Acct 205 Fianl

A company borrowed $10,000 by signing a 180-day promissory note at 9%. The maturity value of the note is: (Use 360 days a year.)

$10,450

The interest accrued on $7,500 at 6% for 90 days is: (Use 360 days a year.)

$112.50.

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 company purchased new furniture at a cost of $14,000 on September 30. The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000. The company uses the straight-line method of depreciation. What is the book value of the furniture on December 31 of the first year?

$13,625.00

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. The book value of the machine at the end of year 2 is:

$16,000.

If a company is considering the purchase of a parcel of land that was acquired by the seller for $104,000, is offered for sale at $188,000, is assessed for tax purposes at $114,000, is recognized by the purchaser as easily being worth $178,000, and is purchased for $175,000, the land should be recorded in the purchaser's books at:

$175,000.

McCarthy Company has inventory of 8 units at a cost of $200 each on October 1. On October 2, it purchased 20 units at $205 each. 11 units are sold on October 4. Using the perpetual FIFO inventory method, what amount will be reported as cost of goods sold for the 11 units that were sold?

$2,215.

A company has $90,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 4% of outstanding receivables are uncollectible. The current balance (before adjustments) in the allowance for doubtful accounts is an $800 credit. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:

$2,800

A company purchased $3,300 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $365 worth of merchandise. On July 8, it paid the full amount due. The amount of the cash paid on July 8 equals:

$2,876.

Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machines' first year depreciation under the straight-line method.

$24,000.

Starlight Company has inventory of 8 units at a cost of $200 each on October 1. On October 2, it purchased 20 units at $205 each. 11 units are sold on October 4. Using the perpetual LIFO inventory method, what is the value of inventory after the October 4 sale?

$3,445.

Given the following information, determine the cost of the inventory at June 30 using the perpetual LIFO inventory method. June 1Beginning inventory15 units at $20 eachJune 15Sale of 6 units for $50 each June 29Purchase8 units at $25 each

$380

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. Gross profit equals:

$390,000.

A company has $90,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 4% of outstanding receivables are uncollectible. The current balance (before adjustments) in the allowance for doubtful accounts is an $800 debit. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:

$4,400

If equity is $430,000 and liabilities are $201,000, then assets equal:

$631,000.

A company's board of directors votes to declare a cash dividend of $.75 per share of common stock. The company has 15,000 shares authorized, 10,000 issued, and 9,500 shares outstanding. The total amount of the cash dividend is:

$7,125.

A company purchased $10,000 of merchandise on June 15 with terms of 3/10, n/45. On June 20, it returned $800 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it was entitled to. The cash paid on June 24 equals:

$8,924. Cash Paid = ($10,000 − $800) × .97 = $8,924

A company purchased $10,000 of merchandise on June 15 with terms of 3/10, n/45, and FOB shipping point. The freight charge, $500, was added to the invoice amount. On June 20, it returned $800 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals:

$9,424.

Fetzer Company declared a $0.65 per share cash dividend. The company has 290,000 shares authorized, 271,000 shares issued, and 7,000 shares in treasury stock. The number of shares to which the dividend applies is:

271,000 shares issued - 7,000 shares treasury stock) = 264,000 shares outstanding

If Bojana Tax Services' office supplies account balance on March 1 was $1,400, the company purchased $675 of supplies during the month, and a physical count of supplies on hand at the end of March indicated $1,250 unused, what is the amount of the adjusting entry for office supplies on March 31?

825

A company's balance sheet shows: cash $42,000, accounts receivable $48,000, equipment $86,000, and equity $90,000. What is the amount of liabilities?

86,000

The Discount on Bonds Payable account is:

A contra liability.

A business uses a credit to record:

A decrease in an asset account.

Unearned revenue is reported in the financial statements as:

A liability on the balance sheet.

Noncash investing and financing activities may be disclosed in:

A note in the financial statements or a schedule attached to the statement of cash flows.

Adonis Corporation issued 10-year, 8% bonds with a par value of $200,000. Interest is paid semiannually. The market rate on the issue date was 7.5%. Adonis received $206,948 in cash proceeds. Which of the following statements is true?

Adonis must pay $200,000 at maturity plus 20 interest payments of $8,000 each.

A debit is used to record which of the following:

An increase in the dividends account.

Prepaid accounts (also called prepaid expenses) are generally:

Assets from prepayments of future expenses.

On February 3, Smart Company sold merchandise in the amount of $5,800 to Truman Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Smart uses the perpetual inventory system and the gross method. Truman pays the invoice on February 8, and takes the appropriate discount. The journal entry that Smart makes on February 8 is:

Cash 5,684 Sales discounts 116 Accounts receivable 5,800

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. Babson pays the invoice on March 17, and takes the appropriate discount. The journal entry that Klein makes on March 17 is:

Cash 7,644 Sales discounts 156 Accounts receivable 7,800

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

Cash.

An account linked with another account that has an opposite normal balance and is subtracted from the balance of the related account is a(n):

Contra account.

Spafford Services, Inc. provides services to clients. On May 1, a client prepaid Spafford Services $30,000 for 6-months services in advance. Spafford Services' general journal entry to record this transaction will include a:

Credit to Unearned Management Fees for $30,000.

Spafford Services, Inc. provides services to clients. On May 1, a client prepaid Spafford Services $74,000 for 6-months services in advance. Spafford Services' general journal entry to record this transaction will include a:

Credit to Unearned Management Fees for $74,000.

On April 12, Hong Company agrees to accept a 60-day, 10%, $4,500 note from Indigo Company to extend the due date on an overdue account. What is the journal entry needed to record the transaction by Indigo Company?

Debit Accounts Payable $4,500; credit Notes Payable $4,500

A law firm billed a client $1,800 for work performed in the current month. Which of the following general journal entries will the firm make to record this transaction?

Debit Accounts Receivable, $1,800; credit Legal Fees Revenue, $1,800.

On January 1, a company issues bonds dated January 1 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $312,177. The journal entry to record the first interest payment using straight-line amortization is:

Debit Bond Interest Expense $12,282.30; debit Premium on Bonds Payable $1,217.70; credit Cash $13,500.00.

For the year ended December 31, a company had revenues of $187,000 and expenses of $109,000. $37,000 in dividends were paid during the year. Which of the following entries could not be a closing entry?

Debit Income Summary $187,000; credit revenues $187,000.

On January 1, a company issues bonds dated January 1 with a par value of $600,000. The bonds mature in 3 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The bonds are sold for $564,000. The journal entry to record the first interest payment using straight-line amortization is:

Debit Interest Expense $27,000; credit Discount on Bonds Payable $6,000; credit Cash $21,000.

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. Alan made the appropriate year-end accrual on December 31. What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made? (Use 360 days a year.)

Debit Notes Payable $9,000; debit Interest Payable $120; debit Interest Expense $120; credit Cash $9,240

For the year ended December 31, a company has revenues of $317,000 and expenses of $196,000. The company paid $50,000 in dividends during the year. The balance in the Retained earnings account before closing is $81,000. Which of the following entries would be used to close the dividends account?

Debit Retained earnings $50,000; credit Dividends $50,000.

The adjusting entry to record the salaries earned due to employees for services provided but unpaid at the end of the accounting period affects the accounts in which of the following ways?

Debit Salaries Expense and credit Salaries Payable.

A physical count of supplies on hand at the end of May for Masters, Inc. indicated $1,250 of supplies on hand. The general ledger balance before any adjustment is $2,100. What is the adjusting entry for office supplies that should be recorded on May 31?

Debit Supplies Expense $850 and credit Supplies $850.

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. What is the adjusting entry for the accrued interest at December 31, the company's year end, on the note? (Use 360 days a year.)

Debit interest expense, $120; credit interest payable, $120

The depreciation method in which a plant asset's depreciation expense for a period is determined by applying a constant depreciation rate to the asset's beginning-of-period book value is called:

Declining-balance depreciation.

A credit entry:

Decreases asset and expense accounts, and increases liability, common stock, and revenue accounts.

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the book value of the asset at the end of the first year of its useful life using the double-declining-balance method?

Depreciation Expense = Beginning of Year Book Value × Double Straight-line RateDepreciation Expense = $3,400 × (2 × 10%) = $680 (Year 1, depreciation)Book value = Cost − Accumulated depreciation$3,400 − $680 = $2,720

Cash (or other assets) stockholders receive from the company are called a(n):

Dividend.

The closing process is necessary in order to:

Ensure that net income or net loss and dividends for the period are closed into the retained earnings account.

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the

Expense recognition (Matching) principle.

During a period of steadily rising costs, the inventory valuation method that yields the highest reported net income is:

FIFO method.

The inventory valuation method that has the advantages of assigning an amount to inventory on the balance sheet that approximates its current cost, and also mimics the actual flow of goods for most businesses is:

FIFO.

The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the retained earnings account is the:

Income Summary account.

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

Is referred to as accumulated depreciation.

Net Income:

Is the excess of revenues over expenses.

Depreciation:

Is the process of allocating the cost of a plant asset to expense.

A business's source documents may include all of the following except:

Ledgers.

The accounting concept that requires financial statement information to be supported by independent, unbiased evidence is:

Objectivity principle

The appropriate section in the statement of cash flows for reporting the cash received from customers is:

Operating activities.

Stockholders' equity consists of which of the following?

Paid-in capital and retained earnings

The materiality constraint:

Prescribes that only information that would influence the decisions of a reasonable person need be disclosed.

When preparing a statement of cash flows using the indirect method, each of the following should be classified as an operating cash flow except:

Proceeds from the disposal of a long-term asset with no gain or loss.

An example of an investing activity is:

Purchase of land.

The statement of cash flows:

Reports on cash flows for operating, financing, and investing activities over a period of time.

On December 15 of the current year, Conrad Accounting Services signed a $40,000 contract with a client to provide bookkeeping services to the client in the following year. The client paid the entire $40,000 on the date the contract was signed. Which accounting principle would require Conrad Accounting Services to record the bookkeeping revenue in the following year and not the year the cash was received?

Revenue recognition principle.

The purchase of long-term assets by issuing a note payable for the entire amount is reported on the statement of cash flows in the:

Schedule of noncash financing and investing activities.

Which of the following is NOT an asset account:

Services Revenue

Closing entries are required:

So that Revenue, expense, and dividends accounts must begin each period with zero balances.

The basic financial statements include all of the following except:

Statement of Changes in Assets.

The financial statement that identifies a company's cash receipts and cash payments over a period of time is the:

Statement of cash flows.

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.

If an issuer sells bonds at a premium:

The carrying value decreases from the issue price to the par value over the bond's term.

When a bond sells at a premium:

The contract rate is above the market rate.

An account balance is:

The difference between the total debits and total credits for an account including the beginning balance.

A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the:

Time period assumption.

Revenue is properly recognized:

Upon completion of the sale or when services have been performed.

On October 27, Able Graphics received a $800 utility bill for the current month's electricity. It is not due until the end of the next month which is when the bill will be paid. Which of the following general journal entries will Able Graphics make on October 27 to record this transaction?

Utilities Expense800 Accounts Payable 800

The date the directors vote to declare and pay a dividend is called the:

date of declaration.

A corporation issued 2,500 shares of its no par common stock at a cash price of $11 per share. The entry to record this transaction would be:

debit Cash $27,500; credit Common Stock $27,500.

An example of a financing activity is:

obtaining a long-term loan.

An example of an operating activity is:

paying wages.

Alto Company issued 7% preferred stock with a $100 par value. This means that:

the amount of the potential dividend is $7 per year per preferred share.

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

treasury stock.