ACCT 3311 Entrance Exam Prep

Moore Company purchased an item for inventory that cost $20 per unit and was priced to sell at $30. It was determined that the replacement cost is $18 per unit. Using the lower of cost or market rule, what amount should be reported on the balance sheet for inventory?

$18

Trane Company purchased merchandise inventory with an invoice price of $4,000 and credit terms of 2/10, n/30. What is the net cost of the inventory if Trane Company pays within the discount period?

$3,920.

Which of the following statements regarding a trial balance is TRUE?

- A trial balance shows whether total debits equal total credits. - A trial balance may be prepared at any time during the accounting period. - A trial balance is a list of all accounts used in a business with their balances.

The ending balance of Cash and Cash Equivalents is reported on the:

- Balance Sheet - Statement of Cash Flows

Under accrual‐basis accounting, if a company fails to record a sale on account:

- Revenue will be understated - Assets will be understated.

A company purchased $1,800 of merchandise on December 5. On December 7, it returned $200 worth of that merchandise. On December 8, it paid the balance, taking a 2% discount. The amount of cash paid on December 8 equals:

1,800 - 200 = 1,600 1 - .2 = .98 1,600 * .98 = $1,568

On December 1 of the current year, Prepaid Rent was debited $10,800 for three months of rent, to cover the period December 1 to February 28. The amount of the adjusting entry on December 31 is:

10,800/3 = $3600

Forever Jewelers uses the perpetual inventory system. On April 2, Forever sold merchandise with a cost of $4,500 for $7,000 to a customer on account with terms of 2/15, n/30. Which of the following journal entries correctly records the sales revenue?

7,000 * 2% = 140 7,000 - 140 = 6,860 Accounts Receivable 6,860 Sales Revenue 6,860

debit to Bonds Payable and a credit to Cash.

A bond was issued at a discount. The journal entry to record payment of this bond payable at maturity will include a:

$95,400.

A bond with a face value of $90,000 and a quoted price of answer to the nearest dollar.)

principal; 10,814

A company borrows $10,700 from the bank at 13% interest for thirty days. $10,700 is the ________ of the note. The maturity value of the note is ________. For computation of interest, use a 365 day year. (Round your final answer to the nearest dollar.)

Which of the following is NOT a business transaction?

A company fired 10 percent of the employees due to lackluster sales.

Which of the following is a business transaction?

A company pays its employees a year‐end bonus.

Regarding income statement formats, which of the following statements is INCORRECT?

A multistep income statement is the only format that allows users to evaluate the profitability of the business.

Which of the following statements does not correctly describe the relationship between the income statement and the ending retained earnings balance?

A net loss does not affect the ending retained earnings balance.

$120,000.

A relevant portion of Smart Touch's Balance Sheet is shown below. Answer Questions 14 and 15 based on the Balance Sheet information. Smart Touch's working capital for 2020 is _______________.

$2.50 per share.

A share of 5% preferred stock has a par value of $50 and market value of $80. The owners of the preferred stock will receive a dividend of: (Round your answer to the nearest cent.)

On July 22, a company purchased merchandise inventory at a cost of $5,250 with credit terms 2/10, net 30. If the company pays for the purchase on August 7, what would be the appropriate journal entry on the payment date?

Accounts Payable 5,250 Cash 5,250

A company that uses a perpetual inventory system purchased inventory on account and later returned goods worth $800 to the vendor. Which of the following would be the correct journal entry to record these returns if the company has not yet paid the vendor?

Accounts Payable 800 Merchandise Inventory 800

A company that uses the perpetual inventory system purchased inventory for $950,000 on account with terms of 4/7, n/20. Which of the following correctly records the payment made 15 days after the date of the invoice?

Accounts Payable 950,000 Cash 950,000

Estimated Warranty Payable and credit Cash

Aisha Company paid $1,500 cash to repair a wheel on equipment sold under a two‐year warranty in the prior year. The entry to record the payment will debit:

unearned revenues for services to be provided in 16 months.

All of the following are reported as current liabilities EXCEPT: a. sales tax payable b. unearned revenues for services to be provided in 16 months c. bonds payable due in 6 months d. accounts payable

2910

An aging-of-accounts-receivable indicates that the amount of uncollectible accounts is $3410. The Allowance for Bad Debts account prior to adjustment has a credit balance of $500. The Accounts Receivable balance is $44,820. The amount of the adjusting entry for uncollectible accounts should be for:

When an expense account is increased:

An amount is entered on the debit side of the expense account.

When an adjustment is made for prepaid rent:

An asset decreases and an expense increases.

equipment

An improvement made to a piece of equipment increased its production capacity. The cost of the improvement should be debited to ________.

debit cash $ 5 million and credit common stock $5 million

Apple Inc. issued $ 5 million. what journal entry is prepared?

Revenues $130,000 Other Expenses $47,000 Salaries Expense $20,000 Dividends $12,000 Utilities Expense $18,000 Advertising Expense $10,000 Building $15,000 Cash $107,000 Land $45,000 Common Stock $50,000 What are total liabilities at the end of the first year?

Assets = 15,000 + 107,000 + 45,000 = 167,000 Equity = 130,000 + 50,000 - 47,000 - 20,000 - 12,000 - 18,000 - 10,000 = 73,000 Liability = 167,000 - 73,000 = $94,000

Long‐Term Notes Payable $60,000 Accounts Receivable $30,000 Accounts Payable $39,000 Building $57,000 Cash and Cash Equivalents $84,000 Common Stock $123,000 Interest Payable $1500 Land $43,000 Short‐term Notes Receivable $7000 Income Taxes Payable $13,000 Equipment $64,500 Supplies $5000 What is the amount of Retained Earnings at the end of the year?

Assets = 290,500 Liabilities = 113,500 Equity = 123,000 Retained Earnings = 290,500 - 113,500 - 123,000 = $54,000

At the end of 2018, a $5,000 understatement was discovered in the amount of the 2018 ending inventory. What were the 2018 effects of the $5,000 inventory error if the error was not corrected?

Assets were understated by $5,000 and net income was understated by $5,000.

8600

At January 1, 2017, the Estimated Warranty Payable is $1100. During 2017, the company recorded Warranty Expense of $19,500. During 2017, the company replaced defective products in accordance with product warranties at a cost of $12,000. What is the Estimated Warranty Payable at December 31, 2017?

current liabilities increase and stockholdersʹ equity decreases.

At the end of the year, a company makes a journal entry to accrue the interest expense on a short‐term note payable. As a result of this transaction:

On July 25, Henry Companyʹs accountant prepared a check for the August rent payment. Henry Company mailed the check on July 27 to the landlord. The landlord received the check on July 31 and cashed it on August 2. When should Henry Company record the rent expense associated with this transaction? Henry Company uses accrual accounting.

August 31

debit to Legal Expense $108,000.

Badger Corporation issued 9000 shares of its $5 par value common stock in payment for attorney services billed at $108,000. Badger Corporationʹs stock has been actively trading at $12 per share. The journal entry for this transaction would include a:

the Statement of Retained Earnings is used to prepare the:

Balance Sheet

$660,480

Basil Company issued $640,000, 6%, 5‐year bonds for 104, with interest paid annually. Assuming straight‐line amortization, what is the carrying value of the bonds after one year?

all dividends in arrears plus the current yearʹs dividends.

Before a company can pay dividends to the common stockholders, the owners of cumulative preferred stock must receive:

A company started the year with $300 of supplies. During the year the company purchased additional supplies costing $1800. There were $1000 of supplies on hand at the end of the year. An adjusted trial balance, prepared at the end of the accounting period, will show the following balance in Supplies Expense:

Beg. = 300 Purchased = 300 + 1800 = 2100 End. = 1000 Adjusted = 2100 - 1000 = $1100

A company had inventory of 5 units at a cost of $20 each on November 1. On November 2, they purchased 10 units at $22 each. On November 6, they purchased 6 units at $25 each. On November 8, they sold 18 units for $54 each. Using the LIFO perpetual inventory method, what was the cost of the 18 units sold?

Beginning Inventory = 5 * 20 = 100 Purchases = 10 * 22 = 220 Purchases = 6 * 25 = 150 Sold = 18 150 (6/6) + 220 (10/10) + 40 (2/5) = $410

What is the statement of retained earnings?

Beginning RE + Revenue - Expenses - Dividends = Ending RE

The cost‐of‐goods‐sold model is:

Beginning inventory, plus Purchases, less Ending inventory equals Cost of Goods Sold.

Which of the following is a permanent account?

Both Merchandise Inventory and Accounts Receivable

When a company borrows money from the bank, which type of account(s) is(are) increased?

Both asset and liability accounts

$108,000.

Burkert Company has 50,000 shares of $1 par value common stock issued and outstanding. The company also has 9000 shares of $100 par value, 4% cumulative preferred stock outstanding. Burkert did not pay the preferred dividends in 2016 and 2017. For the common stockholders to receive a dividend in 2018, the board of directors must declare dividends in excess of:

200,000

CBS Corporation acquired a patent for $2,000,000. The patent has a legal life of 50 years. Because of changing technology, this patent is expected to generate revenue for only 10 years and have no residual value. The annual amortization expense for the patent is: (Round your final answer to the nearest dollar.)

A company has net sales of $1,832,000, sales commissions in the amount of $194,000, net income was $366,400, and the gross profit ratio is 60%, what is the amount of cost of goods sold?

COGS = 1,832,000 - .6(1,832,000) = $732,800

The following data are for Jessee's Candy Store for January: Beginning inventory $205,000 Net sales revenue $440,000 Net purchases $585,000 Normal gross profit rate 40% What is the company's estimated cost of goods sold for the month?

COGS = 440,000 - .4*(440,000) = $264,000

The following data are for Steve's Candy Store for January: Beginning inventory $191,000 Net sales revenue $620,000 Net purchases $480,000 Normal gross profit rate 30% What is the company's estimated ending inventory for the month?

COGS = 620,000 - .3(620,000) = 434,000 480,000 - 434,000 = 46,000 Ending Inventory = 191,000 + 46,000 = $237,000

All of the following accounts are closed EXCEPT for:

Cash

Stockholders' equity is not affected by all

Cash receipts

Company A received cash and issued stock to a new stockholder. In recording this transaction:

Cash would be debited.

6.83

Comet Corp. has the following end‐of‐period balance sheet:Based on the above balance sheet, what is Comet's debt‐to‐equity ratio? (round to two decimal places)

What makes up stockholders equity?

Common Stock and Retained Earnings

Which of the following entities pays federal income taxes?

Corporation

If ending inventory is understated for Year 1, then in Year 2:

Cost of goods sold will be understated and gross profit will be overstated

If the beginning inventory balance is understated:

Cost of goods sold will be understated and net income will be overstated.

The income statement:

Covers a defined period of time.

36,000

Cramer Company purchased equipment on May 1, 2017 for $600,000. The residual value is $60,000 and the estimated useful life is 10 years. What is the Depreciation Expense for the year ending December 31, 2017, if the company uses the straight-line method? (Round your final answer to the nearest dollar.)

Billed customer for outfit shipped to her house 1,000

Debit Accounts Receivable Credit Revenue

Jordan invests 10,000 in company

Debit Cash Credit Common stock

Borrow 20,000 from Sleazy Bank

Debit Cash Credit Notes Payable

Sandra Invests 10,000 in a company

Debit Cash Credit Owners Equity

Starts pay 9,000 in advance for 3 months of uniforms

Debit Cash Credit Unearned Service Revenue

Bought sewing machine 2,500 on credit

Debit Equipment Credit Accounts Payable

Bought 1,000 of cloth for outfits with cash

Debit Material Credit Cash

Prepay 3,000 for 3 months rent in advance

Debit Prepaid Rent Credit Cash

A company has the following adjusted trial balance: Debit Cash = 700 Accounts Receivable = 1200 Inventory = 2000 Supplies = 1700 Prepaid Rent = 400 Land = 5700 Building = 40,100 Dividends = 1000 Rent Expense = 1400 Supplies Expense = 1400 Salaries Expense = 6500 Depreciation Expense = 1400 Utilities Expense = 1600 Totals = $65,100 Credit Accumulated Depreciation = 8100 Accounts Payable = 7100 Unearned Revenue = 4500 Notes Payable, due 2020 = 2500 Common Stock = 6900 Retained Earnings = 2800 Service Revenue = 33,200 Totals = $65,100 Which closing entry is needed?

Debit Service Revenue for $33,200 and credit Income Summary for $33,20

Utility bill of 300, will pay in October

Debit Utilities Expense Credit Utilities Payable

Cash dividends:

Decrease retained earnings on the statement of retained earnings.

$4,838.02

Donnerʹs gross pay for this month is $9,150. His gross year‐to‐date pay, prior to this month totaled $117,000. Donnerʹs federal income tax withholding rate is 28%. His voluntary deductions total $1,050. Based on this information, what is Donnerʹs net pay? (Assume that the FICA‐OASDI tax rate is 6.2%, the FICA‐Medicare tax rate is 1.45%, OASDI is applicable on the first $128,000 of earnings, and FUTA and SUTA are applicable on the first $7,000 of earnings). Round to the nearest cent.

55,500

During the year, Liptom Company made an entry to write off a $4,000 uncollectible account. Before this entry was made, the balance in accounts receivable was $60,000 and the balance in the allowance account was $4500 (normal balance). What is the net realizable value of accounts receivable after the write-off entry?

Operating income reflects:

Earnings from a companyʹs core business activities.

$35,380

ElfCorp has the following list of liability balances at December 31, 2018. Based on the above information, what is the total amount of current liabilities?

Kennel Company reported the following: Cost of goods sold: $300,000 Ending inventory: $95,000 Beginning inventory for the period: $60,000 Based on this information, the purchases are:

Ending = 95,000 Beginning = 60,000 Net Income = 95,000 - 60,000 = 35,000 COGS = 300,000 Purchases = 300,000 + 35,000 = $335,000

The dollar amounts listed on the trial balance are obtained from the:

Ending balances in the ledger accounts.

The accounting assumption that states that the business, rather than its owners, is the reporting unit is the:

Entity assumption.

Decreases in stockholdersʹ equity that result from the cost of operating the business are:

Expenses.

When comparing the FIFO and LIFO inventory methods:

FIFO matches old inventory costs against revenue.

Under the ________ method, ending inventory is based on the costs of the most recent purchases.

FIFO.

overstate stockholdersʹ equity.

Failure to record an accrued liability for wages earned by employees causes a company to:

debit Notes Receivable for $6000 and credit Sales Revenue for $6000

Fourth Company receives a note from a customer for a $6000 sale. On the date of sale, what journal entry did Fourth Company prepare? Ignore cost of goods sold.

a loss of $35,600.

Franco Company sold office furniture for $2400 cash. The furniture cost $70,000 and had accumulated depreciation through the date of sale totaling $32,000. The company will recognize:

2.00

Frosty Limited began business at the beginning of the current period by issuing 60,000 shares of common stock. At the end of the period, Frosty's common stock outstanding had grown to 100,000 shares. During the period, Frosty had net income of $160,000. based on this information, Frosty's earnings per share would be ___. (round to two decimal places)

debit of 22,500 to premium on bonds payable

Godwin Corporation retires its bonds at 108 on January 1, after the payment of interest. The face value of the bonds is $640,000. The carrying value of the bonds at retirement is $662,500. The entry to record the retirement will include a:

On a multistep income statement, a common subtotal is:

Gross Profit

Shareholders of a corporation:

Have limited liability for the corporationʹs debts.

debit Depletion Expense and credit Accumulated Depletion

If a natural resource is extracted and then immediately sold, which of the following accounts are debited and credited?

greater than face value

If the market interest rate is 6%, a $10,000, 7%, 5‐year bond, that pays interest semiannually would sell at an amount:

71,400

Illinois Bank lends Lisle Furniture Company $70,000 on December 1. Lisle Furniture Company signs a $70,000, 6%, 4‐month note. The total cash paid at maturity of the note is: (Round your final answer to the nearest dollar.)

A doctor performed surgery in March and did not receive cash from the patient until July. Under accrual accounting, the doctor recognizes revenue:

In March.

Sale of equipment at book value for cash

In preparing a statement of cash flows, which of the following transactions would be considered an investing activity?

The net income or loss is calculated on which financial statement?

Income Statement

The statement of retained earnings reports a companyʹs net income or net loss for a period of time. What is the source of the amount of net income or net loss?

Income Statement

The statement of retained earnings reports a companyʹs net income or net loss for a period of time. What is the source of the amount of net income or net loss?

Income Statement

Which of the following statements is correct?

Income statement accounts are temporary accounts and do not retain their balances from one period to the next.

If adjusting entries are not prepared, which financial statements are misstated?

Income statement, Balance Sheet and Statement of Retained Earnings

The CORRECT data flow from one financial statement to the next is:

Income statement, statement of retained earnings, balance sheet, statement of cash flows

A trial balance prepared after the closing entries have been posted would show a zero balance in which one of the following accounts?

Income tax expense.

FICA

It is mandatory for both the employer and employee to pay ____________.

Iris Company has provided the following information regarding two of its items of inventory at year‐end: • There are 100 units of Item A, having a cost of $20 per unit and a replacement cost of $18 per unit. • There are 50 units of Item B, having a cost of $50 per unit and a replacement cost of $55 per unit. How much is the ending inventory using lower of cost or market on an item‐by‐item basis?

Item A = 100 * 18 = 1,800 Item B = 50 * 50 = 2,500 1,800 + 2,500 = $4,300

On January 1, 2017, total assets for Wininger Technologies were $140,000; on December 31, 2017, total assets were $155,000. On January 1, 2017, total liabilities were $111,000; on December 31, 2017, total liabilities were $118,000. What is the amount of the change and the direction of the change in Wininger Technologiesʹ stockholdersʹ equity for 2017?

Jan 2017: Asset = 140,000 Liability = 111,000 Equity = 140,000 - 111,000 = 29,000 Dec 2017: Asset = 155,000 Liability = 118,000 Equity = 155,000 - 118,000 = 37,000 37,000 - 29,000 = $8000 increase

On December 15, 2017, a company receives an order from a customer for services to be performed on December 28, 2017. Due to a backlog of orders, the company does not perform the services until January 3, 2018. The customer pays for the services on January 6, 2018. The revenue principle requires the revenue to be recorded by the company on:

January 3, 2018.

debit cash $ 41,040 credit Sales Revenue $ 38,000 and credit Sales Tax Payable $ 3040

Kathyʹs Corner Store has total cash sales for the month of $ 38,000 excluding sales taxes. if the sales tax rate is 8%, which journal entry is needed? (Ignore Cost of Goods Sold.)

$35,400

Kentucky Company uses the indirect method to prepare the statement of cash flows. Refer to the following income statement:Additional information provided by the company includes the following: Current assets, other than cash, increased by $21,000. Current liabilities decreased by $1200. Compute the net cash provided by (used for) operating activities.

48,000

Kow-Pow Company purchased a limited-life intangible asset for $180,000 on May 1, 2017. It has a useful life of 10 years. What total amount of amortization expense should have been recorded on the intangible asset by December 31, 2019? (Round any calculations to the nearest cent, and your final answer to the nearest dollar.)

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

LIFO method

119,560

Lithotech, Inc. had net sales in 2018 of $800,000 .At December 31, 2018, before adjusting entries, the balances in selected accounts were: accounts receivable $122,000 debit, and allowance for doubtful accounts $1200 credit. Lithotech estimates that 2% of its receivables will prove to be uncollectible. What is the net realizable value of the receivables reported on the statement of financial position at December 31, 2018 after adjusting entries?

$60,333

Lorenzo Corporation purchased equipment on January 1, 2016 for $600,000. The equipment had an estimated useful life of 5 years and an estimated salvage value of $10,000. After using the equipment for 2 years, the company determined that the equipment could be used for an additional 6 years and have a salvage value of $2000. Assuming Lorenzo Corporation uses straight-line depreciation, compute depreciation expense for the year ending December 31, 2018. (Round your final answer to the nearest dollar.)

Cash for $110,000 and credit Notes Payable for $110,000.

Madison Bank lends Neenah Paper Company $110,000 on January 1, 2017. Neenah signs a $110,000, 10%, 6‐month note. The journal entry made by Neenah on January 1, 2017 will debit:

4

Martin Company paid $500,000 for equipment. Martin uses straight-line depreciation. Currently the Accumulated Depreciation account shows a balance of $200,000. If the asset has no residual value and an estimated life of 10 years, how many years has the asset been depreciated? (Round your final answer to the nearest year.)

credit to Premium on Bonds Payable for $96,000.

Maybelline Corporation issues $3,200,000, 10‐year, 7% bonds dated January 1 at 103. The journal entry to record the issuance will include a:

debited to Repair Expense

Morgan Oaks Company replaced the windshields and painted several of its vehicles during the year. These costs should be:

Every journal entry:

Must debit at least one account and credit at least one account.

A company's cost of goods sold was $4,000. Determine net purchases and ending inventory given goods available for sale were $11,000 and beginning inventory was $5,000.

Net purchases: $6,000; Ending Inventory: $7,000

On November 1, 2016, a company using accrual accounting, pays $720,000 for a television advertising campaign. Commercials will run evenly over six months beginning on November 1, 2016. How much Advertising Expense will be reported on an income statement prepared for the year ended December 31, 2017?

Nov 2016: 720,000/6 = 120,000 Dec 2016: 240,000 Dec 2017: 720,000 - 240,000 = $480,000

9960

On December 31, 2017, James Company has an accounts receivable balance of $324,000 before any year-end adjustments. The Allowance for Doubtful Accounts has a $1100 credit balance. The company prepares the following aging schedule for accounts receivable: What is the Uncollectible-Account Expense at December 31, 2017?

debit to Interest Expense, a debit to Premium on Bonds Payable and a credit to Cash.

On January 1, 2016, a bond was issued at a premium. The journal entry to record the semiannual interest payment on July 1, 2016 would include a:

6000

On January 1, 2017, Always Corporation issuespaid semiannually on January 1 and July 1. Always Corporation uses the straight‐line method of amortization. The companyʹs fiscal year ends on December 31. The amount of discount amortized on July 1, 2017 is:

276,000

On January 2, 2017, Kaiman Corporation acquired equipment for $700,000. The estimated life of the equipment is 5 years or 100,000 hours. The estimated residual value is $10,000. What is the balance in Accumulated Depreciation on December 31, 2018, if Kaiman Corporation uses the straight-line method of depreciation?

484,000

On January 2, 2017, Kellogg Corporation acquired equipment for $800,000. The estimated life of the equipment is 5 years or 80,000 hours. The estimated residual value is $10,000. What is the book value of the asset on December 31, 2018, if Kellogg Corporation uses the straight-line method of depreciation? (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar.)

Short‐term notes payable and interest payable will be reported on the balance sheet.

On November 1, 2017, a company signed a promissory note. The interest and principal are due on July 1, 2018. What accounts relating to the note payable will be reported on the financial statements for the fiscal year ending December 31, 2017?

predict the ability of a company to pay debts and dividends

One of the purposes of the statement of cash flows is to ________.

The CEO of Clarkson Company owns a vacation home in Hawaii. Clarkson Company owns a factory in Detroit where it is headquartered. Which of these properties is considered to be asset(s) of the business?

Only the factory in Detroit.

Delivery expense is a(n) ________.

Operating Expense

debit cash $54 million, credit Common Stock $2 million and credit Paid‐in Capital in Excess of Stated Value—Common $52 million

Paltrowski Company issued 1 million shares of no‐par common stock with a stated value of $2. The issue price was $ 54 per share. which journal entry is prepared?

contingent liabilities

Potential liabilities that depend on a future event are called:

A corporation uses a FIFO perpetual inventory system and has the following events occur during the reporting period: August 2, 25 units were purchased at $12 per unit. August 5, 10 units were purchased at $13 per unit. August 15, 12 units were sold at $25 per unit. August 18, 15 units were purchased at $14 per unit. What was the dollar amount of the ending inventory for the month of August?

Purchased = 13 (25 - 12) * 12 = 156 Purchased = 10 * 13 = 130 Purchased = 15 * 14 = 210 Ending Inventory = 156 + 130 + 210 = $496

Coleman Company has provided the following information: beginning inventory, $100,000; cost of goods sold, $450,000; and ending inventory, $80,000. How much were Coleman's inventory purchases?

Purchases = Ending - Beginning + COGS = 80,000 - 100,000 + 450,000 = $430,000

Net losses are the only item that decreases retained earnings.

Regarding the retained earnings account, which of the following statements is INCORRECT?

When preparing the balance sheet, the final balancing element of the balance sheet is:

Retained Earnings

All of the following accounts would be considered assets EXCEPT for:

Retained Earnings.

How do you find net income?

Revenue - Expenses

A company had credit sales of $33,000 and cash sales of $23,000 during the month of May. Also during May, the company paid wages of $26,000 and utilities of $12,000. It also received payments from customers on account totaling $5200. What was the companyʹs net income for the month?

Revenue = 56,000 Expenses = 38,000 Net Income = 56,000 - 38,000 = $18,000

Which of the following statements, regarding the rules of debits and credits, is CORRECT?

Revenue is increased by a credit.

Net income is computed as:

Revenues ‐ Expenses.

1.56

Rudolph Company had gross credit sales for the period of $400,000 with sales returns and allowances associated with those credit sales of $50,000. Rudolph's accounts receivable were $ 250,000 at the beginning of the period and $ 200,000 at the end of period. what is Rudolph's accounts receivable turnover for the period?

Which of the following is a temporary account?

Salaries and Wages Expense

Estimated Warranty Payable for $31,800.

Sales for the year are $530,000. Warranty costs are estimated at 6% of yearly sales. Warranties are honored with replacement products. No defective products are returned during the year. At the end of the year, the company should record a journal entry with a credit to:

debit Sales Taxes Payable and credit Cash

Sales taxes collected from customers are sent to the state at the end of each month. What journal entry is prepared?

$26,700.

Schmid Corporation issues $540,000, 8%, 5‐year bonds on January 1, 2017 for $489,000. Interest is paid semiannually on January 1 and July 1. If Schmid uses the straight‐line method of amortization of bond discount, the amount of bond interest expense on July 1, 2017 is:

1.5

Sinta Company had inventory of $180,000 at the beginning of the period and $140,000 at the end of the period. It's gross profit for the year was $60,000 from net sales of $300,000. what is Sinta's Inventory turnover for the period?

1.87.

Smart Touch's current ratio for 2019 is _____________.

The beginning retained earnings balance is found on the:

Statement of Retained Earnings.

_______ will not be found on the statement of retained earnings.

Stockholdersʹ equity

52,000

Teeter Company began 2018 with accounts receivable of $400,000 and an allowance for uncollectible accounts of $29,000 (credit balance). Bad debt expense for the year was $36,000 and the ending balance in the allowance for uncollectible accounts account was $13,000. What was the amount of accounts receivable written off during the year?

relative-market-value

The ________ method is used to allocate the cost of multiple assets acquired in a basket purchase. A) relative-market-value B) cost

matching principle

The accounting principle that requires a company to record warranty expense in the same period that it records sales revenue is the:

a balance sheet approach, since it focuses on accounts receivable.

The aging-of-receivables method of estimating uncollectible accounts is:

an account will have a debit balance if:

The amount of the debits exceeds the amount of the credits.

declaration date

The date on which a cash dividend becomes a legal obligation is the:

overstate; overstate

The direct-write off method for uncollectible accounts receivable may ________ net income and ________ total assets in the year of the sale:

percent-of-sales; aging-of-receivables

The income statement approach to estimating uncollectible accounts is called the ________ method. The balance sheet approach to estimating uncollectible accounts is called the ________ method.

debit Interest Receivable and credit Interest Revenue.

The journal entry to record accrued interest on a note receivable at year end is:

debit Depreciation Expense, credit Accumulated Depreciation.

The journal entry to record depreciation expense is:

Salary Expense for gross pay, credit FICA Tax Payable, credit Employee Income Tax Payable and credit Salary Payable for net pay.

The journal entry to record salaries earned by employees will debit:

allowance for bad debts

The net realizable value of accounts receivable is the difference between gross accounts receivable and:

non‐cash investing and financing activity

The purchase of equipment financed by a long‐term notes payable is an example of ________.

evaluate management decisions

The statement of cash flows helps users ________.

what is the impact of inflation on the cash balance at the end of the year?

The statement of cash flows provides answers to all of the following questions except

Which transaction decreases stockholdersʹ equity?

Total expenses greater than total revenues for the period

gross pay; net pay

Total wages employees earned for the payroll period are called ________. The amount of wages the employees take home is the ________.

has no effect on net income

Under the allowance method, the write-off of an uncollectible account ________.

Allowance for Uncollectible Accounts and credit Accounts Receivable.

Under the allowance method, when a company determines that a specific customerʹs Accounts Receivable will not be collected, its accounting department will debit:

The inventory valuation method that tends to smooth out erratic changes in costs is:

Weighted average

$16.50

Wetzel, Inc. has 20,000 shares of cumulative preferred stock outstanding, with annual dividends paid at a rate of $1 per share. Wetzel, Inc. also has 40,000 shares of common stock outstanding. Preferred dividends were passed in the prior year. If Wetzel, Inc. declares a $700,000 dividend, each outstanding share of common stock would receive: (Round your answer to the nearest cent.)

contra-asset

What type of account is Accumulated Depreciation?

contra asset

What type of account is Allowance for Uncollectible Accounts?

carrying value of the bonds.

When a company retires bonds early, the gain or loss on the retirement is the difference between the cash paid and the:

higher in the earlier periods.

When compared to the other methods of depreciation, the double-declining-balance method of depreciation gives depreciation expense that is:

goodwill

Which intangible asset is NOT amortized?

aging-of-receivables method

Which method of estimating bad debt expense focuses on balance sheet relationships?

expressing each yearʹs financial statement line item as a percentage of the base year amount

Which of the following best describes trend analysis

carefully examining one year of data

Which of the following is NOT a way to accurately determine the financial performance of a company?

operating, investing, financing

Which of the following is the typical order of the sections on a statement of cash flows?

Dividends are a distribution of cash, stock, or other property to stockholders.

Which of the following is true of dividends?

It is not subject to amortization.

Which of the following is true of goodwill?

operating activities

Which of the following sections of the statement of cash flows is presented differently between the direct method and indirect method?

The cash proceeds from the sale are less than the book value of the asset.

Which of the following situations always results in a loss on disposal of an asset?

Before a gain or loss on disposal is recognized, the firm must always first recognize current period depreciation expense.

Which of the following statements about disposal of an asset is true?

purchased a building in exchange for 20,000 shares of common stock

Which of the following transactions would be shown in the non‐cash investing and financing activities section of the statement of cash flows?

debit Interest Expense and credit Interest Payable for $700

Wisconsin Bank lends Local Furniture Company $140,000 on November 1. Local Furniture Company signs a $140,000, 3%, 4‐month note. The fiscal year end of Local Furniture Company is December 31. The journal entry made by Local Furniture Company on December 31 is:

positive cash flow of $ 24,900 from investing activities

Wisconsin Farm Equipment Company sold equipment for cash. The income statement shows a loss on the sale of $6000. The net book value of the asset was $30,900. Which of the following statements describes the cash effect of the transaction?

The borrower signs a written promise to pay the lender a definite sum at the maturity date, with interest

With regard to notes receivable, which of the following statements is correct?

liquidity

Working capital is a measure of

debit to Note Receivable for $500,000

Wull Associates sold a piece of equipment to Coral Company on April 1, 2018, for $500,000. Wull agreed to accept a 9-month note with 8% interest (current market rate) due on its maturity date, December 31, 2018. Wullʹs journal entry to record the receipt of the note on April 1, 2018, will include a ________.

When inventory costs are decreasing, the LIFO costing method will generally result in:

a higher gross profit than under FIFO.

30%

dasher inc. during the period had gross sales revenue of $ 300,000 together with sales returns and allowances of $ 50,000. dasher's income statement for the period shows a cost of goods sold is $ 175,000. what is dasher's percentage for the period?

On May 1, Santelle Company purchased $700 of inventory on account with credit terms of 2/10, net 30. Santelle uses the perpetual inventory system. On May 2, the seller gave Santelle a $100 allowance due to a product defect. What journal entry did Santelle Company prepare on May 2?

debit Accounts Payable for $100 and credit Inventory for $100

On August 1, Savage Company purchased $2200 of inventory on account with credit terms of 4/10, net 30. Savage Company uses the perpetual inventory system. On August 15, Savage Company paid the amount due. What journal entry did they prepare on August 15?

debit Accounts Payable for $2,200 and credit Cash for $2,200

Mariah Company has inventory at the end of the year with a historical cost of $95,000. Mariah Company uses the perpetual inventory system. The current net realizable value is $75,600. The journal entry to record the adjustment to the lower of cost or market will be:

debit Cost of Goods Sold for $19,400 and credit Inventory for $19,400

Grogan Company purchases inventory on account with a cost of $1300 and a retail price of $2600. Grogan Company uses the perpetual inventory method. What journal entry is required on the date of purchase?

debit Inventory for $1300 and credit Accounts Payable for $1300

If a company converts accounts receivable to a note, what journal entry is prepared?

debit Notes Receivable and credit Accounts Receivable

corporation pays taxes on its earnings and the shareholders pay taxes on the dividends received from the corporation

double taxation means that the

Under U.S. GAAP, inventories are reported on the balance sheet at:

lower‐of‐cost‐or‐market.

has a credit balance

premium on bonds payable:

The Sales Discounts Forfeited account ________.

represents the discount a customer loses when the customer does not pay within the discount period

retained earnings and paid-in capital

stockholders' equity is divided into

the difference between the cash received on sale and the book value of the equipment.

the difference between the cash received on sale and the book value of the equipment.

the debtor must pay the creditor the maturity value of the note.

when a note matters:

Preferred stockholders receive dividends before the common stockholders only if the preferred stock is cumulative.

which statement is FALSE? A) Preferred stockholders receive dividends before the common stockholders only if the preferred stock is cumulative. B) Preferred stockholders receive dividends before the common stockholders. C) Preferred stockholders have the same basic four rights as common stockholders, unless a right is taken away. D) Preferred stockholders receive assets before the common stockholders if the corporation liquidates.