Financial Statements
On December 31, 2023, Vivid Corporation prepared adjusting entries that included the following items:
Depreciation expense: $43,400.
Accrued sales revenue: $40,600.
Accrued expenses: $16,800.
Used insurance: $12,600; the insurance was initially recorded as prepaid.
Rent revenue earned: $9,800; the rent was initially prepaid by the tenant and credited to unearned rent revenue.
If Vivid Corporation reported stockholders' equity of $392,000 prior to the adjusting entries, how much is Vivid's stockholders' equity after the adjusting entries?
A) $392,000
B) $366,800
C) $413,000
D) $369,600
A) $392,000
or
D) $369,600
herwood Company began the year with a balance in inventory of $66,000 and ended the year with a balance of $61,200. The net sales for the year were $589,800 with a gross profit on sales of $177,000. The inventory turnover ratio is closest to:
A) 9.27
B) 6.49
C) 2.89
D) 2.78
B) 6.49
Assume Idaho Company recorded the following adjusting journal entry at year-end:
Account Title Debit Credit
Insurance expense $2,000
Prepaid insurance $2,000
If the beginning balance in prepaid insurance was $500, and $2,500 was paid for an insurance premium during the year, what is the ending balance in the prepaid insurance account after the above adjusting entry?
A) $1,200
B) $700
C) $2,200
D) $1,000
D) $1,000
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
Inventory 36
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.
Athena Company is preparing a statement of stockholders' equity for 2023. On December 31, 2023, Athena’s retained earnings balance was $160,000. During the year, Athena earned $70,000 of net income and declared dividends of $10,000. Additionally, during the year Athena received $15,000 as an additional investment from its owners. What was the balance in Athena’s retained earnings on January 1, 2023?
A) $50,000
B) $85,000
C) $80,000
D) $100,000
D) $100,000
Grand Maple Company reported the following data:
Ending inventory $92,000
Cost of goods sold 168,000
Net credit sales 252,000
Long-term liabilities 400,000
Beginning inventory 76,000
Average net receivables 25,200
Total liabilities 600,000
Current assets 300,000
Quick assets 110,000
What was the average number of days to sell inventory?
Note: Assume 365 days in a year.
A) 121.7
B) 182.5
C) 165.9
D) 202.7
B) 182.5
On January 1, 2023, Ryan Company paid the premium on a three-year insurance policy in the amount of $6,000. At that time, the full amount paid was recorded as prepaid insurance. After recording the adjusting entry for the insurance policy on December 31, 2023, what would be the balance in Ryan Company's prepaid insurance account?
A) $6,000
B) $2,000
C) $3,000
D) $4,000
D) $4,000
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
Lockhart Industries reported total stockholders' equity of $340,000 on its balance sheet dated December 31, 2021. During the year ended December 31, 2022, the company declared and paid a cash dividend of $8,000, declared and distributed a 10% stock dividend with a $10,000 total market value, and issued additional common stock for $80,000. If total stockholders' equity as of December 31, 2022 is $452,000, what was the amount of net income for the year ended December 31, 2022?
A) $72,000.
B) $40,000
C) $50,000.
D) $62,000.
B) $40,000
Grand Maple Company reported the following data:
Ending inventory $92,000
Cost of goods sold 168,000
Net credit sales 252,000
Long-term liabilities 400,000
Beginning inventory 76,000
Average net receivables 25,200
Total liabilities 600,000
Current assets 300,000
Quick assets 110,000
What was the current ratio?
A) 2.5
B) 0.5
C) 1.5
D) 0.75
C) 1.5
On July 1, 2023, Goode Company borrowed $100,000. The company signed a note payable with interest at 6 percent per year. The note and interest are due on December 31, 2023. On December 31, 2023, Goode paid $103,000 to settle the debt in full. Assuming no accruals for interest have been made during the year, transaction analysis of the $103,000 cash payment on December 31, 2023 should reflect which of the following?
A) A decrease in assets of $103,000 and a decrease in liabilities of $103,000.
B) A decrease in assets of $100,000, a decrease in stockholders' equity of $3,000, and a decrease in liabilities of $103,000.
C) A decrease in stockholders' equity of $100,000, a decrease in liabilities of $3,000, and a decrease in assets of $103,000.
D) A decrease in liabilities of $100,000, a decrease in stockholders' equity of $3,000, and a decrease in assets of $103,000.
D) A decrease in liabilities of $100,000, a decrease in stockholders' equity of $3,000, and a decrease in assets of $103,000.
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
Hibiscus Company reported the following asset and liability balances at the end of 2021 and 2022:
2021 2022
Total Assets $3,400,000 $3,800,000
Total Liabilities $1,600,000. $1,800,000
During 2022, cash dividends of $25,000 were declared and paid, and common stock was issued for $50,000. What was the amount of net income for 2022?
A) $240,000.
B) $150,000.
C) $200,000.
D) $175,000.
D) $175,000
Hickory Company has provided the following information:
What is Hickory's price/earnings ratio?
A) 3.0
B) 3.4
C) 5.1
D) 4.5
A) 3.0
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. What is the amount to be paid to the bank on March 31, 2023 for interest and principal?
A) $250,000.
B) $257,500.
C) $270,000.
D) $280,000.
D) $280,000
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.
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.
For the year ended December 31, 2023, Teton Company had gross profit of $1,258,000, cost of goods sold of $940,000, interest expense of $34,000, operating expenses of $230,000, and income tax expense of $398,000. What was Teton’s net sales?
A) $2,198,000
B) $2,428,000
C) $2,596,000
D) $2,164,000
A) $2,198,000
Grand Maple Company reported the following data:
Ending inventory $92,000
Cost of goods sold 168,000
Net credit sales 252,000
Long-term liabilities 400,000
Beginning inventory 76,000
Average net receivables 25,200
Total liabilities 600,000
Current assets 300,000
Quick assets 110,000
What was the inventory turnover ratio?
A) 1.8
B) 2.2
C) 3.0
D) 2.0
D) 2.0
Valley Ranch Incorporated borrowed $250,000 cash on October 1, 2022, and signed a nine-month, 8% interest-bearing note payable with interest payable at maturity. Assuming that adjusting entries have not been made during the year, the amount of accrued interest payable to be reported on the December 31, 2022 balance sheet is which of the following?
A) $2,500.
B) $3,000.
C) $5,000.
D) $7,500.
C) $5,000
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.
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