1. An aging of a company's accounts receivable indicates that $4,500 are estimated to be
uncollectible. If Allowance for Doubtful Accounts has a $1,200 credit balance, the adjustment
to record bad debts for the period will require a
debit to Allowance for Doubtful Accounts for $3,300.
debit to Bad Debt Expense for $4,500.
credit to Allowance for Doubtful Accounts for $4,500.
debit to Bad Debt Expense for $3,300.
2. The financial statements of the Melton Manufacturing Company reports net sales of
$300,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and
end of year, respectively. What is the average collection period for accounts receivable in
days?
36.5
60.8
48.7
96.1
3. Stine Company purchased machinery with a list price of $64,000. They were given a 10%
discount by the manufacturer. They paid $400 for shipping and sales tax of $3,000. Stine
estimates that the machinery will have a useful life of 10 years and a residual value of
$20,000. If Stine uses straight-line depreciation, annual depreciation will be
$6,100.
$3,760.
$4,100.
$4,072.
4. Given the following account balances at year end, compute the total intangible assets on
the balance sheet of Janssen Enterprises.
Cash
Accounts Receivable
Trademarks
Goodwill
$1,500,000
4,000,000
1,000,000
2,500,000
.
Research & Development
Costs
2,000,000
$3,500,000.
$7,500,000.
$9,500,000.
$5,500,000.
5. On January 1, a machine with a useful life of five years and a residual value of $40,000 was
purchased for $120,000. What is the depreciation expense for year 2 under the doubledeclining-balance method of depreciation?
$48,000.
$38,400.
$23,040.
$28,800.
6. As a recent graduate of State University you're aware that IFRS requires component
depreciation for plant assets. A friend has asked you to succinctly explain what component
depreciation means. Which of the following correctly describes component depreciation?
The method of depreciation recommended for an asset that is expected to be significantly
more productive in the first half of its useful life.
The method that requires that significant parts of a plant asset with different useful lives be
depreciated separately.
The method used to prorate annual depreciation on a time basis.
The method used to ensure that the depreciation rate remains constant from year to year.
7. Bonds with a face value of $300,000 and a quoted price of 97¼ have a selling price of
$291,750.
$291,006.
$292,500.
$291,075.
8. Sparks Company received proceeds of $423,000 on 10-year, 8% bonds issued on January
1, 2013. The bonds had a face value of $400,000, pay interest annually on December 31st,
and have a call price of 102. Sparks uses the straight-line method of amortization. What is
the carrying value of the bonds on January 1, 2015?
$420,700
$400,000
$418,400
$381,600
9. S. Lawyer performed legal services for E. Corp. Due to a cash shortage, an agreement was
reached whereby E. Corp. would pay S. Lawyer a legal fee of approximately $15,000 by
issuing 8,000 shares of its common stock (par $1). The stock trades on a daily basis and
the market price of the stock on the day the debt was settled is $1.80 per share. Given this
information, the best journal entry for E. Corp. to record for this transaction is
Legal Expense
Common Stock
15,000
Legal Expense
Common Stock
14,400
Legal Expense
Common Stock
Paid-in Capital in Excess of Par Common
15,000
Legal Expense
Common Stock
Paid-in Capital in Excess of Par Common
14,400
15,000
14,400
8,000
7,000
8,000
6,400
10. Logan Corporation issues 50,000 shares of $50 par value preferred stock for cash at $60
per share. The entry to record the transaction will consist of a debit to Cash for $3,000,000
and a credit or credits to
Preferred Stock for $2,500,000 and Paid-in Capital in Excess of Par Value—Preferred Stock
for $500,000.
Preferred Stock for $2,500,000 and Retained Earnings for $500,000.
Preferred Stock for $3,000,000.
Paid-in Capital from Preferred Stock for $3,000,000.
11. Jahnke Corporation issued 8,000 shares of €2 par value ordinary shares for €11 per share.
The journal entry to record the sale will include
a credit to Share Capital–Ordinary for €88,000.
a debit to Cash for €16,000.
a debit to Retained Earnings for €72,000.
a credit to Share Premium–Ordinary for €72,000.
12. Zoum Corporation had the following transactions during 2014:
1.
Issued $125,000 of par value common stock for cash.
2.
Recorded and paid wages expense of $60,000.
3.
Acquired land by issuing common stock of par value $50,000.
4.
Declared and paid a cash dividend of $10,000.
5.
Sold a long-term investment (cost $3,000) for cash of $3,000.
6.
Recorded cash sales of $400,000.
7.
Bought inventory for cash of $160,000.
8.
Acquired an investment in Zynga stock for cash of $21,000.
9.
Converted bonds payable to common stock in the amount of $500,000.
10.
Repaid a 6 year note payable in the amount of $220,000.
What is the net cash provided by financing activities?
$.
$.
$115,000.
$395,000.
13. Colie Company had an increase in inventory of $120,000. The cost of goods sold was
$490,000. There was a $30,000 decrease in accounts payable from the prior period. Using the
direct method of reporting cash flows from operating activities, what were Colie's cash
payments to suppliers?
$370,000.
$640,000.
$310,000.
$580,000.
14. Each of the following items may be classified as operating or financing activities under IFRS
except
interest paid.
all of these answer choices may be classified as such.
dividends paid.
dividends received.
15. The current assets of Orangatte Company are $227,500. The current liabilities are $130,000.
The current ratio expressed as a proportion is
175%.
.57:1.
1.75:1.
$210,000 ÷ $120,000.
16. All of the following requirements about internal controls were enacted under the Sarbanes
Oxley Act of 2002 except:
companies must continually assess the functionality of internal controls.
independent outside auditors must eliminate redundant internal control.
companies must develop sound internal controls over financial reporting.
independent outside auditors must attest to the level of internal control.
17. Which of the following is not an internal control activity for cash?
All cash receipts should be recorded promptly.
The number of persons who have access to cash should be limited.
The functions of record keeping and maintaining custody of cash should be combined.
Surprise audits of cash on hand should be made occasionally
18. Before a check authorization is issued, the following documents must be in agreement, except
for the
invoice.
remittance advice.
receiving report.
purchase order
19. Mitchell Corporation bought equipment on January 1, 2014 .The equipment cost $180,000 and
had an expected salvage value of $30,000. The life of the equipment was estimated to be 6
years. The book value of the equipment at the beginning of the third year would be
$180,000.
$150,000.
$130,000.
$50,000.
20. Brevard Corporation purchased a taxicab on January 1, 2013 for $25,500 to use for its shuttle
business. The cab is expected to have a five-year useful life and no salvage value. During
2014, it retouched the cab's paint at a cost of $1,200, replaced the transmission for $3,000
(which extended its life by an additional 2 years), and tuned-up the motor for $150. If Brevard
Corporation uses straight-line depreciation, what annual depreciation will Brevard report for
2014?
$3,900.
$5,100.
$4,125.
$4,100.
21. On July 1, 2014, Fleming Company sells machinery for $120,000. The machinery originally
cost $300,000, had an estimated 5-year life and an expected salvage value of $50,000. The
Accumulated Depreciation account had a balance of $175,000 on January 1, 2014, using the
straight-line method. The gain or loss on disposal is
$5,000 loss.
$5,000 gain.
$20,000 gain.
$10,000 loss.
22. On July 1, 2014, Linden Company purchased the copyright to Norman Computer Tutorials for
$140,000. It is estimated that the copyright will have a useful life of 5 years. The amount of
Amortization Expense recognized for the year 2014 would be
$25,900.
$14,000.
$13,125.
$28,000.
23. The following totals for the month of April were taken from the payroll records of Metz
Company.
Salaries
FICA taxes withheld
Income taxes withheld
Medical insurance deductions
Federal unemployment taxes
State unemployment taxes
$30,000
2,295
6,600
1,200
240
1,500
The entry to record accrual of employer’s payroll taxes would include a
debit to Payroll Tax Expense for $4,035.
credit to FICA Taxes Payable for $1,740.
credit to Payroll Tax Expense for $4,035.
credit to Payroll Tax Expense for $1,740.
24. Thayer Company purchased a building on January 2 by signing a long-term $2,520,000
mortgage with monthly payments of $23,100. The mortgage carries an interest rate of 10
percent. The amount owed on the mortgage after the first payment will be
$2,517,900.
$2,496,900.
$2,520,000.
$2,499,000.
25. The following data is available for BOX Corporation at December 31, 2014:
Common stock, par $10 (authorized
30,000 shares)
Treasury stock (at cost $15 per share)
$250,000
$1,200
Based on the data, how many shares of common stock are outstanding?
25,000.
29,920.
30,000.
24,920.
26. Indicate the respective effects of the declaration of a cash dividend on the following balance
sheet sections:
Total Assets
Total Liabilities
Total Stockholders'
Equity
No change
Increase
Decrease
Decrease
No change
Increase
Decrease
Increase
Decrease
Increase
Decrease
No change
27. Assume the following cost of goods sold data for a company:
2015
2014
2013
$1,300,000
1,200,000
1,000,000
If 2013 is the base year, what is the percentage increase in cost of goods sold from 2013 to 2015?
130%
20%
30%
70%
28. A company has an average inventory on hand of $75,000 and its average days in inventory is
36.5 days. What is the cost of goods sold?
$750,000
$1,752,000
$1,680,000
$876,000
29. The following information is available for Patterson Company:
Accounts receivable
Inventory
Net credit sales
Cost of goods sold
Net income
2014
2013
$ 360,000 $ 340,000
280,000
320,000
3,000,000 2,600,000
1,500,000
840,000
300,000
170,000
The accounts receivable turnover for 2014 is
8.6 times.
4.3 times.
7.6 times.
8.3 times.
30. All of the following situations below might indicate a company has a low quality of earnings
except
Maintenance costs are capitalized and then depreciated.
Revenue is recognized when earned.
A lack of disclosure about guaranteed payments that were mentioned in the MD&A of the
annual report.
Adoption of a different inventory method for each of the last three years.
31. IFRS
implies that receivables with different characteristics should be reported separately.
requires that receivables with different characteristics should be reported separately.
implies that receivables with different characteristics should be reported as one unsegregated
amount.
requires that receivables with different characteristics should be reported as one unsegregated
amount.
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