Question
Q:1. In management's internal control report that is now required of all public companies, which of the following does not have a direct effect on a company's internal control system?
2. A check drawn by a depositor for $180 in payment of a liability was recorded in the journal as $810. This item would be included on the bank reconciliation as a(n) ________.
3. The bank reconciliation ________.
4. A check drawn by a depositor in payment of a voucher for $725 was recorded in the journal as $257. What entry is required in the depositor's accounts?
5. Receipts from cash sales of $9,500 were recorded incorrectly in the cash receipts journal as $5,900. What entry is required in the depositor's accounts?
6. Marcus Company developed the following reconciling information in preparing its September bank reconciliation:
Cash balance per bank, 9/30 $11,000
Note receivable collected by bank 6,000
Outstanding checks 9,000
Deposits-in-transit 4,500
Bank service charge 75
NSF 1,200
Using the above information, determine the cash balance per books (before adjustments) for the Marcus Company.
7. A $100 petty cash fund has cash of $18 and receipts of $80. The journal entry to replenish the account would include a ________.
8. During 2007, Creative Inc has monthly cash expenses of $150,000. On December 31, 2007, their cash balance is $1,550,000. The ratio of cash to monthly cash expenses is _______.
9. The term "receivables" includes all ________.
10. Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment), and uncollectible accounts expense is estimated at 3% of net sales. If net sales are $600,000, the amount of the adjusting entry to record the provision for doubtful accounts is _______.
11. An estimate based on an analysis of receivables shows that $780 of accounts receivables are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $110. After preparing the adjusting entry at the end of the year, the balance in the Allowance for Doubtful Accounts is _______.
12. Allowance for Doubtful Accounts has a credit balance of $800 at the end of the year (before adjustment), and an analysis of accounts in the customers’ ledger indicates doubtful accounts of $15,000. Which of the following entries records the proper provision for doubtful accounts?
13. After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $450,000 and Allowance for Doubtful Accounts has a balance of $25,000. What is the net realizable value of the accounts receivable?
14. Allowance for Doubtful Accounts has a credit balance of $1,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates doubtful accounts of $12,900. Which of the following entries records the proper provision for doubtful accounts?
15. ABC company uses the estimate of sales method of accounting for uncollectible accounts. ABC estimates that 3% of all credit sales will be uncollectible. On January 1, 2005, the Allowance for Doubtful Accounts had a credit balance of $2,400. During 2005, ABC wrote-off accounts receivable totaling $1,800 and made credit sales of $100,000. After the adjusting entry, the December 31, 2005, balance in the Uncollectible Accounts Expense would be ________.
16. A new machine with a purchase price of $94,000, with transportation costs of $8,000, installation costs of $6,000, and special acquisition fees of $2,000, would have a cost basis of _______.
17. A machine with a cost of $65,000 has an estimated residual value of $5,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-production method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?
18. Equipment with a cost of $160,000 has an estimated residual value of $10,000 and an estimated life of 5 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours?
19. A machine with a cost of $65,000 has an estimated residual value of $5,000 and an estimated life of 4 years or 18,000 hours. What is the amount of depreciation for the second full year, using the double declining-balance method?
20. Equipment with a cost of $80,000, an estimated residual value of $5,000, and an estimated life of 15 years was depreciated by the straight-line method for 5 years. Due to obsolescence, it was determined that the useful life should be shortened by 5 years and the residual value changed to zero. The depreciation expense for the current and future years is _______.
21. An asset was purchased for $60,000 and originally estimated to have a useful life of 10 years with a residual value of $3,000. After two years of straight line depreciation, it was determined that the remaining useful life of the asset was only 2 years with a residual value of $2,000. Calculate this year’s depreciation using the revised amounts and straight line method.
22. A fixed asset with a cost of $30,000 and accumulated depreciation of $27,500 is sold for $3,500. What is the amount of the gain or loss on disposal of the fixed asset?
23. On December 31, Reach It Batting Cages Company has decided to discard one of its batting cages. The initial cost of the equipment was $225,000 with an accumulated depreciation of $195,000. Depreciation has been taken up to the end of the year. The following will be included in the entry to record the disposal.
24. On December 31, Reach It Batting Cages Company has decided to trade-in one of its batting cages for another one that has a cost of $500,000. The seller of the batting cage is willing to allow a trade-in amount of $40,000. The initial cost of the old equipment was $225,000 with an accumulated depreciation of $195,000. Depreciation has been taken up to the end of the year. The difference will be paid in cash. What is the amount of the gain or loss on this transaction?
25. Miller Co. issued a $35,000, 60-day, discounted note to River City Bank. The discount rate is 6%. What is the maturity value of the note?
26. Gray County Bank agrees to lend the Starkwood Building Company $100,000 on January 1. Starkwood Building Company signs a $100,000, 9%, 9-month note. What is the adjusting entry required if Starkwood Building Company prepares financial statements on June 30?
27. The journal entry to record the conversion of a $250 accounts payable to a notes payable would be:
28. On October 30, Santos Salon, Inc. issued a 90-day note with a face amount of $60,000 to Charah Hair Products, Inc. for merchandise inventory. Determine the proceeds of the note assuming the note is discounted at 8%.
29. An employee receives an hourly rate of $15, with time and a half for all hours worked in excess of 40 during the week. Payroll data for the current week are as follows: hours worked, 48; federal income tax withheld, $120; cumulative earnings for the year prior to this week, $24,500; Social security tax rate, 6% on maximum of $100,000; and Medicare tax rate, 1.5% on all earnings; state unemployment compensation tax, 3.4% on the first $7,000; federal unemployment compensation tax, .8% on the first $7,000. What is the employer's payroll tax expense?
30. An employee receives an hourly rate of $15, with time and a half for all hours worked in excess of 40 during the week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $120; cumulative earnings for the year prior to this week, $5,500; Social security tax rate, 6% on maximum of $100,000; and Medicare tax rate, 1.5% on all earnings; state unemployment compensation tax, 3.4% on the first $7,000; federal unemployment compensation tax, .8% on the first $7,000. What is the employer's payroll tax expense?
31. The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding?
32. Hurd Company acquired a building valued at $160,000 for property tax purposes in exchange for 10,000 shares of its $5 par common stock. The stock is widely traded and selling for $15 per share. At what amount should the building be recorded by Hurd Company?
33. The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 50,000 shares were originally issued and 10,000 were subsequently reacquired. What is the number of shares outstanding?
34. The Snow Corporation issues 10,000 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 $600,000 and a credit or credits to ________.
35. The journal entry to issue 1,000,000 shares of $5 par common stock for $7.00 per share on January 2nd would be: _______.
36. When Bunyan Corporation was formed on January 1, 20xx, the corporate charter provided for 100,000 share of $10 par value common stock. The following transaction was among those engaged in by the corporation during its first month of operation: The corporation issued 8,000 shares of stock at a price of $22.00 per share.
The entry to record the above transaction would include a ________.
37. The journal entry to issue 1,000,000 shares of $5 par common stock for $6.25 per share on January 2nd would be: _______.
38. A corporation purchases 10,000 shares of its own $10 par common stock for $25 per share, recording it at cost. What will be the effect on total stockholders' equity?
39. The Rand Corporation began the current year with a retained earnings balance of $25,000. During the year, the company corrected an error made in the prior year, which was a failure to record depreciation expense of $3,000 on equipment. Also, during the current year, the company earned net income of $12,000 and declared cash dividends of $5,000. Compute the year end retained earnings balance.
40. Based on the following information, calculate the dividend yield on common stock
Market price per share $40.00
Earnings per share 4.00
Dividends per share 1.00
Investor's cost per share 30.00
41. A corporation has 50,000 shares of $28 par value stock outstanding that has a current market value of $160. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately ________.
42. A corporation has 50,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the par value of the stock will be _______.
43. If the board of directors authorizes a $100,000 restriction of retained earnings for a future plant expansion, the effect of this action is to ________.
44. The present value of $30,000 to be received in two years, at 12% compounded annually, is (rounded to nearest dollar) ________.
45. On January 1, 2007, the Queen Corporation issued 10% bonds with a face value of $100,000. The bonds are sold for $98,000. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 2011. Queen records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31, 2007, is ________.
46. If $1,000,000 of 8% bonds are issued at 102 1/2, the amount of cash received from the sale is _______.
47. Bonds with a face amount $1,000,000, are sold at 97. The entry to record the issuance is _______.
48. On the statement of cash flows prepared by the indirect method, the cash flows from operating activities section would include ________.
49. Financing activities involve ________.
50. Accounts receivable arising from trade transactions amounted to $45,000 and $52,000 at the beginning and end of the year, respectively. Net income reported on the income statement for the year was $105,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method is _______.
51. Land costing $47,000 was sold for $78,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?
52. Cash dividends of $80,000 were declared during the year. Cash dividends payable were $10,000 and $15,000 at the beginning and end of the year, respectively. The amount of cash for the payment of dividends during the year is _______.
53. Land costing $68,000 was sold for $50,000 cash. The loss on the sale was reported on the income statement as other expense. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?
54. The net income reported on the income statement for the current year was $250,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows:
End Beginning
Cash $ 50,000 $ 60,000
Accounts receivable 112,000 108,000
Inventories 105,000 93,000
Prepaid expenses 4,500 6,500
Accounts payable (merchandise creditors) 75,000 89,000
What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?
55. Concerning the Indirect Statement of Cash Flows, select the correct statement.
