Select Page

Novak Corp. compiled the following financial information as of December 31, 2017:Service revenue $1181000Common stock 246000Equipment 311000Operating expenses 966000Cash 275000Dividends 82000Supplies 35000Accounts payable 162000Accounts receivable 103500Retained earnings, 1/1/17 599000Novak assets on December 31, 2017 are: $1323500. $622000. $724500. $1905500.2. Metlock, Inc. started the year with total assets of $207000 and total liabilities of $117000. During the year the business recorded $333000 in revenues, $167000 in expenses, and dividends of $63000. The net income reported by Metlock, Inc. for the year was $197000. $144000. $117000. $166000.3. Blue Spruce Corp. had the following accounts and balances:Accounts payable $30100 Equipment $35800Accounts receivable 5100 Land 35900Buildings ? Unearned service revenue 9600Cash 14550 Total stockholders’ equity ?If the balance of the Buildings account was $69200 and $4900 of Accounts Payable were paid in cash, what would be the balance of the total stockholders’ equity? $171200 $120850 $130450 $1354004. Which of the following is not a current liability? Salaries and Wages Payable Accounts Payable Taxes Payable Bonds Payable5. Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment.Eddy Auto SuppliesBalance SheetDecember 31, 2017Cash $126,000 Accounts payable $165,000Accounts receivable 120,000 Salaries and wages payable 30,000Inventory 210,000 Mortgage payable 270,000Prepaid insurance 90,000 Total liabilities $465,000Stock Investments 255,000 Land 285,000 Buildings $339,000 Common stock $360,000Less: Accumulated depreciation (60,000) 279,000 Retained earnings 750,000Trademarks 210,000 Total stockholders’ equity $1,110,000Total assets $1,050,000 Total liabilities and stockholders’ equity $1,575,000 $1,029,000 $834,000 $774,000 $564,0006. Blossom Company has current assets of $1610000 and current liabilities of $710000. If they issue $217000 of new stock what will their new current ratio be? (rounded) 2.27:1 2.6:1 2.0:1 2:17. Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment.Swifty CorporationBalance SheetDecember 31, 2017Cash $71000 Accounts payable $137000Accounts receivable 100000 Salaries and wages payable 16100Inventory 100000 Mortgage payable 155000Prepaid insurance 85000 Total liabilities $308100Stock Investments 183500 Land 185000 Buildings $201000 Common stock $213400Less: Accumulated depreciation (64000) 137000 Retained earnings 484000Trademarks 102000 Total stockholders’ equity $697400Total assets $1005500 Total liabilities and stockholders’ equity $1005500 $386000 $322000 $464000 $5055008. The accountant for Wildhorse Co. should have recorded the following correct entry:Jan. 15 Notes Receivable 262 Equipment 262Instead, he misunderstood the transaction and recorded an incorrect entry. Which of the following wrong entries pertaining to this transaction could have been detected as erroneous when using a trial balance? Jan 15 Notes Payable 262 Cash 262 Jan 15 Equipment 262 Notes Receivable 262 Jan 15 Notes Receivable 253 Equipment 253 Jan 15 Notes Receivable 262 Equipment 253 9. Brokaw Industries signs a $44000, 8%, 6-month note payable on September 1, 2016. How much interest expense will Brokaw report in its 2017 financial statements? $1761 $0 $587 $117410. Kingbird, Inc. purchased an 18-month insurance policy on May 31, 2017 for $13860. The December 31, 2017 balance sheet would report Prepaid Insurance of: $8470. $13860. $0 because Prepaid Insurance is reported on the Income Statement. $5390.11. Financial information is presented below:Operating expenses $ 63000Sales returns and allowances 4000Sales discounts 7000Sales revenue 190000Cost of goods sold 88000Gross Profit would be $91000. $102000. $106000. $98000.12. Nash’s Trading Post, LLC receives a payment on account from Martinez Industries. Based on the original sale of $11000 using the periodic inventory approach, Nash’s honors the 2% cash discount and records the payment. Which of the following is the correct entry for Ramos to record? Cash 10780 Purchase Discounts 220 Accounts Payable 11000 Cash 10780 Sales Discounts 220 Inventory 11000 Accounts Receivable 11000 Cash 6980 Purchase Discounts 20 Cash 10780 Sales Discounts 220 Accounts Receivable 1100013. The collection of a $2500 account beyond the 2 percent discount period will result in a debit to Cash for $2450. debit to Cash for $2500. debit to Sales Discounts for $50. debit to Accounts Receivable for $2500. Don’t show me this message again for the assignment14. Which of the following statements is true regarding inventory cost flow assumptions? A company must comply with the method specified by industry standards. A company must use the same method for domestic and foreign operations. A company may use more than one costing method concurrently. A company may never change its inventory costing method once it has chosen a method. 15. After the physical inventory is completed, quantities are entered into various general ledger inventory accounts. quantities are listed on inventory summary sheets. unit costs are determined by dividing the quantities on the summary sheets by the total inventory costs. the accuracy of the inventory summary sheets is checked by the person listing the quantities on the sheets.16. Nash’s Trading Post, LLC had the following records: 2017 2016Ending inventory $38650 $46490Cost of goods sold 234100 201290What is Nash’s average days in inventory for 2017? (rounded) (Use 365 days for calculation.) 73.0 days 66.4 days 59.8 days 77.7 days17. An error in the physical count of goods on hand at the end of a period resulted in a $9600 overstatement of the ending inventory. The effect of this error in the current period is Cost of Goods Sold Net Income understated understated overstated overstated overstated understated understated overstated18. Oriole Company just began business and made the following four inventory purchases in June:June 1 168 units $1160June 10 224 units 1750June 15 224 units 1880June 28 168 units 1480 $6270A physical count of merchandise inventory (rounded to whole dollar) on June 30 reveals that there are 240 units on hand. The inventory method which results in the highest gross profit for June is not determinable. the average cost method. the FIFO method. the LIFO method. 19. Which statement regarding negative cash balances is true? The negative cash balance is included as a current asset and discussed in a footnote to the financial statements. The company must obtain a loan to bring the cash balance to zero before financial statements are prepared. The amount is offset against other current assets because users need to know net current assets. The amount is shown as a current liability because a company cannot have a cash balance below zero.20 . Kingbird, Inc. wrote checks totaling $43810 during October and $47839 during November. $41660 of these checks cleared the bank in October, and $46735 cleared the bank in November. What was the amount of outstanding checks on November 30? $1561. $5075. $3254. $586.21. Sunland Company gathered the following reconciling information in preparing its August bank reconciliation:Cash balance per books, 8/31 $26900Deposits in transit 1200Notes receivable and interest collected by bank 6500Bank charge for check printing 150Outstanding checks 15400NSF check 1310The adjusted cash balance per books on August 31 is $31940. $18940. $30740. $17760.22. In the month of May, Splish Brothers Inc. wrote checks in the amount of $77700. In June, checks in the amount of $106327 were written. In May, $71131 of these checks were presented to the bank for payment, and $91417 in June. What is the amount of outstanding checks at the end of June? $6569. $14910. $21479. $29820. Don’t show me this message again for the assignment23. In the table below the information for four companies is provided.Company Accounts Receivable turnover Average collection periodMartin 13.9 26.3 Lewis 13.3 27.4 Danforth 10.4 35.1 Garner 14.5 25.2 Industry Average 13.0 28.1Assuming all four companies are in the same industry, which company appears to have the greatest likelihood of paying its current obligations? Lewis Garner Danforth Martin24. Under the allowance method, when a specific account is written off total assets will be unchanged. net income will decrease. total assets will decrease. total assets will increase. Don’t show me this message again for the assignment25. Receivables might be sold to take advantage of deep discounts on the cash realizable value of receivables. finance companies at an amount greater than cash realizable value. lengthen the cash-to-cash operating cycle. generate cash quickly.26. The expense recognition principle relates to credit losses by stating that bad debt expense should be recorded for an exact amount. in the period of the loss. in the same period as allowed for tax purposes. in the period of the sale.27. The direct write-off method is acceptable for financial reporting purposes only if the bad debt losses are insignificant. This is a false statement because the direct write-off method violates the matching principle. This is a true statement based on the concept of materiality. This is a false statement because the direct write-off method can only be used for tax reporting. This is a true statement because companies can choose either the direct write-off or the allowance method for financial reporting, as long as they consistently apply the method. Don’t show me this message again for the assignment28. Goodwill can be sold by itself to another company. may be expensed upon purchase if desired. is only recorded when the purchase of an entire business occurs. can be purchased and charged directly to stockholders’ equity.29. Which of the following statements concerning bonds is not a true statement? The bond indenture is prepared after the bonds are printed. The bond indenture and bond certificate are separate documents. The trustee keeps records of each bondholder. Bonds are generally sold through an investment company.30. Which of the following statements is true regarding corporate performance ratios? Low growth rates are characterized by low payout ratios. Return on common stockholder’s equity is often higher under bond financing rather than common stock financing. A high payout ratio may indicate that a company is retaining earnings for future growth investments. As a company grows larger, it is easy to sustain a high return on common stockholder’s equity.31. Which of the following statements regarding the date of a cash dividend declaration is not accurate? The dividend can be rescinded once it has been declared. The corporation is committed to a legal, binding obligation. The board of directors formally authorizes the cash dividend. A liability account must be increased.32. Cash from operations and net income are approximately the same during the maturity phase. growth phase. decline phase. introductory phase.