ace

A company sold equipment that originally cost $100,000 for $60,000 cash. The accumulated depreciation on the equipment was $40,000. The company should recognize a:

$0 gain or loss.

An employee earned $62,500 during the year working for an employer. The FICA tax rate for Social Security is 6.2% of the first $118,500 of employee earnings per calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. What is the amount of total unemployment taxes the employee must pay?

$0.00

Mayan Company had net income of $132,000. The weighted-average common shares outstanding were 80,000. The company has no preferred stock. The company sold 3,000 shares before the end of the year. There were no other stock transactions. The company's earnings per share is:

$1.65.

Cushman Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in operating expenses. Net income equals:

$115,000.

Ngu owns equipment that cost $93,500 with accumulated depreciation of $64,000. Ngu asks $35,000 for the equipment but sells the equipment for $33,000. Compute the amount of gain or loss on the sale.

$3,500 gain.

On December 31 of the current year, the unadjusted trial balance of a company using the percent of receivables method to estimate bad debt included the following: Accounts Receivable, debit balance of $95,250; Allowance for Doubtful Accounts, credit balance of $921. What amount should be debited to Bad Debts Expense, assuming 6% of outstanding accounts receivable at the end of the current year are estimated to be uncollectible?

$4,794.

A company had the following purchases and sales during its first year of operations: Purchases Sales January: 10 units at $120 6 units February: 20 units at $125 5 units May: 15 units at $130 9 units September: 12 units at $135 8 units November: 10 units at $140 13 units On December 31, there were 26 units remaining in ending inventory. Using the Perpetual FIFO inventory valuation method, what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)

$5,130.

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000. The machine is depreciated using the double-declining-balance method. The machine's useful life is estimated to be 5 years with a $4,000 salvage value. Depreciation expense in year 2 is:

$5,760.

Beginning November 1 5 units @ $20 Purchase November 2 10 units @ $22 Purchase November 12 6 units @ $25

(2 × $20) + (10 × $22) = $260

Based on the following information from Schrute Company's balance sheet, calculate the current ratio. Current assets $ 87,000 Investments 50,000 Plant assets 220,000 Current liabilities 39,000 Long-term liabilities 90,000 Retained earnings 228,000

2.23.

On May 1, Sellers Marketing Company received $1,500 from Franco Marcelli for a marketing campaign effective from May 1 this year to April 30 of the following year. The Cash receipt was recorded as unearned fees and at year-end on December 31, $1,000 of the fees had been earned. Assuming adjustments are only made at year-end, the adjusting entry on December 31 would be:

A debit to Unearned Fees and a credit to Fees Earned for $1,000.

A debit memorandum on a bank statement indicates:

A decrease in the bank's liability account.

A contingent liability is:

A potential obligation that depends on a future event arising from a past transaction or event.

The statement of cash flows helps analysts evaluate all but which of the following?

Ability of the company to generate profit.

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

Accrual basis accounting.

Alpha Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It buys office equipment on credit for $75,000. What would be the effects of this transaction on the accounting equation?

Assets increase by $75,000 and liabilities increase by $75,000.

The number of shares that a corporation's charter allows it to sell is referred to as:

Authorized stock.

A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $15,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $375. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Bad Debts Expense 16,125 Allowance for Doubtful Accounts 16,125

The total cost of an asset less its accumulated depreciation is called:

Book value.

The process of allocating the cost of intangibles to periods when they are used.

Calculated using the double-declining balance method.

Which of the following does not require an adjusting entry at year-end?

Cash invested by stockholders.

Which of the following accounts is not included in the calculation of net income?

Cash.

A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the merchandise return on July 7 is:

Debit Accounts Payable $200; credit Merchandise Inventory $200.

What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $7,750 before adjustment, and the unexpired amount per analysis of policies is, $3,250?

Debit Insurance Expense, $4,500; credit Prepaid Insurance, $4,500

On a bank reconciliation, an unrecorded debit memorandum for printing checks is:

Deducted from the book balance of cash.

The accounting equation for Long Company shows an increase in its assets and an increase in its liabilities. Which of the following transactions could have caused that effect?

Equipment was purchased on credit.

Extraordinary repairs:

Extend the useful life of an asset beyond its original estimate.

An employee earned $37,000 during the year working for an employer when the maximum limit for Social Security was $118,500. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The employee's annual FICA taxes amount is:

FICA Taxes = Wages * (FICA tax rate + Medicare tax rate) FICA Taxes = $37,000 * (0.062 + 0.0145); FICA Taxes = $2,830.50

A promissory note:

Is a written promise to pay a specified amount of money at a certain date.

The acid-test ratio:

Is also called the quick ratio.

The total amount of depreciation recorded against an asset over the entire time the asset has been owned:

Is referred to as accumulated depreciation.

Investing activities do not include the:

Issuance of common stock.

Intangible assets do not include:

Land held as an investment.

Obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as:

Long-term liabilities.

Cash flows from interest received on loans are reported in the statement of cash flows as part of:

Operating activities.

Which of the following is not classified as plant assets?

Patent.

The indirect method for the preparation of the operating activities section of the statement of cash flows:

Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities.

If a company records prepayment of expenses in an asset account, the adjusting entry when all or part of the prepaid asset is used or expired would:

Result in a debit to an expense and a credit to an asset account.

Identify the accounts that would normally have balances in the credit column of a business's trial balance.

Revenues and liabilities.

The principles of internal control include:

Separate recordkeeping from custody of assets.

Stock that was reacquired and is still held by the issuing corporation is called:

Treasury stock.

The following data has been collected about Keller Company's stockholders' equity accounts: Common stock $10 par value 20,000 shares authorized and 10,000 shares issued, 9,000 shares outstanding $100,000 Paid-in capital in excess of par value, common stock 50,000 Retained earnings 25,000 Treasury stock 11,500

$11.50.

Garza Company had sales of $135,000, sales discounts of $2,000, and sales returns of $3,200. Garza Company's net sales equals:

$129,800.

A corporation declared and issued a 15% stock dividend on October 1. The following information was available immediately prior to the dividend:

$135,000.

Clayborn Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on May 31, its Cash account shows a debit balance of $17,025. Clayborn's May bank statement shows $15,800 on deposit in the bank. Determine the adjusted cash balance using the following information:

$16,400

During the month of February, Victor Services had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the February 1 beginning cash balance?

$2,900

Monarch Company uses a weighted-average perpetual inventory system, and has the following purchases and sales: January 1 20 units were purchased at $10 per unit. January 12 12 units were sold. January 20 18 units were purchased at $11 per unit. What is the value of ending inventory? (Round average cost per unit to 2 decimal places, and final answer to the nearest dollar.)

$278.

On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of equity as of May 31 of the current year?

$31,100.

A company has sales of $695,000 and cost of goods sold of $278,000. Its gross profit equals:

$417,000.

A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life. In the first year, 15,000 bolts were produced. In the second year, production increased to 19,000 units. Using the units-of-production method, what is the amount of depreciation expense that should be recorded for the second year?

$45,600.

Cushman Company had $800,000 in net sales, $350,000 in gross profit, and $200,000 in operating expenses. Cost of goods sold equals:

$450,000.

On March 12, Klein Company sold merchandise in the amount of $7,800 to Babson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Klein uses the perpetual inventory system and the gross method of accounting for sales. On March 15, Babson returns some of the merchandise. The selling price of the merchandise is $600 and the cost of the merchandise returned is $350. Babson pays the invoice on March 20, and takes the appropriate discount. The amount that Klein receives from Babson on March 20 is:

$7,056.

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. What is the maturity value of the note on March 1? (Use 360 days a year.)

$9,240

A corporation reports the following year-end balance sheet data. The company's debt-to-equity ratio equals: Cash $40,000 Current liabilities $75,000 Accounts receivable 55,000 Long-term liabilities 35,000 Inventory 60,000 Common stock 100,000 Equipment 145,000 Retained earnings 90,000 Total assets $300,000 Total liabilities and equity $300,000

0.58

Refer to the following selected financial information from Keller Company. Compute the company's debt to equity for Year 2. Year 2 Year 1 Total assets $327,800 $301,000 Total liabilities 171,400 169,300 Total equity 156,400 131,700

1.1.

Refer to the following selected financial information from McCormik, LLC. Compute the company's acid-test ratio for Year 2. Year 2 Year 1 Cash $37,500 36,850 Short-term investments 90,000 90,000 Accounts receivable, net 85,500 86,250 Merchandise inventory 121,000 117,000 Prepaid expenses 12,100 13,500 Plant assets 388,000 392,000 Accounts payable 113,400 111.750 Net sales 711,000 706,000 Cost of goods sold 390,000 385,500

1.88.

Powers Company reported Net sales of $1,200,000 and average Accounts Receivable, net of $78,500. The accounts receivable turnover ratio is:

15.3 times.

The credit terms 2/10, n/30 are interpreted as:

2% cash discount if the amount is paid within 10 days, or the balance due in 30 days.

Use the following selected information from Wheeler, LLC to determine the 2017 and 2016 common size percentages for operating expenses using Net sales as the base.

20.0% for 2017 and 23.0% for 2016.

A company has net sales of $1,200,000 and average accounts receivable of $400,000. What is its accounts receivable turnover for the period?

3.0

Mega Skateboard Supplier had net sales of $2.8 million, its cost of goods sold was $1.6 million, and its net income was $0.9 million. Its gross margin ratio equals:

43%.

A company's ledger is:

A record containing all accounts and their balances used by the company.

On March 12, Klein Company sold merchandise in the amount of $7,800 to Babson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Klein uses the perpetual inventory system and the gross method of accounting for sales. The journal entry or entries that Klein will make on March 12 is:

Accounts receivable 7,800 Sales 7,800 Cost of goods sold 4,500 Merchandise Inventory 4,500

A company's current assets are $23,420, its quick assets are $13,890 and its current liabilities are $12,220. Its acid-test ratio equals:

Acid-Test Ratio = Quick Assets/Current Liabilities Acid-Test Ratio = $13,890/$12,220 = 1.14 1.14.

If a company made a bank deposit on September 30 that did not appear on the bank statement dated September 30, in preparing the September 30 bank reconciliation, the company should:

Add the deposit to the bank statement balance.

Adjusting entries:

Affect both income statement and balance sheet accounts.

Physical counts of inventory:

Are necessary to adjust the Inventory account to the actual inventory available.

If a company receives $12,000 from its sole stockholder to establish a corporation, the effect on the accounting equation would be:

Assets increase $12,000 and equity increases $12,000.

An account used to record stockholders' investments in a business is called a(n):

Common stock account.

Dividend yield is the percent of cash dividends paid to common shareholders relative to the:

Common stock's market value.

Natural resources are:

Consumable assets such standing timber, mineral deposits, and oil and gas fields.

Frisco Company's Merchandise Inventory account at year-end has a balance of $62,115, but a physical count reveals that only $61,900 of inventory exists. The adjusting entry to record this $215 of inventory shrinkage is:

Cost of goods sold 215 Merchandise Inventory 215

A company issued 60 shares of $100 par value common stock for $7,000 cash. The journal entry to record the issuance is:

Debit Cash $7,000; credit Common Stock $6,000; credit Paid-in Capital in Excess of Par Value, Common Stock $1,000.

On December 31, Carmack Company's Prepaid Insurance account had a balance before adjustment of $6,000. The insurance was purchased on July 1 of the same year for one year of insurance coverage, with coverage beginning on that date. The adjusting entry needed on December 31 is:

Debit Insurance Expense $3,000; credit Prepaid Insurance $3,000.

Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due. The correct journal entry to record the purchase on August 7 is:

Debit Merchandise Inventory $9,750; credit Accounts Payable $9,750.

If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees, the end-of-period adjusting entry to record the portion of those fees that has been earned is:

Debit Unearned Legal Fees and credit Legal Fees Earned

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000. The machine is depreciated using the straight-line method. The machine's useful life is estimated to be 5 years with a $4,000 salvage value. Depreciation expense in year 2 is:

Depreciation Expense = (Cost - Salvage Value)/Estimated Useful Life Depreciation Expense = ($24,000 - $4,000)/5 = $4,000

J. Smith, the sole stockholder, received a $100 dividend from Jay's Limo Services. Which of the following general journal entries will Jay's Limo Services make to record this transaction?

Dividends 100 Cash 100

The adjusting entry to record an accrued expense is:

Increase an expense; increase a liability.

If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:

Increased $22,000.

Which of the following statements is true?

Interest on bonds is tax deductible.

Merchandise inventory:

Is a current asset.

The person who signs a note receivable and promises to pay the principal and interest is the:

Maker.

The price-earnings ratio is calculated by dividing:

Market value per share by earnings per share.

The following statements regarding merchandise inventory are true except:

Merchandise inventory appears on the balance sheet of a service company.

A corporation's distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a:

Stock dividend.

All of the following statements regarding stock dividends are true except:

Stock dividends decrease the number of shares outstanding.

An adjusting entry could be made for each of the following except:

Stockholder investments

Plant assets are defined as:

Tangible assets that have a useful life of more than one accounting period and are used in the operation of a business.

A bond traded at 102½ means that:

The bond traded at 102.5% of its par value.

When a bond sells at a premium:

The contract rate is above the market rate.

Identify the account used by businesses to record the transfer of assets from a business to its stockholders:

The dividends account.

Revenues are:

The increase in equity from a company's sales of products and services.

The useful life of a plant asset is:

The length of time it is productively used in a company's operations.

Identify the statement below that is incorrect.

The normal balance of an expense account is a credit.

A bondholder that owns a $1,000, 10%, 10-year bond has:

The right to receive $1,000 at maturity.

Identify the statement below that is true.

The trial balance is a list of all accounts from the ledger with their balances at a point in time.

Which of the following does not affect the equity of a business?

Unearned Revenue

Outstanding checks refer to checks that have been:

Written, recorded on the company books, sent to the payee, but not yet paid by the bank.

A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported in the operating activities section reported under the direct method is:

Zero. This is an investing activity.