Accounting finals

Coachlight Incorporated uses a periodic inventory system. The company purchased 200 unites of inventory at $13.00 per unit and 300 units at $14.00 per unit. What is the weighted average unit cost for these purchases of inventory?

$13.60 Weighted average cost = cost of goods available for sale/number of units available for sale

A machine is purchased on January 1, 2021, for $108,000. It is expected to have a residual value of $14,000. The company closes its books on December 31. Under the double-declining balance method, what is the total amount of depreciation to be expensed during the year 2022?

$17,280 double method

Cortez Company updates its inventory records perpetually. The company's records showed a beginning inventory of $9,000, cost of goods sold of $17,000, and ending inventory of $11,000. How much inventory was purchased during the year?

$19,000 Purchases = Ending inventory + cost of goods sold - beginning inventory

Parker, Incorporated had a beginning balance in its Retained Earnings account of $385,950. During the year, the company declared and paid a $4,770 dividend and, at the end of the year, it reported Retained Earnings of $400,560. The company's net income for the year was:

$19,380 Net income = Ending retained earnings + Dividends - beginning retained earnings

The Xu Corporation uses a periodic inventory system. The company has a beginning inventory of 395 unites at $5 each on January 1. Xu purchases 595 unites at $4 each in February and 295 unites at $6 each in March. There were no additional purchases or sales during the remainder of the quarter. Xu sells 395 units during the quarter. If Xu uses the LIFO method, what is its cost of goods sold for the first quarter?

$2,170 LIFO

Creek COmpany uses the percentage of credit sales method in determining its bad debt expense. the following information comes from the accounting records of Creek Company: What is the estimated bad debt expense?

$23,400 Bad debt expense = Credit sales * bad debt loss rate

Grandview, Incorporated uses the allowance method. At December 31, 2021, the company's balance sheet reports Accounts Receivable, Net in the amount of $23,500. On January 2, 2022, Grandview writes off a $2,800 customer account balance when it becomes clear that the customer will never pay. What is the amount of Accounts Receivable, Net after the write-off?

$23,500

Wool company makes a sale and collects a total of $486.00, which includes an 8% sales tax. What is the amount that will be credited to the Sales Revenue Account

$450 Sales revenue = sales tax/sales tax rate

During its first year of operation, Puffin, Incorporated reported Sales Revenue of $389,200 but only collected $313,000 in cash from customers. At the end of the year, Accounts receivable equals:

76,200 of the $389,200 of Sales Revenue, customers have paid the company only $313,000. which leaves a balance of Accounts Receivable of $76,200.

Which of the following statements about the closing process is correct

After closing entries are posted, the balances of the income statement account will be zero.

Which of the following statements about inventory is not correct?

An increase in inventory levels is always a sign of inefficiency in inventory management.

If the total amount that should have been debited to Rent Expense is mistakenly debited instead to prepaid Rent, What will be the effect on the financial statements for the year?

Assets will be overstated

Bond holders are willing to pay a premium to acquire a bond because the:

Bond's stated interest rate is higher than the market interest rate.

If net sales revenue rises 5% while the average book value of fixed assets fall 5%, the:

Fixed asset turnover ratio will rise

The unadjusted trial balance:

Is created to determine that total debits are equal total credits

Cashiers at a supermarket must talk to a manager before approving price changes at the register. Which internal control principle is being followed?

Segregate duties

The principle of internal control which of the following

Segregate duties

Your company sells $210,000 of bonds for an issue price of $220,500. Which of the following statements is correct?

The bond sold at a price of 105.00, implying a premium of $10,500.

Sparkling Pools performed $2,400 of pool maintenance services during July; the customers had paid in advance for these services in June. The company performed $1,500 of pool maintenance services during July and collected payment from those customers in August. Also, during July, the company accepted an order to perform $750 of pool maintenance services in August; the customers will pay for these services in August. The company uses accrual basis accounting. The Service Revenue account should be credited for:

$0 in June, $3,900 in July, and $750 in August. It depends on when the service is performed

Thomas Longbow is the only employee of Presido, Inc. During the first week of January, Longbow earned $1,400 and had federal and state income tax withholdings of $70 and $26.25, respectively. FICA taxes are 7.65% on earnings up to $132,900. State and federal unemployment taxes for the period are $87.5 and $14, respectively. What would be the amount of Longbow's payroll check for the first week of January

$1,196.65 Net Pay = Gross earnings - Withheld income taxes payable - voluntary deduction

The following is a listing of some of the balance sheet accounts and all of the income statement accounts for Northview Company as they appear on the company's adjusted trial balance. Income from Operation would be

$13,600 Net sale = Sales revenue - sales discounts - sales returns and allowances Income from operations = net sales - cost of goods sold. Selling, general, and administrative expenses

In Year 2, the Denim Company bought an acre of land that cost $15,300. In Year 5, another company purchased a nearby acre of land for $28,300 and a different company purchased another nearby acre of land for $26,300. As a result, an appraiser estimated that the acre owned by Denim had increased in value to $27,300. If Denim prepares Abalance sheet at the end of Year 5, the acre of land that it owns should be reported at:

$15,300 Following the cost principle, assets and liabilities are first recorded at cost, which is their cash-equivalent value on the date of the transaction. Later, if an asset's value increases, the increase is generally not recorded under GAAP (unless it is a particular type of financial investment). It would be original cost

Willetta Company purchases inventory for $10,000 with terms 2/10, n/30. It then returns $2,000 of the inventory purchased to the supplier and also receives an allowance for defective inventory of $100. The company pays the amount due within the discount period. What is the amount of the discount that will be taken?

$158 Purchase discount = (Purchase - Purchase return - Purchase allowance) * discount percentage

Monte Vista uses the perpetual inventory system. At the beginning of the quarter, Monte Vista has $39,000 in inventory. During the quarter the company purchases $9,250 of new inventory from a vendor, returned $850 of inventory to the vendor, and took advantage of discounts from the vendor of $290. At the end of the quarter the balance in inventory is $31,000. What is the cost of goods sold?

$16,110 Net purchases = Purchases - purchase returns - purchase discounts Cost of goods sold = beginning inventory + Net purchases - Ending inventory

During its first year of operations, a company entered into the following transactions: Borrowed $5,160 from the bank by signing a promissory note. Issued stock to owners for $11,600. Purchases $1,160 of supplies on account. Paid $560 to suppliers as payment on account for the supplies purchased. What is the amount of total assets at the end of the year?

$17,360 Total assets = cash from borrowing of $5,160 + cash from issuing stock of $11,600 + Supplies purchased $1,160 - Cash paid to suppliers of $560 = $17,360

0McKeel Publishing had outstanding checks totaling $5,540 on its June bank reconciliation. In July, McKeel issued checks totaling $39,900. The July bank statement shows that $27,800 in checks cleared the bank in July. The amount of outstanding checks on McKeel's July bank reconciliation should be:

$17,600 remaining outstanding checks = outstanding checks + additional checks issued - checks cleared

Quill Industries uses the aging of accounts receivable method. Its estimate of uncollectible receivables resulting from the aging analysis equals $26,500. The unadjusted credit balance in the Allowance for Doubtful Accounts account is $8,600. What is the estimated Bad Debt Expense for the period?

$17,900 Bad debt expense = ending balance in allowance for doubtful accounts - unadjusted ending credit (debit) balance in allowance for doubtful accounts

Delta Diamonds uses a periodic inventory system. The company had five one-carat diamonds available for sale this year: one was purchased on June 1 for $700, two were purchased on July 9 for $750 each, and two were purchased on September 23 for $800 each. On December 24, it sold one of the diamonds that was purchased on July 9. Using the specific identification method, its ending inventory (after the December 24 sale) equals:

$3,050 Ending inventory = cost of one purchased June 1 + Cost of one purchased July 9 + Cost of two purchased 23

Your company rents computers to local businesses and schools. You have 1,200 computers with a book value of $162,000. As a result of changing technology, your computers are more difficult to rent so you must drastically reduce your rental price, which causes a decrease in estimated future cash flows. The fair value of the computers is estimated to be $126,500 because of their outdated technology. Your company should report an asset impairment loss of:

$35,500 Impairment loss = book value - fair value

Because interest rates have fallen, a company retires bonds which had been issued at their face value of $380,000. The company bought the bonds back at 95.00. The journal entry to record this retirement includes a debit of:

$380,000 to bonds payable, a credit of $19,000 to gain on bond retirement, and a credit of $361,000 to cash.

During February, Blake Building company billed a customer $4,500 for services performed during February. During March, Blake collected the $4,500. Which of the following statements about this transaction is correct?

$4,500 of revenue should be recorded in February.

The annual depreciation taken on a vehicle totals $4,900. The vehicle has been in service for two full years and the adjusting entries have been completed for the year. At the end of the second year, the balance in the Depreciation expense account is $________ and the balance in the Accumulated Depreciation account is $________

$4,900; $9,800

If the company's accountant mistakenly recorded an $115 deposit as $73, the error would be shown on the bank reconciliation as a(n):

$42 addition to the book balance

On July 1, 2021, Empire incorporated lends $8,400 to a customer and receives a 10% note due in two years, interest is due in full on July 1, 2023, the due date of the note. What is the amount of interest revenue that will be reported on empire's income statement for the year ended December 31, 2021

$420 Interest = Principal * Interest rate * Time

Deferred Revenue, which represents the company's obligation to honor gift cards previously issued to customers, totaled $6,300 at the beginning of the year and $9,100 at the end of the year. Customers purchased gift cards to $50,000 during the year. What was the amount of gift cards redeemed by customers during the year

$47,200 Gift card redeemed = Beginning Deferred revenue + Gift cards sold - ending deferred revenue

Character Company, which uses the perpetual inventory method, purchases different letters for resale. Character had a beginning inventory comprised of ten units at $5 per unit. the company purchased six units at $7 per unit in February, sold eight units in October, and purchased three unites at $7 per unit in December If Character Company uses the LIFO method, what is the cost of good sold for the year>

$52 LIFO

Elm Corporation is a merchandising company. The year began with inventory of $16,000, Purchases for the year were $41,000, and the Ending Inventory was $3,000. What is the Cost of Goods Sold that would be reported on the income statement?

$54,000 Cost of good sold = Beginning inventory + Purchases - Ending inventory

Eagle Company reported Salaries and Wages Payable of $830 at the beginning of the year and $2,660 at the end of the year. The income statement for the year reported Salaries and Wages Expense of $57,800. How much cash was paid for salaries and wages during the year?

$55,970 Salaries and wages paid during the year = Beginning Salaries and Wages Payable + Salaries and Wages Expense during the year - Ending salaries and wages payable

Before reconciling its bank statement, Rollin Corporation's general ledger had a month-end balance in the cash account of $6,250. The bank reconciliation for the month contained the following items: given the above information, what is the up-to-date ending cash balance Rollin should report at month-end

$6,100 Up-to-date Ending cash balance per books = Ending cash balance per books + interest earned - NSF check - Bank Service charge

On June 15, Oakley Incorporated sells inventory on account to Sunglasses Hut (SH) for $8,500, terms 1/10, n/30. On June 20, SH returns to Oakley inventory that SH had purchased for $1,800. On June 24, SH completely fulfills its obligation to Oakley by making a cash payment. What is the amount of cash paid by SH to Oakley

$6,633 Sales discount = (Sale - Sale return) * Discount % Cash paid by customer = sales revenue - sales return - sale discount

The Sweet Smell of Success Fragrance Company borrowed $60,000 from the bank to be paid back in five years and used all of the money to purchase land for a new store. Sweet Smell's balance sheet would show this as:

$60,000 under Land and $60,000 under Notes Payable (long-term)

Marconi Company has the following information available for the current year: What was the amount of write-offs during the year?

$60,160 Write-offs = beginning balance in allowance for doubtful accounts + bad debt expense - ending credit balance in allowance for doubt accounts

Marshall Company purchases a machine for $480,000. The machine has an estimated residual value of $40,000. The company expects the machine to produce four million units. The machine is used to make 560,000 units during the current period. If the units-of-production method is used, the depreciation expense for this period is:

$61,600 Per unit method

Sheridan's beginning inventory is $484,000, goods purchased during the period cost $144,000, and the cost of goods sold for the period is $564,000. What is the amount of its ending inventory?

$64,000 Ending inventory = Beginning inventory + purchases - cost of goods sold

On January 1, Melrose Manufacturing issues a 5-year bond with a face value of $10,000 and a stated interest rate of 8%. The market interest rate is 6%. The issue price of the bond was $10,876. Using the effective-interest method of amortization and rounding to the nearest dollar, the interest expense for the first year ended December 31 would be:

$652.56 Interest Expense = Carrying value of bonds * Market Interest rate

Tonto Company purchased property for $135,000. The property included a building, equipment and land. The building was appraised at $76,600, the land at $52,000, and the equipment at $25,400. What is the amount of cost to be allocated to the building in the accounting records?

$67,095 Building's contribution towards property's value = building's market value/total market value building cost = property cost * building's contribution

The smith Corporation began business this year and entered into the following transactions during the year. The company issued common stock in exchange for cash of $80,000 from stockholders, borrowed $40,000 from a bank, bought $12,000 of inventory on account, and purchased $32,000 of equipment by paying $12,000 in cash and issuing a note for the remainder. What is the amount of total liabilities to be reported on the balance sheet at the end of the year?

$72,000 total liabilities = Notes payable (40,000) + accounts payable (12,000) + Notes payable (20,000) = $72,000

The net income for Year 1 (the first year of operations for the company) was $20,300 and dividends of $12,150 were paid. In Year 2, the company reported net income of $34,300 and paid dividends of $5,150. At the end of Year 1, the company had total assets of $153,000. At the end of Year 2, the company had total assets of $243,000. What was the amounts of retained earnings at the end of year 1?

$8,150 Ending retained earnings = Beginning retained earnings + Net income - Dividends = $0 + $20,300 - $12,150

Alvarado Company began the current month with inventory costing $38,000, then purchased inventory at a cost of $83,000. The perpetual inventory system indicates that inventory costing $74,000 was sold during the month for $92,000. If an inventory count shows that inventory costing $46,110 is actually on hand at month-end, what amount of shrinkage occurred during the month?

$890 The difference between the ending balance in the inventory account and the physical inventory count is the amount of possible shrinkage $38,000 + $83,000 - $74,000 = $47,000 ending inventory $47,000 - $46,110 (actual count) = $890 shrinkage

An asset is purchased on January 1 for $42,700. It is expected to have a useful life of five years after which it will have an expected salvage value of $5,600. The company uses the straight-line method. If it is sold for $31,200 exactly two years after its purchased, the company will record a:

$gain of $3,340 Gain (loss) on disposal = proceeds from sale - book value at time of sale

Sparks Furniture Company carries three lines of sofas. Information about the sofa inventory as of the end of its most recent fiscal year follows. If LCM/NRV is applied to each separate product line, what is the amount of the adjustment that must be made to the company's inventory?

(97,350) If cost per Unit is higher than market value than total LCM is market value per unit * unit quantity. If not then Total Cost = Total LCM Write-down is the difference, would be negative

On December 31, 2021, a company had assets of $16 billion and stockholders' equity of $11 billion. That same company had assets of $20 billion and stockholders' equity of $12 billion as of December 31, 2022, the company reported total sales revenue of $12 billion and total expenses of $10 billion. What is the company's debt-to-asset ratio on December 31, 2022?

0.40 Liabilities = Assets - Stockholders' equity Debt-to-assets ratio = Total liabilities/total assets

The perry company reported accounts receivable, Net of $63,800 at the beginning of the year and $74,000 at the end of the year. If the company's net sales revenue during the fourth year was $904,000, what are the days to collect during year?

27.8 receivable turnover ratio = Net sales/average net accounts receivable days to college = 365/receivable turnover ratio

Your company has net sales revenue of $40 million during the year. At the beginning of the year, fixed assets are $12 million. At the end of the year, fixed assets are $14 million. What is the fixed asset turnover ratio?

3.08 Average Net fixed Assets = (Prior EB fixed Assets + Current EB fixed Assets)/2 Fixed Asset Turnover Ratio = Net Sales Revenue/Average Net Fixed Assets

Selected financial information presented below was obtained from the financial statements of the Napa Valley Brewery: What was the net profit margin?

40.00% Net profit margin = Net Income + Sales Revenue

Barons industries has the following information: What is Barron's number of days to sell?

47.0 days Inventory turnover ratio = Cost of goods sold.Average inventory Days to sell = 365/inventory turnover ratio

On June 4, Marie Company had cash sales rung up by cashiers totaling $121,000. Cash in the drawer was counted and found to be $127,000. The journal entry to record the sales for June 4, would include

A credit to cash overage for $6,000

Revenues are recognized when

A seller's performance obligations are satisfied

Which of the following statement is correct?

A transaction is recorded if it has a measurable financial effect on the assets, liabilities or stockholder's equity of a business.

The journal entry to record the purchase of supplies on account includes a credit to:

Accounts payable

A one-time error in the application of the lower cost or market/net realizable value(LCM/NRV) rule in the current period distorts financial results for the current accounting period:

And the period after

Blue Fin started the current year with assets of $706,000, liabilities of $353,000 and common stock of $206,000. During the current year, assets increased by $406,000, liabilities decreased by $53,000 and common stock increased by $281,000. There was no payment of dividends to owners during the year. Use the information above to answer the following question. What was the amount of Blue Fin's net income for the year?

Change in stockholders' equity = changes in assets - changes in liabilities Change in retained earnings = change in stockholders' equity - change in common stock Net income = change in retained earnings - dividends

Which of the following will result in the recording of goodwill?

Company A purchases company B and pays more than the fair value of Company B"s assets and liabilities

The owner(s) of a business are not taxed on the profits of the business if the business is a:

Corporation

A company's trial balance included the following account balances: What is the amount of the current ratio

Current Assets = cash + account receivable + inventory + supplies Current Liabilities = Accounts Payable + Wages Payable + Income Tax Payable Current ratio = Current Assets/Current Liabilities

Constable company reported the following information at December 31, Year 1: What is the amount of current liabilities on the classified balance sheet?

Current Liabilities = Accounts payable + Wages payable

The potential disadvantage of extending credit include all of the following except:

Customers buying too much

A company started the year with $7,550 of supplies on hand. During the year the company purchased additional supplies of $4,000 and recorded them as an increase to the supplies asset. At the end of the year the company determined that only $1,550 of supplies are still on hand. What is the adjusting journal entry to be made at the end of the period?

Debit Supplies Expense and Credit supplies for $10,000 Supplies expense = beginning balance + Supplies purchased - Supplies on hand at end of period

A customer of Halifax Manufacturing recently filed for bankruptcy protection two months ago, leading Halifax's credit manager to conclude that the company would never collect the balance of $15,600 owed by the customer. Suppose that three months after filing bankruptcy, Halifax's customer paid its outstanding account balance. Which of the following journal entries would be made to record this transaction?

Debit accounts receivable and credit allowance for doubtful accounts for $15,600; debit cash and credit accounts receivable for $15,600

On January 1, the Sleepy Monk Coffee Shop paid $19,500 for a full year of rent beginning on January 1. The rent payment was appropriately recorded in the cash and prepaid rent accounts. If the financial statements are prepared on January 31, the journal entry to record the adjustment would be:

Debit rent expense and credit prepaid rent for $1,625

Missouri Company uses a perpetual inventory system. On October 1, Missouri Company sold inventory on account in the amount of $6,500 to Montebello Company, terms 1/10, n/30. The items cost Missouri $4,200. On October 4, Montebello returns some of the inventory. This inventory had a selling price of $500 and a cost of $200. On October 8, Montebello Company paid Missouri Company the amount due on that date. What journal entry (entries) will Missouri Company make on October 4 to record the sales return?

Debit sales returns and allowances and credit accounts receivable for $500; debit inventory and credit cost of goods sold for $200

A company pays $9,000 in interest on notes consisting of $6,000 of interest that was accrued during the last accounting period and $3,000 of interest that accumulated during the current accounting period but has not yet been accrued on the books. The journal entry for the interest payment should include a:

Debit to interest expense for $3,000 a debit to interest payable for $6,000, and a credit to Cash for $9,000

The adjusting entry to record the amount earned that had been previously collected in advance will:

Decrease liabilities and increase revenue

The following account balances are taken from the December 31, 2020, financial statements of ABZ advertising Company. The company uses accrual basis accounting. The following activities occurred in 2021: 1. Performed advertising services on account, $64,050. 2. Received cash payments on account 3. Received deposits from customers for advertising services to be performed in 2022, 4. Made payments to suppliers on account 5. Incurred $52,400 of operating expenses; $45,400 was paid in cash and $7,000 was on account and unpaid as of the end of the year. What is the balance of accounts receivable at December 31, 2021

Ending accounts receivable = beginning accounts receivable + sales on account - cash collected on account

Faithful representation is a characteristic of external financial reporting that means:

Financial information depicts the economic substance of business activities.

A company reported the following What is the amount of gross profit

Gross profit = sales revenue - sales discounts - sales returns & allowances - cost of goods sold

The fraud triangle contains three elements that must exist for accounting fraud to occur. The elements are:

Incentive, opportunity, and rationalization.

During January 2020, the first month of operations, a consulting firm had the following transactions: What is the amount of total revenue to be reported on the income statement for the month of January?

Income statement would report the revenues earned of $24,500 ($9,100 + $15,400)

A company began the year with Assets of $115,000, Liabilities of $27,500 and Stockholders' equity of $87,500. During the year Assets increased $56,500 and stockholders' equity increased $23,000. What was the change in Liabilities for the year?

Increase of $33,500 Changes in liabilities = change in assets - Change in stockholders' equity = $56,500 - $23,000 = $33,500

The adjusting entry to record interest owed on obligations at the end of the accounting period includes a debit to:

Interest Expense and credit to Interest Payable

What is the effect of an impairment loss on the accounting equation?

It decreases total stockholders' equity

Considering current laws that deal with misstatements of financial results, which of the following statements is correct?

Managers can be sentenced to maximum jail terms of up to 20 years for each violation.

Intel makes microchips from raw materials acquired from suppliers. Intel is a:

Manufacture

A decrease in operating expenses would have which of the following effects on a company;s profit margin

Net profit margin would increase

If a bank reconciliation included a deposit in transit of $765, the company's journal entry for this reconciling item would include

Nothing, because the deposit has already been recorded.

If a bank reconciliation included a deposit outstanding of $695, the company's entry for this reconciling item would include:

Nothing, because the deposit has already been recorded.

which of the following would eventually cause Retained Earning to increase

Performing services for which cash will be received next month

Which inventory system records a change in the inventory account every time goods are bought, sold or returned?

Perpetual

Which of the following situations depicts the best receivables management

Receivables turnover ratio increases and the days to collect decreases

When the amount of a contingent liability can be reasonably estimated and its likelihood is probable, the company should:

Record the estimated amount of the liability on the balance sheet

Boston Enterprises declared and paid a dividend of $8,200 this year. The entry to close the Dividend at the end of the year will include a debit to:

Retained Earnings and a credit to dividends for 8,200

Restricted cash is reported

Separately as an asset on the balance sheet

How much financing did the stockholders of Pick-A-Pet, incorporated, directly contribute to the company?

The common stock amount

How will a company's current ratio be affected by the purchase of equipment for cash?

The current ratio will decrease because current assets decrease.

A company started the year with a normal balance of $136,000 in the inventory account. During the year, debits totaling $90,000 and credits totaling $110,000 were posted to the inventory account. Which of the following statements about the inventory account is correct?

The debits and credits posted to the inventory account caused it to decrease by $20,000.

What is the main goal of GAAP?

To ensure that the financial information produced by companies is useful to existing and potential investors and other parties in decision making.

A company's balance sheet contained the following information: Notes payable is the only other item on the balance sheet. Notes payable must equal:

Total assets = accounts payable + notes payable + common stock + retained earning

Liabilities are classified as current if they

Will be paid within the company's operating cycle or within 1 year, whichever is longer.

Investors of a company increase their wealth by receiving dividends and by:

an increase in the market value in their stock

At the end of the first year of an asset's life, the declining-balance depreciation method:

causes an asset to be carried at a lower book value than that computed using the straight-line method