ACCT 3001 FINAL: computation TB

d; Cash 3,200 c; int receivable 2,400 c; int revenue 800

AAA A company receives interest on a $40,000, 8%, 5-year note receivable each April 1. At December 31, 2012, the following adjusting entry was made to accrue interest receivable: d: Interest Receivable 2,400 c:Interest Revenue 2,400 Assuming that the company does not use reversing entries, what entry should be made on April 1, 2013 when the annual interest payment is received?

d; cash 3,200 c; int revenue 3,200

AAA A company receives interest on a $40,000, 8%, 5-year note receivable each April 1. At December 31, 2012, the following adjusting entry was made to accrue interest receivable: d: Interest Receivable 2,400 c:Interest Revenue 2,400 Assuming that the company does use reversing entries, what entry should be made on April 1, 2013 when the annual interest payment is received?

b

AAA A review of the December 31, 2012, financial statements of Somer Corporation revealed that under the caption "extraordinary losses," Somer reported a total of $1,030,000. Further analysis revealed that the $1,030,000 in losses was comprised of the following items: (1) Somer recorded a loss of $300,000 incurred in the abandonment of equipment formerly used in the business. (2) In an unusual and infrequent occurrence, a loss of $500,000 was sustained as a result of hurricane damage to a warehouse. (3) During 2012, several factories were shut down during a major strike by employees, resulting in a loss of $170,000. (4) Uncollectible accounts receivable of $60,000 were written off as uncollectible. Ignoring income taxes, what amount of loss should Somer report as extraordinary on its 2012 income statement? a. $300,000. b. $500,000. c. $800,000. d. $1,030,000.

a

AAA An income statement shows "income before income taxes and extraordinary items" in the amount of $2,740,000. The income taxes payable for the year are $1,440,000, including $480,000 that is applicable to an extraordinary gain. Thus, the "income before extraordinary items" is a. $1,780,000. b. $820,000. c. $1,860,000. d. $900,000.

b

AAA Arreaga Corp. has a tax rate of 40 percent and income before non-operating items of $464,000. It also has the following items (gross amounts). Unusual loss $ 74,000 Extraordinary loss 202,000 Gain on disposal of equipment 16,000 Change in accounting principle increasing prior year's income 106,000 What is the amount of income tax expense Arreaga would report on its income statement? a. $185,600 b. $162,400 c. $198,400 d. $124,000

a

AAA At Ruth Company, events and transactions during 2012 included the following. The tax rate for all items is 30%. (1) Depreciation for 2010 was found to be understated by $60,000. (2) A strike by the employees of a supplier resulted in a loss of $50,000. (3) The inventory at December 31, 2010 was overstated by $80,000. (4) A flood destroyed a building that had a book value of $1,000,000. Floods are very uncommon in that area. The effect of these events and transactions on 2012 income from continuing operations net of tax would be a. ($35,000). b. ($77,000). c. ($133,000). d. ($833,000).

b

AAA At Ruth Company, events and transactions during 2012 included the following. The tax rate for all items is 30%. (1) Depreciation for 2010 was found to be understated by $60,000. (2) A strike by the employees of a supplier resulted in a loss of $50,000. (3) The inventory at December 31, 2010 was overstated by $80,000. (4) A flood destroyed a building that had a book value of $1,000,000. Floods are very uncommon in that area. The effect of these events and transactions on 2012 net income net of tax would be a. ($35,000). b. ($735,000). c. ($777,000). d. ($833,000).

c

AAA Brown Company's account balances at December 31, 2012 for Accounts Receivable and the related Allowance for Doubtful Accounts are $920,000 debit and $1,400 credit, respectively. From an aging of accounts receivable, it is estimated that $25,000 of the December 31 receivables will be uncollectible. The necessary adjusting entry would include a credit to the allowance account for a. $25,000. b. $26,400. c. $23,600. d. $1,400.

b

AAA Chen Company's account balances at December 31, 2012 for Accounts Receivable and the Allowance for Doubtful Accounts are $480,000 debit and $900 credit. Sales during 2012 were $1,350,000. It is estimated that 1% of sales will be uncollectible. The adjusting entry would include a credit to the allowance account for a. $14,400. b. $13,500. c. $12,600. d. $4,800.

c

AAA Dole Company, with an applicable income tax rate of 30%, reported net income of $350,000. Included in income for the period was an extraordinary loss from flood damage of $50,000 before deducting the related tax effect. The company's income before income taxes and extraordinary items was a. $400,000. b. $500,000. c. $550,000. d. $385,000.

c

AAA Sandstrom Corporation has an extraordinary loss of $150,000, an unusual gain of $105,000, and a tax rate of 40%. At what amount should Sandstrom report each item? Extraordinary loss Unusual gain a. $(150,000) $105,000 b. (150,000) 63,000 c. (90,000) 105,000 d. (90,000) 63,000

b

AAA During the first year of Wilkinson Co.'s operations, all purchases were recorded as assets. Supplies in the amount of $25,800 were purchased. Actual year-end supplies amounted to $8,600. The adjusting entry for store supplies will a. increase net income by $17,200. b. increase expenses by $17,200. c. decrease supplies by $8,600. d. debit Accounts Payable for $8,600.

b

AAA Eaton Co. sells major household appliance service contracts for cash. The service contracts are for a one-year, two-year, or three-year period. Cash receipts from contracts are credited to Unearned Service Revenue. This account had a balance of $3,600,000 at December 31, 2012 before year-end adjustment. Service contract costs are charged as incurred to the Service Contract Expense account, which had a balance of $900,000 at December 31, 2012. Service contracts still outstanding at December 31, 2012 expire as follows: During 2013 $760,000 During 2014 1,140,000 During 2015 700,000 What amount should be reported as Unearned Service Revenue in Eaton's December 31, 2012 balance sheet? a. $2,700,000. b. $2,600,000. c. $1,700,000. d. $1,000,000.

a

AAA For Grimmett Company, the following information is available: Capitalized leases $600,000 Trademarks 195,000 Long-term receivables 225,000 In Grimmett's balance sheet, intangible assets should be reported at a. $195,000. b. $225,000. c. $795,000. d. $825,000.

c

AAA For Rondelli Company, the following information is available: Cost of goods sold $270,000 Dividend revenue 12,000 Income tax expense 27,000 Operating expenses 105,000 Sales revenue 450,000 In Rondelli's multiple-step income statement, gross profit a. should not be reported b. should be reported at $60,000. c. should be reported at $180,000. d. should be reported at $192,000.

c

AAA Fulton Company owns the following investments: Trading securities (fair value) $120,000 Available-for-sale securities (fair value) 70,000 Held-to-maturity securities (amortized cost) 94,000 Fulton will report investments in its current assets section of a. $0. b. exactly $120,000. c. $120,000 or an amount greater than $120,000, depending on the circumstances. d. exactly $190,000.

a

AAA Garwood Company has the following items: write-down of inventories, $360,000; loss on disposal of Sports Division, $555,000; and loss due to an expropriation, $339,000. Ignoring income taxes, what total amount should Garwood Company report as extraordinary losses? a. $339,000 b. $555,000. c. $699,000. d. $894,000.

c

AAA Gross billings for merchandise sold by Lang Company to its customers last year amounted to $12,720,000; sales returns and allowances were $370,000, sales discounts were $175,000, and freight-out was $140,000. Net sales last year for Lang Company were a. $12,720,000. b. $12,350,000. c. $12,175,000. d. $12,035,000.

a

AAA Lantos Company had a 40 percent tax rate. Given the following pre-tax amounts, what would be the income tax expense reported on the face of the income statement? Sales revenue $ 300,000 Cost of goods sold 180,000 Salaries and wages expense 24,000 Depreciation expense 33,000 Dividend revenue 27,000 Utilities expense 3,000 Extraordinary loss 30,000 Interest expense 6,000 a. $32,400 b. $20,400 c. $21,600 d. $ 9,600

a

AAA Manning Company has the following items: write-down of inventories, $360,000; loss on disposal of Sports Division, $555,000; and loss due to strike, $339,000. Ignoring income taxes, what total amount should Manning Company report as extraordinary losses? a. $ -0-. b. $555,000. c. $699,000. d. $894,000.

d; unearned rent revenue 20,000 c; rent revenue 20,000

AAA Murphy Company sublet a portion of its warehouse for five years at an annual rental of $30,000, beginning on May 1, 2012. The tenant, Sheri Charter, paid one year's rent in advance, which Murphy recorded as a credit to Unearned Rent Revenue. Murphy reports on a calendar-year basis. The adjustment on December 31, 2012 for Murphy should be

c

AAA On September 1, 2012, Lowe Co. issued a note payable to National Bank in the amount of $900,000, bearing interest at 12%, and payable in three equal annual principal payments of $300,000. On this date, the bank's prime rate was 11%. The first payment for interest and principal was made on September 1, 2013. At December 31, 2013, Lowe should record accrued interest payable of a. $36,000. b. $33,000. c. $24,000. d. $22,000.

a

AAA Palomo Corp has a tax rate of 30 percent and income before non-operating items of $714,000. It also has the following items (gross amounts). Unusual gain $ 46,000 Loss from discontinued operations 366,000 Dividend revenue 12,000 Income increasing prior period adjustment 148,000 What is the amount of income tax expense Palomo would report on its income statement? a. $231,600 b. $121,800 c. $166,200 d. $217,800

c

AAA Panda Corporation paid cash of $30,000 on June 1, 2012 for one year's rent in advance and recorded the transaction with a debit to Prepaid Rent. The December 31, 2012 adjusting entry is a. debit Prepaid Rent and credit Rent Expense, $12,500. b. debit Prepaid Rent and credit Rent Expense, $17,500. c. debit Rent Expense and credit Prepaid Rent, $17,500. d. debit Prepaid Rent and credit Cash, $12,500.

c

AAA Pappy Corporation received cash of $18,000 on September 1, 2012 for one year's rent in advance and recorded the transaction with a credit to Unearned Rent Revenue. The December 31, 2012 adjusting entry is a. debit Rent Revenue and credit Unearned Rent Revenue, $6,000. b. debit Rent Revenue and credit Unearned Rent Revenue, $12,000. c. debit Unearned Rent Revenue and credit Rent Revenue, $6,000. d. debit Cash and credit Unearned Rent Revenue, $12,000.

d

AAA Perry Corp. reports operating expenses in two categories: (1) selling and (2) general and administrative. The adjusted trial balance at December 31, 2012, included the following expense accounts: Accounting and legal fees $280,000 Advertising 240,000 Freight-out 150,000 Interest 120,000 Loss on sale of long-term investments 60,000 Officers' salaries 360,000 Rent for office space 360,000 Sales salaries and commissions 220,000 One-half of the rented premises is occupied by the sales department. How much of the expenses listed above should be included in Perry's selling expenses for 2012? a. $460,000. b. $610,000. c. $640,000. d. $790,000.

c

AAA Prophet Corporation has an extraordinary loss of $600,000, an unusual gain of $420,000, and a tax rate of 40%. At what amount should Prophet report each item? Extraordinary loss Unusual gain a. $(600,000) $420,000 b. (600,000) 252,000 c. (360,000) 420,000 d. (360,000) 252,000

c

AAA Starr Corporation loaned $150,000 to another corporation on December 1, 2012 and received a 3-month, 8% interest-bearing note with a face value of $150,000. What adjusting entry should Starr make on December 31, 2012? a. Debit Interest Receivable and credit Interest Revenue, $3,000. b. Debit Cash and credit Interest Revenue, $1,000. c. Debit Interest Receivable and credit Interest Revenue, $1,000. d. Debit Cash and credit Interest Receivable, $3,000.

d

AAA Tate Company purchased equipment on November 1, 2012 and gave a 3-month, 9% note with a face value of $40,000. The December 31, 2012 adjusting entry is a. debit Interest Expense and credit Interest Payable, $3,600. b. debit Interest Expense and credit Interest Payable, $900. c. debit Interest Expense and credit Cash, $600. d. debit Interest Expense and credit Interest Payable, $600.

b

AAAAllen Corp.'s liability account balances at June 30, 2013 included a 10% note payable in the amount of $3,000,000. The note is dated October 1, 2011 and is payable in three equal annual payments of $1,000,000 plus interest. The first interest and principal payment was made on October 1, 2012. In Allen's June 30, 2013 balance sheet, what amount should be reported as accrued interest payable for this note? a. $225,000. b. $150,000. c. $75,000. d. $50,000.

d

AAAAt December 31, 2012, Sue's Boutique had 1,000 gift certificates outstanding, which had been sold to customers during 2012 for $75 each. Sue's operates on a gross profit of 60% of its sales. What amount of revenue pertaining to the 1,000 outstanding gift certificates should be deferred at December 31, 2012? a. $0. b. $30,000. c. $45,000. d. $75,000.

c

AAAFor Mortenson Company, the following information is available: Cost of goods sold $120,000 Dividend revenue 5,000 Income tax expense 12,000 Operating expenses 46,000 Sales revenue 200,000 In Mortenson's multiple-step income statement, gross profit a. should not be reported b. should be reported at $27,000. c. should be reported at $80,000. d. should be reported at $85,000.

a

AAAIf plant assets of a manufacturing company are sold at a gain of $1,640,000 less related taxes of $500,000, and the gain is not considered unusual or infrequent, the income statement for the period would disclose these effects as a. a gain of $1,640,000 and an increase in income tax expense of $500,000. b. operating income net of applicable taxes, $1,140,000. c. a prior period adjustment net of applicable taxes, $1,140,000. d. an extraordinary item net of applicable taxes, $1,140,000.

a

AAAIn November and December 2012, Lane Co., a newly organized magazine publisher, received $75,000 for 1,000 three-year subscriptions at $25 per year, starting with the January 2013 issue. Lane included the entire $75,000 in its 2012 income tax return. What amount should Lane report in its 2012 income statement for subscriptions revenue? a. $0. b. $4,167. c. $25,000. d. $75,000.

c

AAAOn June 1, 2012, Nott Corp. loaned Horn $600,000 on a 12% note, payable in five annual installments of $120,000 beginning January 2, 2013. In connection with this loan, Horn was required to deposit $5,000 in a noninterest-bearing escrow account. The amount held in escrow is to be returned to Horn after all principal and interest payments have been made. Interest on the note is payable on the first day of each month beginning July 1, 2012. Horn made timely payments through November 1, 2012. On January 2, 2013, Nott received payment of the first principal installment plus all interest due. At December 31, 2012, Nott's interest receivable on the loan to Horn should be a. $0. b. $6,000. c. $12,000. d. $18,000.

b

BBBConsider the following: Cash in Bank - checking account of $18,500, Cash on hand of $500, Post-dated checks received totaling $3,500, and Certificates of deposit totaling $124,000. How much should be reported as cash in the balance sheet? a. $ 18,500. b. $ 19,000. c. $ 22,500. d. $136,500.

d; unrealized holding gain or loss 200,000 c; estimated liability on purchase commitments

BBB 89. During the current fiscal year, Jeremiah Corp. signed a long-term noncancellable purchase commitment with its primary supplier. Jeremiah agreed to purchase $2.5 million of raw materials during the next fiscal year under this contract. At the end of the current fiscal year, the raw material to be purchased under this contract had a market value of $2.3 million. What is the journal entry at the end of the current fiscal year?

d; inventory 2,300,000 d; estimated liability on purchase commitments 200,000 c; cash 2,500,00

BBB 90.During the prior fiscal year, Jeremiah Corp. signed a long-term noncancellable purchase commitment with its primary supplier to purchase $2.5 million of raw materials. Jeremiah paid the $2.5 million to acquire the raw materials when the raw materials were only worth $2.3 million. Assume that the purchase commitment was properly recorded. What is the journal entry to record the purchase?

d; unrealized holding gain or loss-income 70,000 c; established liability on purchase commitments 70,00

BBB 91.During 2012, Larue Co., a manufacturer of chocolate candies, contracted to purchase 200,000 pounds of cocoa beans at $4.00 per pound, delivery to be made in the spring of 2013. Because a record harvest is predicted for 2013, the price per pound for cocoa beans had fallen to $3.30 by December 31, 2012. Of the following journal entries, the one which would properly reflect in 2012 the effect of the commitment of Larue Co. to purchase the 100,000 pounds of cocoa is

c

BBB Bell Inc. took a physical inventory at the end of the year and determined that $760,000 of goods were on hand. In addition, the following items were not included in the physical count. Bell, Inc. determined that $96,000 of goods were in transit that were shipped f.o.b. destination (goods were actually received by the company three days after the inventory count).The company sold $40,000 worth of inventory f.o.b. destination. What amount should Bell report as inventory at the end of the year? a. $760,000. b. $856,000. c. $800,000. d. $896,000.

d

BBB Bell Inc. took a physical inventory at the end of the year and determined that $780,000 of goods were on hand. In addition, Bell, Inc. determined that $60,000 of goods that were in transit that were shipped f.o.b. shipping point were actually received two days after the inventory count and that the company had $90,000 of goods out on consignment. What amount should Bell report as inventory at the end of the year? a. $780,000. b. $840,000. c. $870,000. d. $930,000.

d

BBB Elkins Corporation uses the perpetual inventory method. On March 1, it purchased $20,000 of inventory, terms 2/10, n/30. On March 3, Elkins returned goods that cost $2,000. On March 9, Elkins paid the supplier. On March 9, Elkins should credit a. purchase discounts for $400. b. inventory for $400. c. purchase discounts for $360. d. inventory for $360.

a

BBB For Randolph Company, the following information is available: Capitalized leases $560,000 Trademarks 180,000 Long-term receivables 210,000 In Randolph's balance sheet, intangible assets should be reported at a. $180,000. b. $210,000. c. $740,000. d. $770,000.

b

BBB Houghton Company has the following items: common stock, $900,000; treasury stock, $105,000; deferred taxes, $125,000 and retained earnings, $390,000. What total amount should Houghton Company report as stockholders' equity? a. $1,060,000. b. $1,185,000. c. $1,310,000. d. $1,395,000.

a

BBB Hudson, Inc. is a calendar-year corporation. Its financial statements for the years 2013 and 2012 contained errors as follows: 2013 2012 En Inv: $4,500 O $12,000 O Dep exp: $3,000 U $9,000 O Assume that no correcting entries were made at December 31, 2012, or December 31, 2013 and that no additional errors occurred in 2014. Ignoring income taxes, by how much will working capital at December 31, 2014 be overstated or understated? a. $0 b. $3,000 overstated c. $3,000 understated d. $7,500 understated

a

BBB Hudson, Inc. is a calendar-year corporation. Its financial statements for the years 2013 and 2012 contained errors as follows: 2013 2012 En Inv: $4,500 O $12,000 O Dep exp: $3,000 U $9,000 O Assume that no correcting entries were made at December 31, 2012. Ignoring income taxes, by how much will retained earnings at December 31, 2013 be overstated or understated? a. $1,500 understated b. $7,500 overstated c. $7,500 understated d. $13,500 understated

d

BBB Hudson, Inc. is a calendar-year corporation. Its financial statements for the years 2013 and 2012 contained errors as follows: 2013 2012 En Inv: $4,500 O $12,000 O Dep exp: $3,000 U $9,000 O Assume that the proper correcting entries were made at December 31, 2012. By how much will 2013 income before taxes be overstated or understated? a. $1,500 understated b. $1,500 overstated c. $3,000 overstated d. $7,500 overstated

d

BBB Kohler Company owns the following investments: Trading securities (fair value) $120,000 Available-for-sale securities (fair value) 70,000 Held-to-maturity securities (amortized cost) 94,000 Kohler will report securities in its long-term investments section of a. exactly $190,000. b. exactly $214,000. c. exactly $284,000. d. $164,000 or an amount less than $164,000, depending on the circumstances.

c

BBB Lawson Manufacturing Company has the following account balances at year end: Office supplies $ 4,000 Raw materials 27,000 Work-in-process 59,000 Finished goods 97,000 Prepaid insurance 6,000 What amount should Lawson report as inventories in its balance sheet? a. $97,000. b. $101,000. c. $183,000. d. $187,000.

d

BBB Malone Corporation uses the perpetual inventory method. On March 1, it purchased $50,000 of inventory, terms 2/10, n/30. On March 3, Malone returned goods that cost $5,000. On March 9, Malone paid the supplier. On March 9, Malone should credit a. purchase discounts for $1,000. b. inventory for $1,000. c. purchase discounts for $900. d. inventory for $900.

a

BBB Mendenhall Corporation constructed a building at a cost of $10,000,000. Average accumulated expenditures were $4,000,000, actual interest was $600,000, and avoidable interest was $400,000. If the salvage value is $800,000, and the useful life is 40 years, depreciation expense for the first full year using the straight-line method is a. $240,000. b. $245,000. c. $260,000. d. $340,000.

b

BBB Messersmith Company is constructing a building. Construction began in 2012 and the building was completed 12/31/12. Messersmith made payments to the construction company of $1,500,000 on 7/1, $3,150,000 on 9/1, and $3,000,000 on 12/31. Average accumulated expenditures were a. $1,537,500. b. $1,800,000. c. $4,650,000. d. $7,650,000.

c

BBB Morgan Manufacturing Company has the following account balances at year end: Office supplies $ 4,000 Raw materials 27,000 Work-in-process 59,000 Finished goods 82,000 Prepaid insurance 6,000 What amount should Morgan report as inventories in its balance sheet? a. $82,000. b. $86,000. c. $168,000. d. $172,000.

b

BBB Muckenthaler Company sells product 2005WSC for $30 per unit. The cost of one unit of 2005WSC is $27, and the replacement cost is $26. The estimated cost to dispose of a unit is $6, and the normal profit is 40%. At what amount per unit should product 2005WSC be reported, applying lower-of-cost-or-market? a. $12. b. $24. c. $26. d. $27.

b

BBB Olmsted Company has the following items: common stock, $900,000; treasury stock, $105,000; deferred taxes, $125,000 and retained earnings, $454,000. What total amount should Olmsted Company report as stockholders' equity? a. $1,124,000. b. $1,249,000. c. $1,374,000. d. $1,499,000.

b

BBB On January 4, 2012, Kiley Co. leased a building to Dodd Corp. for a ten-year term at an annual rental of $100,000. At inception of the lease, Dodd received $400,000 covering the first two years' rent of $200,000 and a security deposit of $200,000. This deposit will not be returned to Dodd upon expiration of the lease but will be applied to payment of rent for the last two years of the lease. What portion of the $400,000 should be shown as a current and long-term liability in Kiley's December 31, 2012 balance sheet? Current Liab LT Liab a. $0 $400,000 b. $100,000 $200,000 c. $200,000 $200,000 d. $200,000 $100,000

a

BBB Oslo Corporation has two products in its ending inventory, each accounted for at the lower of cost or market. A profit margin of 30% on selling price is considered normal for each product. Specific data with respect to each product follows: Product #1 Product #2 Historical cost $20.00 $ 35.00 Replacement cost 22.50 27.00 Estimated cost to dispose 5.00 13.00 Estimated selling price 40.00 65.00 In pricing its ending inventory using the lower-of-cost-or-market, what unit values should Oslo use for products #1 and #2, respectively? a. $20.00 and $32.50. b. $23.00 and $32.50. c. $23.00 and $30.00. d. $22.50 and $27.00.

b

BBB Risers Inc. reported total assets of $1,800,000 and net income of $200,000 for the current year. Risers determined that inventory was overstated by $15,000 at the beginning of the year (this was not corrected). What is the corrected amount for total assets and net income for the year? a. $1,800,000 and $200,000. b. $1,800,000 and $215,000. c. $1,785,000 and $185,000. d. $1,815,000 and $215,000.

c

BBB Risers Inc. reported total assets of $3,200,000 and net income of $170,000 for the current year. Risers determined that inventory was understated by $46,000 at the beginning of the year and $20,000 at the end of the year. What is the corrected amount for total assets and net income for the year? a. $3,220,000 and $190,000. b. $3,180,000 and $196,000. c. $3,220,000 and $144,000. d. $3,200,000 and $170,000.

c

BBB Rodriguez Corporation sells its product, a rare metal, in a controlled market with a quoted price applicable to all quantities. The total cost of 5,000 pounds of the metal now held in inventory is $210,000. The total selling price is $490,000, and estimated costs of disposal are $5,000. At what amount should the inventory of 5,000 pounds be reported in the balance sheet? a. $205,000. b. $210,000. c. $485,000. d. $490,000.

d

BBB Stine Corp.'s trial balance reflected the following account balances at December 31, 2012: Accounts receivable (net) $24,000 Trading securities 6,000 Accumulated depreciation on equipment and furniture 15,000 Cash 16,000 Inventory 30,000 Equipment 25,000 Patent 4,000 Prepaid expenses 2,000 Land held for future business site 18,000 In Stine's December 31, 2012 balance sheet, the current assets total is a. $95,000. b. $87,000. c. $82,000. d. $78,000.

b

BBBB Given the historical cost of product Z is $80, the selling price of product Z is $95, costs to sell product Z are $11, the replacement cost for product Z is $83, and the normal profit margin is 40% of sales price, what is the amount that should be used to value the inventory under the lower-of-cost-or-market method? a. $46. b. $80. c. $84. d. $83.

b

CCC 100. Stine Co. is a retail store operating in a state with a 6% retail sales tax. The retailer may keep 2% of the sales tax collected. Stine Co. records the sales tax in the Sales Revenue account. The amount recorded in the Sales Revenue account during May was $222,600. The amount of sales taxes (to the nearest dollar) for May is a. $13,089. b. $12,600. c. $13,356. d. $14,157.

a

CCC 100.In the recent year Hill Corporation had net income of $280,000, interest expense of $60,000, and tax expense of $80,000. What was Hill Corporation's times interest earned ratio for the year? a. 7.0 b. 5.0 c. 4.7 d. 3.7

b

CCC 101.Stine Co. is a retail store operating in a state with a 6% retail sales tax. The retailer may keep 2% of the sales tax collected. Stine Co. records the sales tax in the Sales Revenue account. The amount recorded in the Sales Revenue account during May was $222,600. The amount of sales taxes payable (to the nearest dollar) to the state for the month of May is a. $12,826. b. $12,348. c. $13,089. d. $13,873.

a

CCC 103.Jenkins Corporation has $2,500,000 of short-term debt it expects to retire with proceeds from the sale of 90,000 shares of common stock. If the stock is sold for $20 per share subsequent to the balance sheet date, but before the balance sheet is issued, what amount of short-term debt could be excluded from current liabilities? a. $1,800,000 b. $2,500,000 c. $700,000 d. $0

d

CCC 105. Preston Co., which has a taxable payroll of $700,000, is subject to FUTA tax of 6.2% and a state contribution rate of 5.4%. However, because of stable employment experience, the company's state rate has been reduced to 2%. What is the total amount of federal and state unemployment tax for Preston Co.? a. $81,900 b. $57,400 c. $28,000 d. $19,600

a

CCC 106. On July 1, 2012, Spear Co. issued 3,000 of its 10%, $1,000 bonds at 99 plus accrued interest. The bonds are dated April 1, 2012 and mature on April 1, 2022. Interest is payable semiannually on April 1 and October 1. What amount did Spear receive from the bond issuance? a. $3,045,000 b. $3,000,000 c. $2,970,000 d. $2,895,000

d

CCC 112.CalCount pays a weekly payroll of $170,000 that includes federal taxes withheld of $25,400, FICA taxes withheld of $15,780, and 401(k) withholdings of $18,000. What is the effect of assets and liabilities from this transaction? a. Assets decrease $170,000 and liabilities do not change. b. Assets decrease $128,820 and liabilities increase $41,180. c. Assets decrease $128,820 and liabilities decrease $41,180. d. Assets decrease $110,820 and liabilities increase $59,180.

d

CCC 119. A company buys an oil rig for $2,000,000 on January 1, 2012. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is $400,000 (present value at 10% is $154,220). 10% is an appropriate interest rate for this company. What expense should be recorded for 2012 as a result of these events? a. Depreciation expense of $240,000 b. Depreciation expense of $200,000 and interest expense of $15,422 c. Depreciation expense of $200,000 and interest expense of $40,000 d. Depreciation expense of $215,420 and interest expense of $15,422

b

CCC 130. Winter Co. is being sued for illness caused to local residents as a result of negligence on the company's part in permitting the local residents to be exposed to highly toxic chemicals from its plant. Winter's lawyer states that it is probable that Winter will lose the suit and be found liable for a judgment costing Winter anywhere from $1,600,000 to $8,000,000. However, the lawyer states that the most probable cost is $4,800,000. As a result of the above facts, Winter should accrue a. a loss contingency of $1,600,000 and disclose an additional contingency of up to $6,400,000. b. a loss contingency of $4,800,000 and disclose an additional contingency of up to $3,200,000. c. a loss contingency of $4,800,000 but not disclose any additional contingency. d. no loss contingency but disclose a contingency of $1,600,000 to $8,000,000.

b

CCC 73. Manning Company issued 10,000 shares of its $5 par value common stock having a fair value of $25 per share and 15,000 shares of its $15 par value preferred stock having a fair value of $20 per share for a lump sum of $520,000. How much of the proceeds would be allocated to the common stock? a. $54,167 b. $236,364 c. $270,833 d. $276,250

d

CCC 79. On September 1, 2012, Valdez Company reacquired 16,000 shares of its $10 par value common stock for $15 per share. Valdez uses the cost method to account for treasury stock. The journal entry to record the reacquisition of the stock should debit a. Treasury Stock for $160,000. b. Common Stock for $160,000. c. Common Stock for $160,000 and Paid-in Capital in Excess of Par for $60,000. d. Treasury Stock for $240,000.

b

CCC 85. Kant Corporation retires its $500,000 face value bonds at 102 on January 1, following the payment of interest. The carrying value of the bonds at the redemption date is $481,250. The entry to record the redemption will include a a. credit of $18,750 to Loss on Bond Redemption. b. credit of $18,750 to Discount on Bonds Payable. c. debit of $28,750 to Gain on Bond Redemption. d. debit of $10,000 to Premium on Bonds Payable.

c

CCC 88. At December 31, 2012 the following balances existed on the books of Rentro Corporation: Bonds Payable $2,500,000 Discount on Bonds Payable 200,000 Interest Payable 60,000 Unamortized Bond Issue Costs 150,000 If the bonds are retired on January 1, 2013, at 102, what will Rentro report as a loss on redemption? a. $250,000 b. $337,500 c. $400,000 d. $460,000

b

CCC 90. Glaus Corp. signed a three-month, zero-interest-bearing note on November 1, 2012 for the purchase of $250,000 of inventory. The face value of the note was $253,675. Assuming Glaus used a "Discount on Note Payable" account to initially record the note and that the discount will be amortized equally over the 3-month period, the adjusting entry made at December 31, 2012 will include a a. debit to Discount on Note Payable for $1,225. b. debit to Interest Expense for $2,450. c. credit to Discount on Note Payable for $1,255. d. credit to Interest Expense for $2,450.

d

CCC 91. The effective interest on a 12-month, zero-interest-bearing note payable of $300,000, discounted at the bank at 8% is a. 8.51%. b. 8%. c. 11.49%. d. 8.70%.

a

CCC 92. On September 1, Hydra purchased $13,300 of inventory items on credit with the terms 1/15, net 30, FOB destination. Freight charges were $280. Payment for the purchase was made on September 18. Assuming Hydra uses the perpetual inventory system and the net method of accounting for purchase discounts, what amount is recorded as inventory from this purchase? a. $13,167. b. $13,447. c. $13,580. d. $13,300.

d

CCC 93.Sodium Inc. borrowed $280,000 on April 1. The note requires interest at 12% and principal to be paid in one year. How much interest is recognized for the period from April 1 to December 31? a. $0. b. $33,600. c. $8,400. d. $25,200.

b

CCC 94.Collier borrowed $350,000 on October 1 and is required to pay $360,000 on March 1. What amount is the note payable recorded at on October 1 and how much interest is recognized from October 1 to December 31? a. $350,000 and $0. b. $350,000 and $6,000. c. $360,000 and $0. d. $350,000 and $10,000.

c

CCC 96. On June 30, 2012, when Ermler Co.'s stock was selling at $65 per share, its capital accounts were as follows: Capital stock (par value $50; 80,000 shares issued) $4,000,000 Premium on capital stock 600,000 Retained earnings 4,200,000 If a 100% stock dividend were declared and distributed, capital stock would be a. $4,000,000. b. $4,600,000. c. $8,000,000. d. $8,800,000.

b

CCC 96. Vista newspapers sold 6,000 of annual subscriptions at $125 each on September 1. How much unearned revenue will exist as of December 31? a. $0. b. $500,000. c. $250,000. d. $750,000.

d

CCC 97. Purchase Retailer made cash sales during the month of October of $221,000. The sales are subject to a 6% sales tax that was also collected. Which of the following would be included in the summary journal entry to reflect the sale transactions? a. Debit Cash for $221,000. b. Credit Sales Taxes Payable for $12,510. c. Credit Sales Revenue for $208,490. d. Credit Sales Taxes Payable for $13,260.

b

CCC 98. The stockholders' equity of Howell Company at July 31, 2012 is presented below: Common stock, par value $20, authorized 400,000 shares; issued and outstanding 160,000 shares $3,200,000 Paid-in capital in excess of par 160,000 Retained earnings 650,000 $4,010,000 On August 1, 2012, the board of directors of Howell declared a 10% stock dividend on common stock, to be distributed on September 15th. The market price of Howell's common stock was $35 on August 1, 2012, and $38 on September 15, 2012. What is the amount of the debit to retained earnings as a result of the declaration and distribution of this stock dividend? a. $320,000. b. $560,000. c. $608,000. d. $400,000.

d

CCC 99. Putnam Company's 2012 financial statements contain the following selected data: Income taxes $40,000 Interest expense 25,000 Net income 60,000 Putnam's times interest earned for 2012 is a. 3.0 times b. 3.4 times. c. 4.0 times. d. 5.0 times.

d; equipment 136,000 d; loss on disposal 22,000 d; A/D 44,000 c; equipment 186,000 c; cash 16,000

CCC Dodson Company traded in a manual pressing machine for an automated pressing machine and gave $16,000 cash. The old machine cost $186,000 and had a net book value of $142,000. The old machine had a fair value of $120,000. Which of the following is the correct journal entry to record the exchange?

c

CCC During 2012, Kimmel Co. incurred average accumulated expenditures of $600,000 during construction of assets that qualified for capitalization of interest. The only debt outstanding during 2012 was a $750,000, 10%, 5-year note payable dated January 1, 2010. What is the amount of interest that should be capitalized by Kimmel during 2012? a. $0. b. $15,000. c. $60,000. d. $75,000.

b

CCC Durler Company traded machinery with a book value of $540,000 and a fair value of $900,000. It received in exchange from Hoyle Company a machine with a fair value of $810,000 and cash of $90,000. Hoyle's machine has a book value of $855,000. What amount of gain should Durler recognize on the exchange? a. $ -0- b. $36,000 c. $90,000 d. $360,000

b

CCC Gates Co. purchased machinery on January 2, 2007, for $660,000. The straight-line method is used and useful life is estimated to be 10 years, with a $60,000 salvage value. At the beginning of 2013 Gates spent $144,000 to overhaul the machinery. After the overhaul, Gates estimated that the useful life would be extended 4 years (14 years total), and the salvage value would be $30,000. The depreciation expense for 2013 should be a. $42,375. b. $51,750. c. $60,000. d. $55,500.

c

CCC Hardin Company received $60,000 in cash and a used computer with a fair value of $180,000 from Page Corporation for Hardin Company's existing computer having a fair value of $240,000 and an undepreciated cost of $225,000 recorded on its books. The transaction has no commercial substance. How much gain should Hardin recognize on this exchange, and at what amount should the acquired computer be recorded, respectively? a. $0 and $165,000 b. $1,153 and $166,153 c. $15,000 and $180,000 d. $60,000 and $225,000

a

CCC Huffman Corporation constructed a building at a cost of $20,000,000. Average accumulated expenditures were $8,000,000, actual interest was $1,200,000, and avoidable interest was $800,000. If the salvage value is $1,600,000, and the useful life is 40 years, depreciation expense for the first full year using the straight-line method is a. $480,000. b. $490,000. c. $520,000. d. $680,000.

b

CCC Marsh Corporation purchased a machine on July 1, 2010, for $1,250,000. The machine was estimated to have a useful life of 10 years with an estimated salvage value of $70,000. During 2013, it became apparent that the machine would become uneconomical after December 31, 2017, and that the machine would have no scrap value. Accumulated depreciation on this machine as of December 31, 2012, was $295,000. What should be the charge for depreciation in 2013 under generally accepted accounting principles? a. $177,000 b. $191,000 c. $205,000 d. $238,750

d; loss on impairment of equip 160,000 c; A/D-equip 160,000

CCC Newell, Inc. purchased equipment in 2011 at a cost of $800,000. Two years later it became apparent to Newell, Inc. that this equipment had suffered an impairment of value. In early 2013, the book value of the asset is $480,000 and it is estimated that the fair value is now only $320,000. The entry to record the impairment is

c

CCC On December 1, 2012, Kelso Company acquired new equipment in exchange for old equipment that it had acquired in 2009. The old equipment was purchased for $70,000 and had a book value of $26,600. On the date of the exchange, the old equipment had a fair value of $28,000. In addition, Kelso paid $91,000 cash for the new equipment, which had a list price of $126,000. The exchange lacked commercial substance. At what amount should Kelso record the new equipment for financial accounting purposes? a. $91,000. b. $117,600. c. $119,000. d. $126,000.

a

CCC Rivera Company purchased a tooling machine on January 3, 2006 for $700,000. The machine was being depreciated on the straight-line method over an estimated useful life of 10 years, with no salvage value. At the beginning of 2013, the company paid $175,000 to overhaul the machine. As a result of this improvement, the company estimated that the useful life of the machine would be extended an additional 5 years (15 years total). What should be the depreciation expense recorded for the machine in 2013? a. $48,125 b. $58,333 c. $70,000 d. $77,000

d; equipment 34,800 c; investment in common stock 30,000 c; gain on disposal of equipment 4,000

CCC Siegle Company exchanged 600 shares of Guinn Company common stock, which Siegle was holding as an investment, for equipment from Mayo Company. The Guinn Company common stock, which had been purchased by Siegle for $50 per share, had a quoted market value of $58 per share at the date of exchange. The equipment had a recorded amount on Mayo's books of $31,500. What journal entry should Siegle make to record this exchange?

b

CCC Timmons Company traded machinery with a book value of $240,000 and a fair value of $400,000. It received in exchange from Lewis Company a machine with a fair value of $360,000 and cash of $40,000. Lewis's machine has a book value of $380,000. What amount of gain should Timmons recognize on the exchange? a. $ -0- b. $16,000 c. $40,000 d. $160,000