Principles of Accounting Final Exam Jinette 2019

Mayan Company had net income of $132, 000. The weighted-average common shares outstanding were 80, 000. The company declared a $27, 000 dividends on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company' s earnings per share is

$1.3125 Per share

What is the total of Vashon' s liabilities at the end of June?

$118,000

The payroll taxes expense incurred by Ehrlich Company in January is:

$13,650

Use the following information for questions 26 through 30. Elite Property Management adjusts its books each month but closes its books at the end of the year. The trial balance at January 31 before adjustments is as follows: Cash $ 8, 310 Accounts Receivable $ 6, 000 Supplies $ 750 Prepaid Advertising $1, 800 Equipment $ 14, 400 Accumulated Depreciation- -Equipment $ 5, 000 Unearned Management Fees $3, 900 Donald York, Capital $12, 400 Management Fees Earned $17, 500 Salaries Expense $6, 400 Utilities Expense $240 Rent Expense $900 $38,800 $38,800 26. According to property management contracts, $2, 400 of the Unearned Management Fees has been earned in January. The amount of Management Fees Earned (revenue) to be reported in the income statement is:

$19, 900

What is the total owner's equity at the end of June?

$400,000 Owners Equity

Which of the following relationships cannot be derived from the accounting equation?

(A = L+C) (A - L = C.) (A -C =L) (C+L =A) (Anything that does not Compute with this formula does not belong)

Mays Corporation reported net income $24, 000; net sales $400, 000; and average assets $600, 000. What is the profit margin?

.06

Before the end-of-month adjusting entries, the trial balance for Shepard' s Kennel shows revenue of $10, 000, expenses of $8, 500, and dividends to owners of $3,500 for the month of May. Compute net income or loss for May if the depreciation adjustment for the month amounts to $500.

1,000

At the start of the current year, Belmont Corporation had a credit balance in the Allowance for Doubtful Accounts of $1, 200. During the year a monthly provision of 2% of sales was made for uncollectible accounts. Sales for the year were $400, 000, and $7, 400 of accounts receivable were written off as worthless. No recoveries of accounts previously written off were made during the year. The year-end financial statements should show:

1,800

On May 1st, Irwin Company purchased the copyright to Quick Computer Tutorials for 75,000. It is estimated that the copyright , will have a useful life of 5 years. The amount Amortization Expense recognized for the year would be.

10,000

The following data is available for BOX Corporation at December 31,. Common stock, par $10 (authorized 15, 000 shares) $100, 000 Treasury Stock (at cost $15 per share) 600 76. Based on the data, how many shares of common stock are outstanding?

10,000

Based on the data, how many shares of common stock are issued?

10,040

As of December 31, Bentley Company has $2, 580 cash in its checking account, well as several other items listed below: Petty cash fund 400 Bank credit card slips signed by customers 840 Money market fund balance 3,500 Investment in U.S. Treasury bills 5,000 Checks received from customers, but not yet deposited in the bank 520 Investment in IBM 9% bonds, maturing April next year 8,000 What amount should be shown in Bentley' s December 31, balance sheet as "Cash and cash equivalents"?

12,790

On April 8, Arco Corp. acquired equipment at a cost of $90, 000. The equipment is to be depreciated by the straight-line method over five years with no provision for salvage value. Depreciation for fractional years is computed by rounding the ownership period to the nearest month. Depreciation expense recognized will be:

13,500

The accounting records of Waller Company showed cash of $14, 000 at June 30. The balance per the bank statement at June 30 was $15, 380. The only reconciling items were deposits in transit of $4, 000, outstanding checks totaling $5, 600, an NSF check for $200 returned by the bank which Waller had not yet charged back to the customer, and a bank service charge of $20. The preparation of a bank reconciliation should indicate cash owned by Waller at June 30 in the amount of :

13,780

Compute the cost of ending inventory based on the average-cost method of inventory valuation.

16,800

Shown below are selected data from the balance sheet of Ames Hardware, a small retail store (dollar amounts are in thousands) Cash$ 20 Accounts Receivable100 Inventory195 Total Assets450 Current Liabilities150 Non-current Liabilities120 What is the capital

165 or 165,000 if in thousands

At December 31, Keystone Company's accounting records contained the following selected ledger accounts and balances: Inventory, January 1 $ 38, 000 Transportation- In $5, 500 Sales $ 370, 000 Sales Discounts $7,000 Purchases $196, 500 Delivery Expense $5, 200 Depreciation Expense $12, 000 Sales Returns and Allowances $3,000 Salaries Expense $ 86, 000 A physical count determined the cost of inventory on December 31 to be $42, 000. Compute the cost of goods gold for the year.

198,000

On April 1, Brennen Construction paid $10, 000 for equipment with an estimated useful life of 10 years and a residual value of $1, 000. The company uses the double-declining-balance method of depreciation. For next year, depreciation expense is:

2,000 for a year

Hunt Company had $250, 000 of current assets and $90, 000 of current liabilities before borrowing $60, 000 from the bank with a 3 -month note payable. What effect did the borrowing transaction have on Hunt Company's current ratio?

2.78 then 2.06

Cotula, Inc. had retained earnings of $230, 000 at the beginning of the current year. During the year the corporation earned net income of $34, 000 and declared dividends in the amount of $10, 000. What is the balance of Cotula' s retained earnings at the end of the year?

254,000

Assume that the replacement cost of this software at year-end is $210 per unit. Using the FIFO flow assumption and the lower-of-cost-or-market rule, Software City should write-down the carrying value of this inventory by:

27,000

Use the following information for questions 2 through 5. The following transactions occurred during June, the first month of operations for Vashon Engineering: Mark Vashon transferred $400, 000 from his personal bank account to the Vashon Engineering bank account to start the business. Purchased land for $200, 000, making a $60, 000 cash down payment and signing a note payable for the balance. Made a $50, 000 cash payment on the note payable from the purchase of land. Purchased equipment on credit from CADPro for $28, 000. 2.What is the balance in the cash account at the end of June?

290,000

At the end of January, the unadjusted trial balance of Viewpoint, Inc. included the following accounts: Debit Credit Sales (80% represent credit sales) $300, 000 Accounts Receivable $220, 000 Allowance for Doubtful Accounts $ 1, 760 Viewpoint's aging of the accounts receivable balance indicates the estimated uncollectible portion to be $5, 600. What is the amount of uncollectible accounts expense recognized in Viewpoint's income statement for January?

3,840

On January 1, Morningstar Farms established a petty cash fund of $500, which it replenishes at the end of each month. When a surprise count of the petty cash fund is made on March 5, the petty cash box contains $90 in cash and receipts for the following items: Delivery expense $16 Typewriter repairs $54 Office supplies $27 This situation indicates:

313 is left unaccounted for

Use the following information for questions 46 and 47. Seabright, Inc. uses a periodic inventory system. The purchases of a particular product during the year are shown below: Jan.1 Beginning Inventory 1, 500 units @ $ 9. 00 = $13, 500 Apr. 18 Purchase 1, 250 units @ $ 9. 50 = $11, 875 Aug. 11 Purchase 1, 750 units @ $10. 00 = $17, 500 Oct. 23 Purchase 500 units @ $10 .25 = $5,125 Totals 5 000 units $48, 000 At December 31, the ending inventory consisted of 1, 750 units. 46. Compute the cost of goods sold for the current year based on the LIFO method of inventory valuation.

32,125

Crestwood Department Store had net credit sales of $13, 000, 000 and cost of goods sold of $10, 000, 000 for the year. The average inventory for the year amounted to $2, 500, 000. The inventory turnover ratio for the year is

4

Westlake Associates sold office furniture for cash of $27, 000. The accumulated depreciation at date of sale amounted to $23, 000, and a gain of $9, 000 was recognized on the sale. The original cost of the asset must have been:

41,000

Adams Company reported the following on its income statement: Income before income taxes $420, 000 Income tax expense 120 000 Net income $300, 000 An analysis of the income statement revealed that interest expense was $80, 000. Adams Company's times interest ear

5.25

At year-end, the perpetual inventory records of Brandt Co. indicate 50 units of a particular product in inventory, acquired at the following dates and unit costs: Purchased in September: 25 units at $1, 000 per unit Purchased in November: 25 units at $1, 100 per unit However, a complete physical inventory taken at year-end indicates only 45 units of this product actually are on hand. Assuming that Brandt uses the FIFO flow assumption, it should record this inventory shrinkage by:

5000 Debit shrinkage Credit Merch

What are the total assets of Vashon Engineering at the end of June?

518,000

Employees are owed $350 for services since the last payday in January, to be paid the first week in February. The amount to be reported in the January income statement for salaries expense is:

6,750

Pine Hardware Store had net credit sales of $4, 225, 000 and cost of goods sold of $3, 000, 000 for the year. The Accounts Receivable balances at the beginning and end of the year were $600, 000 and $700,000, respectively. The receivables turnover ratio was

6.5

The fair market value of Suarez Company' s net identifiable assets is Bidwell Corporation purchases Suarez' entire business for $5,600,000. Which of the following statements is not correct?

600,000 might be goodwill

Use the following information for questions 21 and 22. Ehrlich Company had $100, 000 in salaries for January. Assume that 5. 4% of the applicable amount of wages for state unemployment taxes was paid. Also, the appropriate amounts of social security (6.2%), Medicare (1.45%), and federal unemployment taxes (0. 6%) were paid. Federal and state income taxes withheld amounted to $17, 000 and no employee earned more than $7, 000 in January. 21. The January take-home pay of the employees as a group amounts to:

75,350

Silverado Company purchased equipment having an invoice price of $8,000. The terms of sale were 2/10, n/ 30, and Silverado paid within the discount period. In addition, Silverado paid a $100 delivery charge, a $130 installation charge, sales tax of $550, and $200 for repairs. The repairs were necessitated due to damage while the equipment was unloaded from the delivery truck. The amount recorded as the cost of this equipment is:

8820

Nance Corporation' s December 31, balance sheet showed the following: 8% preferred stock, $20 par value, cumulative, 10, 000 shares authorized; 5, 000 shares issued $100, 000 Common stock, $10 par value, 1, 000, 000 shares authorized; 650, 000 shares issued, 640, 000 shares outstanding $6,500,000 Paid-in capital in excess of par value — preferred stock 20, 000 Paid-in capital in excess of par value common stock $ 9,000,000 Retained earnings $ 2,550,000 Treasury stock (10, 000 shares) 210,000 Nance's total paid-in capital was:

9,020,000

The equipment had an estimated useful life of six years. Compute the book value of the equipment at January 31, after the proper January adjustment is recorded.

9,200

Use the following information for questions 43 and 44 . Software City purchased 1, 500 units of a particular software package on January 12 at a per-unit cost of $200, and another 1, 500 units on January 31 at a per-unit cost of $300. In the period from February 1 through year-end, the company sold 2, 700 units of this product. At year-end, 300 units remained in inventory. 43.Assume that Software City uses FIFO flow assumption. The cost of the 300 units in inventory at year-end is:

90,000

Schaeffer receives a salary of $90, 000 per year from Riverside Manufacturing. Federal and state income taxes withheld amounted to $22,500. FICA taxes totaled $5, 192. FUTA and SUTA taxes totaled $434. The total annual cost to Riverside Manufacturing of having Schaeffer on the payroll is:

95,626

The Allowance for Doubtful Accounts represents:

A contra to accounts receivable

When a bank reconciliation has been satisfactorily completed, the only related entries to be made in the depositor's records are:

Add interest and collections, less NSF checks and bank service charges

On May 1, Smith Company has 100, 000 shares of $25 par value common stock outstanding. On May 20, Smith Company reacquired 15, 000 shares of common stock when the market price was $40. 114-116. To record the acquisition of the 15, 000 shares

Answer Debit Treasury Stock $600,000 Credit Cash $600,000

Outstanding stock of the Hall Corporation included 20, 000 shares of $5 par common stock and 10, 000 shares of 6%, $10 par non-cumulative preferred stock. In Year 1, Hall declared and paid dividends of $4, 000. In Year 2, Hall declared and paid dividends of $12, 000. How much of the Year 2 dividend was distributed to preferred shareholders?

Answer $6,000

What is the total stockholders ' equity based on the following account balances? Common Stock $ 1, 000,000 Paid-In Capital in Excess of Par 80, 000 Retained Earnings 380, 000 Treasury Stock 40, 000

Answer = $1, 460,000

The following amounts were taken from the financial statements of Turner Company: Year 2 Year 1 Total assets $ 800, 000 $1,000.00 Net sales $720, 000 650, 000 Gross profit $352, 000 320, 000 Net income $ 144 ,000 117, 000 The return on assets ratio for Year 2 is

Answer = 16%

A company paid $0 .48 in cash dividends per share. Its earnings per share is $3 .20 and its market price per share is $20.00. Its dividend yield equals

Answer Rate divided by Share price .48/20 = 2.4%

On December 1 of last year, Elite paid in advance for six months' advertising in the local newspaper. The necessary adjusting entry at January 31 includes which of the following

Answer: $360.00 (1800/5months)

Denson, Inc. has 10, 000 shares of 8%, $100 par value, non-cumulative preferred stock and 40, 000 shares of $1 par value common stock outstanding at December 31. There were no dividends declared in 2009. The board of directors declares and pays a $120, 000 dividends. What is the amount of dividends received by the common stockholders?

Answer: $40,000

At January 31, the amount of supplies on hand is $410. What amount is reported in the January income statement for supplies expense?

Answer: $750 - $410 =$340

A small stock dividend is defined as

Answer: Any Stock dividend up to 25 % of the Corporate 's issued stock

A company would not acquire treasury stock

Answer: As an Investment DO NOT RETIRE IT

The date on which a cash dividend becomes a binding legal obligation is on the:

Answer: Declaration date

A corporation purchases 10, 000 shares of its own $10 par common stock for $25 per share, recording it at cost. What will be the effect on total stockholders' equity?

Answer: Decrease Stockholders Equity by $250,000

A balance sheet:

Answer: Describes a company's Financial position (types and amount of Asset, liabilities and ) of a company at a specific point in time.

The wages earned by employees of Tycor, Inc., during the month of September will not be paid until Monday, October 3. The best rationale for recognizing these wages as expense in September is:

Answer: Matching Principle (Expense Recognition) we would debit wages expense and credit wages payable

Dividends in arrears on cumulative preferred stock

Answer: Must be paid before common stock holders can receive dividends

The per share amount normally assigned by the board of directors to a large stock dividend is

Answer: Par value or Stated Value of a Stock

Which of the following factors does not affect the initial market price of a stock?

Answer: The par value of the stock DOES -expected future earnings-dividends-growth-other economic factors

Which of the following is not a right or preference associated with preferred stock?

Answer: The right to vote

Which of the following statements is not true about a 2-for-l split?

Answer: Total Contributed Capital Increases

Treasury stock is

Answer: a corporation's own stock, which had been reacquired and held for future use

The amount of stock that may be issued according to the corporation' s charter is referred to as the

Answer: authorized stock

A contingent liability for a material loss that is reasonably possible is disclosed:

Answer: is Disclosed in the notes (kinda like a heads up because it hasn't happened yet)

Treasury Stock is a (n)

Answer: is a Contra Equity Account (it reduces Equity)

Par value

Answer: is the value assigned per share in the corporate charter

On January 1, Year 1, the Black Corporation issued 200, 000 shares of $10 par value common stock at the market price of $12. On December 1, the board of directors declared a 10% stock dividend to stockholders of record on December 31, Year 1, payable on January 15, Year 2. The market value of Black Corporation stock was $17 per share on December 1. 96—99. To record the issuance of the stock

D 2,400,000 C 2,000,000 C 400,000

105-107. To record the payment of the stock dividends

D Common Stock Div. Distributable 200,000 C Common Stock 200,000

100-104 record declaration of stock divdend

D Retained Earnings 340,000 C Common Stock Div. Distributable 200,000 C Paid-In Capital 140,000

108-113 To record the declaration of the stock dividend

D Retained Earnings 90,000 C Common Dividends Payable 90,000 ? D Common Dividends Payable 90,000 C Cash 90,000 ?

On November 1, 19A, Columbus Corporation sold land priced at $700,000 in exchange for a 12%, six-month note receivable. 63. Columbus' balance sheet at December 31, 19A, includes which of the following as a result of the sale of land on November 1?

Dec. 31: Debit Interest Receivable 14,000. Credit Interest Revenue 14,000.

Conservatism, as the term is used in accounting, means:

It is the general concept of recognizing expenses and liabilities as soon as possible when there is uncertainty about the outcome, but to only recognize revenues and assets when they are assured of being received.

The accounting concept of materiality:

It prescribes that only information that influences decisions (such as through importance and dollar amount) need be disclosed.

Assuming the maker of the note defaults on May 1, 19B, Columbus will record on this date:

May 1:D Accounts Receivable 742,000.C Interest Receivable 14,000.C Interest Revenue 28,000.C Note Receivable 700,000.

The balance in the owner's capital account of Dayton Company at the beginning of the year was $65, 000. During the year, the company earned revenue of $430, 000 and incurred expenses of $360, 000; the owner withdrew $50, 000 in cash for personal use, and the balance of the cash account increased by $10, 000. The company' s net income and the year-end balance in the owner' s capital account are, respectively:

Net income 70,000 year end; 95,000

Efficient management of cash includes which of the following concepts?

One of these: Collect receivables Delay liabilities Plan Expenditures Invest Idle Cash

Of the following, the best description of internal control is:

Protects assets, ensures reliable accounting, promotes efficient operations, and upholds company policies. It is used to monitor and control business activities.

In evaluating a company's solvency, a banker or creditor would be most interested in:

Solvency ratio; measures the ability of a company to survive over a long period of time.

Common Stock Dividends Distribute able is classified as a(n)

Stock Holders equity

The basic purpose in preparing classified financial statements is to:

The classification process provides additional details about the net worth and liquidity; it separates current and noncurrent items for both assets and liabilities; it organizes them into subgroups that provide more info to decision makers. Basically, it provides better, detailed information.

If no-par stock is issued without a stated value, then

There is no minimal legal capital

Which of the following is NOT a purpose of adjusting entries?

To prepare the revenue and expense accounts for recording transactions of the following period

In a perpetual inventory system:

Updates are made to the accounting records for each purchase and sale of inventory. Credit and debit directly to Cost of Goods Sold and Merch Inventory. Inventory represents value.

If sales discounts are shown as a separate item in the financial statements, they should be shown as a (n):

a debit (sales discount-Contra revenue)

The best definition of an accounting system is:

data to make decisions; it identifies, records, and communicates information about an organization's business activities.

The board of directors of Bosco Company declared a cash dividend on November15, to be paid on December 15, to stockholders owning the stock on November 30. Given these facts, the date of November 30 is referred to as the:

date of record

1. The essential point of double-entry system of accounting is that every transaction

debit and credit must each receive at least one entry; the sum of debits must equal the sum of credits for each entry

On June I, the board of directors of Information Corporation declared a regular quarterly dividend of $1 .50 per share on the 20, 000 shares of outstanding capital stock. The dividend is payable on June 15. What entry is necessary to record the declaration of the dividend on June 1?

dividends expense =30,000 dividends payable=30,000

Which of the following is not a characteristic of current liabilities?

if they are longer than a year or cycle, not an obligation or paid with current assets

Financial accounting information about a business organization:

is primarily reported to outsiders through a set of reports called financial statements. It also must be relevant, reliable, and comparable. It serves external and internal users.

Which of the following is not considered an intangible asset?

long-term resources that benefit business operations but lack physical form. Examples are patents, trademarks, copyrights, franchises, and goodwill. Their value comes from the privileges or rights granted to or held by the owner.

The goal of objectivity in the financial statements often involves a trade-off between the:

relevance/reliability

The owner's equity at the end of a period:

should increase with retained earnings

Stock dividends and stock splits have the following effects on retained earnings:

stock splits- no change Stock dividends- decrease

Gross profit is the difference between:

the difference between net sales revenue and cost goods sold

Net income is best described as:

the difference between revenue and expenses; net income occurs when revenue exceeds expenses; revenue after all expenses and deductions

Generally accepted accounting principles may best be described as:

the guidelines and standards used in financial accounting; concepts and rules that govern financial accounting; they include 4 principles, 4 assumptions, and 2 constraints

The relationship between the income statement and the balance sheet may be described as follows:

the results from the income statment are then used in retained earnings, which are then calculated into the balance sheet

The basic purpose of an audit of financial statements by a firm of CPAs is to:

to keep everything reliable and accurate

Which of the following is NOT true about a periodic inventory system?

what IT IS updates the accounting records for purchases and sales of inventory only at the end of a period.