accounting

Prior to adjustments, Barrett Company's account balances at December 31 for Accounts Receivable and the related Allowance for Doubtful Accounts were $1,200,000 and $60,000, respectively. An aging of accounts receivable indicated that $106,000 of the December 31 receivables may be uncollectible. The net realizable value of accounts receivable at December 31 was:

$1,094,000

During the year, Anthony Company purchased debt securities as a long-term investment and classified them as trading. All securities were purchased at par value. Pertinent data are as follows: The net holding gain or loss included in Anthony's income statement for the year should be:

$3,000 gain

On January 1, Year 1, Weaver Company purchased as held-to-maturity debt securities $500,000 face value of Park Corporation's 8% bonds for $456,200. The bonds were purchased to yield 10% interest and pay interest annually. The bonds mature on January 1, Year 6. Weaver uses the effective interest method of amortization. What amount should Weaver report on its December 31, Year 1, balance sheet as an investment in held-to-maturity debt securities?

$461,820

Moore Company uses the LIFO cost flow assumption and carries Product A in inventory on December 31 at its unit cost of $9.50. Because of a sharp decline in demand for the product, the selling price was reduced to $10.00 per unit. Moore's normal profit margin on Product A is $2.00, disposal costs are $1.00 per unit, and the replacement cost is $6.50. Under the lower of cost or market rule, Moore's December 31 inventory of Product A should be valued at a unit cost of:

$7

On January 1, Year 3, Belmont Company changed its inventory cost flow method to the FIFO method from the LIFO method. Belmont can justify the change that was made for both financial statement and income tax reporting purposes. Belmont's inventories were $4,000,000 on the LIFO basis at December 31, Year 2. Supplementary records maintained by Belmont showed that the inventories would have totaled $4,800,000 at December 31, Year 2, on the FIFO basis. Ignoring income taxes, the adjustment for the effect of changing to the FIFO method from the LIFO method should be reported by Belmont as an:

$800,000 increase to the Year 3 beginning balance of retained earnings

On January 1, Year 1, Bay Company issues bonds with a face value of $850,000 that pay 9% interest semiannually and mature in 15 years. The market interest rate at the date of issuance is 8%. What is the issue price of the bond?

$923,491.41

During Year 5, White Company determined that machinery previously depreciated over a 7-year life had a total estimated useful life of only 5 years. An accounting change was made in Year 5 to reflect the change in estimate. If the change had been made in Year 4, accumulated depreciation at December 31, Year 4, would have been $1,600,000 instead of $1,200,000. As a result of this change, the Year 5 depreciation expense was $100,000 greater than it would have been if no change were made. Ignoring income tax considerations, what is the proper amount of the adjustment to White's January 1, Year 5, balance of retained earnings?

0

he following information is available for Cooke Company for the current year: Net sales$1,800,000 Freight-in45,000 Purchase discounts25,000 Ending inventory120,000 The gross margin is 40% of net sales. What is the cost of goods available for sale?

1,200,000

On January 1, Year 1, when the market rate for bond interest was 14%, Lenoir Corporation issued bonds in the face amount of $500,000 with interest at 12% payable semiannually. The bonds mature on December 31, Year 8, and were issued at a discount of $53,180. How much of the discount should be amortized by the effective interest method at July 1, Year 1?

1,277

On its December 31, Year 1, balance sheet, Fay Company reported equity investments at a market value of $183,000. There was no change during Year 2 in the composition of Fay's portfolio of marketable equity securities. Pertinent data are as follows: What amount of loss on these securities should be included in Fay's income statement for the year ended December 31, Year 2?

1500

On July 1, Year 1, Aldrich Company purchased as an available-for-sale security $200,000 face value, 9% U.S. Treasury notes for $194,000. The notes mature July 1, Year 2, and pay interest semiannually on January 1 and July 1. The notes were sold on December 1, Year 1, for $199,000. Aldrich normally uses straight-line amortization on all of its notes. In its income statement for the year ended December 31, Year 1, what amount should Aldrich report as a gain on the sale of the available-for-sale security?

2,500

The following items were included in Venicio Corporation's inventory account on December 31? Merchandise out on consignment, at sales price, including 40% markup on selling price$14,000 Goods purchased, in transit, shipped FOB shipping point 12,000 Goods held on consignment by Venicio 9,000 What amount should Venicio report as inventory at December 31

20,400

On January 1, King Company's Allowance for Doubtful Accounts had a credit balance of $15,000. During the year King (1) charged $32,000 to bad debt expense, (2) wrote off $23,000 of uncollectible accounts receivable, and (3) unexpectedly recovered $6,000 of bad debts written off in the prior year. The Allowance for Doubtful Accounts balance at December 31 should be:

30,000

On January 2, Year 1, Garr Company acquired machinery at a cost of $320,000. This machinery was being depreciated by the double-declining-balance method over an estimated useful life of 8 years, with no residual value. At the beginning of Year 3, Garr changed to the straight-line method of depreciation. What is the amount of depreciation expense that Garr should record for Year 3?

30,000

The following information is available for Wagner Corporation for the current year: Sales $500,000 Beginning inventory 180,000 Ending inventory 95,000 Advertising 45,000 Purchases 215,000 How much is the cost of goods sold?

300,000

Marmol Corporation uses the allowance method for bad debts. During the current year Marmol charged $50,000 to bad debt expense and wrote off $45,200 of uncollectible accounts receivable. These transactions resulted in a decrease in working capital of:

50000

In Year 1, Cromwell Corporation purchased bonds of Oliver Company at par for $300,000 and classified the investment as available-for-sale. In Year 2, the market value declined to $200,000. In Year 3, the market value of the investment rose to $230,000, and the investment was sold. How much should Cromwell record as a realized gain or loss in its determination of net income for Year 3?

70,000 loss

Sienna Company uses the FIFO cost flow assumption. Sierra has inventory with a selling price of $100, packaging costs of $5, and transportation costs of $10. Sienna's normal profit margin is $20. However, due to limited supply of the product from the manufacturer, it would cost Sienna $80 to replace the inventory. What amount should be used as the market value?

85

Which two of the following four statements determine the supply of financial accounting information that companies report?

Authoritative professional accounting standards (e.g., U.S. GAAP) The choices, methods, estimates, and judgments that companies make in producing financial statements

The cumulative effect of an accounting change should generally be reported as an adjustment to the beginning balance of retained earnings in the period in which the change is made for a:

Change in Accounting Principle- yes Change in Accounting Estimate- no

Which business activities involve raising the capital a company needs?

Financing activities

Which business activities involve purchasing and selling productive resources that a company needs to operate the business?

Investing activities

Generally, how should a change in accounting estimate that is affected by a change in accounting principle be reported?

Prospective Method- yes Retrospective Adjustment Method- no

Rent revenue collected 1 month in advance should be accounted for as:

a current liability for deferred revenue

When the market value of a company's portfolio of available-for-sale securities is lower than its cost, the difference should be:

accounted for as a valuation allowance deducted from the asset to which it relates

A change in the expected service life of an asset arising because additional information has been obtained is:

an accounting change that should be reported in the period of change and future periods if the change affects both

When a change in accounting principle is made during the year, the cumulative effect on retained earnings is determined:

as of the beginning of the year in which the change is made

On October 2, Year 1, a company borrowed cash and signed a 3-year, interest-bearing note on which both the principal and interest are payable on October 2, Year 4. At December 31, Year 3, the principal and accrued interest should:

be reported on the balance sheet as current liabilities

Which of the following is considered a constraint on useful information by Statement of Financial Accounting Concepts No. 8?

benefits> costs

A method of estimating bad debts that focuses on the income statement rather than the balance sheet is the allowance method based on:

credit sales

For the issuer of a 10-year term bond, the amount of amortization using the effective interest method would increase each year if the bond was sold at a:

discount- no premium- no

Which of the following may be used to determine fair value based on Level 3 inputs?

estimated market value- yes present value- yes

Accruing net losses on obsolete inventory is an example of the accounting concept of:

faithful representation

The valuation of a promise to receive cash in the future at present value on the financial statements of a company is valid because of the accounting concept of:

going concern

A company is in its first year of operations and has never written off any accounts receivable as uncollectible. When the allowance method of recognizing bad debt expense is used, the entry to recognize that expense:

has no effect on current assets

Land reported in the property, plant, and equipment section of a manufacturing company's balance sheet is reported at:

historical cost

A company purchased a patent 4 years ago, and was amortizing that patent over a 10-year useful life. In the current year, the company determined the patent had become worthless. The write-off of the patent asset in the current year is an example of which of the following expense recognition principles

immediate consumption

A company forgets to record a purchase on credit in the purchases account, but ending inventory is correct. The effect of this mistake in the current year is:

income- overstated COGS- understated Accounts Payable- understated Retained Earnings- overstated

An accrued expense is an expense:

incurred but not paid

Which of the following is expensed under the principle of systematic and rational allocation?

insurance premiums

Financial accounting information is used by various stakeholders of a company, which include

investors. creditors suppliers. government regulators.

Refer to the information for Shannon Corporation above. Ignoring income taxes, what is the total effect of the errors on Year 2 net income?

net income overstated by $14,200

Which business activities involve day-to-day transactions to make and sell goods and services to customers and to pay employees and suppliers?

operating activities

The moving average inventory cost flow assumption is applicable to which of the following inventory systems?

periodic no perpetual yes

According to Statement of Financial Accounting Concepts No. 8, to be relevant accounting information is expected to have which of the following?

predictive- yes confirmatory- yes

Assuming no beginning inventory, what can be said about the trend of inventory prices if cost of goods sold computed when inventory is valued using the FIFO method exceeds cost of goods sold when inventory is valued using the LIFO method?

prices decreased

Under Statement of Financial Accounting Concepts No. 8, which of the following means the process of formally recording and reporting an item in the financial statements of a company?

recognition

A company uses the LIFO cost flow assumption. The replacement cost of an inventory item is below the net realizable value and above the net realizable value minus the normal profit margin. The original cost of the inventory item is above the replacement cost and below the net realizable value. As a result, under the lower of cost or market rule, the inventory item should be valued at the:

replacement cost

Goods on consignment should be included in the inventory of:

the consignor but not the consignee

The demand for financial reporting accounting information is driven by

the need to avoid potential problems that can arise when the ownership of a company's resources are separate from the control of those resources.

Under Statement of Financial Accounting Concepts No. 8, which of the following enhances decision-useful information?

timliness

Which characteristic states that accounting information should be supported by sufficient evidence to allow two or more qualified individuals to arrive at similar measures and conclusions?

verifiability