ACCT 2100 (W01) - Quizzes Review
The inventory records for Radford Co. reflected the following Beginning inventory @ May 1 2,200 units @ $ 6.00 First purchase @ May 7 2,300 units @ $ 6.20 second purchase @ May 17 2,500 units @ $ 6.30 Third purchase @ May 23 2,100 units @ $ 6.40 Sales @ May 31 6,900 units @ $ 7.90 Determine the amount of cost of goods sold assuming the LIFO cost flow method.
(2100 * 6.40) + (2500 * 6.30) + (2300 * 6.20) = 43450
Glasgow Enterprises started the period with 60 units in beginning inventory that cost $1.90 each. During the period, the company purchased inventory items as follows. Glasgow sold 250 units after purchase 3 for $10.10 each. Purchase No. of Items Cost 1 230 $ 2.40 2 150 $ 2.50 3 50 $ 2.90 Glasgow's cost of goods sold under FIFO would be:
(60 * 1.90) + (190 * 2.40) = 570
Currie Company borrowed $30,000 from the Sierra Bank by issuing a 9% three-year note. Currie agreed to repay the principal and interest by making annual payments in the amount of $11,852. Based on this information, the amount of the interest expense associated with the second payment would be: (Round your answer to the nearest dollar.)
--Year 1-- Beg. Balance = 30,000 Cash Payment = 11852 Interest Expense = beg. balance * rate = 30,000 * 0.09 = 2700 Principal Repayment = cash - interest = 11852 - 2700 = 9152 --Year 2-- Beg. Balance = 30,000 - 29512 = 20848 Cash Payment = 11852 Interest Expense = beg. balance * rate = 20848 * 0.09 = 1876.32 Answer: 1876
On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $64,000 and $1,400, respectively. During the year Kincaid reported $155,000 of credit sales. Kincaid wrote off $1,250 of receivables as uncollectible in Year 2. Cash collections of receivables amounted to $166,700. Kincaid estimates that it will be unable to collect one percent (1%) of credit sales. The amount of uncollectible accounts expense recognized in the Year 2 income statement will be:
0.01 * 155,000 = 1550
On January 1, Year 2, Grande Company had a $66,800 balance in the Accounts Receivable account and a $2,000 balance in the Allowance for Doubtful Accounts account. During Year 2, Grande provided $169,000 of service on account. The company collected $191,100 cash from accounts receivable. Uncollectible accounts are estimated to be 1% of sales on account. The amount of uncollectible accounts expense recognized on the Year 2 income statement is:
0.01 * 169,000 = 1690
Domino Company uses the aging of accounts receivable method to estimate uncollectible accounts expense. Domino began Year 2 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $41,130 and $3,170, respectively. During the year, the company wrote off $2,470 in uncollectible accounts. In preparation for the company's Year 2 estimate, Domino prepared the following aging schedule: What will Domino record as Uncollectible Accounts Expense for Year 2?
1. Multiply table 4381 Subtract ADA, add write-off 4381 - 3170 + 2470 = 3681
Curtain Co. paid dividends of $7,000; $12,000; and $12,000 during Year 1, Year 2, and Year 3, respectively. The company had 2,000 shares of 5.0%, $100 par value preferred stock outstanding that paid a cumulative dividend. The amount of dividends received by the common shareholders during Year 3 would be:
1. The annual preferred dividends each year = 2000 * 0.05 * 100 = 10,000 2. In Year 1, there were $3000 of dividends in arrears ($10,000 preferred dividends − $7,000 paid). 3. In Year 2, there were $1,000 in arrears ($3,000 beginning + $10,000 preferred dividends − $12,000 paid). 4. In Year 3, the preferred dividends was $10,000 + $1,000 in arrears = $11,000. The remaining $1,000 was paid to common shareholders.
Flagler Corporation shows a total of $440,000 in its common stock account and $1,040,000 in its paid-in capital in excess of par value - common stock account. The par value of Flagler's common stock is $4. How many shares of Flagler stock have been issued?
440,000 / 4 = 110,000
Which of the following represents the impact of a taxable cash sale of $500 on the accounting equation if the sales tax rate is 4%? An increase to cash for $520, an increase to sales tax payable for $20, and an increase to sales revenue for $500. None of these answer choices is correct. An increase to cash for $520, an increase to sales tax expense for $20, and an increase to sales revenue for $500. An increase to cash for $500, an increase to sales tax payable for $20, and an increase to sales revenue for $480.
500 * 0.04 = 20 Sales revenue = 500 Sales tax PAYABLE* = 20 [To balance equation] Cash = 520 *Payable, NOT expense The transaction is recorded as an increase to cash of $520, the amount of the sale, plus the 4% sales tax collected, an increase to sales tax payable of $20, the amount owed to the state, and an increase to sales revenue of $500, the amount of the sale. An increase to cash for $520, an increase to sales tax payable for $20, and an increase to sales revenue for $500.
The Bloom Company issued stock for $53,800 cash on January 20, 2011. During 2011, the company recorded revenue on account of $17,950 and expenses for which cash was paid of $10,620. Bloom received $10,180 cash from accounts receivable. The company also purchased land for $6,500 cash. Based on this information, the amount of change in cash for 2011 was
53,800 - 10,620 + 10,180 - 6,500 = 46860
Benitez Co. had sales of $660,000 in Year 1. The company expects to incur warranty expenses amounting to 4% of sales. There were $18,000 of warranty obligations paid in cash during Year 1. Based on this information: All of these answer choices are correct. The warranties payable account would increase by $8,400 in Year 1. Warranty expenses would decrease net earnings by $26,400 in Year 1. Cash would decrease by $18,000 as a result of the accounting events associated with warranties in Year 1.
660000 * 0.04 = 26400 decrease in net earnings 26400 - 18000 = 8400 increase to warranties payable 18000 paid in Y1 = cash decreases 18000 $660,000 × 4% = $26,400 warranty expense is recognized in Year 1. Cash decrease by $18,000 when the warranty obligations are paid. Warranties payable increases by $26,400 when warranty expense is recognized and decreases by $18,000 when warranty obligations are paid, for a net increase of $8,400. All of these answer choices are correct.
The following account balances were drawn from the 2011 financial statements of Gwynn Company Cash $2,240 Supplies $540 A/R 950 Common Stock ? Land 1,000 Retained earnings 2,890 - - Revenues 5,500 - - Expenses 2,640 Based on the above information, what is the balance of Common Stock for Gwynn Company?
A = L + CS + RE A: Cash + Supplies + Land + A/R L: 0 2240 + 540 + 950 + 1000 = CS + 2890 CS = 1840
Which of the following reflects the effect of the year-end adjusting entry to record estimated uncollectible accounts expense using the allowance method?
Assets: - Liab: NA Equity: - Rev.: NA Exp: + NI: - Cash Flow: NA
Osborn Company provided services to a customer on account. Which of the following represents the effect of this transaction on the financial statements?
Cash Flow: NA A: + Liab: NA
The year-end financial statements of Grunewald Company contained the following elements and corresponding amounts. Assets = $22,250; Common Stock = $5,000; Revenue = $11,200; Dividends = $840; Beginning Retained Earnings = $3,580; Ending Retained Earnings = $6,220. The amount of liabilities reported on the end-of-period balance sheet was
Magic Equations 1) A = L + CS + Ending RE 22250 = L + 5000 + 6220 L = 11030
The year-end financial statements of Grunewald Company contained the following elements and corresponding amounts. Assets = $22,250; Common Stock = $5,000; Revenue = $11,200; Dividends = $840; Beginning Retained Earnings = $3,580; Ending Retained Earnings = $6,220. Based on this information, the amount of expenses on Grunewald's income statement was
Magic equations 1) Beg. RE + NI - Div = End. RE 3580 + NI - 840 = 6220 NI = 3480 2) Rev - Exp = NI 11200 - Exp. = 3480 Exp = 7720
At the end of 2011, retained earnings for the Bisk Company was $1,950. Revenue earned by the company in 2011 was $2,150, expenses paid during the period were $1,120, and dividends paid during the period were $520. Based on this information alone, retained earnings at the beginning of 2011 was
Magic equations 1) NI = Rev - Exp 1030 = 2150 - 1120 2) End. RE = Beg. RE + NI - Div 1950 = Beg. RE + 1030 - 520 Beg. RE = 1440
Riley Company borrowed $22,000 on April 1, Year 1 from the Titan Bank. The note issued by Riley carried a one year term and a 8% annual interest rate. Riley earned cash revenue of $880 in Year 1 and $900 in Year 2. Assume no other transactions. The amount of net income on the Year 2 income statement would be:
NI = Rev - Exp 1. Calculate interest expense In Year 2, Jan-April is (3/12) on note 22000 * 0.08 * (3/12) = 440 2. Calculate NI 900 - 440 = 460
Stahl Company paid $7,800 on May 1, 2008 for insurance coverage for a one year period beginning that date. The adjusting entry required to recognize insurance expense on December 31, 2008 would have what effect on the financial statements?
NO Cash Flow 7800 / 12 * 8 = 5200 A: -5200 Equity: -5200 Exp: 5200 NI: -5200
On December 31, Year 1, the Loudoun Corporation estimated that 3% of its credit sales of $112,500 would be uncollectible. Loudoun uses the allowance method of accounting for uncollectible accounts. In February of Year 2, one of Loudoun's customers failed to pay his $1,050 account and the account was written off. On April 4, Year 2, this customer paid Loudoun the $1,050. Which of the following answers correctly states the effect of Loudoun Company's February Year 2 entry to write off the customer's account?
NOTHING
On December 31, Year 1, the Loudoun Corporation estimated that 3% of its credit sales of $112,500 would be uncollectible. Loudoun uses the allowance method of accounting for uncollectible accounts. In February of Year 2, one of Loudoun's customers failed to pay his $1,050 account and the account was written off. On April 4, Year 2, this customer paid Loudoun the $1,050. Which of the following answers correctly states the effect of Loudoun's recording the reestablishment of the receivable on April 4, Year 2?
NOTHING
The Miller Company earned $135,000 of revenue on account during Year 2. There was no beginning balance in the accounts receivable and allowance accounts. During Year 2, Miller collected $88,000 of cash from its receivables accounts. The company estimates that it will be unable to collect 3% of its sales on account. The net realizable value of Miller's receivables at the end of Year 2 was:
NRV = AR - ADA AR: 135,000 - 88,000 = 47000 ADA: 0.03 * 135,000 = 4050 NRV = 47000 - 4050 = 42950
On January 1, Year 2, the Accounts Receivable balance was $27,400 and the balance in the Allowance for Doubtful Accounts was $3,100. On January 15, Year 2, an $890 uncollectible account was written-off. The net realizable value of accounts receivable immediately after the write-off is:
NRV = AR - ADA ARA = 27400 - 3100 = 24300
Madison Company issued an interest-bearing note payable with a face amount of $13,200 and a stated interest rate of 8% to the Metropolitan Bank on August 1, Year 1. The note carried a one-year term. The amount of cash flow from operating activities on the Year 1 statement of cash flows would be:
No operating activities, so no OA cash! Zero.
Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1) issued stock for $46,000 2) borrowed $28,000 from its bank 3) provided consulting services for $44,000 cash 4) paid back $18,000 of the bank loan 5) paid rent expense for $10,500 6) purchased equipment for $15,000 cash 7) paid $3,300 dividends to stockholders 8) paid employees' salaries of $24,000 What is Yowell's net cash flow from operating activities?
OA: - consulting services - rent expense - salaires 44,000 - 10,500 - 24,000 = 9500 Inflow of 9500
Cole Company began operations on January 1, 2011. During 2011, the company engaged in the following cash transactions: 1) issued stock for $30,000 2) borrowed $36,000 from its bank 3) sold merchandise for $30,000 4) paid back $11,300 of the bank loan 5) paid rent expense for $3,950 6) purchased equipment costing $6,950 7) paid $3,000 dividends to stockholders 8) paid employees' salaries, $12,300 What is Cole's net cash flow from operating activities?
OA: - merchandise sold - rent expense - salaries (NOT bank loan, equipment purchase , dividend) 30,000 - 3950 - 12300 = 13750 Inflow of 13750
Ogilvie Corp. issued 16,000 shares of no-par stock for $50 per share. Ogilvie was authorized to issue 39,000 shares. What effect will this event have on the company's financial statements? Increase cash flow from investing activities by $800,000. None of these answer choices are correct. Increase assets by $1,950,000, increase equity by $1,950,000. Increase assets by $800,000, increase equity by $800,000.
Page 303, Chapter 7 16000 * 50 = 800,000 Assets, common stock, and cash increase by 800,000
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QUIZ 3
On January 1, 2011, Baird Company had beginning balances as follows: Assets = $1,400 Liabilities = $450 Common Stock = $545 During 2011, Baird paid dividends to its stockholders of $500. Given that ending retained earnings was $630, what was Baird's net income for the 2011 accounting period?
Remember the three magic equations 1) A = L + CS + Beg. RE 1400 = 450 + 545 + Beg. RE Beg. RE = 405 2) End. RE = Beg. Re + NI - Div. 630 = 405 + NI - 500 NI = 725
On January 2, Year 1, Torres Corporation issued 22,000 shares of $15 par-value common stock for $25 per share. Which of the following statements is true? Total equity will increase by $330,000. The cash account will increase by $330,000. The common stock account will increase by $550,000. The paid-in capital in excess of par value account will increase by $220,000.
Total cash increase = 22000 * 25 = 550000 CS increase = 22000 * 15 = 330,000 PIC = 550,000 - 330,000 = 220000 Answer: The paid-in capital in excess of par value account will increase by $220,000.
Koontz Company uses the perpetual inventory method. On January 1, Year 1, the company's first day of operations, Koontz purchased 600 units of inventory that cost $3.30 each. On January 10, Year 1, the company purchased an additional 850 units of inventory that cost $4.20 each. If Koontz uses a weighted average cost flow method and sells 750 units of inventory, the amount of inventory appearing on balance sheet following the sale will be approximately: (Round your intermediate calculations to one decimal place.)
Transactions: 600 @ 3.30 850 @ 4.20 WA method Units left: (600 + 850) - 750 = 700 Price per unit (600 * 3.30) + (850 * 4.20) / (600 + 850) = 3.8 Inventory left: ((600 + 850) * 3.8) - (750 * 3.8) = 2660
The claims of a business's creditors are called
liabilities
Montana Company was authorized to issue 140,000 shares of common stock. The company had issued 63,000 shares of stock when it purchased 10,000 shares of treasury stock. The number of outstanding shares of common stock was:
63000 - 10000 = 53000