ACC 291 Week 5 Final Examination

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ACC 291 Week 5 Final Examination
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Year: 2015
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ACC 291 Week 5 Final Examination

Multiple Choice Question 86

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.

debit to Bad Debt Expense for $3,300.

credit to Allowance for Doubtful Accounts for $4,500.

Multiple Choice Question 182

Correct.

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

96.1

48.7

Multiple Choice Question 119

Correct.

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

$3,760.

$4,072.

$4,100.

$6,100.

Multiple Choice Question 207

Correct.

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 double-declining-balance method of depreciation?

$48,000.

$23,040.

$38,400.

$28,800.

IFRS Multiple Choice Question 01

Correct.

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 used to prorate annual depreciation on a time basis.

The method that requires that significant parts of a plant asset with different useful lives be depreciated separately.

The method used to ensure that the depreciation rate remains constant from year to year.

The method of depreciation recommended for an asset that is expected to be significantly more productive in the first half of its useful life.

Multiple Choice Question 198

Correct.

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 4,000,000

Trademarks 1,000,000

Goodwill 2,500,000

Research & Development Costs 2,000,000

$5,500,000.

$7,500,000.

$3,500,000.

$9,500,000.

Multiple Choice Question 146

Correct.

Bonds with a face value of $300,000 and a quoted price of 97¼ have a selling price of

$292,500.

$291,750.

$291,006.

$291,075.

Multiple Choice Question 188

Correct.

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?

$381,600

$418,400

$400,000

$420,700

Multiple Choice Question 90

Correct.

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 14,400

Common Stock 14,400

Legal Expense 15,000

Common Stock 15,000

Legal Expense 15,000

Common Stock 8,000

Paid-in Capital in Excess of Par – Common 7,000

Legal Expense 14,400

Common Stock 8,000

Paid-in Capital in Excess of Par – Common 6,400

Multiple Choice Question 110

Correct.

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.

IFRS Multiple Choice Question 01

Correct.

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 debit to Cash for €16,000.

a credit to Share Premium–Ordinary for €72,000.

a credit to Share Capital–Ordinary for €88,000.

a debit to Retained Earnings for €72,000.

Multiple Choice Question 80

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?

$395,000.

$<605,000>.

$<105,000>.

$115,000.

Multiple Choice Question 176

Correct.

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?

$640,000.

$310,000.

$580,000.

$370,000.

IFRS Multiple Choice Question 04

Each of the following items may be classified as operating or financing activities under IFRS except

dividends paid.

interest paid.

all of these answer choices may be classified as such.

dividends received.

Multiple Choice Question 165

Correct.

The current assets of Orangatte Company are $227,500. The current liabilities are $130,000. The current ratio expressed as a proportion is

$210,000 ÷ $120,000.

1.75:1.

175%.

.57:1.

Multiple Choice Question 41

Your answer is correct.

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.

independent outside auditors must attest to the level of internal control.

companies must develop sound internal controls over financial reporting.

Multiple Choice Question 85

Your answer is correct.

Which of the following is not an internal control activity for cash?

The functions of record keeping and maintaining custody of cash should be combined.

The number of persons who have access to cash should be limited.

Surprise audits of cash on hand should be made occasionally.

All cash receipts should be recorded promptly.

Multiple Choice Question 92

Your answer is correct.

Before a check authorization is issued, the following documents must be in agreement, except for the

receiving report.

purchase order.

invoice.

remittance advice.

Multiple Choice Question 115

Correct.

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

$130,000.

$50,000.

$180,000.

$150,000.

Multiple Choice Question 142

Correct.

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?

$4,100.

$4,125.

$3,900.

$5,100.

Multiple Choice Question 154

Correct.

If a plant asset is retired and is fully depreciated

phantom depreciation must be taken as though the asset were still on the books.

a loss on disposal will be recorded.

no gain or loss on disposal will be recorded.

a gain on disposal will be recorded.

Multiple Choice Question 180

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

$28,000.

$13,125.

$25,900.

$14,000.

Multiple Choice Question 120

Correct.

The following totals for the month of April were taken from the payroll records of Metz Company.

Salaries $30,000

FICA taxes withheld 2,295

Income taxes withheld 6,600

Medical insurance deductions 1,200

Federal unemployment taxes 240

State unemployment taxes 1,500

The entry to record accrual of employer’s payroll taxes would include a

credit to FICA Taxes Payable for $1,740.

debit to Payroll Tax Expense for $4,035.

credit to Payroll Tax Expense for $4,035.

credit to Payroll Tax Expense for $1,740.

Multiple Choice Question 242

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.

$2,499,000.

$2,496,900.

$2,520,000.

Multiple Choice Question 96

The following data is available for BOX Corporation at December 31, 2014:

Common stock, par $10 (authorized 30,000 shares) $250,000

Treasury stock (at cost $15 per share) $1,200

Based on the data, how many shares of common stock are outstanding?

25,000.

24,920.

30,000.

29,920.

Multiple Choice Question 144

Correct.

Indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections:

Total Assets Total Liabilities Total Stockholders’ Equity

Increase Decrease No change

Decrease Increase Decrease

No change Increase Decrease

Decrease No change Increase

Multiple Choice Question 102

Correct.

Assume the following cost of goods sold data for a company:

2015 $1,300,000

2014 1,200,000

2013 1,000,000

If 2013 is the base year, what is the percentage increase in cost of goods sold from 2013 to 2015?

70%

30%

20%

130%

Multiple Choice Question 179

Correct.

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?

$876,000

$750,000

$1,680,000

$1,752,000

Multiple Choice Question 199

Correct.

The following information is available for Patterson Company:

2014 2013

Accounts receivable $ 360,000 $ 340,000

Inventory 280,000 320,000

Net credit sales 3,000,000 2,600,000

Cost of goods sold 1,500,000 840,000

Net income 300,000 170,000

The accounts receivable turnover for 2014 is

7.6 times.

8.6 times.

8.3 times.

4.3 times.

Multiple Choice Question 221

Correct.

All of the following situtations below might indicate a company has a low quality of earnings except

Revenue is recognized when earned.

Adoption of a different inventory method for each of the last three years.

A lack of disclosure about guaranteed payments that were mentioned in the MD&A of the annual report.

Maintenance costs are capitalized and then depreciated.

IFRS Multiple Choice Question 05

IFRS

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.

implies that receivables with different characteristics should be reported separately.