Financial Accounting Pre-Final Quizzes

Sandusky Company borrowed $15,000 from the Lakeside Bank by issuing a 11% four-year installment note. Sandusky agreed to repay the principal and interest by making annual payments in thea mount of $4,834.90. Based on this information, the amount of the interest expense associated with the second payment would be: (round your answer to the nearest dollar)

$1,300.

On January 1, 2014, Rowley Company purchased a truck that cost $26,000. The truck had an expected useful life of 5 years and a $4,000 salvage value. The amount of depreciation expense recognized in 2014 assuming that Rowley uses the double declining balance method is:

$10,400.

Retained Earnings at the beginning and ending of the accounting period was $400 and $900, respectively. If revenues were $1,500 and dividends paid to stockholders were $300, expenses for the period must have been

$700.

On January 12, 2014, the Picard Corporation issued 750 shares of $12 par-value common stock for $15 per share. Which of the following answers describes the effect of the January 12, 2014 transaction?

Assets = $11,250 Liab. = NA Com. Stk. = $9,000 Pd-in Excess = $2,250 Revenue = NA Expenses = NA Net Inc. = NA Cash = 11,250 FA

Which of the following items is an example of revenue?

Cash received from customers at the time services were provided.

Which form of business organization is established as a separate legal entity from its owners?

Corporation

Which of the following is a disadvantage of a sole proprietorship?

Unlimited liability of the owner.

During 2013, Chi Company earned $1,850 of cash revenue, paid $900 of cash expenses, and paid a $400 cash dividend to its owners. Based on this information alone,

all of these are correct. cash inflow from operating activities was $950. net income amounted to $950. total assets increased by $550.

Which of the following is not an accurate description of the Allowance for Doubtful Accounts?

an income statement account.

Cost of Goods Sold is reported

as an expense on the income statement.

In accounting for a contingent liability, if the likelihood of the obligation is probable and the amount can be estimated, a company must

report the liability on the balance sheet.

The Stevens Company provided $58,000 of services on account during 2014, its first year in operation. During 2014, Stevens collected $40,500 of cash from its receivables accounts. The company estimates that it will be unable to collect 3% of its revenues on account. The amount of uncollectible accounts expense recognized on the 2014 income statement was

$1,740.

Woodward Enterprises had the following events during 2013: The business issued $35,000 of common stock to its stockholders. The business purchased land for $27,000 cash. Services were provided to customers for $31,000 cash. Services were provided to customers for $20,000 on account. The company borrowed $31,000 from the bank. Operating expenses of $27,000 were incurred and paid in cash. Salary expense of $2,300 was accrued. A dividend of $19,000 was paid to the owners of Woodward Enterprises. Assuming the company began operations during 2013, the amount of retained earnings as of December 31, 2013 would be:

$2,700.

The balance sheet of the Chesapeake Company contained the following accounts and balances: Cash = $700 Notes Payable = $400 Equity = $550 Land = ? Based on the above information only, the amount or balance for Land must be

$250.

The following accounts and balances were drawn from the records of Hoover Company on December 31, 2013: Cash = $3,400 Accounts Receivable = $1,450 Dividends = $1,700 Common Stock = $2,175 Land = $2,000 Accounts Payable = $1,050 Revenue = $2,000 Expense = $1,150 The amount of retained earnings as of January 1, 2014 was:

$3,625.

Assume Beta Company uses the perpetual inventory method and engaged in the following transactions 1) Purchased $14,000 of merchandise on account under terms 3/10, n/30. 2) Returned $1,400 (list price) of merchandise to the supplier before payment was made. 3) Paid the account payable within the discount period. 4) Sold the merchandise for $18,200 cash. The amount of gross margin from the four transactions is

$5,978.

Norris Company experienced the following transactions during 2013, its first year in operation. 1. Issued $7,000 of common stock to stockholders. 2. Provided $3,300 of services on account. 3. Paid $1,850 cash for operating expenses. 4. Collected $2,400 of cash from accounts receivable. 5. Paid a $150 cash dividend to stockholders. The amount of net cash flow from operating activities shown on Norris Company's 2013 statement of cash flows is

$550.

The following account balances were drawn from the 2013 financial statements of Gunn Company cash = $4,600 Accounts receivable = $1,700 Land = $8,200 Accounts payable = $1,350 Common stock = ? Retained earnings, Jan. 1 = $2,900 Revenue = $9,700 Expenses = $7,350 Based on the above information, what is the balance of Common Stock for Gunn Company?

$7,900.

The inventory records for Raymond Co. reflected the following Beginning Inventory @ May 1 = 370 units @ $2.20 First Purchase @ May 7 = 620 units @ $2.80 Second Purchase @ May 17 = 560 units @ $2.80 Third Purchase @ May 23 = 420 units @ $2.70 Sales @ May 31 = 1,700 units @ $3.10 Determine the amount of gross margin assuming the weighted average cost flow method. (Do not round average cost per unit and round your answer to the nearest whole number.)

$738.

Barney Company uses the perpetual inventory system. The company purchased $7,750 of merchandise from Bittiker Company under the terms n/30. Barney also paid $310 freight to obtain the goods under terms FOB shipping point. All of the merchandise purchased was sold for $16,500 cash. The amount of gross margin for this merchandise is:

$8,440.

On January 1, 2014, Howe Company's Accounts Receivable balance was $10,500 and the balance in the Allowance for Doubtful Accounts was $525. On January 5, 2014, a $250 uncollectible account was written-off as uncollectible. Assuming that no other transactions related to accounts receivable had occurred, the net realizable value of accounts receivable immediately after the write-off was

$9,975.

James Company paid $3,600 for one year's rent in advance beginning on October 1, 2013. James's 2013 income statement would report rent expense, and its statement of cash flows would report cash outflow for rent, respectively, of

$900; $3,600.

Mitchell Company was authorized to issue 82,000 shares of common stock. The company issued 43,000 shares of stock and later purchased 8,200 shares of treasury stock. The number of outstanding shares of common stock is:

34,800.

The following balance sheet information was provided by Weston Company: Assets; 2014; 2013 Cash; $2,800; $2,300 Accounts receivable; $19,000; $17,000 Inventory; $32,000; $38,000 Assuming 2014 net credit sales totaled $128,000, what was the company's average days to collect receivables? (Use 365 days in a year. Do not round intermediate calculations. Round your final answer to 1 decimal place.)

51.3 days.

The following balance sheet information is provided for San Juan Company for 2014: Assets: Cash = $5,250 Accounts receivable = $6,550 Inventory = $10,850 Prepaid expenses = $3,100 Plant and equipment, net of depreciation = $17,100 Land = $12,300 Total assets = $55,150 Liabilities and Stockholders' Equity: Accounts payable = $2,730 Salaries payable = $8,340 Bonds payable (Due in 2020) = $11,900 Common stock, no par = $17,200 Retained earnings = $14,980 Total liabilities and stockholders' equity = $55,150 What is the company's debt to equity ratio? (Round your final answer to 2 decimal places.)

71.38%.

Barry Company purchased two identical inventory items. The item purchased first cost $7.00 and the item purchased second cost $9.00. Barney sold one of the items for $12.00. Which of the following statements is true?

Ending inventory will be lower if Barney uses weighted average than it would be if FIFO were used.

Yi Company began operations on January 1, 2013. During 2013, the company engaged in the following cash transactions: 1) issued stock for $66,000 2) borrowed $38,000 from its bank 3) provided consulting services for $64,000 4) paid back 28,000 of the bank loan 5) paid rent expense for $15,500 6) purchased equipment costing $25,000 7) paid $4,300 dividends to stockholders 8) paid employees' salaries, $34,000 What is Yi's cash flow from financing activities?

Inflow of $71,700.

Rosierre Company purchased two identical inventory items. One of the items cost $6.00 and was purchased in January. The other was purchased in February, and the company paid $7.00 for this item. One of the items was sold in March at a price of $10.00. Select the correct answer assuming that Rosierre uses a FIFO cost flow assumption.

The balance in ending inventory would be $7.00.

Flynn Company issued 16,000 shares of $10 par value common stock at a market price of $25. As a result of this accounting event, the affect on equity accounts would

increase by $400,000. Explanation: Total equity will increase by the amount equal to the number of shares issued x the market prices. The common stock account will increase by the number of shares x the par value and the additional paid-in capital account will increase by the difference between market price and par value times the number of shares issued.

In accounting for a contingent liability, if the likelihood of the obligation is reasonably possible, a company must

provide disclosure in the footnotes to the financial statements.