Financial Acc Final Exam Review

which time period for classifying a liability is one year or operating cycle whichever is

longer

Which of the following assets is not depreciated over the course of its useful life

land

The following are data concerning cash received or paid from various transactions for Orange Peels Corporation: Sale of land $100,000 Sale of equipment 50,000 Issuance of common stock 70,000 Purchase of equipment 30,000 Payment of cash dividends 60,000 How much is net cash provided by investing activities?

$120,000

Net income is $132,000, accounts payable increased $10,000 during the year, inventory decreased $6,000 during the year, and accounts receivable increased $12,000 during the year. Under the indirect method, how much is net cash provided by operations?

$136,000

An asset purchased on January 1 for $60,000 has an estimated salvage value of $3,000. The current useful life is 8 years. How much is total accumulated depreciation using the straight-line method at the end of the second year of life?

$14,250; ($60,000 - $3,000)/8 years = $7,125x2=$14,250

The blooming miracles flower shop bought a delivery van on Jan 1 2014. Van cost $18,000 salvage of $3,000. Life of van expected 5 years or 150,000 miles The depreciable cost of van is

$15,000 18,000-3,000=15,000

Bennie Razor Company has decided to sell one of its old manufacturing machines on June 30, 2017. The machine was purchased for $80,000 on January 1, 2013, and was depreciated on a straight-line basis over a 10-year life assuming no salvage value. If the machine was sold for $26,000, how much is the gain or loss to be recorded at the time of the sale?

$18,000 loss; $80,000 - [($80,000 ÷ 10) × 4.5 yr.] = $44,000. Loss on sale = $26,000 - $44,000 = $18,000 loss.

A plant asset cost $160000 and is estimated to have a $18000 salvage value at the end of its 10-year useful life. The annual depreciation expense recorded for the third year using the double-declining-balance method would be

$20480; ($160000 - $0) × 0.20 = $32000; ($160000 - $32000) × 0.20 = $25600; ($160000 - $57600) × 0.20 = $20480

The following data are available for Allen Clapp Corporation: Net income $200,000 Depreciation expense 40,000 Dividends paid 60,000 Gain on sale of land 10,000 Decrease in accounts receivable 20,000 Decrease in accounts payable 30,000 How much is cash provided by operating activities using the indirect method?

$220,000

Corristan Company purchased equipment and incurred these costs: Cash price $24,000 Sales taxes 1,200 Insurance during transit 200 Annual maintenance costs 400 Total costs $25,800 What amount should be recorded as the cost of the equipment?

$25,400

Corristan Company purchased equipment and incurred these costs: Cash price $24,000 Sales taxes 1,200 Insurance during transit 200 installation and testing 400 Total costs $25,800 What amount should be recorded as the cost of the equipment?

$25,800

Equipment was purchased for $86200 on January 1, 2016. Freight charges amounted to $2800 and there was a cost of $12000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $17000 salvage value at the end of its 5-year useful life. What is the amount of accumulated depreciation at December 31, 2017, if the straight-line method of depreciation is used?

$33,600; [($86200 + $2800 + $12000 - $17000) ÷ 5] × 2 = $33600

ottoman company... accused interest ?

$3540

An asset was purchased for $480000. It had an estimated salvage value of $80000 and an estimated useful life of 10 years. After 5 years of use, the estimated salvage value is revised to $64000 but the estimated useful life is unchanged. Assuming straight-line depreciation, depreciation expense in Year 6 would be

$432,000; ($480000 - $80000) × 5/10 = $200000; [($480000 - $200000) - $64000] ÷ (10 - 5) = $43200

A company sells a plant asset that originally cost $250000 for $100000 on December 31, 2017. The accumulated depreciation account had a balance of $100000 after the current year's depreciation of $25000 had been recorded. The company should recognize a

$50,000 loss on disposal $100000 - ($250000 - $100000) = ($50000)

A machine with a cost of $1730000 has an estimated salvage value of $20000 and an estimated useful life of 5 years or 57000 hours. It is to be depreciated using the units-of-activity method of depreciation. What is the amount of depreciation for the second full year, during which the machine was used 19000 hours?

$570,000; ($1730000 - $20000) ÷ 57000 = $30; $30 × 19000 = $570000

A company makes a credit sale of $750 on June 13, terms 2/10, n/30, on which it grants a return of $50 on June 16. What amount is received as payment in full on June 23?

$686; (750-50) X 2% = 14; 750-50-14=$686

Net credit sales for the month are $800,000. The accounts recieveables balance is $160,000. The allowance is calculated as 7.5% of the recieveiables balance using the percentage of $5,000 before adjustment what is the bad debt expense?

$7,000 160,000x7.5% = 12,000 (required ending balance)-5,000= $7,000

Cullumber Company bought equipment for $500000 on January 1, 2016. Cullumber estimated the useful life to be 4 years with no salvage value, and the straight-line method of depreciation will be used. On January 1, 2017, Cullumber decides that the business will use the equipment for a total of 6 years. What is the revised depreciation expense for 2017?

$75000

A company purchased factory equipment for $500000. It is estimated that the equipment will have a $50000 salvage value at the end of its estimated 8-year useful life. If the company uses the double-declining-balance method of depreciation, the amount of annual depreciation recorded for the second year after purchase would be

$93750; ($500000 - $0) × 0.25 = $125000; ($500000 - $125000) × 0.25 = $93750

Financial info is presented below Operating expenses $36,000 Sales revenue 150,000 Cost of goods sold 105,000 The profit margin (Net income/ sales revenue) would be

.06

Lake coffee company reported net sales of $180,000 net income of $54,000, beginning total assets of $200,000 and ending total assets of $300,000. What was the company's asset turnover?

0.72

Noise makers Inc has the following inventory data July 1 Beg Inv 20 units @ $19 per unit 7 purchases 70 units @ $20 per unit 22 purchases 10 units @ $22 per unit A physical count of merchandise inventory on July 30 reveals that there are 32 units on hand. Using the FIFO method the value of ending inventory is

10x22 + (32-10) x 20= $660

The blooming miracles flower shop bought a delivery van on Jan 1 2014. Van cost $18,000 salvage of $3,000. Life of van expected 5 years or 150,000 miles The deprecation expense for 2014 using straight-line method

15,000/5 year=3000 $3,000

A plant asset was purchased on January 1 for $35000 with an estimated salvage value of $7000 at the end of its useful life. The current year's depreciation expense is $3500 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $17500. The remaining useful life of the plant asset is

3 years; ($35000 - $7000) ÷ $3500 = 8; 8 - ($17500 ÷ $3500) = 3.0

The blooming miracles flower shop bought a delivery van on Jan 1 2014. Van cost $18,000 salvage of $3,000. Life of van expected 5 years or 150,000 miles using straight-line method the book value of the van at the beginning of the third year would be

3,000x2=6,000 18,000-6,000=12,000 $12,000

Alexis company.... amount credited to sales revenue

4300

A plant asset was purchased on January 1 for $70400 with an estimated salvage value of $20000 at the end of its useful life. The current year's depreciation expense is $3600 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $28800. The remaining useful life of the plant asset is

6 years

Which one of the following is not added back to net income in determining cash provided by operations under the indirect method?

An increase in inventory

Noise makers Inc has the following inventory data July 1 Beg Inv 20 units @ $19 per unit 7 purchases 70 units @ $20 per unit 22 purchases 10 units @ $22 per unit A physical count of merchandise inventory on July 30 reveals that there are 32 units on hand. Using the average cost method the value of ending inventory is

Average cost / unit = total cost/total unit 20x $32 = $640

When using the straight-line depreciation method, which of the following is not a factor affecting the computation of depreciation?

Book Value

Allowance for doubtful accounts chart $90 debit, total after calculated all of the percentages comes to $99. What adjusting journal entry should be made to record bad debt expenses at the end of the period?

Dr Bad Debt Expense 189 Cr Allowance for Doubtful Accounts 189 99+(because of debit) 90 = 189

Info related to Kap Shin Company for 2006 is summarized below Total credit sales $2,100 A/R at Dec 31, $837 Accounts determined to be uncollectible $33 If the company uses the direct write off method of accounting for bad debts what journal entry should be made to record bad debt expenses

Dr Bad Debt Expenses 33 Cr A/R

On January 2006 Errands Etc. receives a $500 cash payment for future services What does the firm record on Jan 2006 upon receipt of cash?

Dr Cash 500 Cr Unearned Revenue 500

On January 2006 Errands Etc. receives a $500 cash payment for future services On Jan 2007 the company actually performed the services. What adjusting entry should the company make?

Dr Unearned revenue 500 Cr Service revenue 500

Moss County Bank agrees to lend the Sheridan Company $590000 on January 1. Sheridan Company signs a $590000, 6%, 9-month note. What is the adjusting entry required if Sheridan Company prepares financial statements on June 30?

Interest Expense 17700 Interest Payable 17700; $590000 × 0.06 × 6/12 = $17700

Which of the following is not a depreciable asset?

Land

Moss County Bank agrees to lend the Crane Company $680000 on January 1. Crane Company signs a $680000, 6%, 9-month note. What entry will Crane Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30?

Notes Payable 680000 Interest Payable 30600 Cash 710600 $680000 × 0.06 × 9/12 = $30600

Novak Corp. issues 73000 shares of $50 par value preferred stock for cash at $55 per share. The entry to record the transaction will consist of a debit to Cash for $4015000 and a credit or credits to

Preferred Stock for $3650000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $365000; 73000 × $50 = $3650000; ($55 - $50) × 73000 = $365000

From an accounting standpoint, prepaid insurance can be considered as

Prepaid expenses

the trial balance shows supplies $1,350 and supplies expense $0. If $550 of supplies are on hand at the end of the period the adjusting entry is

Supplies expense 800 Supplies 800

Receivables are often classified as

accounts notes other

Liabilities are

all of these answers are correct

Which of the following measures provides an indication of how efficient a company is in employing its assets

asset turnover

If total liabilities decreased by $4,000 then

assets and stockholders' equity each increased $2,000

If a company issues common stock for $60,000 and uses $20,000 of the cash to purchase a truck

assets will be increased by $60,000

When the market rate of interest is greater than the contractual rate of interest

bonds will be issued at a discount

JD company borrowed 70,000 on dec 1 on 6 month 12% note at December 31

both the note payable and the interest payable are current liabilities

all of the following are intangible assets except

coal reserves

depreciation is a process of

cost allocation

when there is a change in estimated depreciation

current and future years depreciation should be revised

Marigold Corp. issues 4700, 10-year, 8%, $1000 bonds dated January 1, 2017, at 97. The journal entry to record the issuance will show a

debit to Discount on Bonds Payable for $141000; (4700 × $1000) × (1 - 0.97) = $141000

The payment of liability using cash

decreases assets and liabilities

The cost of an asset less its salvage value is referred to as

depreciable cost

the use of renumbered checks in disbursing cash is

documentation produres

a company issued common stock for $5,000. As a result of this transaction

equity would increase by $5,000

an expense account

increases by debits

purchase an equipment on account

increases liabilities

which of the following items does not require a journal entry

outstanding checks

an exclusive right issued by the US patent Office that enables the recipient to manufacture sell or otherwise control an invention ...

patent

which of the following accounts is increased with a credit?

sales revenue

the most widely used method or depreciation is

straight-line method

when preparing a bank reconciliation, NSF would be

subtracted from the book side