Accting

On the first day of the current year, Griffin Company sold equipment for less than its book value. Which of the following is part of the journal entry to record the sale?

A debit to Loss on Sale of Plant Assets

An exclusive right to operate or sell a specific brand of products in a given geographic area is called:

A franchise.

Which of the basic shareholder rights do preferred stockholders normally give up?

The right to vote on corporate governance issues

Which of the following accounts has a normal debit balance?

Treasury stock

On January 1, the Tlaquepaque Company was authorized to issue 100,000 shares of $4 par value common stock and 50,000 shares of $25 preferred stock. If Tlaquepaque Company issued 5,000 shares of common stock for $10 per share on January 10, the entry to record the issuance of the stock would include a credit to common stock of:

$ 20,000 ($4 par value x 5,000 shares)

General Mills sells cereal and other food items to Safeway. General Mills mails out 1,000,000 coupons to consumers on January 1 for $0.50 off a box of cereal. Based on past experience with this type of coupon, General Mills estimates that five percent of the coupons will be redeemed at Safeway. How much of a "coupon liability" will General Mills record on January 1 when the coupons are mailed?

$ 25,000 (1,000,000 coupons x 5% x $0.50)

Mogollon Inc. is authorized to issue 5,000,000 shares of $10 par common stock. 500,000 shares of stock were originally sold for $25 per share. The stock is currently selling for $20 per share and Mogollon has decided to repurchase 10,000 shares of stock. When Mogollon repurchases their own stock, how much gain or loss will the company recognize on its income statement?

$0

Smith & Sons issued $200,000 of 10 year, 12 percent bonds payable on January 1 for $250,000, yielding an effective interest rate of 10 percent. Interest is payable on January 1 and July 1. Calculate the bond interest expense for the first six months using the effective interest amortization.

$12,500 ($250,000 x 10% x 6/12 months)

A firm issued $250,000 of ten‐year, 12 percent bonds payable on January 1, for $281,180, yielding an effective rate of ten percent. Interest is payable on January 1 and July 1 each year. The firm records amortization on each interest date. Bond interest expense for the first six months using effective interest amortization (see Appendix 10A) is: Select one: $14,331. $15,000. $14,059. $16,871.

$14,059.

Gila Bend Corporation has 700,000 authorized shares of $1 par value common stock. The company issued 400,000 shares and has additional paid-in capital-inexcess of par value of $800,000. The company does not have any treasury stock. Gila Bend declared a 15 percent stock dividend when the stock was selling for $5 per share. As part of the entry to record the stock dividend, Gila Bend would credit Additional Paid-in Capital in Excess of Par Value for:

$240,000 (400,000 shares x 15%) x ($5 - $1 per share)

Goldsteen Corporation obtained a $5,000 loan from a bank on April 1. If the bank charges eight percent interest annually, how much interest will be accrued at December 31? Select one: $400 $275 $300 $250

$300

Davidson Company sold one of its worn out delivery trucks on December 31, 2019. The truck was purchased on January 1, 2016, for $50,000 and was depreciated on a straight‑line basis over a 5‑year life. There was no salvage value associated with the truck. If the truck was sold for $14,000, what was the amount of gain or loss recorded at the time of the sale?

$4,000 gain

On January 1, Smith & Sons purchased a delivery truck for $24,000, having a salvage value of $2,000, and an estimated useful life of 100,000 miles. Calculate the depreciation expense for Year 2 assuming the truck is driven 20,000 miles.

$4,400 ($24,000 - $2,000) x (20,000 miles/100,000 miles)

On January 1, Smith & Sons purchased a delivery truck for $24,000, having a salvage value of $2,000, and an estimated useful life of 4 years. Calculate the depreciation expense in Year 2 assuming the use of straight-line depreciation.

$5,500 ($24,000 - $2,000)/4 years

On January 1, Smith & Sons purchased a delivery truck for $24,000, having a salvage value of $2,000, and an estimated useful life of 4 years. Calculate the depreciation expense in Year 2 assuming the use of the double-declining balance method.

$6,000 ($24,000 - $12,000) x 2/4

Smith & Sons has a dividend per share of $2.00, earnings per share of $4.50, and a market price per share of $16.00. What is the company's dividend payout ratio?

0.4 ($2.00/$4.50)

A company reports net income of $12,000, net sales of $30,000, and average total assets of $48,000. What is the company's asset turnover?

0.625

A company reports net income of $8,000, sales revenue of $18,000, and average total assets of $24,000. Calculate the company's asset turnover.

0.75 (rounded) ($18,000/$24,000)

Smith & Sons reported net income of $10,000, and has a beginning of year common stockholders' equity balance of $5,000 and an end of year common stockholders' equity balance of $9,000. What is the company's return on common stockholders' equity?

1.4 $10,000/ [($5,000 + $9,000)/2]

A company reports net income of $12,000, net sales of $30,000, and average total assets of $48,000. What is the company's return on assets?

25.0 percent

Ahwatukee Airlines has the following shareholders' equity at December 31: Common Stock, 5,000,000 shares authorized, $5 par value $2,000,000 Paid-in Capital in Excess of Par Value $4,000,000 Retained Earnings $16,530,000 Treasury Stock (150,000 shares) $1,800,000 How many shares of stock are outstanding at December 31?

250,000 [($2,000,000/$5 par value) - 150,000 shares]

Apolo Company reported year‐end current assets of $75,000 and current liabilities of $25,000. The company's current ratio is:

3

Smith & Sons reported current assets of $15,000, quick assets of $10,000, and current liabilities of $5,000. What is the company's current ratio?

3 ($15,000/$5,000)

The assets of a corporation that has liabilities of $170,000, common stock of $85,000, and retained earnings of $74,000.

329,000

A company reports net income of $8,000, sales revenue of $18,000, and average total assets of $24,000. Calculate the company's return on assets.

33 percent (rounded) ($8,000/$24,000)

The stockholders' equity of a corporation that has assets of $750,000 and liabilities of $300,000.

450,000

The following data relate to a firm's purchase of a machine used in the manufacture of its product: Invoice price $34,000 Applicable sales tax 2,000 Cash discount taken for prompt payment 400 Freight paid 260 Cost of insurance coverage on machine while in transit 125 Installation costs 2,000 Testing and adjusting costs 475 Repair of damages to machine caused by the firm's employees 750 Prepaid maintenance contract for first year of machine's use 400

Acquisition Cost = $38,460

Impairments of plant assets are recorded as a consequence of which accounting principle or assumption?

Conservatism

In financial statement presentations, the Discount on Bonds Payable account is: Select one: -Added to Bond Interest Expense. -Deducted from Bond Interest Expense. -Deducted from Bonds Payable. -Added to Bonds Payable.

Deducted from Bonds Payable.

On January 1, Bush Company purchased a delivery truck for $10,000. The company estimates the truck will be driven 80,000 miles over its eight‑year useful life. The estimated salvage value is $2,000. The truck was driven 12,000 miles in its first year. Which method results in the largest depreciation expense for the first year?

Double-declining balance

On October 1, Smith & Sons borrowed $60,000 from Bank of America on a 6 month, 7 percent note. If the company's fiscal year ends on December 31 and no adjusting entries have been made since the initial journal entry on October 1, Smith & Sons should make a year-end adjusting entry involving a debit to:

Interest expense for $1,050

What is the usual liability of stockholders for corporation actions? -Limited to the amount of their investment in the corporation -Limited to the par value or stated value of the shares of stock they hold -Unlimited -Limited to the amount of a corporation's retained earnings

Limited to the amount of their investment in the corporation

Which of the following is not considered to be a contingent liability?

Notes payable

Lunar, Inc., plans to issue $300,000 of 10% bonds that will pay interest semiannually and mature in 5 years. Assume that the effective interest rate is 12% per year compounded semiannually. Calculate the selling price of the bonds. Use financial calculator or Excel to calculate answers. Round answers to the nearest whole number.

Selling price of bonds is $277,919

Tide, Inc., plans to issue $900,000 of 9% bonds that will pay interest semiannually and mature in 10 years. Assume that the effective interest is 8% per year compounded semiannually. Calculate the selling price of the bonds. Use financial calculator or Excel to calculate answers. Round answers to the nearest whole number.

Selling price of bonds is $961,159

Accounting for the periodic amortization of intangible assets is similar to which depreciation method?

Straight-line depreciation

Accounting for the periodic amortization of intangible assets is similar to which depreciation method?

Straight‑line

Which of the following expenditures would not be capitalized as part of the cost of purchasing a piece of equipment?

The cost to train employees to maintain the new equipment

The acquisition cost of a plant asset is equal to the asset's implied cash price and:

The reasonable and necessary costs incurred to prepare the asset for its intended use.

Italian Garden Restaurant sold $20,000 of gift cards in May. These gift cards may be used anytime before their expiration on May 31 of the following year. In May, when the gift cards are sold, Italian Garden will credit:

Unearned Revenue for $20,000

An example of a current liability that must be accrued at the end of a fiscal period is:

Wages payable

Maggie Enterprises issued $110,000 of 6%, 5-year bonds with interest payable semiannually. Determine the issue price if the bonds are priced to yield (a) 6%, (b) 8%, and (c) 4%. Use financial calculator or Excel to calculate answers. Round answers to the nearest whole number.

a)110,000 b)101,078 c)119,881

Conner Enterprises issued $150,000 of 10%, 5-year bonds with interest payable semiannually. Determine the issue price if the bonds are priced to yield (a) 10%, (b) 8%, and (c) 12%. Use financial calculator or Excel to calculate answers. Round answers to the nearest whole number.

a)150000 b)162166 c)138959

Label each of the following characteristics of a corporation as either an (A) advantage, or (D) disadvantage: a. Limited liability Answer b. Taxation Answer c. Regulations Answer d. Transferability of ownership

a. Advantage (A) b. Disadvantage (D) c. Disadvantage (D) d. Advantage (A)