Revenue, Cash,
Receivables
Receivables
Laurel Industries sold merchandise with an invoice price of $1,800 to Calvary Company, with terms of 2/10, n/30. Which of the following is the correct entry to record the payment by Calvary within 10 days if the company uses the perpetual inventory system and the gross method to record purchases?
A)
Cash 1,764
Inventory 36
Accounts Payable 1,800
B)
Accounts Payable 1,800
Cash 1,764
Inventory 36
C)
Accounts Payable 1,800
Cash. 1,800
D)
Purchases 1,764
Cash 1,764
B)
Accounts Payable 1,800
Cash 1,764
Alderwood Company has provided the following information prior to any year-end bad debt adjustment:
Alderwood prepares an aging of accounts receivable and the result shows that 5% of accounts receivable is estimated to be uncollectible. How much is bad debt expense?
A) $16,500.
B) $20,100.
C) $12,720.
D) $12,900.
D) $12,900.
Rocket Corporation entered into the following transactions:
Which of the following statements is correct with respect to determining Rocket's working capital? Assume that Rocket's operating cycle is four months.
A) The purchase of the insurance policy increases working capital.
B) The cash payments for the note and insurance both decrease working capital.
C) The accrual of wages and salaries expense decreases working capital.
D) The cash payment on the note payable decreases working capital.
C) The accrual of wages and salaries expense decreases working capital.
Irish Corporation issued (sold) 10,000 shares of common stock for $70 per share. The bylaws established a stated value of $10 per share. What is the amount of increase in the common stock account as a result of this transaction?
A) $700,000.
B) $100,000.
C) $600,000.
D) $0.
B) $100,000.
Which of the following statements is correct?
A) Assets normally have a credit balance and are increased with debits.
B) Assets normally have a debit balance and are increased with credits.
C) Liability accounts normally have debit balances and are increased with debits.
D) Stockholders' equity accounts normally have credit balances and are increased with credits.
D) Stockholders' equity accounts normally have credit balances and are increased with credits.
Maxim Corporation has provided the following information about one of its products:
Date Transaction # of Units Cost/Unit
1/1 Beg Inv 200 $140
6/5 Purchase 400 $160
11/10 Purchase 100. $200
During the year, Maxim sold 400 units.
What is ending inventory using the average cost method?
A) $48,000.
B) $64,000.
C) $50,000.
D) $62,000.
A) $48,000.
Alderwood Company has provided the following information prior to any year-end bad debt adjustment:
Alderwood estimates bad debt expense assuming that 1.5% of credit sales have historically been uncollectible. How much is Alderwood's bad debt expense?
A) $23,850.
B) $20,250.
C) $16,650.
D) $23,400.
B) $20,250.
Which of the following correctly describes the accounting for leases?
A) There are eight criteria used to establish whether the lessor maintains effective control of the leased asset.
B) The amount recorded as a lease asset and a lease liability is the sum of the required future lease payments.
C) A lease asset and a lease liability are initially recognized for both a finance lease and an operating lease.
D) If none of the criteria used to establish whether the lessor maintains effective control of the leased asset are met, then the lease is classified as a finance lease.
C) A lease asset and a lease liability are initially recognized for both a finance lease and an operating lease.
Which of the following statements about treasury stock transactions is correct?
A) A stockholders' equity account is debited when treasury stock is purchased.
B) Gains and losses on treasury stock transactions are reported on the income statement.
C) The total number of shares issued increases when treasury stock is purchased.
D) The total number of shares authorized changes when treasury stock is purchased.
A) A stockholders' equity account is debited when treasury stock is purchased.
Which of the following statements does not correctly describe the relationship between the income statement and the ending retained earnings balance?
A) Net income increases the ending balance of retained earnings.
B) A net loss decreases the ending retained earnings balance.
C) A net loss does not affect the ending retained earnings balance.
D) Net income and net loss both affect the ending retained earnings balance.
C) A net loss does not affect the ending retained earnings balance.
Maxim Corporation has provided the following information about one of its products:
Date Transaction # of Units Cost/Unit
1/1 Beg Inv 200 $140
6/5 Purchase 400 $160
11/10 Purchase 100. $200
During the year, Maxim sold 400 units.
What is Cost of Goods Sold using the average cost method?
A) $48,000.
B) $64,000.
C) $50,000.
D) $62,000.
B) $64,000.
Which of the following is correct when bad debt expense is recorded at year-end?
A) Current assets will increase.
B) Gross profit will decrease.
C) Income from operations will decrease.
D) Current liabilities will decrease.
C) Income from operations will decrease.
A loan supported by an agreement to transfer ownership of assets if the loan is not repaid is called a:
A) Private placement of debt
B) Publicly traded debt
C) Finance lease
D) Secured debt
D) Secured debt
On February 1, 2022, Cue Company acquired 1,000 shares of its $1 par value stock for $47 per share and held these shares in treasury. On April 10, 2023, Cue resold all the treasury shares for $50 per share. Which of the following entries would be recorded when Cue Company resells the shares of treasury stock?
A)
Cash 50,000
Treasury Stock 47,000
APIC 3,000
B)
Cash 50,000
Treasury Stock 47,000
Retained Earnings 3,000
C)
Cash 50,000
Treasury Stock 47,000
Gain on Sale of Treasury Stock. 3,000
D)
Cash 50,000
Common Stock. 1,000
APIC 49,000
A)
Cash 50,000
Treasury Stock 47,000
APIC 3,000
Which of the following statements is correct?
A) Accumulated depreciation is the amount of depreciation on the income statement.
B) Current liabilities are debts expected to be paid within one year.
C) Current assets are resources of a company that might include cash and copyrights.
D) Patents, goodwill, and deferred revenues are classified as intangible assets on the balance sheet.
B) Current liabilities are debts expected to be paid within one year.
Square 9 Corporation has provided the following information about one of its laptop products:
Date Transaction # of Units Cost/Unit
1/1 Beg Inv 100 $400
5/5 Purchase 200 $450
8/10 Purchase 300. $500
10/15 Purchase. 200. $550
During the year, Square9 sold 750 laptop computers.
What was ending inventory using the FIFO cost flow assumption?
A) $30,000.
B) $27,500.
C) $22,500.
D) $20,000.
B) $27,500.
Which of the following statements is false?
A) The journal entry to record bad debt expense decreases current assets.
B) The journal entry to record bad debt expense decreases retained earnings.
C) The journal entry to write off an uncollectible account receivable decreases operating income.
D) The journal entry to write off an uncollectible account receivable does not affect current assets.
C) The journal entry to write off an uncollectible account receivable decreases operating income.
Tallows Company borrowed $500,000 cash on September 1, 2022, and signed a one-year, 6% interest-bearing note payable. Assume that the appropriate adjusting entry was made on December 31, 2022, and that no adjusting entries have been made during 2023. Which of the following would be the required journal entry to pay the note on August 31, 2023?
A)
Interest Expense. 22,500
Cash 22,500
B)
Interest Expense. 20,000
Interest Payable. 10,000
Notes Payable. 500,000
Cash 530,000
C)
Notes Payable 500,000
Interest Expense 20,000
Cash 520,000
D)
Interest Payable. 10,000
Notes Payable 500,000
Cash 510,000
B)
Interest Expense. 20,000
Interest Payable. 10,000
Notes Payable. 500,000
Cash 530,000
Which of the following statements is false?
A) The declaration of a cash dividend creates a liability as of the date of record.
B) The dividend liability for a cash dividend is created on the declaration date.
C) The dividend payment date is when the dividend liability is reduced.
D) The date of record is irrelevant with respect to recording a liability for a cash dividend.
A) The declaration of a cash dividend creates a liability as of the date of record.
Boone's Cleaning Service performed cleaning services during December 2022, but had not collected any cash from its customers as of December 31, 2022. What impact did performing these services have on the accounting equation?
A) Performing the service increased assets and increased liabilities.
B) Performing the service increased assets and increased stockholders' equity.
C) Performing the service increased assets and decreased stockholders' equity.
D) Performing the service decreased liabilities and decreased stockholders' equity.
B) Performing the service increased assets and increased stockholders' equity.
Square 9 Corporation has provided the following information about one of its laptop products:
Date Transaction # of Units Cost/Unit
1/1 Beg Inv 120 $420
5/5 Purchase 220 $470
8/10 Purchase 320. $520
10/15 Purchase. 210. $570
During the year, Square9 sold 800 laptop computers.
What was cost of goods sold using the FIFO cost flow assumption?
A) $405,000
B) $400,000
C) $400,500
D) $410,500
B) $400,000
Which of the following journal entries correctly records bad debt expense?
A)
Bad Debt Expense XXXX
Accounts Receivable. XXXX
B)
Allowance for Doubtful Accounts. XXXX
Accounts Receivable. XXXX
C)
Allowance for Doubtful Accounts XXXX
Bad Debt Expense. XXXX
D)
Bad Debt Expense. XXXX
Allowance for Doubtful Accounts. XXXX
D)
Bad Debt Expense. XXXX
Allowance for Doubtful Accounts. XXXX
Devonshire Company borrowed $250,000 cash on April 1, 2022, and signed a one-year, 12% interest-bearing note payable. The interest and principal are both due on March 31, 2023. Assume that the appropriate adjusting entry was made on December 31, 2022 and that no adjusting entries have been made during 2023. What is the amount of interest expense to be recorded when the interest and principal are paid on March 31, 2023?
A) $30,000
B) $22,500
C) $20,000
D) $7,500
D) $7,500
CBA Company reported total stockholders' equity of $85,000 on its balance sheet dated December 31, 2021. During the year ended December 31, 2022, CBA reported net income of $10,000, declared and paid a cash dividend of $2,000, and issued additional common stock for $20,000. What is total stockholders' equity as of December 31, 2022?
CBA Company reported total stockholders' equity of $85,000 on its balance sheet dated December 31, 2021. During the year ended December 31, 2022, CBA reported net income of $10,000, declared and paid a cash dividend of $2,000, and issued additional common stock for $20,000. What is total stockholders' equity as of December 31, 2022?
A) $113,000.
B) $109,000.
C) $115,000.
D) $117,000
A) $113,000.
Eagle Crest Company has provided the following information for its recent year of operation:
The common stock account balance at the beginning of the year was $10,000 and the year-end balance was $15,000.
The additional paid-in capital account balance increased $3,500 during the year.
The retained earnings balance at the beginning of the year was $75,000 and the year-end balance was $89,000.
Net income was $36,000.
How much did Eagle Crest sell its common stock for during the year?
A) $3,500
B) $8,500
C) $15,000
D) $5,000
B) $8,500