1) Which of the following changes describes the declaration of $1,000 in
cash
dividends payable next
month?
നമധ
Assets and owners' equity increase by $1,000 Assets and
owners' equity decrease by $1,000 L
iabilities increase and
owners' equity increases by $1,000 Liabilities increase
and owners' equity decrease by $ 1,000 No changes in
total assets, liabilities, or owners' equity
An example of a cash
equivalent is:
Accounts receivable
Certificates of deposit
Compensating
balance Notes
receivable Stock
certificates
3) On July 10, Ali Company made a $10,000 credit sale under the terms
3/10, n/30. If
Ali receives full payment of the account on July 19, the amount of cash received is
b
.
$ 9,700. $ 9.800.
$10,000
$10,300
Sam's Town had net income for 20x4 before tax and depreciation of $1,000,000. The
corporate tax rate is 30%. Sam's has $ 800,000 in fixed assets. Assume that the fixed
assets are depreciated using the straight line method for reporting purposes over
8 years with no salvage value. All of the property is 5 year property for tax (MACRS)
purposes. The five year percentages are 20.00, 32.00, 19.20, 11.52,
11.52, 5.76. The equipment was all purchased at the beginning of 20x3. Assume
this is the company's second year of operation and has no fixed assets other
than the $800,000 which the company purchased on the day it opened.
4) How much is the debit to tax expense for
20x4?
A
.
$
A A
240,00
0
300,00
0
46,800 270,000 Some other
number
A
E
.
$
5) Still Sam's Company-- How much is the credit to deferred taxes in the
20x4 journal entry to record taxes?
A $ 240,000 B. $
300,000
46,800 270,000 Some other number
Odw
EA A A
6) Current portion of Long-term Debt
is:
A. The total payment on a loan due in the next 12 months B. The
principal payment on a loan due in the next 12 months
C. The balloon portion of long-term debt D. An example
of a significant noncash transaction E. None of these
Bella's Baubles, Inc. sold a piece of equipment on January 1, 2003. The company
originally purchased the equipment 20 years ago for $200,000. Accumulated
depreciation on the date of sale was $120,000. The sale resulted in a gain of $5,000.
7) The equipment was sold for:
A $ 205,000 B. $
85,000 C. $
125,000 D. $
80,000 E. None of
these.
8) Still Bella's-On the Income Statement, Bella
would:
A. Add $5,000 to revenue B. Add $5, 000 to
other revenue" C. Add $85,000
revenue D. Add $85,000 to "other
revenue"
9) On the cash flow statement, Bella
would
A. Subtract the gain from the income in the "Cash Flow-operations"
B. Add the gain to the income in the “Cash Flow- Investing" C.
Subtract the gain in the "Cash Flow-Investing" D. Add $80,000 to
the "Cash Flow- Financing" E. Subtract $80,000 from the "Cash
Flow- Financing"
10) Bender Corporation is buying all the assets and assuming all the liabilities of Miller
Company. The following information is available for A Miller Company on the day of the
purchase:
Accounts payable 50,000
Ac counts Rec
300,000 Bond Payable 100,000 Inventory
200,000 Common Stock 200,000 Land
400,000 Retained Earnings 550,000
The inventory is worth $175,000 and the land is worth $500,000. Additionally, the Bond
Payable debt is payable interest only at 10% per year for the next 3 years and then the
principal is due. Current interest rates for similar are debt is 6%. Bender will pay
$1,000,000 for Miller Company. How much of the purchase price will Bender debit to
goodwill?
A $ 100,000 B. $914,310 C. $ 175,000
D. $ 185,690 E. Some other number
which is not here
11) A 10 year, $1,000,000 zero coupon bond is priced to yield
10%. The amount the issuing company will receive when it is issued is:
A. $ 620,900 B. $
1,000,000 C.
$ 998,980 D. $
385,500 E. $
613,900
12) If the above zero bond was sold on Jan 1 of 2002, the interest expense for 2003
(the second year) would be
A. $ 38,550.00
$ 42,405.00 C.
$50,000.00 D. $
54,448.00 E. Some other
number
13) Fast Eddie will sell you a Thingie for $50,000. The deal is you pay for the Thingie in
four equal annual payments that include interest at 2%. You called the bank and they said that
they would charge you 10% for a similar loan..
How much are the payments if you take Fast Eddie's deal?
A. $ 13,131.29 B. $ 12,500.00
C. $ 14,500.00
D. $ 25,000.00
E. None of these
14) How much, to the nearest dollar, are you really paying for the Thingie
under Fast Eddie's deal?
A $ 30,375 B. $
58,000 C.
$
50,000 D. $
41,625 E. None
of these
15) If you amortize the Fast Eddie Bob deal properly, the interest for the first year
would be
A. $
5,000.00 B. $
2,000.00 C. $
4,162.50
$ 2,375.50 E. $
none of these
Cathy just bought a new truck - cost $50,000. She will use it as a delivery truck for the
next five ye ars after which it will be worthless. Cathy estimates that she will drive
the t ruck approximately 100,000 miles. Her actual mileage was as follows: year 1,
30,000; year 2, 25,000; year 3, 20,000; year 4, 15,000, year 5, 15,000. For IRS
purposes, the truck is considered 5 year property, Cathy will use the activity based
depreciation method.
16) How much will be in accumulated depreication at the end of the
fifth year?
a. b.
$ 10,000
$ 15,000
$ 50,000
$
52,500
vo
17) What was depreciation expense for
year one?
a
೧
$ 10,000 $ 15,000 $
50,000 $
52,500
d.
.
18)
JD Co. had a beginning balance (12 /31/x 5) in Accounts Receivable of
$200,000 and a beginning credit balance in the Allowance for Doubtful Accounts
of $4,000. During
20x6 he sold $660,000 of goods on credit and
collected $640,000. IfJD estimates that 2% of his ending accounts
receivable will eventually not be collected, his adjusting journal entry for the bad
debt expense will include a credit to allowance for doubtful accounts of:
A. $ 4,400 B. $ 4,000 C. $
400 D. $5,300 E.
None of the above
19
)
Still JD Co. - The ending balance in the Allowance for Doubtful Accounts at
December 31, 20x6 would be:
A. $ 4,400
B. $ 4,000
$ 400 D. $5,300 E.
None of the above
20
)
Still JD Co. - If JD Co. had written off $5,000 of accounts receivable during
20x6, the debit to bad debt expense would have been:
A. $ 4,400
B. $ 4,000
C. $ 400
$ 5,300 E. None of the
above
211
If a customer's account is written off by the company and then the
customer comes back and pays what they owe,
ou would only debit the accounts receivable for the amount B. you would both
A. y
debit and credit accounts receivable for the amount C. you would debit
accounts receivable and credit cash for the amount D. you would debit both
bad debt expense and the allowance for doubtful accounts for the amount
E. you would debit bad debt expense for the amount
Kylie will sell you a Pumpkin for $500. The deal is you pay for the Pumkin in five equal
annual payments that include interest at 5%. You put no money down and the first
payment is not due until one year from today!! You called the bank and they said that
they would charge you 10% for a similar loan.
How much are the payments if you buy the Pumpkin from Kylie?
A $ 100 + interest at 5% B. $ 100 + interest at 10% C. $ 131.90 D. $ 115.49 E. None of
the above
How much are you really paying for the Pumpkin under Kylie's deal?
.78 B. $ 500.00 C. $ 750.0
A. $ 437 0
$ 625.00 E. None of the above
ent will be:
23) If you amortize the Kylie deal properly, the principal balance after the first paym
A. B. C.
$ 366.07 $ 415.89 $ 450.00 $ 349.66 None of the above
24)
........
..
You are preparing a bid for a note that has exactly five years to go. It was originally for
$100,000 payable in 10 equal annual payments which included interest at 8%.
Current interest rates are 10%. How much do you offer for the note so that you
will earn 10%? Be careful!
A. $ 100,000.00 B. $ 94,943.27
$ 105,326.05 D. $ 56,493.95 E
. None of these is close to the correct number
25) There are exactly five years left on a bond you are considering buying. The
face amount is $100,000 and the bond pays interest only for 5 more years. In five
ars, the company will pay the principal with the last interest payment. The company
ye
pays interest semi-annually at 10% (ie $ 5,000 each six months). Current interest rates
are 12%. How much would you pay to buy the bond?
A. $ 100,000 B. $
55,840
$ 92,641 D. $ 84,091 E.
None of the above
26) If you want to have $100,000 in 5 years and the bank pays interest
at 8%
compounded quarterly, how much would you need to put in the bank today?
A
B
.
C
.
$ 16,315 $ 67,300
$ 68,060 $ 20,000
Some other
number
E
.
27) Freeland Company had wages payable at the beginning of the year of $10,000,
During the year her company paid cash wages of $100,000 and at the end of the year
she owed wages of $ 8,000. Her income statement for the year will show wage
expense of:
A) $ 90,000 B) $
92,000 C)
$ 88,000
D) $
98,000 E)
$100,000
28) Your beginning balance in Equipment is $20,000 and the ending balance is
$25,000. During the year, you sold a piece of equipment that originally
4,000. How much equipment did you purchase during the year?
cost $
$ 9,000. $ 7,000. $
ome
5,000 $ 1,000 S
other number
d.
29) Your club will sell MP3 players for $80.00. The players cost you $60 each. You
rent a table in Wendy's to sell the MP3s. You pay W ndy's $160 rent. How
e
many players do you need to sell to make $200?
A) B) C) D)
ther number
3 6 12 18 Some o
30) Susie Company has a balance in the treasury stock account of $5,000 representing
1,000 shares of stock she bought back last year. If she sells 700 shares of the
stock for $ 7 per shares, the balance in treasury stock will be:
A. $5,000 B. $2,500 C. $1,500 D. None of these
For the next three questions, use the following data:
$1,200
Per the company's books Balance January 1, 2006 Deposits
00 1/7 4
1/1 8 ,300 1/17
8,000 1/ 28 9,400 1/31
2,000
Checks written 1201 1202 1203 1204 1205 1206
50 70 120
1,280 14,670 4,500
1,740
Per the bank statement Balance January 1, 2006 Deposits 1/15
2
800 1/2
4,300 1/2
6
8,000 1/30
9,400
90
Checks cleared 1198 1199 1200 1201 1203 1204
,280
300 150 50 120 1
1/0
Bank Service Charge $10 Balance at 1/3 6 22,320
31
)
The reconciled cash balance at the end of January is
A. $5,000 B. $
22,320
$ 20,690 D.
$2,000 E. $
19,240
32
)
Deposits in transit for
January are
A. $ 5,000 B. $
22,320 C.
$ 20,690
D. $2,000
E. $ 19,240
3
3)
Outstanding checks for
January are
A. $ 5,000
$
22,320
$ 20,690 D.
$2,000 E. $
19,240
