Q&A Hero

Q: Interest on a note can be computed without knowledge of the a. fair value of the note b. rate of interest c. note duration d. principal amount

Q: paid-in capital in excess of par value a.is credited when no-par stock does not have a stated value b.is reported as part of paid-in capital on the balance sheet c.represents the amount of legal capital d.normally has a debit balance

Q: On October 1, Black Company receives a 9% interest-bearing note from Reese Company to settle a $20,000 account receivable. The note is due in six months. At December 31, Black should record interest revenue of a. $0 b. $450 c. $900 d. $1,800

Q: if common stock is issued for an amount greater than par value, the excess should be credited to a.cash b.retained earnings c.paid-in capital in excess of par value d.legal capital

Q: You have just received notice that a customer with an account receivable balance has gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry you make is to a. debit Bad Debt Expense and credit Allowance for Doubtful Accounts b. debit Bad Debt Expense and credit Accounts Receivable c. debit Allowance for Doubtful Accounts and credit Accounts Receivable d. debit Allowance for Doubtful Accounts and credit Bad Debt Expense

Q: if pratt company issues 3,000 shares of $5 par value common stock for $210,000, the account a.common stock will be credited for $195,000 b.paid-in capital in excess of par value will be credited for $210,000 c.paid-in capital in excess of par value will be credited for $225,000 d.cash will be debited for $210,000

Q: The two methods of accounting for uncollectible receivables are the allowance method and the a. equity method b. direct write-off method c. interest method d. cost method

Q: if lantz company issues 3,000 shares of $5 par value common stock for $210,000, the account a.common stock will be credited for $15,000 b.paid-in capital in excess of par value will be credited for $15,000 c.paid-in capital in excess of par value will be credited for $210,000 d.cash will be debited for $195,000

Q: A 60-day, 12% note for $7,000, dated April 15, is received from a customer on account. The face value of the note is a. $6,860 b. $7,140 c. $7,840 d. $7,000

Q: 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 $20,000 by issuing 10,000 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

Q: Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a a. credit to Bad Debt Expense b. credit to Accounts Receivable c. debit to Allowance for Doubtful Accounts d. debit to Accounts Receivable

Q: when stock is issued in exchange for a noncash asset, the value recorded for the shares issued is best determined by a.the book value of the noncash asset b.the market value of the shares c.the par value of the shares d.the contributed capital of the shares

Q: Abbott Company uses the allowance method of accounting for uncollectible receivables. Abbott estimates that 3% of credit sales will be uncollectible. On January 1, Allowance for Doubtful Accounts had a credit balance of $2,400. During the year, Abbott wrote off accounts receivable totaling $1,800 and made credit sales of $100,000. There were no sales returns during the year. After the adjusting entry, the December 31 balance in Bad Debt Expense will be a. $1,200 b. $3,000 c. $3,600 d. $7,200

Q: cey, inc. issued 5,000 shares of stock at a stated value of $10/share. the total issue of stock sold for $15/share. the journal entry to record this transaction would include a a.debit to cash for $50,000 b.credit to common stock for $50,000 c.credit to paid-in capital in excess of par value for $25,000 d.credit to common stock for $75,000

Q: The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles a. will increase net income in the period it is collected b. will decrease net income in the period it is collected c. does not affect net income in the period it is collected d. requires a correcting entry for the period in which the account was written off

Q: holden packaging corporation began business in 2012 by issuing 60,000 shares of $5 par common stock for $8 per share and 15,000 shares of 6%, $10 par preferred stock for par. at year end, the common stock had a market value of $10. on its december 31, 2012 balance sheet, holden packaging would report a.common stock of $600,000 b.common stock of $300,000 c.common stock of $480,000 d.paid-in capital of $450,000

Q: Other receivables includes all of the following except a. notes receivable from sales transactions b. receivables from employees c. taxes receivable d. interest receivable

Q: To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a a. debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts b. debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts c. debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable d. debit to Loss on Credit Sales and a credit to Accounts Receivable

Q: tomlinson packaging corporation began business in 2010 by issuing 20,000 shares of $5 par common stock for $8 per share and 5,000 shares of 6%, $10 par preferred stock for par. at year end, the common stock had a market value of $10. on its december 31, 2012 balance sheet, tomlinson packaging would report a.common stock of $200,000 b.common stock of $100,000 c.common stock of $160,000 d.paid-in capital of $150,000

Q: A debit balance in Allowance for Doubtful Accounts a. is the normal balance for that account b. indicates that actual bad debt write-offs have been less than what was estimated c. cannot occur if the percentage of receivables method of estimating bad debts is used d. indicates that actual bad debt write-offs have exceeded previous provisions for bad debts

Q: which of the following represents the largest number of common shares? a.treasury shares b.issued shares c.outstanding shares d.authorized shares

Q: the paid-in capital in excess of par value is increased in the accounting records when a.the number of shares issued exceeds par value b.the stated value of capital stock is greater than the par value c.the market value of the stock rises above par value d.capital stock is issued at an amount greater than par value

Q: the following data is available for box corporation at december 31, 2012:based on the data, how many shares of common stock are issued?a.30,000b.20,000c.29,920d.19,920

Q: The accounts receivable turnover measures a. how frequently during the year the accounts receivable are converted to cash b. the number of days of accounts receivable outstanding c. the fair market value of accounts receivable d. the efficiency of the accounts payable function

Q: The following data is available for BOX Corporation at December 31, 2012:based on the data, how many shares of common stock are outstanding?a.30,000b.20,000c.29,920d.19,920

Q: The operating expense recorded from uncollectible receivables can be called all of the following except a. Accounts Receivable b. Bad Debt Expense c. Doubtful Accounts Expense d. Uncollectible Accounts Expense

Q: which of the following statements about treasury stock is true? a.few corporations have treasury stock b.purchasing treasury stock is done to eliminate hostile shareholder buyouts c.companies acquire treasury stock to increase the number of shares outstanding d.companies acquire treasury stock to decrease earnings per share

Q: If the maker of a promissory note fails to pay the note on the due date, the note is said to be a. displaced b. disallowed c. dishonored d. discounted

Q: Retro Company is authorized to issue 10,000 shares of 8%, $100 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share. If Retro issues 5,000 shares of common stock to pay its recent attorney's bill of $20,000 for legal services on a land access dispute, which of the following would be the best journal entry for Retro to record?

Q: The maturity value of a $40,000, 9%, 40-day note receivable dated July 3 is a. $40,000 b. $40,400 c. $43,600 d. $44,000

Q: Dawson Company issued 800 shares of no-par common stock for $7,200. Which of the following journal entries would be made if the stock has stated value of $2 per share?

Q: If collection of an other receivable is expected beyond one year, it is classified as a(n) a. other receivable under Noncurrent Assets b. other receivable under Current Assets c. investment under Current Assets d. investment under Noncurrent Assets

Q: Johnson Company issued 600 shares of no-par common stock for $10,200. Which of the following journal entries would be made if the stock has no stated value?

Q: Miles uses the allowance method and wrote off the account of James. Miles then received $559 as partial payment on the account of James.The journal entry for the initial write-off includes a a. debit to Allowance for Doubtful Accounts b. credit to Cash c. debit to Accounts Receivable—James d. credit to Bad Debt Expense

Q: if the market value of the assets received and the market value of the stock issued are both available, then what amount should be used to value the assets? a.market value of the stock b.market value of the assets c.par value of the stock d.the more clearly determinable market value

Q: the board of directors of yancey company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on july 15, 2012. the dividend is to be paid on august 15, 2012, to stockholders of record on july 31, 2012. the effects of the journal entry to record the declaration of the dividend on july 15, 2012, are to a.decrease stockholders equity and increase liabilities b.decrease stockholders equity and decrease assets c.increase stockholders equity and increase liabilities d.increase stockholders equity and decrease assets

Q: Under the direct write-off method of accounting for uncollectible accounts, Bad Debt Expense is recorded a. at the end of each accounting period b. when a credit sale is past due c. whenever a predetermined amount of credit sales has been made d. when an account is determined to be worthless

Q: the board of directors of yancey company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on july 15, 2012. the dividend is to be paid on august 15, 2012, to stockholders of record on july 31, 2012. the correct entry to be recorded on july 15, 2012, will include a a.debit to dividends payable b.debit to cash dividends c.credit to cash d.credit to cash dividends

Q: Indications that an account may be uncollectible include all of the following except the customer a. closes its business b. is making small but regular payments c. files for bankruptcy d. cannot be located

Q: which of the following is the appropriate general journal entry to record the declaration of cash dividends? a.cash dividends cash b.dividends payable cash c.paid-in capital dividends payable d.cash dividends dividends payable

Q: the effect of the declaration of a cash dividend by the board of directors is to

Q: Which of the following receivables would not be classified as an “other receivable”? a. advance to an employee b. interest receivable c. refundable income tax d. notes receivable from sales transactions

Q: The balance in Allowance for Doubtful Accounts will directly impact the end-of-period adjustment for bad debt expense when using the a. allowance method based on aging the receivables b. direct write-off method c. allowance method based on the percent of sales method d. declining value method

Q: the board of directors of bosco company declared a cash dividend on november 15, 2012, to be paid on december 15, 2012, to stockholders owning the stock on november 30, 2012. given these facts, the date of november 30, 2012, is referred to as the a.declaration date b.record date c.payment date d.ex-dividend date

Q: the cumulative effect of the declaration and payment of a cash dividend on a companys financial statements is to a.decrease total liabilities and stockholders equity b.increase total expenses and total liabilities c.increase total assets and stockholders equity d.decrease total assets and stockholders equity

Q: A $6,000, 60-day, 12% note is not paid by the maker at maturity. The journal entry to recognize this event is a. debit Cash, $6,120; credit Notes Receivable, $6,120 b. debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Receivable, $120 c. debit Notes Receivable, $6,060; credit Accounts Receivable, $6,060 d. debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Revenue, $120

Q: the date on which a cash dividend becomes a binding legal obligation is on the a.declaration date b.date of record c.payment date d.last day of the fiscal year end

Q: An account becomes uncollectible a. when an account receivable is converted into a note receivable b. when a discount is availed on notes receivable c. There is no general rule for when an account becomes uncollectible. d. at the end of the fiscal year

Q: which one of the following is not necessary in order for a corporation to pay a cash dividend? a.adequate cash b.approval of stockholders c.declared dividends d.retained earnings

Q: on january 1, edmiston corporation had 1,200,000 shares of $10 par value common stock outstanding. on march 31 the company declared a 10% stock dividend. market value of the stock was $15/share. as a result of this event, a.edmistons paid-in capital in excess of par value account increased $600,000 b.edmistons total stockholders equity was unaffected c.edmistons stock dividends account increased $1,800,000 d.all of the above

Q: One of the weaknesses of the direct write-off method is that it a. understates accounts receivable on the balance sheet b. violates the matching concept c. is too difficult to use for many companies d. is based on estimates

Q: on january 1, mccarver corporation had 800,000 shares of $10 par value common stock outstanding. on march 31 the company declared a 10% stock dividend. market value of the stock was $15/share. as a result of this event, a.mccarvers paid-in capital in excess of par value account increased $400,000 b.mccarvers total stockholders equity was unaffected c.mccarvers stock dividends account increased $1,200,000 d.all of the above

Q: When a company receives an interest-bearing note receivable, it will a. debit Notes Receivable for the maturity value of the note b. debit Notes Receivable for the face value of the note c. credit Notes Receivable for the maturity value of the note d. credit Notes Receivable for the face value of the note

Q: xyz company has $20,000 of dividends in arrears. based on this information, which of the following statements is false? a.dividends in arrears are not considered to be liabilities b.an obligation for dividends in arrears exists only after the board of directors declares payment c.the investment community looks favorably on companies with dividends in arrears, since the money is redirected toward more important growth opportunities d.the amount of dividends in arrears should be disclosed in the notes to the financial statements

Q: Retro Company is authorized to issue 10,000 shares of 8%, $100 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share. If Retro issues 6,000 shares of preferred stock for land with an asking price of $750,000 and a market value of $660,000, which of the following would be the best journal entry for Retro to record?

Q: The receivable that is usually evidenced by a formal, written instrument of credit is a(n) a. trade receivable b. note receivable c. accounts receivable d. income tax receivable

Q: all of the following statements about preferred stock are true except a.preferred stock will have a paid-in capital account that is separate from other stock b.preferred stock is presented first on the stockholder's equity section c.preferred stock can be either par value or no-par value d.there can be only one class of preferred stock

Q: outstanding stock of the hall corporation included 30,000 shares of $5 par common stock and 15,000 shares of 6%, $10 par non-cumulative preferred stock. in 2011, hall declared and paid dividends of $6,000. in 2012, hall declared and paid dividends of $18,000. how much of the 2012 dividend was distributed to preferred shareholders? a.$12,000 b.$21,000 c.$9,000 d.none of the above

Q: An alternative name for Bad Debt Expense is a. Collection Expense b. Credit Loss Expense c. Uncollectible Accounts Expense d. Doubtless Accounts Expense

Q: outstanding stock of the west corporation included 20,000 shares of $5 par common stock and 5,000 shares of 6%, $10 par non-cumulative preferred stock. in 2011, west declared and paid dividends of $2,000. in 2012, west declared and paid dividends of $6,000. how much of the 2012 dividend was distributed to preferred shareholders? a.$4,000 b.$7,000 c.$3,000 d.none of the above

Q: At the beginning of the year, the balance in Allowance for Doubtful Accounts is a credit of $760. During the year, previously written off accounts of $120 are reinstated and accounts totaling $740 are written off as uncollectible. The end-of-year balance (before adjustment) in Allowance for Doubtful Accounts should be a. $760 b. $120 c. $140 d. $740

Q: dividends in arrears are dividends on a.cumulative preferred stock that have been declared but have not been paid b.non-cumulative preferred stock that have not been declared for a given period of time c.cumulative preferred stock that have not been declared for a given period of time d.common dividends that have been declared but have not yet been paid

Q: dividends in arrears on cumulative preferred stock a.are considered to be a non-current liability b.are considered to be a current liability c.only occur when preferred dividends have been declared d.should be disclosed in the notes to the financial statements

Q: dividends in arrears on cumulative preferred stock a.never have to be paid, even if common dividends are paid b.must be paid before common stockholders can receive a dividend c.should be recorded as a current liability until they are paid d.enable the preferred stockholders to share equally in corporate earnings with the common stockholders

Q: When comparing the direct write-off method and the allowance method of accounting for uncollectible receivables, a major difference is that the direct write-off method a. uses a percentage of sales to estimate uncollectible accounts b. is used primarily by large companies with many receivables c. is used primarily by small companies with few receivables d. uses an allowance account

Q: nice corporation issues 20,000 shares of $100 par value preferred stock for cash at $110 per share. the entry to record the transaction will consist of a debit to cash for $2,200,000 and a credit or credits to a.preferred stock for $2,200,000 b.preferred stock for $2,000,000 and paid-in capital in excess of par valuepreferred stock for $200,000 c.preferred stock for $2,000,000 and retained earnings for $200,000 d.paid-in capital from preferred stock for $2,200,000

Q: A company uses the allowance method to account for uncollectible accounts receivable. When the firm writes off a specific customer's account receivable, a. total current assets are reduced b. total expenses for the period are increased c. the net realizable value of accounts receivable increases d. there is no effect on total current assets or total expenses

Q: logan corporation issues 40,000 shares of $50 par value preferred stock for cash at $60 per share. in the stockholders equity section, the effects of the transaction above will be reported a.entirely within the capital stock section b.entirely within the additional paid-in capital section c.under both the capital stock and additional paid-in capital sections d.entirely under the retained earnings section

Q: When referring to a note receivable or promissory note, a. the maker is the party to whom the money is due b. the note is not considered a formal credit instrument c. the note cannot be factored to another party d. the note may be used to settle an accounts receivable

Q: logan corporation issues 40,000 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 $2,400,000 and a credit or credits to a.preferred stock for $2,400,000 b.preferred stock for $2,000,000 and paid-in capital in excess of par valuepreferred stock for $400,000 c.preferred stock for $2,000,000 and retained earnings for $400,000 d.paid-in capital from preferred stock for $2,400,000

Q: In accounting for uncollectible receivables, the balance in Allowance for Doubtful Accounts will directly impact the amount of the adjustment when applying a. the direct write-off method b. the percentage of sales method c. the analysis of receivables method d. both the percentage of sales and analysis of receivables methods

Q: The term "receivables" includes all a. money claims against other entities b. merchandise to be collected from individuals or companies c. cash to be paid to creditors d. cash to be paid to debtors

Q: which of the following is not a right or preference associated with preferred stock? a.the right to vote b.first claim to dividends c.preference to corporate assets in case of liquidation d.to receive dividends in arrears before common stockholders receive dividends

Q: treasury shares plus outstanding shares equal a.authorized stock b.issued stock c.unissued stock d.distributable stock

Q: Dalton Company uses the allowance method to account for uncollectible receivables. Dalton has determined that the Irish Company account is uncollectible. To write off this account, Dalton should debit a. Bad Debt Expense and credit Accounts Receivable—Irish Company b. Bad Debt Expense and credit Allowance for Doubtful Accounts c. Allowance for Doubtful Accounts and credit Accounts Receivable—Irish Company d. Accounts Receivable—Irish Company and credit Allowance for Doubtful Accounts

Q: the number of shares of issued stock equals a.unissued shares minus authorized shares b.outstanding shares plus treasury shares c.authorized shares minus treasury shares d.outstanding shares plus authorized shares

Q: Accounts receivable and notes receivable from sales transactions can also be called trade receivables. a. True b. False

Q: treasury stock is a(n) a.contra asset account b.retained earnings account c.asset account d.contra stockholders equity account

Q: a company would not acquire treasury stock a.in order to reissue shares to officers b.as an asset investment c.in order to increase trading of the companys stock d.to have additional shares available to use in acquisitions of other companies

Q: When the allowance method for accounting for uncollectible receivables is used, net income is reduced when a specific receivable is written off. a. True b. False