ACCT 201 Exam 2 Review
On January 1, 2020, Ott Co. sold goods to Flynn Company. Flynn signed a zero-interest-bearing note requiring payment of $200,000 annually for seven years. The first payment was made on January 1, 2020. The prevailing rate of interest for this type of note at date of issuance was 10%. Information on present value factors is as follows: Present Value of Ordinary Present Value of Period Annuity of 1 at 10% Annuity Due of 1 at 10% 6 .5645 4.3553 7 .5132 4.8684 Ott should record sales revenue in January 2020 of a. $1,071,048. b. $973,680. c. $871,060. d. $714,000.
a. $1,071,048.
Kerr Co.'s accounts payable balance at December 31, 2020 was $1,600,000 before considering the following transactions: ● Goods were in transit from a vendor to Kerr on Dec 31, 2020. The invoice price was $70,000, and the goods were shipped f.o.b. shipping point on Dec 29, 2020. The goods were received on January 4, 2021. ● Goods shipped to Kerr, f.o.b. shipping point on Dec 20, 2020, from a vendor were lost in transit. The invoice price was $50,000. On January 5, 2021, Kerr filed a $50,000 claim against the common carrier. In its December 31, 2020 balance sheet, Kerr should report accounts payable of a. $1,720,000. b. $1,670,000. c. $1,650,000. d. $1,600,000.
a. $1,720,000.
In preparing its August 31, 2020 bank reconciliation, Bing Corp. has available the following information: Balance per bank statement, 8/31/20 $25,650 Deposit in transit, 8/31/20 3,900 Return of customer's check for insufficient funds, 8/30/20 600 Outstanding checks, 8/31/20 2,750 Bank service charges for August 100 At August 31, 2020, Bing's correct cash balance is a. $26,800. b. $26,200. c. $26,100. d. $24,500.
a. $26,800.
For Grimmett Company, the following information is available: Capitalized leases $600,000 Trademarks 275,000 Long-term receivables 225,000 In Grimmett's balance sheet, intangible assets should be reported at a. $275,000. b. $500,000. c. $825,000. d. $875,000.
a. $275,000
Tresh, Inc. had the following bank reconciliation at March 31, 2020: Balance per bank statement, 3/31/20 $74,400 Add: Deposit in transit 20,600 95,000 Less: Outstanding checks 25,200 Balance per books, 3/31/20 $69,800 Data per bank for the month of April 2020 follow: Deposits $87,400 Disbursements 99,400 All reconciling items at March 31, 2020 cleared the bank in April. Outstanding checks at April 30, 2020 totaled $12,000. There were no deposits in transit at April 30, 2020. What is the cash balance per books at April 30, 2020? a. $50,400 b. $57,800 c. $62,400 d. $71,000
a. $50,400
Opera Corp. uses the dollar-value LIFO method of computing its inventory cost. Data for the past three years is as follows: Year ended December 31 Inventory at End-of-year Prices Price Index 2019 $650,000 1.00 2020 1,260,000 1.05 2021 1,350,250 1.10 What is the 2019 inventory balance using dollar-value LIFO? a. $650,000. b. $619,040. c. $1,227,270. d. $1,350,250.
a. $650,000.
On the December 31, 2020 balance sheet of Vanoy Co., the current receivables consisted of the following: Trade accounts receivable $65,000 Allowance for uncollectible accounts (2,000) Claim against shipper for goods lost in transit (Nov 2020) 3,000 Selling price of unsold goods sent by Vanoy on consignment at 130% of cost (not included in Vanoy 's ending inventory) 26,000 Security deposit on lease of warehouse used for storing some inventories 30,000 Total $122,000 At 12/31/20, the correct total of Vanoy's current net receivables was a. $66,000. b. $92,000. c. $96,000. d. $122,000.
a. $66,000.
On December 30, 2020, AGH, Inc. purchased a machine from Grant Corp. in exchange for a zero-interest-bearing note requiring eight payments of $150,000. The first payment was made on December 30, 2020, and the others are due annually on December 30. At date of issuance, the prevailing rate of interest for this type of note was 11%. Present value factors are as follows: Present Value of Ordinary Present Value of Period Annuity of 1 at 11% Annuity Due of 1 at 11% 7 4.712 5.231 8 5.146 5.712 On AGH's 12/31/2020 balance sheet, the net note payable to Grant is a. $706,800. b. $771,900. c. $785,325. d. $856,800.
a. $706,800.
Assume Royal Palm Corp., an equip. distributor, sells a piece of machinery with a list price of $900,000 to Arch Inc. Arch Inc. will pay $975,000 in one year. Royal Palm normally sells this type of equip. for 90% of list price. How much should be recorded as revenue? a. $810,000. b. $877,500. c. $900,000. d. $975,000.
a. $810,000.
During 2020 the DLD Company had a net income of $85,000. In addition, selected accounts showed the following changes: Accounts Receivable $3,000 increase Accounts Payable 1,000 increase Buildings 4,000 decrease Depreciation Expense 1,500 increase Bonds Payable 8,000 increase What was the amount of cash provided by operating activities? a. $84,500 b. $85,000 c. $86,500 d. $94,500
a. $84,500
Packard Corporation reports the following information: Net cash provided by operating activities $335,000 Average current liabilities 150,000 Average long-term liabilities 100,000 Dividends declared 60,000 Capital expenditures 110,000 Payments of debt 35,000 Packard's cash debt coverage is a. 1.34. b. 2.23. c. 3.35. d. 3.05.
a. 1.34.
The opening balance of Accounts Receivable for George Company was $25,000. Net sales (all on account) for the year amounted to $200,000. The Company doesn't offer any cash discount. During the year $180,000 was collected on accounts receivable. Compute accounts receivable turnover for the year. a. 5.7 times b. 5.1 times c. 4.4 times d. 8.0 times
a. 5.7 times
For which of the following transactions would the use of the present value of an ordinary annuity concept be appropriate in calculating the present value of the asset obtained or the liability owed at the date of incurrence? a. A capital lease is entered into with the initial lease payment due one month subsequent to the signing of the lease agreement. b. A capital lease is entered into with the initial lease payment due upon the signing of the lease agreement. c. A ten-year 8% bond is issued on January 2 with interest payable semiannually on January 2 and July 1 yielding 7%. d. A ten-year 8% bond is issued on January 2 with interest payable semiannually on January 2 and July 1 yielding 9%.
a. A capital lease is entered into with the initial lease payment due one month subsequent to the signing of the lease agreement.
Which of the following transactions would require the use of the present value of an annuity due concept in order to calculate the present value of the asset obtained or liability owed at the date of incurrence? a. A capital lease is entered into with the initial lease payment due upon the signing of the lease agreement. b. A capital lease is entered into with the initial lease payment due one month subsequent to the signing of the lease agreement. c. A ten-year 8% bond is issued on January 2 with interest payable semiannually on July 1 and January 1 yielding 7%. d. A ten-year 8% bond is issued on January 2 with interest payable semiannually on July 1 and January 1 yielding 9%.
a. A capital lease is entered into with the initial lease payment due upon the signing of the lease agreement.
AG Inc. made a $25,000 sale on account with the following terms: 2/10, n/30. If the company uses the net method to record sales made on credit, what is/are the debit(s) in the journal entry to record the sale? a. Debit Accounts Receivable for $24,500. b. Debit Accounts Receivable for $24,500 and Sales Discounts for $500. c. Debit Accounts Receivable for $25,000. d. Debit Accounts Receivable for $25,000 and Sales Discounts for $500.
a. Debit Accounts Receivable for $24,500.
What is the normal journal entry when writing-off an account as uncollectible under the allowance method? a. Debit Allowance for Doubtful Accounts, credit Accounts Receivable. b. Debit Allowance for Doubtful Accounts, credit Bad Debt Expense. c. Debit Bad Debt Expense, credit Allowance for Doubtful Accounts. d. Debit Accounts Receivable, credit Allowance for Doubtful Accounts.
a. Debit Allowance for Doubtful Accounts, credit Accounts Receivable.
Which table would you use to determine what amount was deposited three years ago to provide $1,000 today? a. Future value of 1 or present value of 1 b. Future value of an annuity due of 1 c. Future value of an ordinary annuity of 1 d. Present value of an ordinary annuity of 1
a. Future value of 1 or present value of 1
How should the following costs affect a retailer's inventory valuation? Freight-in // Interest on Inventory Loan a. Increase // No effect b. Increase // Increase c. No effect // Increase d. No effect // No effect
a. Increase // No effect
Sun Inc. factors $6,000,000 of its accounts receivables without recourse for a finance charge of 5%. The finance company retains an amount equal to 10% of the accounts receivable for possible adjustments. What would be recorded as a gain (loss) on the transfer of receivables? a. Loss of $300,000. b. Gain of $530,000. c. Loss of $1,130,000. d. Loss of $230,000.
a. Loss of $300,000.
When the double-extension approach to the dollar-value LIFO inventory cost flow method is used, the inventory layer added in the current year is multiplied by an index number. How would the following be used in the calculation of this index number? Ending inventory at current year cost // Ending inventory at base year cost a. Numerator // Denominator b. Numerator // Not used c. Denominator // Numerator d. Not used // Denominator
a. Numerator // Denominator
In which account are post-dated checks received classified? a. Receivables. b. Prepaid expenses. c. Cash. d. Payables.
a. Receivables.
What is "recourse" as it relates to selling receivables? a. The obligation of the seller of the receivables to pay the purchaser in case the debtor fails to pay. b. The obligation of the purchaser of the receivables to pay the seller in case the debtor fails to pay. c. The obligation of the seller of the receivables to pay the purchaser in case the debtor returns the product related to the sale. d. The obligation of the purchaser of the receivables to pay the seller if all of the receivables are collected.
a. The obligation of the seller of the receivables to pay the purchaser in case the debtor fails to pay.
During periods of rising prices, a perpetual inventory system would result in the same dollar amount of ending inventory as a periodic inventory system under which of the following inventory cost flow methods? FIFO // LIFO a. Yes // No b. Yes // Yes c. No // Yes d. No // No
a. Yes // No
In a statement of cash flows, interest payments to lenders and other creditors should be classified as cash outflows for a. operating activities. b. borrowing activities. c. lending activities. d. financing activities.
a. operating activities.
Niles Co. has the following data related to an item of inventory: Inventory, March 1 400 units @ $2.10 Purchase, March 7 1,400 units @ $2.20 Purchase, March 16 280 units @ $2.25 Inventory, March 31 520 units The value assigned to ending inventory if Niles uses LIFO is a. $1,160. b. $1,104. c. $1,092. d. $1,168.
b. $1,104.
Farr Co. adopted the dollar-value LIFO inventory method on December 31, 2020. Farr's entire inventory constitutes a single pool. On December 31, 2020, the inventory was $960,000 under the dollar-value LIFO method. Inventory data for 2021 are as follows: 12/31/21 inventory at year-end prices $1,320,000 Relevant price index at year end (base year 2020) 110 Using dollar value LIFO, Farr's inventory at December 31, 2021 is a. $1,056,000. b. $1,224,000. c. $1,200,000. d. $1,320,000
b. $1,224,000.
Hay Company had January 1 inventory of $300,000 when it adopted dollar-value LIFO. During the year, purchases were $1,800,000 and sales were $3,000,000. December 31 inventory at year-end prices was $379,500, and the price index was 110. What is Hay Company's gross profit? a. $1,245,000. b. $1,249,500. c. $1,279,500. d. $2,650,500.
b. $1,249,500.
RF Company had January 1 inventory of $300,000 when it adopted dollar-value LIFO. During the year, purchases were $1,800,000 and sales were $3,000,000. December 31 inventory at year-end prices was $430,080, and the price index was 112. What is RF Company's gross profit? a. $1,248,000. b. $1,294,080. c. $1,330,380. d. $2,605,920.
b. $1,294,080.
Dole Corp.'s accounts payable at December 31, 2020, totaled $900,000 before any necessary year-end adjustments relating to the following transactions: ● On Dec 27, 2020, Dole wrote and recorded checks to creditors totaling $350,000 causing an overdraft of $100,000 in Dole's bank account at December 31, 2020. The checks were mailed out on January 10, 2021. ● On Dec 28, 2020, Dole purchased and received goods for $150,000, terms 2/10, n/30. Dole records purchases and accounts payable at net amounts. The invoice was recorded and paid January 3, 2021. ● Goods shipped f.o.b. destination on December 20, 2020 from a vendor to Dole were received January 2, 2021. The invoice cost was $65,000. At December 31, 2020, what amount should Dole report as total accounts payable? a. $1,462,000. b. $1,397,000. c. $1,150,000. d. $1,050,000.
b. $1,397,000.
On January 15, 2020, Dolan Corp. adopted a plan to accumulate funds for environmental improvements beginning July 1, 2024, at an estimated cost of $8,000,000. Dolan plans to make four equal annual deposits in a fund that will earn interest at 10% compounded annually. The first deposit was made on July 1, 2020. Future value factors are as follows: Future value of 1 at 10% for 5 periods 1.61 Future value of ordinary annuity of 1 at 10% for 4 periods 4.64 Future value of annuity due of 1 at 10% for 4 periods 5.11 Dolan should make four annual deposits of a. $1,423,234. b. $1,565,558. c. $1,724,137. d. $2,000,000.
b. $1,565,558.
At the close of its first year of operations, December 31, 2020, Ming Company had accounts receivable of $1,620,000, after deducting the related allowance for doubtful accounts. During 2020, the company had charges to bad debt expense of $270,000 and wrote off, as uncollectible, accounts receivable of $120,000. What should the company report on its balance sheet at December 31, 2020, as accounts receivable before the allowance for doubtful accounts? a. $2,010,000 b. $1,770,000 c. $1,470,000 d. $1,320,000
b. $1,770,000
In preparing its bank reconciliation for the month of April 2020, Henke, Inc. has the following information available. Balance per bank statement, 4/30/20 $102,420 NSF check returned with 4/30/20 bank statement 1,350 Deposits in transit, 4/30/20 15,000 Outstanding checks, 4/30/20 15,600 Bank service charges for April 60 What should be the correct balance of cash at April 30, 2020? a. $103,110 b. $101,820 c. $100,470 d. $100,410
b. $101,820
Walsh Retailers purchased merchandise with a list price of $150,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable. Walsh should record the cost of this merchandise as a. $105,000. b. $108,000. c. $117,000. d. $150,000.
b. $108,000.
David Company uses the gross method to record sales made on credit. On June 10, 2020, it sold goods worth $250,000 with terms 2/10, n/30 to Charles Inc. On June 19, 2020, David received payment for 1/2 of the amount due from Charles Inc. David's fiscal year end is on June 30, 2020. What amount will be reported in the financial statements for the accounts receivable due from Charles Inc.? a. $122,500. b. $125,000. c. $250,000. d. $245,000.
b. $125,000.
Packard Corporation reports the following information: Net cash provided by operating activities $335,000 Average current liabilities 150,000 Average long-term liabilities 100,000 Dividends declared 60,000 Capital expenditures 110,000 Payments of debt 35,000 Packard's free cash flow is a. $130,000. b. $165,000. c. $225,000. d. $275,000.
b. $165,000.
Houghton Company has the following items: common stock, $1,600,000; treasury stock, $210,000; deferred income taxes, $250,000 and retained earnings, $780,000. What total amount should Houghton Company report as stockholders' equity? a. $1,390,000. b. $2,170,000. c. $2,420,000. d. $2,590,000.
b. $2,170,000.
On January 4, 2020, Kiley Co. leased a building to Dodd Corp. for a ten-year term at an annual rental of $200,000. At inception of the lease, Kiley received $800,000 covering the first two years' rent of $400,000 and a security deposit of $400,000. This deposit will not be returned to Dodd upon expiration of the lease but will be applied to payment of rent for the last two years of the lease. What portion of the $800,000 should be shown as a current and long-term liability in Kiley's December 31, 2020 balance sheet? Current Liability // Long-term Liability a. $0 // $800,000 b. $200,000 // $400,000 c. $400,000 // $400,000 d. $400,000 // $200,000
b. $200,000 // $400,000
Nenn Co.'s allowance for uncollectible accounts was $190,000 at the end of 2020 and $180,000 at the end of 2019. For the year ended December 31, 2020, Nenn reported bad debt expense of $31,000 in its income statement. What amount did Nenn debit to the appropriate account in 2020 to write off actual bad debts? a. $10,000 b. $21,000 c. $31,000 d. $41,000
b. $21,000
On February 1, 2020, Henson Company factored receivables with a carrying amount of $700,000 to Agee Company. Agee Company assesses a finance charge of 3% of the receivables and retains 5% of the receivables. Relative to this transaction, you are to determine the amount of loss on sale to be reported in the income statement of Henson Company for February. Assume that Henson factors the receivables on a without recourse basis. The loss to be reported is a. $0. b. $21,000 c. $35,000. d. $56,000.
b. $21,000
Lawrence Company has cash in bank of $25,000, restricted cash in a separate account of $4,000, and a bank overdraft in an account at another bank of $2,000. Lawrence should report cash of a. $23,000. b. $25,000. c. $28,000. d. $29,000.
b. $25,000.
Lohmeyer Corporation reports: Cash provided by operating activities $320,000 Cash used by investing activities 110,000 Cash provided by financing activities 140,000 Beginning cash balance 90,000 What is Lohmeyer's ending cash balance? a. $410,000. b. $440,000. c. $570,000. d. $660,000.
b. $440,000.
June Corp. sells one product and uses a perpetual inventory system. The beginning inventory consisted of 80 units that cost $20 per unit. During the current month, the company purchased 480 units at $20 each. Sales during the month totaled 360 units for $43 each. What is the cost of goods sold using the LIFO method? a. $1,600. b. $7,200. c. $9,600. d. $15,480.
b. $7,200.
On July 1, 2020, Ed Wynne signed an agreement to operate as a franchisee of Kwik Foods, Inc., for an initial franchise fee of $900,000. Of this amount, $300,000 was paid when the agreement was signed and the balance is payable in four equal annual payments of $150,000 beginning July 1, 2021. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. Wynne's credit rating indicates that he can borrow money at 14% for a loan of this type. Information on present and future value factors is as follows: Present value of 1 at 14% for 4 periods 0.59 Future value of 1 at 14% for 4 periods 1.69 Present value of an ordinary annuity of 1 at 14% for 4 periods 2.91 Wynne should record the acquisition cost of the franchise on July 1, 2020 at a. $654,000. b. $736,500. c. $900,000. d. $1,014,000.
b. $736,500.
Web World began using dollar-value LIFO for costing its inventory last year. The base year layer consists of $600,000. Assuming the current inventory at end of year prices equals $828,000 and the index for the current year is 1.10, what is the ending inventory using dollar-value LIFO? a. $828,000. b. $768,000. c. $752,727. d. $910,800.
b. $768,000.
Wise Company adopted the dollar-value LIFO method on January 1, 2020, at which time its inventory consisted of 6,000 units of Item A @ $5.00 each and 3,000 units of Item B @ $16.00 each. The inventory at December 31, 2020 consisted of 12,000 units of Item A and 7,000 units of Item B. The most recent actual purchases related to these items were as follows: Using the double-extension method, what is the price index for 2020 that should be computed by Wise Company? a. 108.33% b. 109.59% c. 111.05% d. 220.51%
b. 109.59%
During the year Tulip reported net sales of $960,000. The company had accounts receivable of $75,000 at the beginning of the year and $120,000 at the end of the year Compute Tulip's average collection period (assume 365 days a year.) a. 28.5 days b. 37.2 days c. 45.7 days. d. 74.2 days.
b. 37.2 days
Which of the following is not a long-term investment? a. Cash surrender value of life insurance b. Franchise c. Land held for speculation d. A sinking fund
b. Franchise
Peter invests $100,000 in a 3-year certificate of deposit earning 3.5% at his local bank. Which time value concept would be used to determine the maturity value of the certificate? a. Present value of one. b. Future value of one. c. Present value of an annuity due. d. Future value of an ordinary annuity.
b. Future value of one.
Sun Inc. factors $6,000,000 of its accounts receivables with recourse for a finance charge of 3%. The finance company retains an amount equal to 10% of the accounts receivable for possible adjustments. Sun estimates the fair value of the recourse liability at $300,000. What would be recorded as a gain (loss) on the transfer of receivables? a. Gain of $180,000. b. Loss of $480,000. c. Gain of $1,080,000. d. Loss of $300,000.
b. Loss of $480,000.
Under which section of the balance sheet is "cash restricted for plant expansion" reported? a. Current assets. b. Non-current assets. c. Current liabilities. d. Stockholders' equity.
b. Non-current assets.
Which item below is not a current liability? a. Unearned revenue b. Stock dividends distributable c. The currently maturing portion of long-term debt d. Trade accounts payable
b. Stock dividends distributable
Which of the following is a method to generate cash from accounts receivable? Assignment // Factoring a. Yes // No b. Yes /// Yes c. No /// Yes d. No // No
b. Yes /// Yes
The correct order to present current assets is a. cash, accounts receivable, prepaid items, inventories. b. cash, accounts receivable, inventories, prepaid items. c. cash, inventories, accounts receivable, prepaid items. d. cash, inventories, prepaid items, accounts receivable.
b. cash, accounts receivable, inventories, prepaid items.
Receivables are valued based on their ________. a. fair value b. estimated amount collectible c. lower-of-cost-or-market value d. historical cost
b. estimated amount collectible
In preparing a statement of cash flows, sale of treasury stock at an amount greater than cost would be classified as a(n) a. operating activity. b. financing activity. c. extraordinary activity. d. investing activity.
b. financing activity.
In a statement of cash flows, payments to acquire debt instruments of other entities (other than cash equivalents) should be classified as cash outflows for a. operating activities. b. investing activities. c. financing activities. d. lending activities.
b. investing activities.
Making and collecting loans and disposing of property, plant, and equipment are a. operating activities. b. investing activities. c. financing activities. d. liquidity activities.
b. investing activities.
All of the following may be included under the heading of "cash" except a. currency. b. money market funds. c. checking account balance. d. savings account balance.
b. money market funds.
On June 1, 2020, Yang Corp. loaned Gant $500,000 on a 12% note, payable in five annual installments of $100,000 beginning January 2, 2021. In connection with this loan, Gant was required to deposit $5,000 in a zero-interest-bearing escrow account. The amount held in escrow is to be returned to Gant after all principal and interest payments have been made. Interest on the note is payable on the first day of each month beginning July 1, 2020. Gant made timely payments through November 1, 2020. On January 2, 2021, Yang received payment of the first principal installment plus all interest due. At December 31, 2020, Yang's interest receivable on the loan to Gant should be a. $0. b. $5,000. c. $10,000. d. $15,000.
c. $10,000.
Morgan Manufac Co. has the following account balances at year end: Office supplies $4,000 Raw materials 27,000 Work-in-process 59,000 Finished goods 97,000 Prepaid insurance 6,000 What amount should Morgan report as inventories in its bal. sheet? a. $97,000. b. $101,000. c. $183,000. d. $187,000.
c. $183,000.
Groh Co. recorded the following data pertaining to raw material X during January 2020: Units Date Received Cost Issued On Hand 1/1/20 Inventory $2.00 3,200 1/11/20 Issue 1,600 1,600 1/22/20 Purchase 4,000 $2.35 5,600 The moving-average unit cost of X inventory at January 31, 2020 is a. $2.17. b. $2.21. c. $2.25. d. $2.35.
c. $2.25.
Jenny Manufactures sold toys listed at $360 per unit to Jack Inc. for $306, a trade discount of 15 percent. Jack Inc. in turn sells the toys in the market at $335. Jenny should record the receivable and related sales revenue (per unit) at: a. $360. b. $335. c. $306. d. $285.
c. $306.
Hay Company had January 1 inventory of $300,000 when it adopted dollar-value LIFO. During the year, purchases were $1,800,000 and sales were $3,000,000. December 31 inventory at year-end prices was $379,500, and the price index was 110. What is Hay Company's ending inventory? a. $330,000. b. $345,000. c. $349,500. d. $379,500.
c. $349,500.
On June 1, 2020, Penny Corp. sold merchandise with a list price of $70,000 to Linn on account. Penny allowed trade discounts of 30% and 20%. Credit terms were 2/15, n/40 and the sale was made f.o.b. shipping point. Penny prepaid $1,000 of delivery costs for Linn as an accommodation. On June 12, 2020, Penny received from Linn a remittance in full payment amounting to a. $38,416. b. $39,788. c. $39,416. d. $39,186.
c. $39,416.
Kaniper Company has the following items at year-end: Cash in bank $35,000 Petty cash 300 Short-term paper with maturity of 2 months 5,500 Postdated checks 1,400 Kaniper should report cash and cash equivalents of a. $35,000. b. $35,300. c. $40,800. d. $42,200.
c. $40,800.
The following information applied to Howe, Inc. for 2020: Merchandise purchased for resale $410,000 Freight-in 8,000 Freight-out 5,000 Purchase returns 2,000 Howe's 2020 inventoriable cost was a. $410,000. b. $413,000. c. $416,000. d. $421,000.
c. $416,000.
On January 1, 2020, Gore Co. sold to Cey Corp. $900,000 of its 10% bonds for $796,766 to yield 12%. Interest is payable semiannually on January 1 and July 1. What amount should Gore report as interest expense for the six months ended June 30, 2020? a. $39,838 b. $45,000 c. $47,806 d. $54,000
c. $47,806
On January 1, 2020, Ball Co. exchanged equipment for a $600,000 zero-interest-bearing note due on Jan 1, 2023. The prevailing rate of interest for a note of this type at Jan 1, 2020 was 10%. The present value of $1 at 10% for three periods is 0.75. What amount of interest revenue should be included in Ball's 2021 income statement? a. $0 b. $45,000 c. $49,500 d. $60,000
c. $49,500
Steinert Company has the following items at year-end: Cash in bank $45,000 Petty cash 500 Short-term paper with maturity of 2 months 8,200 Postdated checks 2,100 Steinert should report cash and cash equivalents of a. $45,000. b. $45,500. c. $53,700. d. $55,800.
c. $53,700.
On January 1, 2020, West Co. exchanged equipment for an $800,000 zero-interest-bearing note due on January 1, 2023. The prevailing rate of interest for a note of this type at January 1, 2020 was 10%. The present value of $1 at 10% for three periods is 0.75. What amount of interest revenue should be included in West's 2021 income statement? a. $0. b. $60,000. c. $66,000. d. $80,000.
c. $66,000.
Keck Co. had 300 units of product A on hand at January 1, 2020, costing $21 each. Purchases of product A during January were as follows: Date Units Unit Cost Jan. 10 400 $22 18 500 23 28 200 24 A physical count on January 31, 2020 shows 400 units of product A on hand. The cost of the inventory at January 31, 2020 under the LIFO method is a. $9,400. b. $8,900. c. $8,500. d. $8,200.
c. $8,500.
Bell Inc. took a physical inventory at the end of the year and determined that $840,000 of goods were on hand. In addition, the following items were not included in the physical count. Bell, Inc. determined that $96,000 of goods purchased were in transit that were shipped f.o.b. destination (goods were actually received by the company three days after the inventory count). The company sold $40,000 worth of inventory f.o.b. destination. What amount should Bell report as inventory at the end of the year? a. $840,000. b. $936,000. c. $880,000. d. $976,000.
c. $880,000.
Huge Cart Inc. gives you the following information pertaining to the year 2020. Net sales $850,000 Cost of goods sold 500,000 Current assets 500,000 Current liabilities 250,000 Average total assets 1,000,000 Total liabilities 550,000 Net income 150,000 The asset turnover ratio of Huge Cart Inc. is a. 0.50 b. 0.15 c. 0.85 d. 1.18
c. 0.85
The stockholders' equity section is usually divided into what three parts? a. Preferred stock, common stock, treasury stock b. Preferred stock, common stock, retained earnings c. Capital stock, additional paid-in capital, retained earnings d. Capital stock, appropriated retained earnings, unappropriated retained earnings
c. Capital stock, additional paid-in capital, retained earnings
What is the normal journal entry for recording bad debt expense under the allowance method? a. Debit Allowance for Doubtful Accounts, credit Accounts Receivable. b. Debit Allowance for Doubtful Accounts, credit Bad Debt Expense. c. Debit Bad Debt Expense, credit Allowance for Doubtful Accounts. d. Debit Accounts Receivable, credit Allowance for Doubtful Accounts.
c. Debit Bad Debt Expense, credit Allowance for Doubtful Accounts.
Hite Co. was formed on January 2, 2020, to sell a single product. Over a two-year period, Hite's acquisition costs have increased steadily. Physical quantities held in inventory were equal to three months' sales at December 31, 2020, and zero at December 31, 2021. Assuming the periodic inventory system, the inventory cost method which reports the highest amount of each of the following is Inventory 12/31/20 // Cost of Sales 2021 a. LIFO // FIFO b. LIFO // LIFO c. FIFO // FIFO d. FIFO // LIFO
c. FIFO // FIFO
Which of the following facts concerning fixed assets should be included in the summary of significant accounting policies? Depreciation Method // Composition a. No // Yes b. Yes // Yes c. Yes // No d. No // No
c. Yes // No
Antique Company has notes receivable that have a fair value of $920,000 and a carrying amount of $710,000. Antique decides on December 31, 2020, to use the fair value option for these recently-acquired receivables. The adjusting entry to record this change will include a: a. debit to Unrealized Holding Gain or Loss⎯Income for $210,000. b. credit to Notes Receivable for $210,000. c. credit to Unrealized Holding Gain or Loss⎯Income for $210,000. d. debit to Notes Receivable for $920,000.
c. credit to Unrealized Holding Gain or Loss⎯Income for $210,000.
Under the allowance method of recognizing uncollectible accounts, the entry to write off an uncollectible account a. increases the allowance for uncollectible accounts. b. has no effect on the allowance for uncollectible accounts. c. has no effect on net income. d. decreases net income.
c. has no effect on net income.
In a statement of cash flows, receipts from sales of property, plant, and equipment and other productive assets should generally be classified as cash inflows from a. operating activities. b. financing activities. c. investing activities. d. selling activities.
c. investing activities.
Current assets are presented in the balance sheet in a. ascending order of their balances. b. descending order of their balances. c. order of their liquidity. d. reverse order of their liquidity.
c. order of their liquidity.
When a portion of inventories has been pledged as security on a loan, a. the value of the portion pledged should be subtracted from the debt. b. an equal amount of retained earnings should be appropriated. c. the fact should be disclosed but the amount of current assets should not be affected. d. the cost of the pledged inventories should be transferred from current assets to noncurrent assets.
c. the fact should be disclosed but the amount of current assets should not be affected.
The statement of cash flows reports all of the following except a. the net change in cash for the period. b. the cash effects of operations during the period. c. the free cash flows generated during the period. d. investing transactions.
c. the free cash flows generated during the period.
On December 1, 2020, Richards Company sold some machinery to Fleming Company. The two companies entered into an installment sales contract at a predetermined interest rate. The contract required four equal annual payments with the first payment due on December 1, 2020, the date of the sale. What time value of money concept is appropriate for this situation? a. Future amount of an annuity of 1 for four periods b. Future amount of 1 for four periods c. Present value of an ordinary annuity of 1 for four periods d. Present value of an annuity due of 1 for four periods.
d
The balance in Moon Co.'s accounts payable account at December 31, 2020 was $980,000 before any necessary year-end adjustments relating to the following: ● Goods were in transit to Moon from a vendor on December 31, 2020. The invoice cost was $40,000. The goods were shipped f.o.b. shipping point on December 29, 2020 and were received on January 4, 2021. ● Goods shipped f.o.b. destination on December 21, 2020 from a vendor to Moon were received on January 6, 2021. The invoice cost was $25,000. ● On December 27, 2020, Moon wrote and recorded checks to creditors totaling $30,000 that were mailed on January 10, 2021. In Moon's December 31, 2020 balance sheet, the accounts payable should be a. $1,010,000. b. $1,020,000. c. $1,045,000. d. $1,050,000.
d. $1,050,000.
Winsor Co. records purchases at net amounts. On May 5 Winsor purchased merchandise on account, $80,000, terms 2/10, n/30. Winsor returned $6,000 of the May 5 purchase and received credit on account. At May 31 the balance had not been paid. By how much should the account payable be adjusted on May 31? a. $ 0. b. $1,720. c. $1,600. d. $1,480.
d. $1,480.
Checkers uses the periodic inventory system. For the current month, the beginning inventory consisted of 7,200 units that cost $12 each. During the month, the company made two purchases: 3,000 units at $13 each and 12,000 units at $13.50 each. Checkers also sold 12,900 units during the month. Using the LIFO method, what is the ending inventory? a. $120,438. b. $111,600. c. $125,550. d. $113,700.
d. $113,700.
For the year ended December 31, 2020, Dent Co. estimated its allowance for uncollectible accounts using the year-end aging of accounts receivable. The following data are available: Allowance for uncollectible accounts, 1/1/20 $126,000 Uncollectible accounts written off, 11/30/20 104,000 Estimated uncollectible accounts per aging, 12/31/20 156,000 After year-end adjustment, the bad debt expense for 2020 should be a. $104,000. b. $90,000. c. $156,000. d. $134,000.
d. $134,000.
26. Stine Corp.'s trial balance reflected the following account balances at December 31, 2020: Accounts receivable (net) $38,000 Trading securities 12,000 Accumulated depreciation on equipment and furniture 30,000 Cash 32,000 Inventory 60,000 Equipment 50,000 Patent 8,000 Prepaid expenses 4,000 Land held for future business site 36,000 In Stine's Dec 31, 2020 balance sheet, the current assets total is a. $180,000. b. $164,000. c. $154,000. d. $146,000.
d. $146,000.
The following information is available for Naab Company for 2020: Freight-in $60,000 Purchase returns 150,000 Selling expenses 460,000 Ending inventory 520,000 The cost of goods sold is equal to 400% of selling expenses. What is the cost of goods available for sale? a. $1,840,000. b. $2,300,000. c. $2,370,000. d. $2,360,000.
d. $2,360,000.
Ace Co. prepared an aging of its accounts receivable at December 31, 2020 and determined that the amount expected to be collected was $900,000. Additional information is available as follows: Allowance for uncollectible accounts at 1/1/20—cr bal $102,000 Accounts written off as uncollectible during 2020 69,000 Accounts receivable at 12/31/20 975,000 Uncollectible accounts recovered during 2020 15,000 For the year ended Dec 31, 2020, Ace's bad debt expense would be a. $75,000. b. $69,000. c. $48,000. d. $27,000.
d. $27,000.
Niles Co. has the following data related to an item of inventory: Inventory, March 1 400 units @ $2.10 Purchase, March 7 1,400 units @ $2.20 Purchase, March 16 280 units @ $2.25 Inventory, March 31 520 units The value assigned to cost of goods sold if Niles uses FIFO is a. $1,160. b. $1,104. c. $3,448. d. $3,392.
d. $3,392.
On January 1, 2020, Haley Co. issued ten-year bonds with a face amount of $5,000,000 and a stated interest rate of 8% payable annually on January 1. The bonds were priced to yield 10%. Present value factors are as follows: At 8% At 10% Present value of 1 for 10 periods 0.463 0.386 Present value of an ordinary annuity of 1 for 10 periods 6.710 6.145 The total issue price of the bonds was a. $5,000,000. b. $4,900,000. c. $4,600,000. d. $4,388,000.
d. $4,388,000.
The following accounts were abstracted from Starr Co.'s unadjusted trial balance at December 31, 2020: Debit Credit Accounts receivable $750,000 Allowance for uncollectible accounts 8,000 Net credit sales $3,000,000 Starr estimates that 6% of the gross accounts receivable will become uncollectible. After adjustment at 12/31/20, the allowance for uncollectible accounts should have a credit balance of a. $180,000. b. $168,000. c. $57,000. d. $45,000.
d. $45,000.
Willy World began using dollar-value LIFO for costing its inventory two years ago. The ending inventory for the past two years in end-of-year dollars was $300,000 & $450,000 and the year-end price indices were 1.0 & 1.2, respectively. Assuming the current inventory at end of year prices equals $645,000 and the index for the current year is 1.25, what is the ending inventory using dollar-value LIFO? a. $532,500. b. $559,200. c. $570,000. d. $566,250.
d. $566,250.
The following information was derived from the 2020 accounting records of Perez Co.: Perez's Central Warehouse Perez's Goods Held by Consignees Beginning inventory $130,000 $14,000 Purchases 625,000 70,000 Freight-in 10,000 Transport. to consignees 5,000 Freight-out 30,000 8,000 Ending inventory 145,000 20,000 Perez's 2020 cost of sales was a. $620,000. b. $650,000. c. $684,000. d. $689,000.
d. $689,000.
Becky had net sales (all on account) in 2020 of $8,000,000. At December 31, 2020, before adjusting entries, the balances in selected accounts were: accounts receivable $1,000,000 debit, and allowance for doubtful accounts $2,000 debit. Becky estimates that 3% of its accounts receivable will prove to be uncollectible. What is the net amount expected to be collected of the receivables reported on the financial statements at December 31, 2020? a. $32,000 b. $972,000 c. $968,000 d. $970,000
d. $970,000
Huge Cart Inc. gives you the following information pertaining to the year 2020. Net sales $850,000 Cost of goods sold 500,000 Current assets 500,000 Current liabilities 250,000 Average total assets 1,000,000 Total liabilities 550,000 Net income 150,000 The rate of return on assets Huge Cart Inc. is: a. 85.0%. b. 30.0%. c. 17.6%. d. 15.0%.
d. 15.0%.
An amount is deposited for eight years at 8%. If compounding occurs quarterly, then the table value is found at a. 8% for eight periods. b. 2% for eight periods. c. 8% for 32 periods. d. 2% for 32 periods.
d. 2% for 32 periods.
Which of the following should be reported for capital stock? a. The shares authorized b. The shares issued c. The shares outstanding d. All of these answer choices are correct.
d. All of these answer choices are correct.
If you invest $50,000 to earn 8% interest, which of the following compounding approaches would return the lowest amount after one year? a. Daily. b. Monthly. c. Quarterly. d. Annually.
d. Annually.
Which of the following events will appear in the cash flows from financing activities section of the statement of cash flows? a. Cash purchases of equipment. b. Cash purchases of bonds issued by another company. c. Cash received as repayment for funds loaned. d. Cash purchase of treasury stock.
d. Cash purchase of treasury stock.
If a petty cash fund is established in the amount of $300, and contains $180 in cash and $115 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts a. Petty Cash, $90. b. Petty Cash, $120. c. Cash, $115; Cash Over and Short, $5. d. Cash, $120.
d. Cash, $120.
Which of the following is included in the normal journal entry to record the collection of accounts receivable previously written off when using the allowance method? a. Debit Allowance for Doubtful Accounts, credit Accounts Receivable. b. Debit Allowance for Doubtful Accounts, credit Bad Debt Expense. c. Debit Bad Debt Expense, credit Allowance for Doubtful Accounts. d. Debit Accounts Receivable, credit Allowance for Doubtful Accounts.
d. Debit Accounts Receivable, credit Allowance for Doubtful Accounts.
Which of the following is not an acceptable major asset classification? a. Current assets b. Long-term investments c. Property, plant, and equipment d. Deferred charges
d. Deferred charges
If common stock was issued to acquire an $8,000 machine, how would the transaction appear on the statement of cash flows? a. It would depend on whether you are using the direct or the indirect method. b. It would be a positive $8,000 in the financing section and a negative $8,000 in the investing section. c. It would be a negative $8,000 in the financing section and a positive $8,000 in the investing section. d. It would not appear on the statement of cash flows but rather on a schedule of noncash investing and financing activities.
d. It would not appear on the statement of cash flows but rather on a schedule of noncash investing and financing activities.
What is a compensating balance? a. Savings account balances. b. Margin accounts held with brokers. c. Temporary investments serving as collateral for outstanding loans. d. Minimum deposits required to be maintained in connection with a borrowing arrangement.
d. Minimum deposits required to be maintained in connection with a borrowing arrangement.
On May 1, 2020, a company purchased a new machine which it does not have to pay for until May 1, 2022. The total payment on May 1, 2022 will include both principal and interest. Assuming interest at a 10% rate, the cost of the machine would be the total payment multiplied by what time value of money factor? a. Future value of annuity of 1 b. Future value of 1 c. Present value of annuity of 1 d. Present value of 1
d. Present value of 1
Which table would you use to determine how much must be deposited now in order to provide for 5 annual withdrawals at the beginning of each year, starting one year from the first deposit? a. Future value of an ordinary annuity of 1. b. Future value of an annuity due of 1. c. Present value of an annuity due of 1. d. Present value of an ordinary annuity of 1.
d. Present value of an ordinary annuity of 1.
Which of the following would be classified in a different major section of a balance sheet from the others? a. Capital stock b. Common stock subscribed c. Stock dividend distributable d. Stock investment in affiliate
d. Stock investment in affiliate
Long-term liabilities include a. obligations not expected to be liquidated within the operating cycle. b. obligations payable at some date beyond the operating cycle. c. deferred income taxes and most lease obligations. d. all of these answer choices are correct.
d. all of these answer choices are correct.
In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from a. lending activities. b. operating activities. c. investing activities. d. financing activities.
d. financing activities.
Elkins Corporation uses the perpetual inventory and the gross method. On March 1, it purchased $50,000 of inventory, terms 2/10, n/30. On March 3, Elkins returned goods that cost $5,000. On March 9, Elkins paid the supplier. On March 9, Elkins should credit a. purchase discounts for $1,000. b. inventory for $1,000. c. purchase discounts for $900. d. inventory for $900.
d. inventory for $900.
A cash equivalent is a short-term, highly liquid investment that is readily convertible into known amounts of cash and a. is acceptable as a means to pay current liabilities. b. has a current market value that is greater than its original cost c. bears an interest rate that is at least equal to the prime rate of interest at the date of liquidation. d. is so near its maturity that it presents insignificant risk of changes in interest rates.
d. is so near its maturity that it presents insignificant risk of changes in interest rates.
Travel advances should be reported as a. supplies. b. cash because they represent the equivalent of money. c. investments. d. receivables
d. receivables
Treasury stock should be reported as a(n) a. current asset. b. investment. c. other asset. d. reduction of stockholders' equity.
d. reduction of stockholders' equity.
Bank overdrafts, if material, should be a. reported as a deduction from the current asset section. b. reported as a deduction from cash. c. netted against cash and a net cash amount reported. d. reported as a current liability.
d. reported as a current liability.
