Management 30A Final

20. Equipment was purchased for $85,000 on January 1, 2016. Freight charges amounted to $3,500 and there was a cost of $10,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $15,000 salvage value at the end of its 5-year useful life. What is the amount of accumulated depreciation at December 31, 2017, if the straight-line method of depreciation is used? a. $33,400. b. $16,700. c. $14,300. d. $28,600.

a. $33,400 [(Purchase Price + Freight + Foundation - Salvage Value)/(Useful Life Year)] x [2]

31. When an asset is sold, a gain occurs when the a. sale price exceeds the book value of the asset sold. b. sale price exceeds the original cost of the asset sold. c. book value exceeds the sale price of the asset sold. d. sale price exceeds the depreciable cost of the asset sold.

a. sale price exceeds the book value of the asset sold

88. Nance Corporation's December 31, 2017 balance sheet showed the following: 6% preferred stock, $20 par value, cumulative, 30,000 shares authorized; 20,000 shares issued $ 400,000 Common stock, $10 par value, 3,000,000 shares authorized; 1,950,000 shares issued, 1,920,000 shares outstanding 19,500,000 Paid-in capital in excess of par value - preferred stock 60,000 Paid-in capital in excess of par value - common stock 28,000,000 Retained earnings 9,650,000 Treasury stock (30,000 shares) 630,000 Nance's total paid-in capital was a. $47,960,000. b. $48,590,000. c. $47,330,000. d. $28,060,000.

a. $47,960,000.

52. Bonds with a face value of $500,000 and a quoted price of 97¼ have a selling price of a. $486,250. b. $485,125. c. $485,013. d. $487,500.

a. $486,250.

30. A company sells a plant asset that originally cost $360,000 for $120,000 on December 31, 2017. The accumulated depreciation account had a balance of $180,000 after the current year's depreciation of $30,000 had been recorded. The company should recognize a a. $60,000 loss on disposal. b. $40,000 gain on disposal. c. $120,000 loss on disposal. d. $120,000 gain on disposal.

a. $60,000 loss on disposal

The financial statements of the Phelps Manufacturing Company reports net sales of $600,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year and end of the year, respectively. What is accounts receivable turnover for Phelps? a. 10.0 times b. 15.0 times c. 7.5 times d. 5.0 times

a. 10.0 times

77. Johnson Company issued 900 shares of no-par common stock for $17,100. Which of the following journal entries would be made if the stock has no stated value? a. Cash 17,100 Common Stock - No-Par Value 17,100 b. Cash 17,100 Common Stock - No-Par Value 900 Paid-in Capital in Excess of Par 16,200 c. Cash 17,100 Common Stock - No-Par Value 900 Paid-in Capital in Excess of Stated Value 16,200 d. Common Stock - No-Par Value 17,100 Cash

a. Cash 17,100 Common Stock - No-Par Value 17,100

38. Which of the following most likely would be classified as a current liability? a. Dividends payable b. Bonds payable in 5 years c. Three-year notes payable d. Mortgage payable as a single payment in 10 years

a. Dividends payable

72. The term legal capital is a descriptive term for a. stockholders' equity. b. par value. c. residual equity. d. market value.

b. par value.

41. Moss County Bank agrees to lend the Sadowski Brick Company $500,000 on January 1. Sadowski Brick Company signs a $500,000, 6%, 9-month note. What is the adjusting entry required if Sadowski Brick Company prepares financial statements on June 30? a. Interest Expense 15,000 Interest Payable 15,000 b. Interest Expense 15,000 Cash 15,000 c. Interest Payable 15,000 Cash 15,000 d. Interest Payable 15,000 Interest Expense 15,000

a. Interest Expense 15,000 Interest Payable 15,000

74. The amount of stock that may be issued according to the corporation's charter is referred to as the a. authorized stock. b. issued stock. c. unissued stock. d. outstanding stock.

a. authorized stock.

50. The following totals for the month of March were taken from the payroll records of Kern Company. Salaries $270,000 FICA taxes withheld 20,655 Income taxes withheld 59,400 Medical insurance deductions 3,915 Federal unemployment taxes 2,160 State unemployment taxes 13,500 The entry to record the accrual of federal unemployment tax would include a a. credit to Federal Unemployment Taxes Payable for $2,160. b. debit to Federal Unemployment Taxes Expense for $2,160. c. credit to Payroll Tax Expense for $2,160. d. debit to Federal Unemployment Taxes Payable for $2,160.

a. credit to Federal Unemployment Taxes Payable for $2,160.

The following totals for the month of April were taken from the payroll records of Noll Company. Salaries $120,000 FICA taxes withheld 9,180 Income taxes withheld 25,000 Medical insurance deductions 4,500 Federal unemployment taxes 320 State unemployment taxes 2,160 The entry to record the accrual of federal unemployment tax would include a a. credit to Federal Unemployment Taxes Payable for $320. b. debit to Federal Unemployment Taxes Expense for $320. c. credit to Payroll Tax Expense for $320. d. debit to Federal Unemployment Taxes Payable for $320.

a. credit to Federal Unemployment Taxes Payable for $320.

49. The following totals for the month of April were taken from the payroll records of Noll Company. Salaries $120,000 FICA taxes withheld 9,180 Income taxes withheld 25,000 Medical insurance deductions 4,500 Federal unemployment taxes 320 State unemployment taxes 2,160 The journal entry to record the monthly payroll on April 30 would include a a. debit to Salaries and Wages Expense for $120,000. b. credit to Salaries and Wages Payable for $120,000. c. debit to Salaries and Wages Payable for $120,000. d. debit to Salaries and Wages Expense for $81,320.

a. debit to Salaries and Wages Expense for $120,000.

22. The declining-balance method of depreciation produces a(n) a. decreasing depreciation expense each period. b. increasing depreciation expense each period. c. declining percentage rate each period. d. constant amount of depreciation expense each period.

a. decreasing depreciation expense each period

39. With an interest-bearing note, the amount of assets received upon issuance of the note is generally a. equal to the note's face value. b. greater than the note's face value. c. less than the note's face value. d. equal to the note's maturity value.

a. equal to the note's face value

56. If bonds are issued at a premium, the stated interest rate is a. higher than the market rate of interest. b. lower than the market rate of interest. c. too low to attract investors. d. adjusted to a higher rate of interest.

a. higher than the market rate of interest.

A company purchased factory equipment for $450,000. It is estimated that the equipment will have $45,000 salvage value at the end of its estimated 5-year useful life. If the company uses the double-declining balance method of depreciation, the amount of annual depreciation recorded for the second year after purchase would be: a. $180,000 b. $108,000 c. $162,000 d. $97,200

b. $108,000

24. On November 1, 2016, Love Company places a new asset into service. The cost of the asset is $90,000 with an estimated 5-year life and $10,000 salvage value at the end of its useful life. What is the depreciation expense for 2017 if Love Company uses the straight-line method of depreciation? a. $4,000. b. $16,000. c. $2,667. d. $9,000.

b. $16,000 (Cost - Salvage Value)/(Useful Life Year)

Givens Retail purchased land for a new parking lot for $125,000. The paving cost $175,000 and the lights to illuminate the new parking area cost $60,000. Which of the following statements is true with respect to these additions? a. $300,000 should be debited to Land account b. $235,000 should be debited to Land Improvements c. $360,000 should be debited to the Land account d. $360,000 should be debited to Land Improvements

b. $235,000 should be debited to Land Improvements

19. Equipment was purchased for $150,000. Freight charges amounted to $7,000 and there was a cost of $20,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $30,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be a. $35,400. b. $29,400. c. $24,600. d. $24,000.

b. $29,400 (Purchase Price + Freight + Foundation - Salvage Value)/(Useful Life Year)

28. An asset was purchased for $400,000. It had an estimated salvage value of $80,000 and an estimated useful life of 10 years. After 5 years of use, the estimated salvage value is revised to $64,000 but the estimated useful life is unchanged. Assuming straight-line depreciation, depreciation expense in Year 6 would be a. $48,000. b. $35,200. c. $24,000. d. $33,600.

b. $35,200

14. Arnold Company purchases a new delivery truck for $45,000. The sales taxes are $2,500. The logo of the company is painted on the side of the truck for $1,200. The truck's annual license is $120. The truck undergoes safety testing for $220. What does Arnold record as the cost of the new truck? a. $49,040. b. $48,920. c. $47,500. d. $46,920.

b. $48,920

37. The following information is provided for Nguyen Company and Northwest Corporation. (in $ millions) Nguyen Company Northwest Corporation Net income 2017 $165 $420 Net sales 2017 1,650 4,900 Total assets 12/31/15 1,000 2,400 Total assets 12/31/16 1,050 3,000 Total assets 12/31/17 1,150 4,000 What is Nguyen's asset turnover for 2017? a. 4.00 times b. 1.50 times c. 0.25 times d. 0.67 times

b. 1.50 times

The financial statements of the Melton Manufacturing Company reports net sales of $360,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of the year, respectively. What is the average collection period for accounts receivable in days? a. 81.1 b. 40.6 c. 50.7 d. 30.4

b. 40.6

66. Which of the following statements reflects the transferability of ownership rights in a corporation? a. If a stockholder decides to transfer ownership, he must transfer all of his shares. b. A stockholder may dispose of part or all of his shares. c. A stockholder must obtain permission of the board of directors before selling shares. d. A stockholder must obtain permission from at least three other stockholders before selling shares.

b. A stockholder may dispose of part or all of his shares.

51. Julie Lambert has a large consulting practice. New clients are required to pay one-half of the consulting fees up front. The balance is paid at the conclusion of the consultation. How does Lambert account for the cash received at the end of the engagement? a. Cash Unearned Service Revenue b. Cash Unearned Service Revenue Service Revenue c. Prepaid Service Revenue Service Revenue d. No entry is required when the engagement is concluded.

b. Cash Unearned Service Revenue Service Revenue

60. Five thousand bonds with a face value of $1,000 each, are sold at 97. The entry to record the issuance is a. Cash 4,850,000 Bonds Payable 4,850,000 b. Cash 4,850,000 Discount on Bonds Payable 150,000 Bonds Payable 5,000,000 c. Cash 4,850,000 Premium on Bonds Payable 150,000 Bonds Payable 5,000,000 d. Cash 5,000,000 Discount on Bonds Payable 150,000 Bonds Payable 4,850,000

b. Cash 4,850,000 Discount on Bonds Payable 150,000 Bonds Payable 5,000,000

40. Moss County Bank agrees to lend the Sadowski Brick Company $500,000 on January 1. Sadowski Brick Company signs a $500,000, 6%, 9-month note. The entry made by Sadowski Brick Company on January 1 to record the proceeds and issuance of the note is a. Interest Expense 22,500 Cash. 477,500 Notes Payable 500,000 b. Cash 500,000 Notes Payable 500,000 c. Cash 500,000 Interest Expense 22,500 Notes Payable 522,500 d. Cash 500,000 Interest Expense 22,500 Notes Payable 500,000 Interest Payable 22,500

b. Cash 500,000 Notes Payable 500,000

78. Tomlinson Packaging Corporation began business in 2017 by issuing 50,000 shares of $5 par common stock for $8 per share and 5,000 shares of 6%, $10 par preferred stock for par. At year end, the common stock had a market value of $10. On its December 31, 2017 balance sheet, Tomlinson Packaging would report a. Common Stock of $500,000. b. Common Stock of $250,000. c. Common Stock of $400,000. d. Paid-in Capital of $330,000.

b. Common Stock of $250,000.

65. Which of the following would not be true of a privately held corporation? a. It is sometimes called a closely held corporation. b. Its shares are regularly traded on the New York Stock Exchange. c. It does not offer its shares for sale to the general public. d. It is usually smaller than a publicly held company.

b. Its shares are regularly traded on the New York Stock Exchange.

42. Moss County Bank agrees to lend the Sadowski Brick Company $500,000 on January 1. Sadowski Brick Company signs a $500,000, 6%, 9-month note. What entry will Sadowski Brick Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30? a. Notes Payable 522,500 Cash 522,500 b. Notes Payable 500,000 Interest Payable 22,500 Cash 522,500 c. Interest Expense 22,500 Notes Payable 500,000 Cash 522,500 d. Interest Payable 15,000 Notes Payable 500,000 Interest Expense 7,500 Cash 522,500

b. Notes Payable 500,000 Interest Payable 22,500 Cash 522,500

27. An expenditure for which of the following items would be considered a revenue expenditure? a. Plant asset. b. Ordinary repair. c. Addition. d. Improvements.

b. Ordinary Repair

71. The term residual claim refers to a stockholders' right to a. receive dividends. b. share in assets upon liquidation. c. acquire additional shares when offered. d. exercise a proxy vote.

b. share in assets upon liquidation.

86. Nice Corporation issues 40,000 shares of $100 par value preferred stock for cash at $110 per share. The entry to record the transaction will consist of a debit to Cash for $4,400,000 and a credit or credits to a. Preferred Stock for $4,400,000. b. Preferred Stock for $4,000,000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $400,000. c. Preferred Stock for $4,000,000 and Retained Earnings for $300,000. d. Paid-in Capital from Preferred Stock for $4,400,000.

b. Preferred Stock for $4,000,000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $400,000.

54. If the market interest rate for a bond is higher than the stated interest rate, the bond will sell at a. a premium. b. a discount. c. par. d. either a discount or premium.

b. a discount.

58. Selling the bonds at a premium has the effect of a. causing the total cost of borrowing to be higher than the bond interest paid. b. causing the total cost of borrowing to be lower than the bond interest paid. c. raising the effective interest rate above the state interest rate. d. increasing the amount of cash paid for interest each 6 months.

b. causing the total cost of borrowing to be lower than the bond interest paid.

84. The board of directors of Yancey Company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on July 15, 2017. The dividend is to be paid on August 15, 2017, to stockholders of record on July 31, 2017. The correct entry to be recorded on July 15, 2017, will include a a. debit to Dividends Payable. b. debit to Cash Dividends. c. credit to Cash. d. credit to Cash Dividends.

b. debit to Cash Dividends.

57. Yanik Corporation issues 5,000, 10-year, 8%, $1,000 bonds dated January 1, 2017, at 97. The journal entry to record the issuance will show a a. debit to Cash of $5,000,000. b. debit to Discount on Bonds Payable for $150,000. c. credit to Bonds Payable for $4,850,000. d. credit to Cash for $4,850,000.

b. debit to Discount on Bonds Payable for $150,000.

59. Over the term of the bonds, the balance in the Discount on Bonds Payable account will a. fluctuate up and down if the market is volatile. b. decrease. c. increase. d. be unaffected until the bonds mature.

b. decrease.

79. The acquisition of treasury stock by a corporation a. increases its total assets and total stockholders' equity. b. decreases its total assets and total stockholders' equity. c. has no effect on total assets and total stockholders' equity. d. requires that a gain or loss be recognized on the income statement.

b. decreases its total assets and total stockholders' equity.

90. The asset turnover measures a. how often a company replaces its assets. b. how efficiently a company uses its assets to generate sales. c. the portion of the assets that have been financed by creditors. d. the overall rate of return on assets.

b. how efficiently a company uses its assets to generate sales.

76. Paid-in Capital in Excess of Par Value a. is credited when no-par stock does not have a stated value. b. is reported as part of paid-in capital on the balance sheet. c. represents the amount of legal capital. d. normally has a debit balance.

b. is reported as part of paid-in capital on the balance sheet.

32. A truck costing $75,000 and on which $65,000 of accumulated depreciation has been re-corded was discarded as having no value. The entry to record this event would include a a. gain of $10,000. b. loss of $10,000. c. credit to Accumulated Depreciation for $65,000. d. credit to Accumulated Depreciation for $75,000.

b. loss of $10,000

73. A corporation has the following account balances: Common Stock, $1 par value, $80,000; Paid-in Capital in Excess of Par Value, $2,700,000. Based on this information, the a. legal capital is $2,780,000. b. number of shares issued is 80,000. c. number of shares outstanding is 2,780,000. d. average price per share issued is $3.48.

b. number of shares issued is 80,000.

69. A disadvantage of the corporate form of organization is a. professional management. b. tax treatment. c. ease of transfer of ownership. d. lack of mutual agency.

b. tax treatment.

12. Vickers Company uses the units-of-activity method in computing depreciation. A new plant asset is purchased for $36,000 that will produce an estimated 110,000 units over its useful life. Estimated salvage value at the end of its useful life is $3,000. What is the depreciation cost per unit? a. $3.00. b. $3.27. c. $0.30. d. $0.33.

c. $0.30

87. What is the total stockholders' equity based on the following account balances? Common Stock $950,000 Paid-In Capital in Excess of Par 50,000 Retained Earnings 175,000 Treasury Stock 25,000 a. $1,000,000. b. $975,000. c. $1,150,000. d. $800,000.

c. $1,150,000.

83. Outstanding stock of the Hall Corporation included 40,000 shares of $5 par common stock and 20,000 shares of 5%, $10 par non-cumulative preferred stock. In 2016, Hall declared and paid dividends of $8,000. In 2017, Hall declared and paid dividends of $24,000. How much of the 2017 dividend was distributed to preferred shareholders? a. $14,000. b. $18,000. c. $10,000. d. None of these answer choices are correct.

c. $10,000.

Burke Company purchases land for $180,000 cash. Burke assumes $5,000 in property taxes on the land. The title and attorney fees totaled $2,000. Burke has the land graded for $4,400. They paid $20,000 for paving of a parking lot. What amount does Burke record as the cost for the land? a. $186,400 b. $211,400 c. $191,400 d. $180,000

c. $191,400

33. Given the following account balances at year end, compute the total intangible assets on the balance sheet of Janssen Enterprises. Cash $1,500,000 Accounts Receivable 1,000,000 Trademarks 1,200,000 Goodwill 2,500,000 Research & Development Costs 2,000,000 a. $9,700,000. b. $5,700,000. c. $3,700,000. d. $7,700,000.

c. $3,700,000

61. Winrow Company received proceeds of $754,000 on 10-year, 8% bonds issued on January 1, 2016. The bonds had a face value of $800,000, pay interest annually on December 31st, and have a call price of 101. Winrow uses the straight-line method of amortization. Winrow Company decided to redeem the bonds on January 1, 2018. What amount of gain or loss would Winrow report on its 2018 income statement? a. $36,800 gain b. $44,800 gain c. $44,800 loss d. $36,800 loss

c. $44,800 loss

36. The following information is provided for Nguyen Company and Northwest Corporation. (in $ millions) Nguyen Company Northwest Corporation Net income 2017 $165 $420 Net sales 2017 1,650 4,900 Total assets 12/31/15 1,000 2,400 Total assets 12/31/16 1,050 3,000 Total assets 12/31/17 1,150 4,000 What is Nguyen's return on assets for 2017? a. 150.0% b. 15.7% c. 15.0% d. 14.3%

c. 15.0%

A company purchased office equipment for $30,000 and estimated a salvage value of $6,000 at the end of its 8-year useful life. The constant percentage to be applied against book value each year if the double-declining balance method is used is: a. 8% b. 12.5% c. 25.0% d. 2.5%

c. 25.0%

17. Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets? a. Salvage value. b. Estimated useful life. c. Cash needed to replace the plant asset. d. Cost.

c. Cash needed to replace the plant asset

68. Which of the following statements concerning taxation is accurate? a. Partnerships pay state income taxes but not federal income taxes. b. Corporations pay federal income taxes but not state income taxes. c. Corporations pay federal and state income taxes. d. Only the owners must pay taxes on corporate income.

c. Corporations pay federal and state income taxes.

80. A corporation purchases 20,000 shares of its own $20 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders' equity? a. Increase by $700,000. b. Decrease by $400,000. c. Decrease by $700,000. d. Decrease by $300,000.

c. Decrease by $700,000.

Which of the follow assets does not decline in service potential over the course of its useful life? a. Equipment b. Furnishings c. Land d. Fixtures

c. Land

89. The effect of the declaration of a cash dividend by the board of directors is to Increase Decrease a. Stockholders' equity Assets b. Assets Liabilities c. Liabilities Stockholders' equity d. Liabilities Assets

c. Liabilities Stockholders' equity

75. If Norben Company issues 6,000 shares of $5 par value common stock for $210,000, the account a. Common Stock will be credited for $210,000. b. Paid-in Capital in Excess of Par Value will be credited for $30,000. c. Paid-in Capital in Excess of Par Value will be credited for $180,000. d. Cash will be debited for $180,000.

c. Paid-in Capital in Excess of Par Value will be credited for $180,000.

44. Sales taxes collected by a retailer are recorded by a. crediting Sales Tax Revenue. b. debiting Sales Tax Expense. c. crediting Sales Taxes Payable. d. debiting Sales Taxes Payable.

c. crediting Sales T axes Payable

A high accounts receivable turnover ratio indicates: a. the company's sales are increasing b. a large proportion of the company's sales are on credit c. customers are making payments very quickly d. customers are making payments slowly

c. customers are making payments very quickly

70. A disadvantage of the corporate form of business is a. its status as a separate legal entity. b. continuous existence. c. government regulation. d. ease of transfer of ownership.

c. government regulation.

55. If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest annually would sell at an amount a. less than face value. b. equal to face value. c. greater than face value. d. that cannot be determined.

c. greater than face value.

43. As interest is recorded on an interest-bearing note, the Interest Expense account is a. increased; the Notes Payable account is increased. b. increased; the Notes Payable account is decreased. c. increased; the Interest Payable account is increased. d. decreased; the Interest Payable account is increased.

c. increased; the Interest Payable account is increased.

The accounts receivable turnover is computed by dividing a. total sales by average receivables b. total sales by ending receivables c. net credit sales by average receivables d. net credit sales by ending receivables

c. net credit sales by average receivables

35. The cost of an intangible asset with an indefinite life should a. be amortized over 20 years. b. be amortized over the life of the creator plus 70 years. c. not be amortized. d. None of these answer choices are correct.

c. not be amortized

45. Unearned Rent Revenue is a. a contra account to Rent Revenue. b. a revenue account. c. reported as a current liability. d. debited when rent is received in advance.

c. reported as a current liability

64. Liquidity ratios measure a company's a. operating cycle. b. revenue-producing ability. c. short-term debt paying ability. d. long-range solvency.

c. short-term debt paying ability.

82. Logan Corporation issues 40,000 shares of $50 par value preferred stock for cash at $60 per share. In the stockholders' equity section, the effects of the transaction above will be reported a. entirely within the capital stock section. b. entirely within the additional paid-in capital section. c. under both the capital stock and additional paid-in capital sections. d. entirely under the retained earnings section.

c. under both the capital stock and additional paid-in capital sections.

46. A retail store credited the Sales Revenue account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales Revenue account amounted to $294,000, what is the amount of the sales taxes owed to the taxing agency? a. $280,000 b. $294,000 c. $14,700 d. $14,000

d. $14,000

34. On July 1, 2017, Linden Company purchased the copyright to Norman Computer Tutorials for $210,000. It is estimated that the copyright will have a useful life of 5 years. The amount of amortization expense recognized for the year 2017 would be a. $42,000. b. $19,687. c. $38,850. d. $21,000.

d. $21,000

26. Bates Company purchased equipment on January 1, 2016, at a total invoice cost of $1,200,000. The equipment has an estimated salvage value of $30,000 and an estimated useful life of 5 years. What is the amount of accumulated depreciation at December 31, 2017, if the straight-line method of depreciation is used? a. $240,000. b. $480,000. c. $234,000. d. $468,000.

d. $468,000 (Cost - Salvage Value)/(Useful Life Year) x (2)

15. Carpino Company purchased equipment and these costs were incurred: Cash price $75,000 Sales taxes 3,500 Insurance during transit 750 Installation and testing 1,500 Total costs $80,750 What amount should be recorded as the cost of the equipment? a. $75,000. b. $78,500. c. $79,250. d. $80,750.

d. $80,750

21. A machine was purchased for $54,000 and it was estimated to have a $9,000 salvage value at the end of its useful life. Monthly depreciation expense of $600 was recorded using the straight-line method. The annual depreciation rate is a. 20%. b. 1.6%. c. 12.8%. d. 16.0%.

d. 16.0%

During 2017, Phelps Corporation reported net sales of $2,500,000, net income of $1,320,000, and depreciation expense of $80,000. Phelps also reported beginning total assets of $1,000,000, ending total assets of $1,500,000, plant assets of $800,000, and accumulated depreciation of $500,000. Phelps's asset turnover is: a. 1.3 times b. 1.1 times c. 1.7 times d. 2.0 times

d. 2.0 times

25. A plant asset was purchased on January 1 for $75,000 with an estimated salvage value of $15,000 at the end of its useful life. The current year's depreciation expense is $5,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $35,000. The remaining useful life of the plant asset is a. 15 years. b. 12 years. c. 7 years. d. 5 years.

d. 5 Years

29. Grant Company has decided to change the estimate of the useful life of an asset that has been in service for 2 years. Which of the following statements describes the proper way to revise a useful life estimate? a. Revisions in useful life are permitted if approved by the IRS. b. Retroactive changes must be made to correct previously recorded depreciation. c. Only future years will be affected by the revision. d. Both current and future years will be affected by the revision.

d. Both current and future years will be affected by the revision

48. A cash register tape shows cash sales of $8,000 and sales taxes of $400. The journal entry to record this information is a. Cash 8,000 Sales Revenue 8,000 b. Cash 8,400 Sales Tax Revenue 400 Sales Revenue 8,000 c. Cash 8,000 Sales Tax Expense 400 Sales Revenue 8,400 d. Cash 8,400 Sales Revenue 8,000 Sales Taxes Payable 400

d. Cash 8,400 Sales Revenue 8,000 Sales Taxes Payable 400

63. A $900,000 bond was retired at 103 when the carrying value of the bond was $933,000. The entry to record the retirement would include a a. gain on bond redemption of $27,000. b. loss on bond redemption of $6,000. c. loss on bond redemption of $27,000. d. gain on bond redemption of $6,000.

d. gain on bond redemption of $6,000.

47. On January 1, 2017, Ermler Company, a calendar-year company, issued $2,000,000 of notes payable, of which $500,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2017, is a. Current liabilities, $2,000,000. b. Long-term debt , $2,000,000. c. Current liabilities, $500,000; Long-term Debt, $1,000,000. d. Current liabilities, $500,000; Long-term Debt, $1,500,000.

d. Current liabilities, $500,000; Long-term Debt, $1,500,000.

23. Which of the following methods will result in the highest depreciation in the first year? a. Sum-of-year's-digits. b. Time valuation. c. Straight-line. d. Declining-balance.

d. Declining Balance

Which of the following would not be included in the Equipment account? a. Installation costs b. Freight costs c. Cost of trial runs d. Electricity used by the machine

d. Electricity used by the machine

16. The balance in the Accumulated Depreciation account represents the a. cash fund to be used to replace plant assets. b. amount to be deducted from the cost of the plant asset to arrive at its fair market value. c. amount charged to expense in the current period. d. amount charged to expense since the acquisition of the plant asset.

d. amount charged to expense since the acquisition of the plant asset

81. Treasury Stock is a(n) a. contra asset account. b. retained earnings account. c. asset account. d. contra stockholders' equity account.

d. contra stockholders' equity account.

85. The board of directors of Benson Company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on July 15, 2017. The dividend is to be paid on August 15, 2017, to stockholders of record on July 31, 2017. The correct entry to be recorded on August 15, 2017, will include a a. debit to Cash Dividends. b. credit to Cash Dividends. c. credit to Dividends Payable. d. debit to Dividends Payable.

d. debit to Dividends Payable.

18. All of the following statements are false regarding depreciation except a. depreciation is an asset valuation process. b. depreciation does not apply to land improvements. c. recognizing depreciation results in the accumulation of cash for asset replacement. d. depreciation does not apply to land.

d. depreciation does not apply to land

67. A corporate board of directors does not generally a. select officers. b. formulate operating policies. c. declare dividends. d. execute policy.

d. execute policy.

62. A $1,000,000 bond was retired at 98 when the carrying value of the bond was $985,000. The entry to record the retirement would include a a. gain on bond redemption of $15,000. b. loss on bond redemption of $5,000. c. loss on bond redemption of $15,000. d. gain on bond redemption of $5,000.

d. gain on bond redemption of $5,000.

13. Land improvements should be depreciated over the useful life of the a. land. b. buildings on the land. c. land or land improvements, whichever is longer. d. land improvements.

d. land improvements

53. The contractual interest rate on a bond is often referred to as the a. callable rate. b. the maturity rate. c. market rate. d. stated rate.

d. stated rate.