Exam 1 2241 Accounting

Blossom Company had the following account balances: Sales revenue$ 430000 Cost of goods sold190000 Salaries and wages expense25000 Depreciation expense55000 Dividend revenue11000Utilities expense23000 Rent revenue58000 Interest expense35000 Sales returns and allow.32000 Advertising expense38000 What would Blossom report as total revenues in a single-step income statement?

$ 101000 $430000 $423000 $467000

Included in Vaughn Manufacturing's balance sheet at June 30, 2021 is a 10%, $4600000 note payable. The note is dated October 1, 2019 and is payable in three equal annual payments of $2300000 plus interest. The first interest and principal payment was made on October 1, 2020. In Vaughn's June 30, 2021 balance sheet, what amount should be reported as accrued interest payable for this note?

$115000. $517500. $173075. $345000.

Gross billings for merchandise sold by Crane Company to its customers last year amounted to $12730000; sales returns and allowances were $380000, sales discounts were $174400, and freight-out was $140700. Net sales last year for Crane Company were

$12175600. $12034900. $12350000. $12730000.

Sandhill Co. has the following items: common stock, $1585000; treasury stock, $212000; deferred income taxes, $243000 and retained earnings, $781000. What total amount should Sandhill Co. report as stockholders' equity?

$1373000. $2154000. $2397000. $2578000.

Waterway Industries reported revenue of $1620000 in its accrual basis income statement for the year ended June 30, 2021. Additional information was as follows: Accounts receivable June 30, 2020$387000Accounts receivable June 30, 2021531000Uncollectible accounts written off during the fiscal year14300 Under the cash basis, Waterway should report revenue of

$1490300. $1218700. $1461700. $1233000.

The following information was extracted from the accounts of Pharoah Company at December 31, 2020: CR(DR)Total reported income since incorporation$4790000Total cash dividends paid(2480000)Unrealized holding loss on available-for-sale securities(367000)Total stock dividends distributed(595000)Prior period adjustment, recorded January 1, 2020225000 What should be the balance of retained earnings at December 31, 2020?

$1940000. $1885000. $3045500. $1573000.

In 2020, Sunland Company reported net income of $531000. It declared and paid preferred stock dividends of $129000 and common stock dividends of $63000. During 2020, Sunland had a weighted average of 300000 common shares outstanding. Compute Sunland's 2020 earnings per share.

$2.20 $1.34 $1.13 $1.77

The following information was extracted from the 2020 financial statements of Sunland Company: Income from continuing operations before income tax$706500Selling and administrative expenses480500Income from continuing operations503500Gross profit1346000 Assuming that there are no other revenues and gains, amount reported for other expenses and losses is

$226000. $203000. $23000. $159000.

On January 4, 2020, Crane Company leased a building to Marigold Corp. for a ten-year term at an annual rental of $186000. At inception of the lease, Crane received $744000 covering the first two years' rent of $372000 and a security deposit of $372000. This deposit will not be returned to Marigold 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 $744000 should be shown as a current and long-term liability in Crane's December 31, 2020 balance sheet?

$372000 $372000 $186000 $372000 $372000 $186000 $0 $744000

Crane Company has a tax rate of 30 percent and income before non-operating items of $1784700. It also has the following items (gross amounts). Unusual gain$ 110100Loss from discontinued operations914300Dividend revenue29200Income increasing prior period adjustment375000 What is the amount of income tax expense Crane would report on its income statement?

$415410 $302910 $577200 $542700

Wildhorse Co. reported the following information for 2020: Sales revenue$2038000 Cost of goods sold1410000 Operating expenses220000 Unrealized holding gain on available-for-sale securities120200 Cash dividends received on the securities8800 For 2020, Wildhorse would report other comprehensive income o

$416800. $408000. $120200. $129000.

In November and December 2020, Sheridan Company, a newly organized magazine publisher, received $80400 for 1,000 three-year subscriptions at $28 per year, starting with the January 2021 issue. Sheridan included the entire $80400 in its 2020 income tax return. What amount should Sheridan report in its 2020 income statement for subscriptions revenue?

$4466. $0. $80400. $26800.

The following trial balance of Sheridan Company at December 31, 2020 has been properly adjusted except for the income tax expense adjustment. Sheridan CompanyTrial BalanceDecember 31, 2020 Dr. Cr.Cash $876500 Accounts receivable (net) 2693000 Inventory 2086000 Property, plant, and equipment (net) 7572000 Accounts payable and accrued liabilities $1768000Income taxes payable 656000Deferred income tax liability 84500Common stock 2351000Additional paid-in capital 3677000Retained earnings, 1/1/20 3518000Net sales and other revenues 12848000Costs and expenses 11160000 Income tax expenses 515000 $24902500 $24902500 Included in accounts receivable is $1200000 due from a customer and payable in quarterly installments of $150000. The last payment is due December 29, 2022.In Sheridan's December 31, 2020 balance sheet,The final retained earnings balance is

$4606500. $4691000. $3518000. $5206000.

On September 1, 2020, Sheridan Company issued a note payable to National Bank in the amount of $1420000, bearing interest at 9%, and payable in three equal annual principal payments of $570000. On this date, the bank's prime rate was 8%. The first payment for interest and principal was made on September 1, 2021. At December 31, 2021, Sheridan should record accrued interest payable of

$51300. $45600. $25500. $19800.

Sunland Company reports the following information: Correction of understatement of depreciation expense in prior years, net of tax$ 1283000Dividends declared957000Net income2970000Retained earnings, 1/1/20, as reported5880000 Sunland should report retained earnings, 1/1/20, as adjusted at

$7163000. $5880000. $4597000. $9176000.

Sandhill Co.'s trial balance of income statement accounts only for the year ended December 31, 2020 included the following: Debit CreditSales revenue $287000Cost of goods sold$175000 Administrative expenses38800 Loss on disposal of equipment19000 Sales commission expense16300 Interest revenue 10200Freight-out5800 Loss from discontinued operations24400 Bad debt expense5800 Other information:Sandhill's income tax rate is 30%. Finished goods inventory: January 1, 2020$159600December 31, 2020139500 On Sandhill's multiple-step income statement for 2020, Income from continuing operations is

$8470. $35300. $66700. $25550.

Reversing entries are 1. normally prepared for prepaid, accrued, and estimated items. 2. necessary to achieve a proper matching of revenue and expense. 3. useful in simplifying the recording of transactions in the next accounting period.

1 and 2 2 3 1

A company receives interest on a $102000, 7%, 5-year note receivable each April 1. At December 31, 2020, the following adjusting entry was made to accrue interest receivable: Interest Receivable5355 Interest Revenue 5355 Assuming that the company does not use reversing entries, what entry should be made on April 1, 2021 when the annual interest payment is received?

Cash1785 Interest Revenue 1785 Cash5355 Interest Receivable 5355 Cash7140 Interest Revenue 7140 Cash7140 Interest Receivable 5355 Interest Revenue 1785

Sandhill Corporation loaned $700000 to another corporation on December 1, 2020 and received a 3-month, 6% interest-bearing note with a face value of $700000. What adjusting entry should Sandhill make on December 31, 2020?

Debit Cash and credit Interest Revenue, $3500. Debit Interest Receivable and credit Interest Revenue, $3500. Debit Cash and credit Interest Receivable, $10500. Debit Interest Receivable and credit Interest Revenue, $10500.

The double-entry accounting system means

Each transaction is recorded with two journal entries. Each item is recorded in a journal entry, then in a general ledger account. The dual effect of each transaction is recorded with a debit and a credit. None of these answer choices are correct.

At the end of 2020, Concord Corporation made four adjusting entries for the following items: 1. Depreciation expense, $24100. 2. Expired insurance, $2080 (originally recorded as prepaid insurance.) 3. Interest payable, $6300. 4. Rent receivable, $10900.In the normal situation, to facilitate subsequent entries, the adjusting entry or entries that may be reversed is (are)

Entry No. 4 only. Entry No. 3 only. Entry No. 3 and No. 4. Entry No. 2, No. 3 and No. 4.

Which accounting assumption or principle is being violated if a company is a party to major litigation that it may lose and decides not to include the information in the financial statements because it may have a negative impact on the company's stock price?

Full disclosure. Going concern. Historical cost. Expense recognition.

Not adjusting the amounts reported in the financial statements for inflation is an example of which basic assumption or principle of accounting?

Going concern Economic entity Monetary unit Full disclosure

Which of the following is a real (permanent) account?

Goodwill Service Revenue Accounts Receivable Both Goodwill and Accounts Receivable

What is the general approach as to when product costs are recognized as expenses?

In the period when the vendor invoice is received In the period when the related revenue is recognized In the period when the expenses are incurred In the period when the expenses are paid

Which of the following errors will cause an imbalance in the trial balance?

Omission of a transaction in the journal. Posting a credit of $720 to Accounts Payable as a credit of $720 to Accounts Receivable. Listing the balance of an account with a debit balance in the credit column of the trial balance. Posting an entire journal entry twice to the ledger.

The stockholders' equity section is usually divided into what three parts?

Preferred stock, common stock, treasury stock Capital stock, appropriated retained earnings, unappropriated retained earnings Capital stock, additional paid-in capital, retained earnings Preferred stock, common stock, retained earnings

During 2020, Wildhorse Co. disposed of Maria Division, a major component of its business. Wildhorse realized a gain of $3010000, net of taxes, on the sale of Maria's assets. Maria's operating losses, net of taxes, were $3470000 in 2020. How should these facts be reported in Wildhorse's income statement for 2020?

Total Amount to be Included in Income from Results of Continuing Operations Discontinued Operations 460000 loss 0 $3470000 loss $3010000 gain $ 3010000 gain3470000 loss 0 460000 loss

Watts Corporation made a very large arithmetical error in the preparation of its year-end financial statements by improper placement of a decimal point in the calculation of depreciation. The error caused the net income to be reported at almost double the proper amount. Correction of the error when discovered in the next year should be treated as

an increase in depreciation expense for the year in which the error is discovered. a change in accounting principle for the year in which the error was made. a prior period adjustment. a component of income for the year in which the error is discovered, but separately listed on the income statement and fully explained in a note to the financial statements.

Adjustments are often prepared

before the balance sheet date, and dated before the balance sheet date. after the balance sheet date, and dated after the balance sheet date. after the balance sheet date, but dated as of the balance sheet date. before the balance sheet date, and dated after the balance sheet date.

In preparing a statement of cash flows, cash flows from operating activities

can be calculated by appropriately adding to or deducting from net income those items in the income statement that do not affect cash. are calculated as the difference between revenues and expenses. can be calculated by appropriately adding to or deducting from net income those items in the income statement that do affect cash. are always equal to accrual accounting income.

When a revenue is collected and recorded in advance, it is normally accounted for as a(n) ___________ revenue.

cash unearned prepaid accrued

The correct order to present current assets is

cash, inventories, prepaid items, accounts receivable. cash, inventories, accounts receivable, prepaid items. cash, accounts receivable, prepaid items, inventories. cash, accounts receivable, inventories, prepaid items.

A journal entry to record a payment on account will include a credit to Accounts Receivable. debit to Accounts Receivable. debit to Accounts Payable. credit to Accounts Payable.

credit to Accounts Receivable. debit to Accounts Receivable. debit to Accounts Payable. credit to Accounts Payable.

Coronado Industries paid cash of $130500 on June 1, 2020 for one year's rent in advance and recorded the transaction with a debit to Prepaid Rent. The December 31, 2020 adjusting entry is

debit Prepaid Rent and credit Cash, $54375. debit Prepaid Rent and credit Rent Expense, $76125. debit Rent Expense and credit Prepaid Rent, $76125. debit Prepaid Rent and credit Rent Expense, $54375.

Coronado Industries received cash of $62100 on August 1, 2020 for one year's rent in advance and recorded the transaction with a credit to Rent Revenue. The December 31, 2020 adjusting entry is

debit Rent Revenue and credit Unearned Rent Revenue, $25875. debit Cash and credit Unearned Rent Revenue, $36225. debit Unearned Rent Revenue and credit Rent Revenue, $25875. debit Rent Revenue and credit Unearned Rent Revenue, $36225.

Marigold Corp. had revenues of $336000, expenses of $211000, and dividends of $46500. When Income Summary is closed to Retained Earnings, the amount of the debit or credit to Retained Earnings is a

debit of $125000. credit of $125000. credit of $78500. debit of $78500.

Revenue is recognized in the accounting period in which the performance obligation is satisfied. This statement describes the

expense recognition principle. consistency characteristic. revenue recognition principle. relevance characteristic.

When a corporation pays a note payable and interest,

he account notes payable will be increased. they will debit cash. they will debit notes payable and interest expense. the account interest expense will be decreased.

The measurement principle includes the

historical cost principle and the fair value principle. fair value principle only. historical cost principle only. revenue recognition principle and expense recognition principle.

Earnings per share data are required on the face of the

income statement. statement of stockholders' equity. statement of retained earnings. balance sheet.

In a statement of cash flows, interest payments to lenders and other creditors should be classified as cash outflows for

lending activities. operating activities. borrowing activities. financing activities.

The accounting equation (A = L + SE) must remain in balance:

only when journal entries are recorded. only at the time the trial balance is prepared. throughout each step in the accounting cycle. only when formal financial statements are prepared.

The failure to properly record an adjusting entry to accrue an expense will result in an

overstatement of expenses and an understatement of assets. understatement of expenses and an understatement of liabilities. understatement of expenses and an overstatement of assets. understatement of expenses and an overstatement of liabilities.

A trial balance

proves that debits and credits are equal in the ledger. supplies a listing of open accounts and their balances that are used in preparing financial statements. is normally prepared three times in the accounting cycle. All of these answer choices are correct.

The income statement reveals

resources and equities of a firm at a point in time. resources and equities of a firm for a period of time. net earnings (net income) of a firm at a point in time. net earnings (net income) of a firm for a period of time.

For Oriole Company, the following information is available: Cost of goods sold $391000 Dividend revenue 15400 Income tax expense 35200 Operating expenses 137500 Sales revenue 611000 In Oriole's multiple-step income statement, gross profit

should be reported at $220000. should not be reported. should be reported at $235400. should be reported at $62700.

Adjusting entries that should be reversed include those for prepaid or unearned items that

were originally entered in an asset or liability account. create an asset or a liability account. were originally entered in a receivable or liability account. were originally entered in a revenue or expense account.

Under the cash-basis of accounting, revenues are recorded

when the performance obligation is satisfied and cash is received. when expenses are incurred. when cash is received. when the performance obligation is satisfied.