final accounting

A 60-day, 9% note for $10,000, dated May 1, is received from a customer on account. The maturity value of the note is

$10,150

Machinery was purchased on January 1 for $51,000. The machinery has an estimated life of 7 years and an estimated salvage value of $9,000. Double-declining-balance depreciation for the second year would be (round calculations to the nearest dollar):

$10,500

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

$100,000

A corporation has 50,000 shares of $25 par stock outstanding. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be

150,000 shares

Jefferson uses the percent of sales method of estimating uncollectible expenses. Based on past history, 2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000.​ Which of the following is correct?

Uncollectible accounts are estimated to be $111,000.

A $200 petty cash fund has cash of $20 and receipts of $177. The journal entry to replenish the account would include a credit to You Answered

cash for $180

For accounting purposes, the business entity should be considered separate from its owners if the entity is

corporation, proprietorship, partnership

On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company. The terms of the note were $20,000 face value and 6% interest. On October 30, the journal entry to record the collection of the note should include a

credit to Interest Revenue for $300

When Wisconsin Corporation was formed on January 1, the corporate charter provided for 100,000 shares of $10 par value common stock. The following transaction was among those engaged in by the corporation during its first month of operation: The corporation issued 8,500 shares of stock at a price of $16 per share. ​ The entry to record the above transaction would include a

credit to Paid-In Capital in Excess of Par for $51,000

Which of the following is an example of an accrued expense?

salary owed but not yet paid

Which of the following accounts should be closed to Income Summary at the end of the fiscal year?

service revenue

Using accrual accounting, expenses are recorded and reported only

when they are incurred, whether or not cash is paid

A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. What entry is required in the company's accounts?

debit cash; credit accounts payable

Which of the following entries records the investment of cash by Taylor Thomas, owner of a proprietorship?

debit cash; credit taylor thomas, capital

The adjusting entry to record the depreciation of a building for the fiscal period is

debit depreciation expense; credit accumulated depreciation

The entry to close the appropriate insurance account at the end of the accounting period is

debit income summary; credit insurance expense

The Glenn Corporation issues 1,000, 10-year, 8%, $2,000 bonds dated January 1 at 96. The journal entry to record the issuance will show a

debit to Discount on Bonds Payable for $80,000

The adjusting entry to adjust supplies was omitted at the end of the year. This would affect the income statement by having

expenses understated and therefore net income overstated

The post-closing trial balance differs from the adjusted trial balance in that it does not

include income statement accounts

There are four closing entries. The first one is to close revenues, the second one is to close expenses, the third one is to close ____, and the last one is to close the ____.

income summary, drawing account

Michael Anderson is starting his computer programming business and has deposited in initial investment of $15,000 into the business cash account. Identify how the accounting equation will be affected.

increase assets (Cash) and increase owner's equity (Michael Anderson, Capital)

Earning Revenue

increases assets, increases owner's equity

Franklin Corporation issues $50,000, 10%, 5-year bonds on January 1, for $52,100. Interest is paid semiannually on January 1 and July 1. If Franklin uses the straight-line method of amortization of bond premium, the amount of bond interest expense to be recognized on July 1 is

$2,290

How does th purchase of equipment by signing a note affect the accounting equation?

assets increase; liabilities increase

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Year 1: $10,000 Year 2: 45,000 Year 3: 90,000 ​ Determine the dividends per share for preferred and common stock for the second year.

$2.25 and $0.00

The assets and liabilities of the company are $128,000 and $84,000, respectively. Owner's equity should equal

$44,000

The initials GAAP stand for

Generally accepte accounting principles

A machine with a cost of $75,000 has an estimated residual value of $5,000 and an estimated life of 4 years or 18,000 hours. What is the amount of depreciation for the second full year, using the double-declining-balance method?

$18,750

Which of the following applications of the rules of debit and credit is true?

Increase equipment with a debit and the normal balance is a debit

A fixed asset with a cost of $30,000 and accumulated depreciation of $28,500 is sold for $3,500. What is the amount of the gain or loss on disposal of the fixed asset?

$2,000 gain

Equipment with a cost of $220,000 has an estimated residual value of $30,000 and an estimated life of 10 years or 19,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 2,100 hours?

$19,000

The following units of an inventory item were available for sale during the year. Use this information to answer the following questions. Beginning inventory 10 units at $55 First purchase 25 units at $60 Second purchase 30 units at $65 Third purchase 15 units at $70 The firm uses the periodic inventory system. During the year, 60 units of the item were sold. The value of ending inventory rounded to nearest dollar using average cost is:

$1263

The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. Date Blankets Units Cost May 3 Purchase 5 $20 10 Sale 3 17 Purchase 10 $24 20 Sale 6 23 Sale 3 30 Purchase 10 $30 Assuming that the company uses the perpetual inventory system, determine the cost of goods sold for the sale of May 20 using the FIFO inventory cost method.

$136

If total liabilities decreased by $46,000 during a period of time and owner's equity increased by $60,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is

$14,000 increase

The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. Date Blankets Units Cost May 3 Purchase 5 $20 10 Sale 3 17 Purchase 10 $24 20 Sale 6 23 Sale 3 30 Purchase 10 $30 Assuming that the company uses the perpetual inventory system, determine the cost of goods sold for the sale of May 20 using the LIFO inventory cost method.

$144

The following data were gathered to use in reconciling the bank account of Savannah Company: Balance per bank $16,750 Balance per company records 16,125 Bank service charges 80 Deposit in transit 2,195 NSF check 950 Outstanding checks 3,850 ​ What is the adjusted balance on the bank reconciliation?

$15,095

Equipment with a cost of $160,000, an estimated residual value of $40,000, and an estimated life of 15 years was depreciated by the straight-line method for 4 years. Due to obsolescence, it was determined that the remaining useful life should be shortened by 3 years and the residual value changed to zero. The depreciation expense for the current and future years is

$16,000

Bonds Payable has a balance of $900,000 and Premium on Bonds Payable has a balance of $10,000. If the issuing corporation redeems the bonds at 103, what is the amount of gain or loss on redemption?

$17,000 loss

Prentice Company, Inc. had cash sales of $95,150, credit sales of $83,975, sales returns and allowances of $2,050, and sales discounts of $3,825. Prentice's net sales for this period equal:

$173,250

Donner Company is selling a piece of land adjacent to its business premises. An appraisal reported the market value of the land to be $220,000. The Focus Company initially offered to buy the land for $177,000. The companies settled on a purchase price of $212,000. On the same day, another piece of land on the same block sold for $232,000. Under the cost concept, at what amount should the land be recorded in the accounting records of Focus Company?

$212,000

An asset was purchased for $120,000 on January 1, Year 1 and originally estimated to have a useful life of 10 years with a residual value of $10,000. At the beginning of the third year, it was determined that the remaining useful life of the asset was only 4 years with a residual value of $2,000. Calculate the third-year depreciation expense using the revised amounts and straight-line method.

$24,000

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Year 1: $10,000 Year 2: 45,000 Year 3: 90,000 ​ Determine the dividends in arrears for preferred stock for the second year

$25,000

The Designer Company issued 10-year bonds on January 1. The 6% bonds have a face value of $800,000 and pay interest every January 1 and July 1. The bonds were sold for $690,960 based on the market interest rate of 8%. Designer uses the effective interest method to amortize bond discounts and premiums. On July 1 of the first year, Designer should record interest expense (round to the nearest dollar) of

$27,638

Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 3% of credit sales will be uncollectible. On January 1, the Allowance for Doubtful Accounts had a credit balance of $2,400. During the year, Abbott wrote off accounts receivable totaling $1,800 and made credit sales of $100,000. After the adjusting entry, the December 31 balance in Bad Debt Expense will be

$3,000

A company purchased $3,700 of merchandise on July 5 with terms 3/10, n/30. On July 7, it returned $410 worth of merchandise. On July 8, it paid the full amount due. The amount of the cash paid on July 8 equals:

$3,191

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Year 1: $10,000 Year 2: 45,000 Year 3: 90,000 ​ Determine the dividends per share for preferred and common stock for the third year.

$3.25 and $0.25

Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment), and bad debt expense is estimated at 4% of credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is

$32,000

A machine with a cost of $120,000 has an estimated residual value of $15,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-output method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

$35,000

On January 1, $2,000,000, 5-year, 10% bonds, were issued for $1,960,000. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, the semiannual amortization amount is

$4,000

On January 1, the Elias Corporation issued 10% bonds with a face value of $50,000. The bonds are sold for $46,000. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, ten years from now. Elias records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 of the first year is

$5,400

Rodgers Company gathered the following reconciling information in preparing its May bank reconciliation. Calculate the adjusted cash balance per books on May 31. ​ Cash balance per books, 5/31 $5,400 Deposits in transit 375 Notes receivable and interest collected by bank 650 Bank charge for check printing 40 Outstanding checks 2,400 NSF check 140

$5,870

At the end of the current year, Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and sales for the year total $2,500,000. An analysis of receivables estimates uncollectible receivables as $25,000. ​ Determine the net realizable value of accounts receivable after adjustment.

$525,000

The inventory data for an item for November are: Nov. 1 Inventory 20 units at $19 4 Sold 10 units 10 Purchased 30 units at $20 17 Sold 20 units 30 Purchased 10 units at $21 Using a perpetual system, what is the cost of the goods sold for November if the company uses FIFO?

$580

The inventory data for an item for November are: Nov. 1 Inventory 20 units at $19 4 Sold 10 units 10 Purchased 30 units at $20 17 Sold 20 units 30 Purchased 10 units at $21 Using a perpetual system, what is the cost of the goods sold for November if the company uses LIFO?

$590

The supplies account has a balance of $4,400 at the beginning of the year and was debited during the year for $2,400, representing the total of supplies purchased during the year. If $400 of supplies are on hand at the end of the year, the supplies expense to be reported on the income statement for the year is

$6,400

The Merchant Company issued 10-year bonds on January 1. The 15% bonds have a face value of $100,000 and pay interest every January 1 and July 1. The bonds were sold for $117,205 based on the market interest rate of 12%. Merchant uses the effective interest method to amortize bond discounts and premiums. On July 1 of the first year, Merchant should record interest expense (round to the nearest dollar) of

$7,032

Texas Inc. has 10,000 shares of 6%, $125 par value cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31. What is the annual dividend on the preferred stock?

$75,000 in total

Addison, Inc. uses a perpetual inventory system. Below is information about one inventory item for the month of September. Use this information to answer the questions that follow. Sep. 1 Inventory 20 units at $20 4 Sold 10 units 10 Purchased 30 units at $25 17 Sold 20 units 30 Purchased 10 units at $30 ​ If Addison uses LIFO, the cost of the ending inventory on September 30 is

$750

The allowance method of estimating uncollectible accounts receivable based on an analysis of receivables shows that $640 of accounts receivable are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $110. The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of:

$750

The balance in the office supplies account on January 1 was $7,000, supplies purchased during January were $3,000, and the supplies on hand at January 30 were $2,000. The amount to be used for the appropriate adjusting entry is

$8,000

Addison, Inc. uses a perpetual inventory system. Below is information about one inventory item for the month of September. Use this information to answer the questions that follow. Sep. 1 Inventory 20 units at $20 4 Sold 10 units 10 Purchased 30 units at $25 17 Sold 20 units 30 Purchased 10 units at $30 ​ If Addison uses FIFO, the cost of the ending inventory on September 30 is

$800

Gently Laser Clinic purchased laser equipment for $8,500, paid $2,250 down, with the remainder to be paid later. The correct entry would be

Debit Equipment Expense 8,500 Credit Accounts Payable 6,250 Credit Cash 2,250

If inventory is being valued at cost and the price level is steadily rising, the method of costing that will yield the highest net income is

FIFO

Treasury stock that had been purchased for $5,600 last month was reissued this month for $8,500. The journal entry to record the reissuance would include a credit to

Paid-In Capital from Sale of Treasury Stock for $2,900

The Sneed Corporation issues 10,000 shares of $50 par preferred stock for cash at $75 per share. The entry to record the transaction will consist of a debit to Cash for $750,000 and a credit or credits to

Preferred Stock for $500,000 and Paid-In Capital in Excess of Par—Preferred Stock for $250,000

A credit balance in which of the following accounts would indicate a likely error?

Salary expense

Basil Corporation issues for cash $1,000,000 of 8%, 10-year bonds, interest payable annually, at a time when the market rate of interest is 7%. The straight-line method is adopted for the amortization of bond discount or premium. Which of the following statements is true?

The carrying amount decreases from its amount at issuance date to $1,000,000 at maturity.

Which of the following is true regarding normal balances of accounts?

The normal balance is on the increase side of the account

Receipts from cash sales of $3,200 were recorded incorrectly in the cash receipts journal as $2,300. This item would be included on the bank reconciliation as a(n)

addition to the balance per company's records

A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. This item would be included on the bank reconciliation as a(n)

addition to the balance per the company's records

When is the adjusted trial balance prepared?

after adjusting journal entries are posted

The statement of owner's equity should be prepared

after the income statement and before the balance sheet

Which of the following is not true about closing entries?

all real accounts are closed at the end of the period

How does paying a liability in cash affect the accounting equation?

assets decrease; liabilities decrease

Land, originally purchased for $30,000, is sold for $62,000 in cash. What is the effect of the sale on the accounting equation?

assets increase $32,000; owner's equity increases $32,000

Prior to the adjusting process, accrued expenses have

been incurred, not paid, and not recorded

The Freeman Corporation issues 2,000, 10-year, 8%, $1,000 bonds dated January 1 at 96. The journal entry to record the issuance will show a

debit to Cash for $1,920,000

A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity. The journal entry to recognize this event is

debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Revenue, $120

Allowance for Doubtful Accounts has a credit balance of $1,300 at the end of the year (before adjustment). The company prepares an analysis of customers' accounts to estimate the amount of uncollectible accounts of $41,900. Which of the following adjusting entries would be made to record the Bad Debt Expense for the year?

debit Bad Debt Expense, $40,600; credit Allowance for Doubtful Accounts, $40,600

On March 12, Klein Company, Inc. sold merchandise in the amount of $7,800 to Babson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Klein uses the perpetual inventory system. On March 15, Babson returns some of the merchandise. The selling price of the merchandise is $600 and the cost of the merchandise returned is $350. Babson pays the invoice on March 20, and takes the appropriate discount. The journal entry that Klein makes on March 20 is:

debit Cash 7,056 debit Sales discounts 144 credit Accounts receivable 7,200

The journal entry a company records for the issuance of bonds when the contract rate is greater than the market rate would be

debit Cash, credit Premium on Bonds Payable and Bonds Payable

The journal entry to close the Fees Earned, $750, and Rent Revenue, $175, accounts during the year-end closing process would be:

debit Fees Earned 750 debit Rent Revenue 175 credit Income Summary 925

Smokey Company purchases a one-year insurance policy on July 1 for $3,600. The adjusting entry on December 31 is

debit Insurance Expense, $1,800; credit Prepaid Insurance, $1,800

The journal entry a company records for the payment of interest, interest expense, and amortization of bond discount is

debit Interest Expense, credit Cash and Discount on Bonds Payable

The balance in the prepaid rent account before adjustment at the end of the year is $32,000, which represents four months' rent paid on December 1. The adjusting entry required on December 31 is

debit Rent Expense, $8,000; credit Prepaid Rent, $8,000

Buster Industries pays weekly salaries of $30,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is

debit Salary Expense, $12,000; credit Salaries Payable, $12,000

On July 1, Ferguson Company, Inc. sold merchandise in the amount of $5,800 to Tracey Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Ferguson uses the perpetual inventory system. On July 5, Tracey returns some of the merchandise. The selling price of the merchandise is $500 and the cost of the merchandise returned is $350. The entry or entries that Ferguson must make on July 5 is:

debit Sales returns and allowances 500 credit Accounts receivable 500 debit Merchandise inventory 350 credit Cost of goods sold 350

Which of the following entries records the payment of an account payable?

debit accounts payable; credit cash

Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $390,000 and credit sales are $1,300,000. An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment?

debit bad debt expense 17,000 credit allowance for doubtful accounts 17,000

An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts totals $6,400. If Allowance for Doubtful Accounts has a $1,300 debit balance, the adjustment to record the bad debt expense for the period will require a

debit to Bad Debt Expense for $7,700

On January 1, Vermont Corporation had 40,000 shares of $10 par value common stock issued and outstanding. All 40,000 shares had been issued in a prior period at $20.00 per share. On February 1, Vermont purchased 3,750 shares of treasury stock for $24 per share and later sold the treasury shares for $21 per share on March 1. ​ The journal entry to record the purchase of the treasury shares on February 1 would include a

debit to treasury stock for $90,000

A business paid $7,000 to a creditor in payment of an amount owed. The effect of the transaction on the accounting equation was to

decrease an asset, decrease a liability

Gomez Service Company paid its first installment on a note payable in the amount of $2,000. How will this transaction affect the accounting equation?

decrease assets (Cash) and decrease liabilities (Notes Payable)

A debit may signify a(n)

decrease in liability accounts

A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 a share. The effect of the declaration and issuance of the stock dividend is to

decrease retained earnings, increase common stock, and increase paid-in capital

A trial balance is prepared to

discover errors that affect the equality of debits and credits

Which of the following entries records the payment of insurance for the current month?

insurance expense, debit; cash, credit

The debit side of an account

is the left side of the account

Adjusting entries are

needed to bring accounts up to date and match revenue and expense

Inventory at the end of the year was inadvertently overstated. Which of the following statements correctly states the effect of the error on net income, assets, and stockholders' equity?

net income is overstated, assets are overstated, and stockholders' equity is overstated

On which financial statement will Income Summary be shown?

no financial statement

Which of the following entries records the acquisition of office supplies on account?

office supplies, debit; accounts payable, credit

Which group of accounts is comprised of only assets?

prepaid expenses, buildings, patents

Which of the accounting steps in the accounting process below would be completed last?

preparing the financial statements

The matching concept

states that the revenues and related expenses should be reported in the same period

An account is said to have a debit balance if

the amount of the debits exceeds the amount of the credits

The first item appearing on the statement of retained earnings is

the beginning balance of retained earnings

Which of the following is not a correct rule of debits and credits?

the normal balance for revenues and expenses is a credit

What is the purpose of the adjusted trial balance?

to verify that the debits and credits balance

Which of the following is the appropriate general journal entry to record the declaration of cash dividends?

​debit Cash Dividends credit Cash Dividends Payable