Great Study Guide for Accounting 2600 Financial Final
A year-end review of Accounts Receivable and estimated uncollectible percentages revealed the following: 1-30 days $74,000 1.3% 31-60 days $12,300 9.0% 61-90 days $7,200 19.0% Amounts over 90 days past due are written off. The credit balance in the Allowance for Doubtful Accounts was $1,010. The Bad Debt Expense for the year is: $3,437 $4,447 $1,010 $2,427 962+1107+1368= 3437 - 1010
$2,427
Royal Company purchased a dump truck at the beginning of 2014 at a cost of $60,000. The truck had an estimated life of 6 years and an estimated residual value of $24,000. On January 1, 2016, the company made major repairs of $20,000 to the truck that extended the life 1 year. Thus, starting with 2016, the truck has a remaining life of 5 years and a new salvage value of $8,000. Royal uses the straight-line depreciation method. What amount should be recorded as depreciation expense each year starting in 2016? $6,000 $12,000 $13,600 $14,400
$12,000
Gear Shop purchased supplies at a cost of $1,000 during the year. At January 1, the beginning balance in the supplies account was $300. At December 31, supplies on hand are $100. Determine supplies expense for the year. $ 1,300 $ 1,200 $ 1,100 $ 1,400
$1200
Marcos Company reported the following items on its financial statements for the year ending December 31, 2017: Sales $560,000 Salary expense 40,000 Dividends 20,000 Cost of goods sold $400,000 Interest expense 30,000 Income tax expense 25,000 How much will be reported as retained earnings on Marcos' balance sheet at December 31, 2017, if this is the first year of operations? $ 45,000 $ 65,000 $ 85,000 Not enough information is provided.
$45,000
Birken Co. purchased a building for $600,000 in 2004. At the end of 2016, when it had a book value of $450,000, it was appraised for $1,000,000. A potential buyer offered $900,000. Birken rejected the offer. What amount should be recorded on Birken's records at the end of 2016 in the account called Buildings? $2,000,000 $800,000 $600,000 $350,000
$600,000
You are a potential stockholder and are concerned that a particular company you are ready to invest in might have too much debt. Which financial statement would provide you information needed in order to evaluate your concern? Income Statement Balance Sheet Statement of retained earnings Statement of public accounting
Balance Sheet
Which pair of accounts has the same set of rules for debit and credit entries? Service Revenue and Rent Expense Dividends and Retained Earnings Equipment and Salaries Expense Accounts Receivable and Accounts Payable
Equipment and Salaries Expense
Sunnyside Vacations has a $1,200 account receivable from John Smith. On September 18, John makes a partial payment of $1,100 to Sunnyside. The journal entry made on September 18 by Sunnyside to record this transaction includes: A debit to the Cash account of $1,150. A debit to the Accounts Receivable account of $1,150. A credit to the Accounts Receivable account of $1,100. A credit to the Accounts Receivable account of $1,050.
a credit to the accounts receivable account of $1,100
how would interest earned on a checking account be dealt with in a bank reconcilliation added to company's book balance deducted from company's book balance added to bank statement balance deducted from bank statement balance
added to company's book balance
The Casan Company purchased a delivery van for $100,000 in cash. What is the effect on current assets? Increase in current assets Decrease in current assets No effect on current assets Unable to determine
decrease in current assets
how would outstanding checks be dealt with in a bank reconcilliation deducted from bank statment balance deducted from company's book balance added to bank statement balance added to companys book balance
deducted from bank statement balance
Deposits made by a company but not yet reflected in a bank statement are called debit memoranda deposits in transit credit memoranda none of the above
deposits in transit
Which one of the following adjustments decreases net income for the period? Recognition of depreciation on plant assets Recognition of interest on a note receivable Recognition of services that had been provided to customers but the cash has not yet been received Recognition of rent as earned that had been received in advance from customers
recognition of depreciation on plant assets
One effect on the accounting equation when a firm lends money is stockholders' equity decreases. liabilities decrease. liabilities increase. total assets remain the same.
total assets remain the same
Benton Corporation The data below is for Benton Corporation for 2016. Accounts Receivable—January 1, 2016 $334,000 Credit sales during 2016 850,000 Collections from credit customers during 2016 725,000 Customer accounts written off as uncollectible during 2016 12,000 Allowance for Doubtful Accounts [Credit Balance] (After write-off of uncollectible accounts) 1,700 Estimated uncollectible accounts based on an aging analysis 13,200 Refer to the data for Benton Corporation. If the aging approach is used to estimate bad debts, what should the balance in the Allowance for Doubtful Accounts be after the bad debts adjustment? $26,900 $14,900 $13,200 $11,500
$13,200
Mobile Power Corp. reported the following information for the year ended December 31, 2017. Revenue $40,000 Expenses 23,000 Dividends 10,000 Retained earnings at December 31, 2017 175,000 What was the retained earnings balance for Mobile Power at December 31, 2016? $ 165,000 $ 168,000 $ 182,000 $ 192,000
$168,000
Grove City Corp. On January 1, 2016, Grove City Corp. purchased a ship for $2,000,000. It has a ten-year useful life and a residual value of $50,000. The company uses the straight line method. What was the depreciation expense for Grove City Corp. for the year ended December 31, 2016? $0 $195,000 $390,000 $400,000
$195,000
On January 21, Fenton Corporation sold merchandise with a gross price of $76,400 to a customer with terms of 3/10, n/30. How much Sales Discounts would be recorded if payment was received from the customer on January 27? Assume the company uses the Gross Method of recording receivables. $0 $74,108 $76,400 $ 2,292
$2,292
Blanton Company bought equipment on January 1, 2012, with a cost of $160,000, an estimated residual value of $40,000, and an estimated life of 15 years was depreciated by the straight-line method for 4 years. Due to obsolescence, it was determined at the beginning of 2016 that the useful life should be shortened by 3 years and the residual value changed to zero. What is the accumulated depreciation at the end of 2015? $42,667 $32,000 $40,000 $8,000
$32,000
The data presented below is for Falconi, Inc. for 2016. Credit sales during the year $2,100,000 Accounts receivable—December 31, 2016 395,000 Allowance for doubtful accounts—December 31, 2016 20,000 Bad debt expense for the year 17,000 What amount will Falconi show on its year-end balance sheet for the net realizable value of its accounts receivable? $378,000 $375,000 $358,000 $ 20,000
$375,000
The following transactions occurred during March, the first month of operations for Canyon Products, Inc.: 1. Issued 50,000 shares of capital stock in exchange for $600,000 cash 2. Purchased land for $400,000, using a $150,000 cash down payment and signing a note payable for the balance. 3. Made a $60,000 cash payment on the note payable from the purchase of land. 4. Purchased equipment on credit from Burton, Inc. for $63,000. What is the balance in the Cash account at the end of March? $810,000 $210,000 $600,000 $390,000
$390,000
Benton Corporation The data below is for Benton Corporation for 2016. Accounts Receivable—January 1, 2016 $334,000 Credit sales during 2016 850,000 Collections from credit customers during 2016 725,000 Customer accounts written off as uncollectible during 2016 12,000 Allowance for Doubtful Accounts [Credit Balance] (After write-off of uncollectible accounts) 1,700 Estimated uncollectible accounts based on an aging analysis 13,200 Refer to the data for Benton Corporation. What is the balance of Accounts Receivable at December 31, 2016? $209,000 $225,000 $447,000 $459,000 Allowance for Doubtful Accounts after the bad debts adjustment = Accounts Receivable at December 31, 2015 = Accounts Receivable - January 1, 2015 + Credit sales during 2015 -Collections from credit customers during 2015 - Customer accounts written off as uncollectible during 2015 Accounts Receivable at December 31, 2015 = 334000 + 850000 - 725000 - 12000 Accounts Receivable at December 31, 2015 = $ 447000
$447,000
Gyro's Shop reported a net loss of $15,000 and total expenses of $80,000. How much are total revenues? $ 15,000 $ 65,000 $ 95,000 The answer cannot be determined from the information given.
$65,000
Music Corporation The data below is for Music Corporation for 2016. Accounts receivable—January 1, 2016 $236,000 Credit sales during 2016 820,000 Collections from credit customers during 2016 590,000 Customer accounts written off as uncollectible during 2016 8,000 Allowance for doubtful accounts—January 1, 2016 8,700 Estimated uncollectible accounts based on an aging analysis 9,600 Refer to the data for Music Corporation. If the aging approach is used to estimate bad debts, what amount should be recorded as bad debt expense for 2016? $8,000 $8,100 $8,700 $8,900
$8,900
Greer Company purchased land for $256,000. Additional costs include a $15,300 fee to a broker, a survey fee of $2,400, $1,750 to construct a fence and a legal fee of $8,500. What is the cost of the land? $256,000 $282,200 $284,600 $281,000
282,200
A company has the following information: Cash 16,300 AR 15,000 Prepaid rent 5,000 Property plant and equipment 54,000 AP 14,800 Wages payable 7,000 Utilities payable 3,200 3- year Notes payable 32,000 What is the current ratio? 0.637 1.584 1.452 3.612 CURRENT RATIO = CURRENT ASSETS/CURRENT LIABILITIES = 36300/57000 CURRENT RATIO = 0.637 SO ANSWER IS A) 0.637 NOTES : ASSUME NOTES PAYABLE IS SHORT TERM NOTES PAYABLE..
1.452
border company's cash account had a balance of $962 on august 31. this included a bank deposit of $87 that was in transit on the 31st. The August 31 bank statement contained the following information: Bank Statement Balance $1,089 NSF check 16 Bank Service Charge 7 Collection of notes receivable 68 Border also had checks outstanding of $169. What is Border's adjusted cash balance at August 31? a. $1,089 b. $940 c. $920 d. $1,007 Company's Cash Balance Per General Ledger 962.00 Less: Bank Charges -7.00 Less: NSF Check -16.00 Add: Collection of Note Directly by Bank 68.00 Company Balance per Reconcilation 1,007.00
1007
Espat Corp. reported net sales (all on credit) of $1,600,000 and cost of goods sold of $1,100,000 for 2016. Its beginning balance of Accounts Receivable was $150,000. The accounts receivable balance decreased by $10,000 during 2016. Rounded to two decimal places, what is Espat's accounts receivable turnover rate for 2016? 7.59 10.32 10.67 11.03 Receivable turnover = Net credit sales / average account receivables Average receivable = (opening receivable + closing receivables) / 2 Ending accounts receivable = $150,000 - $10,000 = $140,000 Accounts receivable turnover = Net sales/Average accounts receivable = $1,600,000/($150,000 + $140,000)/2 = 11.03
11.03
The accountant for Busch Corp. was preparing a bank reconciliation as of February 28, 2016. The following items were identified: Busch's book balance $15,000 Outstanding checks $2,500 service charge 15 customer's nsf check returned by bank 100 what amount will bush report as its adjusted cash balance at february 28,2016? 12,385 12,500 14,885 17,385 15000-115
14,885
Gentech corp. prepared a bank reconciliation as of June 30, 2016. The following items were identified: bank balance: 14,300 deposits in transit: 1,000 outstanding checks: 1,300 bank service charges: 50 customer's nsf check returned by the bank: 150 Gentech's adjusted cash balance at June 30,2016 is 13,800 14,100 14,000 14,300
14000
Harbor City Corporation's end-of-year balance sheet consisted of the following amounts: Cash $15,000 Property, plant, and equipment 70,000 Capital stock 100,000 Retained earnings ? Accounts receivable $50,000 Long-term debt 40,000 Accounts Payable 20,000 Inventory 35,000 What amount should Harbor City report on its balance sheet for total assets? $110,000 $155,000 $170,000 $190,000
170,000
Leary Corporation's end-of-year balance sheet consisted of the following amounts: Cash $25,000 Property, plant, and equipment 69,000 Capital stock 107,000 Retained earnings ? Accounts receivable $46,000 Long-term debt 41,000 Accounts payable 22,000 Inventory 33,000 What is Leary's total liabilities balance at the end of the current year? $3,000 $110,000 $63,000 $173,000
63,000
Remaz Corp. purchased equipment at a cost of $220,000 in January, 2015. As of January 1, 2016, depreciation of $160,000 had been recorded on this asset. Depreciation expense for 2016 is $50,000. After the adjustments are recorded and posted at December 31, 2016, what are the balances for the Equipment and Accumulated Depreciation? Equipment: $220,000; Accumulated Depreciation: $210,000 Equipment: $220,000; Accumulated Depreciation: $0 Equipment: $160,000; Accumulated Depreciation: $ 50,000 Equipment: $120,000; Accumulated Depreciation: $210,000
Equipment: $220,000; Accumulated Depreciation: $210,000
If a company uses the allowance method of accounting for bad debts, which one of the following statements is true? It will report accounts receivable in the balance sheet at their net realizable value. It will record bad debts only when an account is determined to be uncollectible. It will reduce the accounts receivable at the end of the accounting period for estimated uncollectible accounts. It violates the matching principle.
It will report accounts receivable in the balance sheet at their net realizable value.
During December, Horn Inc. purchased $800 of supplies for use in its business. At the end of December, 20% of the supplies were still on hand, but only 75% had been paid. What amounts will appear on the company's balance sheet on December 31? Supplies on Hand: $800; Accounts Payable: $600 Supplies on Hand: $160; Accounts Payable: $200 Supplies on Hand: $640; Accounts Payable: $200 Supplies on Hand: $160; Accounts Payable: $800
Supplies on Hand: $160; Accounts Payable: $200
Allowance for Doubtful Accounts represents: Cash set aside to make up for bad debt losses The amount of uncollectible accounts written off to date The difference between total sales made on credit and the amount collected from those credit sales The difference between the gross amount of accounts receivable and the net realizable value of accounts receivable
The difference between the gross amount of accounts receivable and the net realizable value of accounts receivable
Hennigan Company Use the five transactions for Hennigan Company described below to answer the question(s) that follow(s). Dec 1 Hennigan purchases two new saws on credit at $375 each. The saws are added to Hennigan's rental inventory. Payment is due in 30 days. 8 Hennigan accepts advance deposits for tool Company of $75. 15 Hennigan receives a bill from Farmer's Electric Company for $150. Payment is due in 30 days. 20 Customers are charged $750 by Hennigan for tool Company. Payment is due from the customers in 30 days. 31 Hennigan receives $500 in payments from the customers that were billed for Company on December 20. Refer to the transactions for Hennigan Rentals. Based on the December 15 transaction, Farmer's Electric will record which of the following in its accounting records? a credit in Accounts Payable for $150. a credit in Accounts Receivable for $150. a debit in Accounts Payable for $150. a debit in Accounts Receivable for $150.
a debit in accounts receivable for $150
which of the following situations reflects a weak internal control system all employees are well supervised a single employee is responsible for comparing a receiving report to an invoice all employees must take their vacations a single employee is responsible for collecting and recording cash
a single employee is responsible for collecting and recording cash
On the balance sheet, the cumulative amount of plant and equipment already expensed is reported in an account called Accumulated Amortization Accumulated Depreciation Amortization Expense Depreciation Expense
accumulated depreciation
Which of the following is an economic obligation for a business entity? salaries paid to employees for services rendered materials used in manufacturing products amount owed to creditors payment of rent for the next year
amount owed to creditors
Depreciation is an effort to achieve proper matching of the cost of operating assets. an accumulation of funds to replace the related plant asset. the difference between the original cost and salvage value of an asset. the cash allocated each period to maintain a plant asset.
an effort to achieve proper matching of the cost of operating assets.
A truck is purchased on credit. For this transaction, identify the effect on the accounting equation. Assets increase and liabilities increase. Assets increase and owners' equity increases. Liabilities increase and owners' equity decreases. Liabilities decrease and assets decrease.
assets increase and liabilities increase
Services are provided for customers who pay for the services immediately. For this transaction, identify the effect on the accounting equation. Assets increase and liabilities increase. Assets increase and stockholders' equity increases. Liabilities increase and stockholders' equity decreases. Liabilities decrease and assets decrease
assets increase and stockholders' equity increases
What happens to the accounting equation when the adjustment that recognizes accrued interest revenue is recorded? Assets increase and liabilities increase. Assets increase and stockholders' equity increases. Assets decrease and liabilities decrease. Stockholders' equity increases and decreases by the same amount.
assets increase and stockholders' equity increases
XYZ Corp. made cash sales to customers. What effect does this transaction have on the accounting equation? Liabilities increase and stockholders' equity increases. There is no effect on the accounting equation as one asset account increases while another asset account decreases. Assets increase and liabilities increase. Assets increase and stockholders' equity increases.
assets increase and stockholders' equity increases
Harvest Catering is a local catering service. Conceptually, when should Harvest recognize revenue from its catering service? At the date the customer places the order At the date the meals are served At the date the invoice is mailed to the customer At the date the customer's payment is received
at the date the meals are served
If a company uses the allowance method to account for bad debts, when will the company's owners' equity decrease? At the date a customer's account is written off At the end of the accounting period when an adjusting entry for bad debts is recorded At the date a customer's account is determined to be uncollectible When the accounts receivable amount becomes past due
at the end of the accounting period when an adjusting entry for bad debts is recorded
which one of the following is a sound internal control procedure for cash disbursements? making copies of purchase orders for the receiving department so they know how many items to be expected upon delivery using pre-signed checks to facilitate payment within the cash discount period comparing purchase requisitions, purchase orders, receiving reports, and invoices. requiring the signature of the purchasing department supervisor on checks
comparing purchase requisitions, purchase orders, receiving reports, and invoices
Assets classified as property, plant, and equipment are reported at each asset's original cost less depreciation since acquisition. each asset's estimated salvage value at the balance sheet date. the estimated depreciable cost at the balance sheet date. each asset's estimated market value at the balance sheet date.
each asset's original cost less depreciation since acquisition
Newco Publishing Company purchased equipment at the beginning of 2016 for $200,000. The company decided to depreciate the equipment over an 8-year period using the straight-line method. The company estimated the equipment's residual value at $20,000. The journal entry to record depreciation expense for 2016 will: increase Depreciation Expense and increase Accumulated Depreciation for $25,000. increase Accumulated Depreciation and decrease Equipment for $25,000. increase Depreciation Expense and decrease Equipment for $22,500. increase Depreciation Expense and increase Accumulated Depreciation for $22,500.
increase Depreciation Expense and increase Accumulated Depreciation for $22,500.
Debit entries are used to increase asset accounts. decrease expense accounts. increase liability accounts. increase revenue accounts.
increase asset accounts
which of the following statements does not describe the responsibilities of a company's internal audit staff? internal auditors ensure that the company's financial statements have been presented fairly internal auditors focus on the efficiency with which the organization is run. internal auditors help ensure that the company's policies and procedures are followed internal auditors prepare the report of management to the companys stockholders
internal auditors ensure that the company's financial statements have been presented fairly
A pool cleaning service signs a contract with a new customer on May 1. The pool is vacuumed and "shocked" for the customer on June 1, and the bill for the services is paid on July 1. Under the accrual basis, the business should recognize revenue on: December 31 July 1 June 1 May 1
june 1
What effect does "recognizing revenue at the end of the accounting period for rent previously received in advance" have on the accounting equation for an insurance company? Stockholders' equity increases and liabilities increase. Assets increase and stockholders' equity increases. Assets decrease and liabilities decrease. Liabilities decrease and stockholders' equity increases.
liabilities decrease stockholders equity increases
A company forgot to record four adjustments during 2016. Which one of the following omissions of adjustments will overstate assets? You Answered Sales made during the last week of the period are not recorded. Interest on monies borrowed has not yet been recorded. Prepaid insurance is not reduced for the portion of the policy that has expired during the period. Income taxes owed but not yet paid are ignored.
prepaid insurance is not reduced for the portion of the policy that has expired during the period
which one of the following items would be subtracted from the balance per books in a bank reconciliation outstanding checks deposit in transit service charges interest on customer note
service charges
Which of the following best describes the term "equity"? the amount of total profits earned by a business since it began operations the amount of interest or claim that the owners have in the business the economic resources of a business entity the cumulative profits earned by a business less any dividends distributed
the amount of interest or claim that the owners have in the business
Depreciation is a process by which replacement funds are accumulated for plant and equipment. the decline in market value of plant and equipment is determined and recorded. the cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset. the difference between current market value and historical cost of plant and equipment.
the cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset.
Which of the following best describes the term "retained earnings"? The amount of total profits earned by a business since it began operations. The amount of interest or claim that the owners have on the assets of the business. The future economic resources of a business entity. The cumulative profits earned by the business less any dividends distributed.
the cumulative profits earned by the business less any dividends distributed
Expenses originate from using an asset or recognizing liabilities. incurring liabilities or providing services to customers. collecting cash from customers. paying off liabilities.
using an asset or recognizing liabilities