover was 4.90 (beginning Merchandise Inventory was $890; ending Merchandise Inventory was $850). 2. Profit margin ratio is 15%.
Cost of goods sold = inventory turnover x average merch inventory Net income = profit margin ration x net sales rev interest expense = net sales - COGS - selling and administive expenses - other expenses - income b4 taxes income tax expense = income b4 imcome tax - net income
The financial statements of Jim's Natural Foods include the following items: a. Compute the current ratio for the current year. b. Compute the cash ratio for the current year. c. Compute the acid-test ratio for the current year. d. Compute the inventory turnover for the current year. e. Compute the days' sales in inventory for the current year. f. Compute the days' sales in receivables for the current year. g. Compute the gross profit percentage for the current year.
Current ratio = Total current assets / Total current liabilities Cash ratio = (Cash + Cash equivalents) / Total current liabilities Acid-test ratio= (Cash + STI + Net current receivables) / Total current liabilities Inventory turnover = Cost of goods sold / Average merchandise inventory Days' sales in inventory = 365 days / Inventory turnover Days' sales in receivables = 365 days / Accounts receivable turnover ratio Gross profit percentage = Gross profit / Net sales revenue (gross profit = net sales - cost of goods sold) photo
Completed production on jobs with costs of $36,000.
Finished Goods Inventory 36,000 Work-in-Process Inventory 36,000
Regarding gross and net pay, which of the following statements is correct?
Gross pay minus all deductions such as income tax withheld equals net pay.
At the beginning of the year, Tea Tree Manufacturing had the following account balances: Work−in−Process Inventory 2,000 Finished Goods Inventory 8,000 Manufacturing Overhead 0 Cost of Goods Sold 0 Sales Revenue 0 The following additional details are provided for the year: Direct materials placed in production $80,300 Direct labor incurred 191,000 Manufacturing overhead incurred 300,200 Manufacturing overhead allocated to production 296,600 Cost of jobs completed and transferred 501,700 The unadjusted balance in the Manufacturing Overhead account is a ________.
DEBIT OF 3,600
Under the perpetual inventory system, the journal entry to record the freight paid by the seller on goods sold is:
Delivery Expenses XX Cash XX
Requirement 5. Evaluate the dividends. Begin by selecting the appropriate measurements to evaluate dividends.
Dividend payout Dividends per share The dividend per share is increasing over time so the stock is attractive.
Stockholders primarily use managerial accounting information for decision-making purposes.
FALSE
The cost of goods manufactured is recorded with a debit to the Work−in−Process Inventory account and a credit to the Cost of Goods Manufactured account.
FALSE
A partnership is a business with two or more owners that is legally organized as a corporation.
False
Actual manufacturing overhead costs are credited to the Manufacturing Overhead account.
False
Gross pay is the total amount of salary, wages, commissions, and bonuses earned by an employee during a pay period, after taxes or any other deductions.
False
The balance sheet shows why cash increased or decreased.
False
The employee federal and state income tax and Social Security tax are optional payroll deductions.
False
The left side of the accounting equation measures the amount that the business owes to creditors plus equity. _?_
False
Working capital measures a business's ability to meet its long−term obligations with its current assets.
False
Requirement 2. For the profitability analysis, compute Ambrose's (a) gross profit percentage and (b) profit margin ratio. Compare these figures with the industry averages. Is Ambrose's profit performance better or worse than the industry average? (a) Compute Ambrose's gross profit percentage (b) Compute Ambrose's profit margin ratio. Compare these figures with the industry averages. Is Ambrose's profit performance better or worse than the industry average? Requirement 3. For the analysis of financial position, compute Ambrose's (a) current ratio and (b) debt to equity ratio. Compare these ratios with the industry averages. Assume the current ratio industry average is 1.47, and the debt to equity industry average is 1.83. Is Ambrose's financial position better or worse than the industry averages? (a) Compute Ambrose's current ratio. (b) Compute Ambrose's debt to equity ratio. Compare these ratios with the industry averages. Assume the current ratio industry average is 1.47 and the debt to equity industry average is 1.83. Is Ambrose's financial position better or worse than the industry averages?
Gross profit percentage = Gross profit ÷ Net sales =32.4% Profit margin ratio = Net income ÷ Net sales = 10.6% When comparing the gross profit percentage and the profit margin ratio with the industry averages, Ambrose's profit performance is worse than the industry averages for both the gross profit percentage and the profit margin ratio. Current ratio = Total current assets ÷ Total current liabilities = 1.46 Debt to equity ratio = Total liabilities ÷ Total equity = 2.16 current ratio is close to the industry average. The debt to equity ratio is significantly worse than the industry average.
Danby, Inc. provides the following data from its income statement for 2024: Net Sales $560,000 Cost of Goods Sold (170,000) Gross Profit $390,000 Calculate the gross profit percentage. (Round your answer to two decimal places.)
Gross profit percentage = gross profit / net sales revenue GROSS PROFIT 390,000 / NET SALES 560,000 = .6964285714 = 69.64%
Specific identification
Identifies exactly which inventory item was sold. Usually used for higher cost inventory.
Farrell and Jimmy enter into a partnership agreement on May 1, 2024. Farrell contributes $30,000 and Jimmy contributes $170,000 as their capital contributions. They decide to share profits and losses in the ratio of their respective capital account balances. The net income for the year ended December 31, 2024 is $40,000. Which of the following is the correct journal entry to record the allocation of profit? (Do not round any intermediate calculations. Round your final answers to the nearest dollar.)
Income Summary 40,000 Farrell, Capital 6,000 Jimmy, Capital 34,000
Journalize the entry to close the Income Summary account for the year.
Income Summary 140,000 Polacco, Capital 100,320 CREDIT Walsh, Capital 39,680 CREDIT To close Income Summary to partner's capital.
Requirement 3. Journalize the closing of the Income Summary and partner Withdrawal accounts on December 31, 2024. (Prepare compound entries. Record debits first, then, credits. Select the explanation on the last line of the journal entry table.) Begin by closing the Income Summary account on December 31.
Income Summary 79,000 Loiselle, Capital 47,400 CREDIT Randall, Capital 31,600 CREDIT To close Income Summary.
Which of the following lists the four major financial statements of a company?
Income Statement, Statement of Retained Earnings, Balance Sheet, Statement of Cash Flows
Which of the following is TRUE of a written partnership agreement? A
It is a legally−binding agreement between the owners which explains the procedures for liquidating the partnership. Your answer is correct. B. It is an informal agreement between the partners and is not legally binding. C. It is an agreement in which the partners hold a direct agreement with the registration body, and the registration body acts as an interlocutor between the partners. D. It is a legally−binding agreement between the proprietors and the stock exchange where it is listed regarding the profit sharing between the owners.
GROSS PROFIT
Sales Revenue - Cost of Goods Sold sales revenue= sale unit times unit sales price
Which of the following describes the operating activities section of the statement of cash flows?
It reports on activities that create revenues or expenses for the entity's business.
Perpetual inventory system
Keeps a running computerized record of merchandise inventory. Achieves better control over merchandise inventory. Uses bar codes to keep up-to-the-minute records of inventory. the Merchandise Inventory account is debited for purchases of goods that the company intends to resell to customers.
The inventory costing method that expenses out the newer purchases of goods is the:
Last-in, first-out (LIFO) cost method
Now journalize the closing of the partner Withdrawal accounts on December 31.
Loiselle, Capital 41,000 Randall, Capital 29,000 Loiselle, Withdrawals 41,000 CREDIT Randall, Withdrawals 29,000 CREDIT To close withdrawals.
Recorded manufacturing overhead: depreciation on plant, $12,000; plant insurance (previously paid), $2,000; plant property tax, $3,600 (credit Property Tax Payable).
Manufacturing Overhead 17,600 Accumulated Depreciation-Plant 12,000 Property Tax Payable 3,600 Prepaid Insurance 2,000
Purchased merchandise inventory on account. Journalize the January 16 purchase of merchandise inventory on account and the January 31 sale of merchandise inventory on account.
Merchandise Inventory Accounts Payable To purchase inventory on account.
Purchased merchandise inventory on account from Teaton Wholesalers, $11,000. Terms 1/10, n/30, FOB destination.
Merchandise Inventory 11,000 Accounts Payable—Teaton Wholesalers 11,000
Journalize the purchase transactions. Explanations are not required. (Assume the company uses a perpetual inventory system. Record debits first, then credits. Exclude explanations from journal entries. purchased $167,800 worth of MegoBlock toys on account with credit terms of 2/10, n/45.
Merchandise Inventory 167,800 Accounts Payable—MegoBlock 167,800
Now prepare the entry to update the Merchandise Inventory account for the cost of the returned merchandise—Cost of goods returned, $2,000.
Merchandise Inventory 2,000 Estimated Returns Inventory 2,000
3: Purchased merchandise inventory on account from Sherry Wholesalers, $5,200.Terms 2/15, n/EOM, FOB shipping point.
Merchandise Inventory 5,200 Accounts Payable—Sherry Wholesalers 5,200
Journalize the transaction required by Wheeler Tires on September 23, 2024. Do not round numbers to the nearest whole dollar. Assume tires are purchased on account. (Record debits first, then credits.
Merchandise Inventory 723.54 Accounts Payable—Otis Distribution 723.54 Purchased inventory on account.
Paid freight bill of $90 on September 3 purchase.
Merchandise Inventory 90 Cash 90
Acquisition of equipment by issuance of note payable.
NIF
The net income of a company for the year was $520,000. The company has no preferred stock. Common stockholders' equity was $1,600,000 at the beginning of the year and $2,400,000 at the end of the year. Calculate the rate of return on common stockholders' equity. (Round your answer to two decimal places.)
Net income - preferred dividends / average common stockholders equity $1,600,000 + $2,400,000 = 4000000 4000000 / 2 = 2000000 AVERAGE COMMON STOCKERHOLDERS EQUITY 520,000 / 2000000 = .26 26% measure of profitability
Amber, Inc. provides the following information for 2025: Net income $320,000 Market price per share of common stock $60 per share Dividends paid $185,000 Common stock outstanding at Jan. 1, 2025 160,000 shares Common stock outstanding at Dec. 31, 2025 220,000 shares The company has no preferred stock outstanding. Calculate the earnings per share for 2025. (Round your answer to two decimal places.)
Net income - preferred dividends / weighted average number of common shares outstanding Net income $320,000 + (160,000+220,000/ 2) = 1.68 $1.68 per share
Co. produces sports socks. The company has fixed costs of $80,000 and variable costs of $0.96 per package. Each package sells for $1.60. Requirements 1. Compute the contribution margin per package and the contribution margin ratio. (Round your answers to two decimal places.) 2. Find the breakeven point in units and in dollars, using the contribution margin approach. Requirement 1. Compute the contribution margin per package and the contribution margin ratio. Begin by selecting the labels and entering the amounts to compute the contribution margin per package.
Net sales revenue per unit (1.60) - Variable costs per unit (.96) = CM per unit (.64) CM per unit (.64) ÷ Net sales revenue per unit (1.60) = CM ratio (40%) ( Fixed costs (80,000) + Target profit (0) ) ÷ CM per unit (.64) = Required sales in units (125,000) ( Fixed costs (80,000) + Target profit (0) ) ÷ CM ratio (40%) = Required sales in dollars (200,000)
Company sells a product for $65 per unit. Variable costs are $20 per unit, and fixed costs are $2,200 per month. The company expects to sell 540 units in September. Calculate the contribution margin per unit, in total, and as a ratio.
Net sales revenue per unit (65) - Variable costs per unit (20) = Contribution margin per unit (45) Net sales revenue (35,100) -> 540 x 65 = 35,100 - Variable costs (10,800) -> 540 x 20 = 10,800 = Contribution margin (24,300) Contribution margin (24,300) ÷ Net sales revenue (35,100) -> 540 x 65 = 35,100 = Contribution margin ratio (69%)
Funtime Park competes with Cool World by providing a variety of rides. Funtime sells tickets at $70 per person as aone-day entrance fee. Variable costs are $42 perperson, and fixed costs are $170,800 per month. Compute the contribution margin per unit and the number of tickets Funtime Park must sell to break even. Perform a numerical proof to show that your answer is correct. Begin by selecting the formula labels and then entering the amounts to compute the contribution margin per unit. Begin by selecting the formula labels and then entering the amounts to compute the number of tickets Funtime must sell to break even. Begin by selecting the formula and then entering the amounts to compute the target profit to breakeven.
Net sales revenue per unit (70) - Variable costs per unit (42) = Contribution margin per unit (28) ( Fixed costs 170,800 + Target profit 0 ) ÷ CM per unit 28 = Required sales in units 6,100 Net sales revenue 427,000 - Variable costs. 256,200 - Fixed costs 170,800 = Target profit 0
Co. produces sports socks. The company has fixed costs of $80,000 and variable costs of $0.96 per package. Each package sells for $1.60. Requirements 1. Compute the contribution margin per package and the contribution margin ratio. (Round your answers to two decimal places.) 2. Find the breakeven point in units and in dollars, using the contribution margin approach.
Net sales revenue per unit - Variable costs per unit = CM per unit 1.60 - $0.96 = $0.64 CM per unit ÷ Net sales revenue per unit = CM ratio 0.64 ÷ $1.60 = 40% (Fixed costs + Target profit) ÷ CM per unit = Required sales in units ($80,000 + $0) ÷ $0.64 = 125,000 Fixed costs + Target profit) ÷ CM ratio = Required sales in dollars (80,000 + $0) ÷ 40% = $200,000
Gabby Company sells a product for $65 per unit. Variable costs are $20 perunit, and fixed costs are $2,200 per month. The company expects to sell 540 units in September. Calculate the contribution margin perunit, intotal, and as a ratio.
Net sales revenue per unit - Variable costs per unit = Contribution margin per unit $65 - $20 = $45 Net sales revenue - Variable costs = Contribution margin 35,100 - $10,800 = $24,300 Contribution margin ÷ Net sales revenue = Contribution margin ratio 24,300 ÷ $35,100 = 69%
Funtime Park competes with Cool World by providing a variety of rides. Funtime sells tickets at $70 per person as aone-day entrance fee. Variable costs are $42 perperson, and fixed costs are $170,800 per month. Compute the contribution margin per unit and the number of tickets Funtime Park must sell to break even. Perform a numerical proof to show that your answer is correct.
Net sales revenue per unit - Variable costs per unit = Contribution margin per unit 70 - $42 = $28 (Fixed costs + Target profit) ÷ CM per unit = Required sales in units ($170,800 + $0) ÷ $28 = 6,100 Net sales revenue - Variable costs - Fixed costs = Target profit 427,000 - $256,200 - $170,800 = 0
Periodic inventory system
Normally used for relatively inexpensive goods.
Increase in Salaries Payable.
O+
Increase in accounts payable
O+
Loss on sale of land
O+
Loss on sale of land.
O+
Decrease in Accrued Liabilities.
O-
Decrease in accrued liabilities
O-
Gain on sale of building
O-
Increase in Prepaid Expenses.
O-
Increase in merchandise inventory
O-
From the graph given below, identify the sales revenue line.
OB
Oak Outdoor Furniture manufactures wood patio furniture. If the company reports the following costs for June 2024, what is the balance in the Manufacturing Overhead account before overhead is allocated tojobs? Assume that the labor has beenincurred, but not yet paid. Prepare journal entries for overhead costs incurred in June. What is the balance in the Manufacturing Overhead account before overhead is allocated to jobs? Enter the costs and calculate the balance ("Bal.") of the Manufacturing Overhead T-account. Prepare journal entries for overhead costs incurred in June. (Record debits first, then credits. Exclude explanations from any journal entries.) First, prepare an entry for the overhead costs for materials used. Next, prepare an entry for the overhead costs for labor incurred. Finally, prepare an entry for all other overhead costs.
ON DOCUMENT Manufacturing Overhead 18,000 Raw Materials Inventory 18,000 --- Manufacturing Overhead 45,000 Wages Payable 45,000 -- Manufacturing Overhead 5,300 Accumulated Depreciation 5,300
1. Journalize the sale of the non-cash assets for $15,000. 2. Journalize the allocation of any gain or loss on the sale of the non-cash assets. 3. Journalize the payment of the liabilities. 4. Journalize the payment to the partners.
ONE Cash 15,000 Loss on Disposal 7,000 Non-cash Assets 22,000 CREDIT To record the sale of Non-cash Assets at liquidation. (subtract the non-asset by the sale price given in the description) TWO Murphy, Capital 4,200 Kent, Capital 2,800 Loss on Disposal 7,000 CREDIT To allocate loss on liquidation of Non-cash Assets. THREE Accounts Payable 15,000 Cash 15,000 CREDIT To record the payment of the outstanding liabilities. FOUR Murphy, Capital 4,800 Kent, Capital 5,200 Cash 10,000 CREDIT To distribute remaining cash based on partners' capital balances.
Requirement 1. Journalize the admission of Thomspon as a partner on July 31 if Thomspon pays Loiselle $162,000 cash to purchase Loiselle's interest. Requirement 2. Journalize the admission of Thomspon as a partner on July 31 if Thomspon contributes $81,000 to the partnership, acquiring a 1/4 interest in the business. Requirement 3. Journalize the admission of Thomspon as a partner on July 31 if Thomspon contributes $81,000 to the partnership, acquiring a 1/6 interest in the business. Requirement 4. Journalize the admission of Thomspon as a partner on July 31 if Thomspon contributes $81,000 to the partnership, acquiring a 1/3 interest in the business.
ONE Loiselle, Capital 121,500 Thomspon, Capital 121,500 CREDIT To transfer Loiselle's capital to Thomspon. (Use LOISELLES CAPITAL IN THE ENTRY BC ITS LIKE A BOOK BALANCE) TWO Cash 81,000 Thomspon, Capital 81,000 CREDIT To record Thomspon's contribution. THREE Cash 81,000 Thomspon, Capital 54,000 CREDIT Hudson, Capital 5,400 CREDIT Meehan, Capital 6,750 CREDIT Loiselle, Capital 14,850 CREDIT To record Thomspon's contribution and bonus to existing partners. FOUR Cash 81,000 Hudson, Capital 5,400 Meehan, Capital 6,750 Loiselle, Capital 14,850 Thomspon, Capital 108,000 CREDIT To record Thomspon's contribution and bonus.
Langley, Inc. is the manufacturer of lawn care equipment. The company incurs the following costs while manufacturing edgers: Requirement 1. Describe the difference between period costs and product costs. 2. Classify Langley's costs as period costs or product costs. If the costs are product costs, further classify them as direct materials, direct labor, or manufacturing overhead.
PERIOD COSTS are operating costs that are expensed in the accounting period in which they are incurred. PRODUCT COSTS are all costs of a product that GAAP requires companies to treat as an asset for external financial reporting. These costs are recorded as an asset (inventory) on the balance sheet until the asset is sold. The cost is then transferred to an expense account (COST OF GOODS SOLD) on the income statement. On the income statement, COST OF GOODS SOLD is subtracted from SALES REVENUE to determine gross profit. The PERIOD COSTS are then subtracted to determine operating income. Handle and shaft of edger Product costs - direct materials Motor of edger Product costs - direct materials Factory labor for workers assembling edgers Product costs - direct labor Lubricant used on bearings in the edger (not traced to the product) Product costs - manufacturing overhead Glue to hold the housing together Product costs - manufacturing overhead Plant janitorial wages Product costs - manufacturing overhead Depreciation on factory equipment Product costs - manufacturing overhead Rent on plant Product costs - manufacturing overhead Sales commissions Period costs Administrative salaries Period costs Plant utilities Product costs - manufacturing overhead Shipping costs to deliver finished edgers to customers Period costs
A ________ is a schedule that summarizes the earnings, withholdings, and net pay for each employee.
Payroll register
Requirement 1. Compute the predetermined overhead allocation rate. Round to two decimal places. -- Requirement 2. Post actual and allocated manufacturing overhead to the Manufacturing Overhead T-account. -- Requirement 3. Prepare the journal entry to adjust for underallocated or overallocated overhead. -- Requirement 4. The predetermined overhead allocation rate usually turns out to be inaccurate. Why don't accountants just use the actual manufacturing overhead rate?
Predetermined overhead Estimated overhead cost ÷ Estimated machine hours = allocation rate 223,100 ÷ 30,000 = $7.44 per machine hour -- Manufacturing Overhead Maintenance labor 24,500 Plant supervisor's salary 49,000 Screws, nails and glue 42,000 Plant utilities 90,850 Depreciation 87,000 241,800 Manufacturing overhead allocated Bal. 51,550 -- Cost of Goods Sold 51,550 Manufacturing Overhead 51,550 Adjusted MOH for underallocated overhead. ---- The actual manufacturing overhead rate is not known until the end of the period . Managers need to make decisions throughout the period . Accountants use predetermined overhead allocation rates to give managers product cost information when they need it—today.
Sweeney has a capital balance of $24,000; Sauer's balance is $25,000. Howard pays $100,000 to purchase Sauer's interest in the Sweeney & Sauer partnership. Sauer receives the full $100,000. Journalize the partnership's transaction to admit Howard to the partnership ust Sweeney accept Howard as a full partner? What rights does Howard have after purchasing Sauer's interest in the partnership?
Sauer, Capital 25,000 Howard, Capital 25,000 To record Howard's purchase of Sauer's partnership interest. has the right to refuse to accept Howard into the partnership. After being accepted into the partnership and purchasing the partnership interest of Sauer, Howard has the full rights of a partner. However, Sweeney has to agree to this change.
Data for McNight State Bank follow: Evaluate the common stock of McNight State Bank as an investment. Specifically, use the three stock ratios to determine whether the common stock has increased or decreased in attractiveness during the past year. Round to two decimal places. Begin by selecting the formula to calculate the price/earnings ratio. Now, calculate the price/earnings ratio for 2024 and 2023. Select the formula to calculate the dividend yield. Now, calculate the dividend yield on common stock for 2024 and 2023. Select the formula to calculate the dividend payout. Now, calculate the dividend payout for 2024 and 2023 Determine whether the common stock has increased or decreased in attractiveness during the past year.
Price/earnings ratio = Market price per share of common stock ÷ Earnings per share. Price/earnings ratio 2024 $35.45 2023 $28.89 EXPLAINED: (Net income - preferred dividends) / weighted average number of common shares outstanding THIS NUMBER COMES FROM THE Total Stockholders' Equity at Year-End (includes 75,000 shares of common stock) = earnings per share THEN do market price per share of common stock divided by the earnings per share ---------------------- Dividend yield = Annual dividend per share ÷ Market price per share Dividend yield on common stock % 2024 1.9% 2023 2.8% EXPLAINED: Annual dividend per share ÷ Market price per share × 100 = Dividend yield ANNUAL DIVIDENED PER SHARE = COMMON DIVIDENS / COMMON SHARES OUTSTANDING NOW TAKE THAT ## AND / BY MARKET PRICE PER SHARE X 100 ---------------------- Dividend payout = Annual dividend per share ÷ Earnings per share Dividend payout % 2024 67% 2023 82% EXPLAINED: STEP 1: (net income - perferred dividens) / weighted average number of common shares outstanding = EARNINGS PER SHARE STEP 2: Dividen Common / 90,0000 shares of common stock = ANNUAL DIVIDEN PER SHARE STEP 3: ANNUAL DIVIDEN PER SHARE / EARNINGS PER SHARE = DIVIDEN PAYOUT ---------------------- The stock's attractiveness INCREASED during 2024, as shown by the INCREASED in the price/earnings ratio. If an investor is looking at the stock for dividend potential, then the stock is LESS attractive than last year; both the dividend yield and the dividend payout DECREASED
Conservatism
Principle whose foundation is to exercise caution in reporting financial statement items.
Requirement 2. Compute the profitability analysis. Begin by selecting the appropriate measurements that should be used to complete a profitability analysis.
Profit margin ratio Rate of return on total assets Rate of return on common stockholders' equity Earnings per share of common stock The profit margin ratio, return on assets, and return on equity are increasing over the five years examined. The return on assets and the return on equity for each year are both very respectful. The earnings per share is increasing over time so the stock is attractive.
Identify the category of the statement of cash flows in which each transaction would be reported.
Purchased equipment for $130,000 cash. -> INVESTING Issued $14 par preferred stock for cash. -> FINANCING Cash received from sales to customers of $35,000. -> OPERATING Cash paid to vendors, $17,000. -> OPERATING Sold building for $19,000 gain for cash. -> INVESTING AND OPERATING Purchased treasury stock for $28,000. -> FINANCING Retired a notes payable with 1,250 shares of the company's common stock. -> NON-CASH INVESTING AND FINANCING
Back Country manufactures backpacks. Its plant records include the followingmaterials-related data: Journalize the entries to record the transactions, post to the Raw Materials Inventory account, and determine the ending balance in Raw Materials Inventory. Journalize the entries to record the transactions. Begin by recording the journal entry for the purchases of materials. ---------------------------------------------------------- Now record a single journal entry for the materials used. ----------------------------------------------------------- Post these transactions to the Raw Materials Inventory account and determine the ending balance in Raw Materials Inventory. Raw Materials Inventory
Raw Materials Inventory 73,200 Accounts Payable 73,200 Purchased materials, accumulated in RM. EXPLAIN: Purchases of canvas, on account 72,000 PLUS +++++ Purchases of sewing machine lubricating oil, on account 1,200 EQUALS=== 73,200 ------------------------------------------------------ Work-in-Process Inventory 59,000 Manufacturing Overhead 450 Raw Materials Inventory 59,450 Used materials, direct materials assigned to WIP, indirect materials accumulated in MOH. EXPLAINED: Canvas 59,000 Sewing machine lubricating oil 450 THEN ADD. ----------------------------------------------------- BAL. 38,000 | Purchase 73,200 | 59,450 USED BAL. 51,750 Raw Materials Inventory, beginning balance $38,000 Purchases of canvas, on account 72,000 PLUS Purchases of sewing machine lubricating oil, on account 1,200 = 73,200 Canvas 59,000 PLUS Sewing machine lubricating oil 450 EQUALS 59,450
Apr. 5: Frank received a $4,000 sales return on damaged goods from the customer on April 1. Cost of goods damaged is $2,000. Start by preparing the entry to record the sales return and refund of cash. Do not update the Merchandise Inventory with this entry. We will do that in the following step.
Refunds Payable 4,000 Cash 4,000
On March 18, James Smith purchased $3,000 of furniture from Home Furnishings on account. The cost of the goods was $1,800. On March 20, Home Furnishings granted the customer a $800 sales allowance for goods damaged in transit. Which of the following represents the correct way to record this transaction?
Refunds Payable 800 Accounts Receivable 800
A merchandiser sold merchandise inventory on account. The journal entry to record a sales allowance in the books of the merchandiser (assume an adjusting entry had been recorded for estimated returns), using the perpetual inventory system would be:
Refunds Payable XX Accounts Receivable XX
On January 1, 2024, Mackus contributes land in a partnership with Williams. Mackus purchased the land in 2019 for $275,000. A real estate appraiser now values the land at $700,000. Mackus wants $700,000 capital in the new partnership, but Williams objects. Williams believes that Mackus's capital contribution should be measured by the book value of his land. Williams and Mackus seek your advice.
Requirement 1. Which value of the land is appropriate for measuring Mackus's capital—book value or current market value? Mackus's capital contribution of land should be valued at CURRENT MARKET VALUE. LAND 700,000 MARKUS, CAPITAL 700,000 TO RECORD MACKUS'S CONTRIBUTION
BOTH Perpetual inventory system and Periodic inventory system
Requires a physical count of inventory to determine the quantities on hand.
Journalize the payoff of the short-term notes payable from 2023. Journalize the payment of the salaries payable from 2023. Journalize the borrowing of the short-term notes payable in 2024 Journalize the accrual of the salaries expense for 2024.
Short-Term Notes Payable 16,000 Cash 16,000 CREDIT To record payment of 2023 notes. Salaries Payable 4,000 Cash 4,000 CREDIT To record payment for salaries payable. Cash 16,900 Short-Term Notes Payable 16,900 CREDIT To record cash borrowed on notes payable. Salaries Expense 3,400 Salaries Payable 3,400 CREDIT To record accrued salaries.
The financing activities section of the statement of cash flows includes paying dividends and making payments on long−term liabilities.
True
Within the relevant range, the total fixed costs and the variable cost per unit remain the same.
True
Owner's withdrawals affect the business's net income or net loss and are recorded as an expense.
false
A(n) ________ groups cost by behavior; costs are classified as either variable costs or fixed costs.
contribution margin income statement
Which of the following would be classified as a prime cost?
cost of direct materials used
David, an employee of Cecil, Inc., has gross salary for March of $5,900. The entire amount is under the OASDI limit of $132,900, and thus subject to FICA. He is also subject to federal income tax at a rate of 30%. His year−to−date pay has already exceeded the $7,000 cap for FUTA and SUTA. The journal entry to record the employer's payroll tax expense includes a credit to FICA−OASDI Taxes Payable for $365.80. (Assume a FICA−OASDI Tax of 6.2% and FICA−Medicare Tax of 1.45%.)
True
Online financial databases provide data on companies which allows investors to compare the companies' future earnings.
false
A planning tool that expresses the relationships among costs, volume, and prices and their effects on profits and losses is called ________.
cost−volume−profit analysis
Prepaid Rent is always classified as a long−term asset.
false
O'Malley, Inc. issued 60,000 shares of common stock in exchange for manufacturing equipment. The equipment has a fair value of $1,490,000. The stock has a par value of $0.02 per share. The journal entry to record this transaction includes a ________.
credit to Paid−In Capital in Excess of Par—Common for 1,488,800
Manufacturing costs flow from Work−in−Process Inventory to Cost of Goods Sold to Finished Goods Inventory.
false
What is the net result if the amount of net income for the year is less than the amount of the owner withdrawals?
capital decreases
A corporation has 13,000 shares of 15%, $107 par noncumulative preferred stock outstanding and 20,000 shares of no−par common stock outstanding. At the end of the current year, the corporation declares a dividend of $220,000. What is the dividend per share for preferred stock and for common stock? (Round your answer to the nearest cent.)
The dividend per share is $16.05 to preferred stock and $0.57 to common stock. .15 x 107
Which of the following statements is true for financial leverage?
The higher the debt to equity ratio, the higher the financial leverage. DEBIT TO EQUITY RATIO = total liabilities / total equity
Noncumulative preferred stock is in arrears if the dividend has not been paid for the year.
false
The financial statements of Carrier Office Furniture Company include the following items: 2025 2024 Cash $42,500 $44,000 Short−term Investments 33,000 12,000 Net Accounts Receivable 99,000 97,000 Merchandise Inventory 158,000 148,000 Total Assets 531,000 546,000 Total Current Liabilities 269,000 286,000 Long−term Note Payable 54,000 57,000 What is working capital for 2025?
Working Capital: Current assets − Current liabilities Current assets = (cash + Short-term investments + Net accounting receivable + merch inv). Cash $42,500 Short−term Investments 33,000 Net Accounts Receivable 99,000 Merchandise Inventory 158,000 = 332500 CURRENT ASSETS Total Current Liabilities 269,000 332500 - 269,000 = 63500
Steps
Step 1: Cost of Goods Sold (59,000) + Cost of Ending Merchandise (2,000) = Cost of Goods Available for Sale. (61,000) Beginning Merchandise Inventory + Purchases and Freight In = Cost of Goods Available for Sale. Step 2: Cost of Goods Available for Sale (61,000) - Purchase and Freight In (51,000) = Beginning Merchandise Inventory (10,000) Step 3: Gross Profit (110,000) - Selling and Administrative Expenses (86,000) = Operating Income (24,000) Step 4: Gross Profit (40,000) - Operating Income (10,000) = Selling and Administrative Expenses (30,000) Step 5: Cost of Goods Sold (90,000) + Gross Profit (110,000) = Net Sales Revenue (200,000) Step 6: Gross Profit - Net Sales Revenue = Cost of Goods Sold Step 7: Cost of Goods Available for Sale. (92,000) - Cost of Ending Merchandise (2,000) = Cost of Goods Sold (90,000) Step 8: Cost of Goods Available for Sale (92,000) - Beginning Merchandise Inventory (31,000) = Purchase and Freight In (61,000)
More steps
Step 1: Direct Materials (116,000) + Direct Labor (85,000) + Manufacturing Overhead (41,000)= Total Manufacturing Costs incurred for the year (199,000) Step 2: Total Manufacturing Costs Incurred + Beginning Work in process = Cost to account for Step 3: Cost of Goods Manufactured (200,000) (207,000) + Beginning Finished Goods Inventory (21,000) (21,000) = Cost of Goods Available for Sale (221,000) (228,000) Step 4: Cost of Goods Available for Sale (221,000) (228,000) - Ending Finished Goods Inventory (27,000) (29,000) = Cost of Goods Sold (194,000) (199,000)
more steps
Steps 1: Net Sales Revenue (106,000) - Cost of Goods Sold (54,100) = Gross Profit (51,900) Gross Profit (51,900) - Selling and Administrative Expenses (8,800) = Operating Income (43,100)
Which of the following is a basic right of stockholders?
Stockholders may receive dividends from corporate earnings.
Stone and Smith had beginning capital balances of $18,000 and $13,000, respectively. The two partners fail to agree on a profit-and-loss-sharing ratio. For the first month (June 2024), the partnership has a net loss of $9,000. How much of this loss goes to Stone? How much goes to Smith? The partners withdrew no assets during June. What is each partner's capital balance at June 30? Prepare a T-account for each partner's capital account. Determine each partner's capital balance using these T-accounts.
Stone's loss $4,500 Smith's loss $4,500 (9000/2=4500) Stone, Capital 1 debit 18,000 jun 1 2 credit clos (loss) 4,500 3 debit total 13,500 bal smith capital 1 debit 13,000 jun 1 2 crdit clos (loss) 4,500 3 debit 8,500 bal
Requirement 1. Journalize the partners' initial contributions. (Record debits first, then, credits. Select the explanation on the last line of the journal entry table.) Begin by journalizing the contribution made by Loiselle. Now journalize the contribution made by Randall. Prepare the partnership balance sheet immediately after its formation on March 15, 2024
Store Equipment 24,000 Merchandise Inventory 30,000 Accounts Receivable 10,400 Prepaid Expenses 2,700 Loiselle, Capital 43,100 CREDIT Accounts Payable 24,000 CREDIT To record Loiselle's contribution. Cash 43,100 Randall, Capital 43,100 To record Randall's contribution. Assets cash accounts recievable merch inv. repaid expenses store equipment total assets Liabilities accounts payable Partner's Equity Lo, capital Rand, capital total partner's equity total lib. and partner's equity
Companies, a home improvement storechain, reported the following summarizedfigures: Win's has 20,000 common shares outstanding during 2024. Requirement 1. Compute Win's Companies' current ratio at May 31, 2024 and 2023. Begin by selecting the formula to calculate Win's Companies' current ratio. Then enter the amounts and calculate the current ratio for 2024 and then 2023. Requirement 2. Did Win's Companies' current ratio improve, deteriorate, or hold steady during 2024?
Total current assets ÷ Total current liabilities = Current ratio ASSETS / LIBAILITIES 2024 $51,700 ÷ $22,000 = 2.35 2023 $28,900 ÷ $13,000 = 2.22 TOTAL CURRENT ASSETS = CASH + SHORT-TERM INVESTMENTS + ACCOUNTS RECIEVABLE + MERCH INV. + OTHER CURRENT ASSETS Win's Companies' current ratio improved.
Jamie Baldwin works at College of Charlotte and is paid $35 per hour for a40-hour workweek andtime-and-a-half for hours above 40. Requirement 1. Compute Baldwin's gross pay for working 44 hours during the first week of February. Requirement 2. Baldwin is single, and her income tax withholding is 15% of total pay. Baldwin's only payroll deductions are payroll taxes. Compute Baldwin's net (take-home) pay for the week. Assume Baldwin's earnings to date are less than the OASDI limit. Requirement 3. Journalize the accrual of wages expense and the payments related to the employment of Sarah Baldwin. Begin with the entry to accrue wages expense and payroll withholdings for Sarah Baldwin. Now record the entry to record the payment of wages to Sarah Baldwin.
Straight-time pay for 40 hours $1,400.00 Overtime pay for 4 hours 210.00 Gross Pay $1,610.00 Gross pay $1,610.00 Withholding deductions: Employee income tax $241.50 Employee OASDI tax 99.82 Employee Medicare tax 23.35 Total withholdings 364.67 Net (take-home) pay $1,245.33 Wages Expense 1,610.00 Employee Income Taxes Payable 241.50 FICA-OASDI Taxes Payable 99.82 FICA-Medicare Taxes Payable 23.35 Wages Payable 1,245.33 To record wages expense and payroll withholdings. Wages Payable 1,245.33 Cash 1,245.33 To record payment of wages.
Requirement 1. Compute Baldwin's gross pay for working 62 hours during the first week of February.
Straight-time pay for 40 hours $2,000.00 Overtime pay for 22 hours 1,650.00 Gross Pay $3,650.00
T/F: Accounting is the information system that measures business activities, processes the information into reports, and communicates the results to decision makers.
TRUE
When direct materials are received on the production floor, they are recorded on the job cost record.
TRUE
Requirement 1. Compute the acquisition of plant assets for White Media Corporation during 2024. The business sold no plant assets during the year. Assume the company paid cash for the acquisition of plant assets. Requirement 2. Compute the payment of a long-term note payable. During the year, the business issued a $5,400 note payable.
The acquisition of equipment is $23,000 Plant asset in 2024 - plant asset in 2023 ending balance plant assets + book value of plant assets sold - beginning balance plant assets = acquisition of plant assets ----- The payment of a long-term note payable is $6,400 notes payable in 2024 - notes payable in 2023 = -1,000 now subtract notes payable of 5,400 = -6,400
Illinois Woodworking Company is preparing its statement of cash flows using the indirect method. During the year, Illinois Woodworking sold equipment for $6,490 cash. The net book value of the asset was $4,550. Which of the following statements is true?
The cash receipt of $6,490 is shown as a positive cash flow in the investing activities section.
A corporation has 13,000 shares of 15%, $107 par noncumulative preferred stock outstanding and 20,000 shares of no−par common stock outstanding. At the end of the current year, the corporation declares a dividend of $220,000. What is the dividend per share for preferred stock and for common stock? (Round your answer to the nearest cent.)
The dividend per share is $16.05 to preferred stock and $0.57 to common stock.
Requirement 1. Compute the inventory turnover, days' sales in inventory, and gross profit percentage for Achieve's Companies for 2024. Compute the inventory turnover. Compute the days' sales in inventory. Compute the gross profit percentage. ------------ Requirement 2. Compute days' sales in receivables during 2024. Round intermediate calculations to three decimal places. Assume all sales were on account. ------------ Requirement 3. What do these ratios say about Achieve's Companies' ability to sell inventory and collect receivables?
The inventory turnover = Cost of goods sold ÷ Average merchandise inventory 3.44 times. The days' sales in inventory = 365 days ÷ Inventory turnover 106 days. The gross profit percentage = Gross profit ÷ Net sales revenue 51.6% EXPLAINED: GROSS PRRFIT = net sales - cost of goods sold ------- Days' sales in average receivables = 365 days ÷ Accounts receivable turnover ratio 50 days EXPLAINED: Accounts receivable turnover ratio = net credit sales / average net accounts recievables NET CREDIT SALES IS GIVEN ON INCOME STATEMENT AVERAGE NET ACCOUNTS REIVEBLE = ACCOUNTS RECEIVABLE FROM BALANCE SHEET ADD THEM THEN DIVIDE BY 2. 365 / Accounts receivable turnover ratio Achieve's Companies' have a high amount of inventory on hand and a LOW inventory turnover ratio. This could be an area to look at and compare to the prior year and industry average. They have a HIGH gross profitpercentage, which is a GOOD INDICTATOR The amount of time it takes to collect receivables seems HIGH, but this would depend on the CREDIT TERMS
Stone and Thombs are forming a partnership, Salem Leather Goods, to import merchandise from Spain. Stone is especially artistic and will travel to Spain to buy the merchandise. Thombs is a super salesman and has already lined up several department stores to sell the leather goods. What is the purpose of the partnership agreement? If the partnership agreement does not state the profit-and-loss-sharing ratios, how will profits or losses be shared? Stone is contributing $175,000 in cash and accounts payable of $25,000. Thombs is contributing a building that cost Thombs $65,000. Thebuilding's current market value is $90,000. Journalize the contribution of the two partners. Begin by journalizing Stone's investment. Stone is contributing $175,000 in cash and accounts payable of $25,000. Journalize Thombs' investment. Thombs is contributing a building that cost Thombs $65,000. The building's current market value is $90,000.
The purpose of the partnership agreement is to increase the partners' understanding of how the business is run. If the partnership agreement does not state the profit-and-loss-sharing ratios, the profits or losses are shared equally. cash 175,000 accounts pay 25,000 CREDIT stone, cap 150,000 CREDIT to record stone's contribution builiding 90,000 thombs, cap 90,000 CREDIT to record thombs' contribution
Financial statements all have a goal. The statement of cash flows does as well. Describe how the statement of cash flows helps investors and creditors perform each of the following functions: a. Predict future cash flows. b.Evaluate management decisions. c. Predict the ability to make debt payments to lenders and pay dividends to stockholders.
The statement of cash flows helps predict future cash flows by reporting PAST cash RECEIPTS and PAYMENTS, which are good predictors of future cash flows. The statement of cash flows helps evaluate management decisions by reporting on managers' INVESTMENTS. The statement of cash flows helps predict the ability to make debt payments to lenders and pay dividends to stockholders by reporting WHERE CASH CAME FROM AND HOW CASH WAS SPENT.
Aster Corporation recently organized. The company issued common stock to an inventor in exchange for a patent with a market value of $60,000. Inaddition, Aster received cash for 6,000 shares of its $10 par preferred stock at par value and 9,500 shares of itsno-par common stock at $40 per share. Without making journalentries, determine the totalpaid-in capital created by these transactions.
The total paid-in capital created by these transactions amounts to $500,000
Data for WebEnterprises follows: Compute the dollar amount of change and the percentage of change in Web Enterprises' working capital each year during 2025 and 2024. What do the calculated changes indicate? Begin by selecting the formula to compute the working capital, the dollar amount of change and the percentage of change in Web Enterprises' working capital. First, calculate the amount and percentage of change in working capital in 2024. Next, calculate the amount and percentage of change in working capital in 2025. What do the calculated changes indicate?
Working capital = Current assets - Current liabilities Dollar amount of change = Later period amount - Earlier period amount Percentage of change = (Dollar amount of change ÷ Base period amount) × 100 ----- The amount of change in working capital is $40,000. The percentage of change in working capital is 32.0%. The amount of change in working capital is $65,000. The percentage of change in working capital is 39.4. FORE THESE FIND THE WORKING CAPITAL TOTALS AND WRITE THEM DOWN THEN SUBTRACT THEM FROM EACH OTHER :) --- Web's Enterprises' working capital has improved year over year from 2023 to 2025.
Dan Jones and Pat Smith are two employees of Lone Star, Inc. In January 2025, Dan's gross pay was $9,000, and Pat's gross pay was $16,400. All earnings are subject to FICA—OASDI Tax of 6.2% and FICA—Medicare Tax of 1.45%. Which of the following would be included in the entry to record the payroll tax expense to be paid out by Lone Star, Inc. for January?
a credit to FICA—Medicare Taxes Payable for $368.30
Angie Pereira and Ferro Schwartz are employees of Free Star, Inc. In February 2025, Angie's gross pay was $13,000, and Ferro's gross pay was $14,900. All earnings are subject to FICA—OASDI Tax of 6.2% and FICA—Medicare Tax of 1.45%. Which of the following would be included in the entry to record the salaries expense for February?
a credit to FICA—OASDI Taxes Payable for $1,729.80 13,000 + 14,900 / 6.2%
A company purchased inventory for $4,000 from a vendor on account, FOB shipping point, with terms of 2/10, n/30. The company paid $200 cash for freight in. The entry to record the payment of the invoice within 10 days of the invoice date by the purchaser would include ________. (Assume a perpetual inventory system.)
a debit to Accounts Payable for $4,000, a credit to Merchandise Inventory for $80, and a credit to Cash for $3,920
Which of the following would use a process costing system rather than a job order costing system?
a paint manufacturer
Granger Cards is a manufacturer of greeting cards. Classify its costs by matching the costs to the terms.
a. Artists' wages 2. Direct labor b. Wages of materials warehouse workers 4. Indirect labor c. Paper 1. Direct materials d. Depreciation on manufacturing equipment 5. Other manufacturing overhead e. Manufacturing plant manager's salary 4. Indirect labor f. Property taxes on manufacturing plant 5. Other manufacturing overhead g. Glue for envelopes 3. Indirect materials
Underallocated overhead occurs when ________.
allocated overhead costs are less than actual overhead costs
Randall, an employee of Ramsay's, Inc., has gross salary for March of $4,000. The entire amount is under the OASDI limit of $132,900 and thus subject to FICA. He is also subject to federal income tax at a rate of 18%. Randall has a deduction of $320 for health insurance and $80 for United Way. Which of the following is included in the entry to record the liabilities for payroll withholding deductions?
credit to United Way Payable
Bob and Bill allocate 2/3 of their partnership's profits and losses to Bob and 1/3 to Bill. The net income of the firm is $20,000. The journal entry to close the Income Summary will include ________. (Do not round any intermediate calculations. Round the final answer to the nearest dollar.)
credit to Bob, Capital for $13,333
Under which of the following categories would Accounts Receivable appear?
current assets
Which characteristic of a corporation is a disadvantage?
double taxation
Jason Repair Company incurred $1,500 as advertising expense and promised to pay the advertising agency within 30 days. Which of the following will decrease as a result of this transaction?
equity
The statement of cash flows helps users ________.
evaluate management decisions
If inventory turnover is too slow, a company may be unable to sell goods or it may be understating merchandise inventory.
false
In a cost−volume−profit (CVP) graph, the breakeven point is where the sales revenue line intersects the fixed cost line.
false
In a liquidation, when selling assets at a gain, the Gain on Disposal of Assets account is debited.
false
In a partnership, the income is taxed at the partnership level as well as at the personal level of the owners.
false
Like a sole proprietorship's statement of owner's equity, the statement of partners' equity will show all the partners' capital accounts as one account.
false
Manley Corporation issued 2,500 shares of its $50 par, 4% preferred stock on March 31, 2025, at $80 per share. The amount credited to Paid−In Capital in Excess of Par−Preferred is $200,000.
false
When a new partner is admitted at a higher−than−book−value contribution, the existing partners will receive a bonus amount.
true
Adam, Bill, and Charlie are partners. The profit and loss sharing rule between them is 1:4:4, with Bill getting the largest share and Adam receiving the smallest. The partnership incurs a net loss of $16,000. While closing the Income Summary ________. (Do not round any intermediate calculations.)
Charlie, Capital will be debited for $7,111
The three major categories included on the statement of cash flows are ________.
investing, operating, and financing activities