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Home » Accounting » Page 57

Accounting

Q: in the balance sheet, the account discounts on bonds payable is a.added to bonds payable b.deducted from bonds payable c.classified as a stockholders' equity account d.classified as a revenue account

Q: The inventory costing method that reports the most current prices in ending inventory is a. FIFO b. specific identification c. LIFO d. weighted average cost

Q: in the balance sheet, the account premium on bonds payable is a.added to bonds payable b.deducted from bonds payable c.classified as a stockholders' equity account d.classified as a revenue account

Q: the sale of bonds above face value a.is a rare occurrence b.will cause the total cost of borrowing to be less than the bond interest paid c.will cause the total cost of borrowing to be more than the bond interest paid d.will have no net effect on interest expense by the time the bonds mature

Q: Which of the following is not an example of safeguarding inventory? a. storing inventory in restricted areas b. using physical devices such as two-way mirrors, cameras, and alarms c. matching receiving documents, purchase orders, and vendor’s invoice d. returning inventory that is defective or broken

Q: over the term of the bonds, the balance in the discount on bonds payable account will a.fluctuate up and down if the market is volatile b.decrease c.increase d.be unaffected until the bonds mature

Q: All of the following are reasons to use an estimated method of costing inventory except a. perpetual inventory records are not maintained b. purchase records are not maintained c. a disaster has destroyed the inventory records and the inventory d. interim financial statements are required but physical inventory is only taken at the end of the financial accounting period

Q: if bonds are originally sold at a discount using the straight-line amortization method: a.interest expense in the earlier years of the bond's life will be less that the interest to be paid b.interest expense in the earlier years of the bond's life will be the same as interest to be paid c.unamortized discount is subtracted from the face value of the bond to determine its carrying value d.unamortized discount is added to the face value of the bond to determine its carrying value

Q: the following partial amortization schedule is available for courtney company who sold $300,000, five-year, 10% bonds on january 1, 2012 for $312,000 and uses annual straight-line amortization. which of the following amounts should be shown in cell (iii)? a.$6,000 b.$12,000 c.$2,400 d.$1,200

Q: When using a perpetual inventory system, the journal entry for the cost of merchandise sold is a. debit Cost of Merchandise Sold; credit Sales b. debit Cost of Merchandise Sold; credit Merchandise Inventory c. debit Merchandise Inventory; credit Cost of Merchandise Sold d. No journal entry is necessary for the cost of merchandise sold.

Q: the following partial amortization schedule is available for courtney company who sold $300,000, five-year, 10% bonds on january 1, 2012 for $312,000 and uses annual straight-line amortization. which of the following amounts should be shown in cell (ii)? a.$32,400 b.$27,600 c.$31,200 d.$28,800

Q: If a company mistakenly counts less items during a physical inventory than actually exist, how will the error affect the cost of merchandise sold? a. understated b. overstated c. no change d. only inventory will be affected

Q: the following partial amortization schedule is available for courtney company who sold $300,000, five-year, 10% bonds on january 1, 2012 for $312,000 and uses annual straight-line amortization. which of the following amounts should be shown in cell (i)? a.$31,200 b.$32,400 c.$30,000 d.$ 6,000

Q: If merchandise inventory is being valued at cost and the price level is steadily rising, the method of costing that will yield the highest net income is a. periodic b. LIFO c. FIFO d. weighted average cost

Q: which of the following statements regarding the effective interest method of accounting for bonds characteristics is false? a.gaap requires use of the effective interest method b.the amount of periodic interest expense decreases over the life of a discounted bond issue when the effective interest method is used c.over the life of the bond, the carrying value increases for discounted bonds when using the effective interest method d.the effective interest method applies a constant percentage to the bond carrying value to compute interest expense

Q: the following partial amortization schedule is available for courtney company who sold $300,000, five-year, 10% bonds on january 1, 2012 for $312,000 and uses annual straight-line amortization. which of the following amounts should be shown in cell (v)? a.$314,400 b.$313,200 c.$309,600 d.$310,800

Q: Use this information to answer the following questions.The following units of an inventory item were available for sale during the year:Beginning inventory 10 units at $55First purchase 25 units at $60Second purchase 30 units at $65Third purchase 15 units at $70The firm uses the periodic inventory system. During the year, 60 units of the item were sold.The value of ending inventory rounded to the nearest dollar using the weighted average cost method is a. $1,353 b. $1,263 c. $1,375 d. $1,150

Q: the following partial amortization schedule is available for courtney company who sold $300,000, five-year, 10% bonds on january 1, 2012 for $312,000 and uses annual straight-line amortization. which of the following amounts should be shown in cell (iv)? a.$13,200 b.$10,800 c.$14,400 d.$9,600

Q: Damaged merchandise that can be sold only at prices below cost should be valued at a. net realizable value b. LIFO c. FIFO d. weighted average cost

Q: warner company issued $1,600,000 of 6%, 10-year bonds on one of its interest dates for $1,381,920 to yield an effective annual rate of 8%. the effective-interest method of amortization is to be used. how much bond interest expense (to the nearest dollar) should be reported on the income statement for the end of the first year? a.$110,844 b.$110,554 c.$110,262 d.$96,000

Q: warner company issued $1,600,000 of 6%, 10-year bonds on one of its interest dates for $1,381,920 to yield an effective annual rate of 8%. the effective-interest method of amortization is to be used. the journal entry on the first interest payment date, to record the payment of interest and amortization of discount will include a a.debit to bond interest expense for $96,000 b.credit to cash for $110,554 c.credit to discount on bonds payable for $14,554 d.debit to bond interest expense for $128,000

Q: Merchandise inventory at the end of the year was understated. Which of the following statements correctly states the effect of the error? a. Net income is understated. b. Net income is overstated. c. Cost of merchandise sold is understated. d. Merchandise inventory reported on the balance sheet is overstated.

Q: warner company issued $1,600,000 of 6%, 10-year bonds on one of its interest dates for $1,381,920 to yield an effective annual rate of 8%. the effective-interest method of amortization is to be used. what amount of discount (to the nearest dollar) should be amortized for the first interest period? a.$45,084 b.$21,808 c.$29,108 d.$14,554

Q: on january 1, thompson corporation issued $4,000,000, 14%, 5-year bonds with interest payable on december 31. the bonds sold for $4,288,384. the market rate of interest for these bonds was 12%. on the first interest date, using the effective-interest method, the debit entry to bond interest expense is for a.$480,000 b.$502,324 c.$514,606 d.$560,000

Q: on january 1, weatherholt inc. issued $3,000,000, 9% bonds for $2,817,000. the market rate of interest for these bonds is 10%. interest is payable annually on december 31. jean loptein uses the effective-interest method of amortizing bond discount. at the end of the first year, weatherholt should report unamortized bond discount of a.$164,700 b.$171,300 c.$154,830 d.$153,000

Q: Under a periodic inventory system a. accounting records continuously disclose the amount of inventory b. a separate account for each type of merchandise is maintained in a subsidiary ledger c. a physical inventory is taken at the end of the period d. Merchandise Inventory is debited when goods are returned to vendors

Q: when the effective-interest method of amortization is used for a bond premium, the amount of interest expense for an interest period is calculated multiplying the a.face value of the bonds at the beginning of the period by the contractual interest rate b.face value of the bonds at the beginning of the period by the effective interest rate c.carrying value of the bonds at the beginning of the period by the contractual interest rate d.carrying value of the bonds at the beginning of the period by the effective interest rate

Q: If a company mistakenly counts more items during a physical inventory than actually exist, how will the error affect its bottom line? a. There will be no change to net income. b. Net income will be overstated. c. Net income will be understated. d. Only gross profit will be affected.

Q: warner company issued $1,600,000 of 6%, 10-year bonds on one of its interest dates for $1,381,920 to yield an effective annual rate of 8%. the effective-interest method of amortization is to be used. the journal entry to be recorded at the end of the second year for the payment of interest and the amortization of discount will include a a.debit to bond interest expense for $96,000 b.credit to cash for $111,718 c.credit to discount on bonds payable for $14,554 d.credit to discount on bonds payable for $15,718

Q: the effective-interest method of amortization of bond premiums and discounts is considered superior to the straight-line method because it results in a(n) a.interest rate that is close to the market interest rate b.uniform rate of interest c.more variable interest rate d.interest rate that increases or decreases slightly over time

Q: Which of the following measures the length of time it takes to acquire, sell, and replace inventory? a. inventory turnover b. days’ sales in inventory c. retail method of inventory costing d. gross profit method of inventory costing

Q: the amortization of a bond premium will result in reporting an amount of interest expense for an interest period that a.is less than the amount of cash to be paid for interest for the period b.exceeds the amount of cash to be paid for interest for the period c.equals the amount of cash to be paid for interest for the period d.has no predictable relationship with the amount of cash to be paid for interest for the period

Q: On the basis of the following data, what is the estimated cost of the merchandise inventory on May 31 using the retail method? CostRetailMay 1Merchandise inventory$125,000$166,667May 1–31Purchases235,000313,333May 1–31Sales 230,000 a. $250,000 b. $360,000 c. $172,500 d. $187,500

Q: unsecured bonds that are issued against the general credit of the borrower are called ________________ bonds.

Q: A company will most likely use an estimated method of determining inventory when a. the company decides not to do a physical inventory b. a natural disaster has destroyed most of the inventory c. the company has not kept up with its inventory records d. the company is preparing annual financial statements

Q: If a manufacturer ships merchandise to a retailer on consignment, the unsold merchandise should be included in the inventory of the a. consignee b. retailer c. manufacturer d. shipper

Q: the terms of a bond issue are set forth in a formal legal document called a bond ________________.

Q: Garrison Company uses the retail method of inventory costing. It started the year with an inventory that had a retail cost of $45,000. During the year, Garrison purchased an inventory with a retail sales value of $300,000. After performing a physical inventory, Garrison found the inventory at retail to be $80,000. The markup is 100% of cost. Determine the ending inventory at its estimated cost. a. $160,000 b. $80,000 c. $40,000 d. $45,000

Q: bonds that mature at a single specified future date are called _________________ bonds, whereas bonds that mature in installments are called __________________ bonds.

Q: FIFO reports higher gross profit and net income than the LIFO method when a. prices are increasing b. prices are decreasing c. prices remain stable d. prices are reduced by 50%

Q: payroll taxes include the employers share of ________________ taxes and both state and federal ________________ taxes.

Q: sales taxes collected from customers are a ______________ of the business until they are remitted to the taxing agency.

Q: Determine the total value of the merchandise using net realizable value. ItemQuantitySelling PriceCommissionDoll10$7$2Horse5 9 3 a. $35 b. $80 c. $115 d. $25

Q: Which of the following is used to analyze the efficiency and effectiveness of inventory management? a. inventory turnover only b. days’ sales in inventory only c. both inventory turnover and days’ sales in inventory d. neither inventory turnover nor days’ sales in inventory

Q: with an interest-bearing note, a borrower must pay the ________________ of the note plus _________________ at maturity.

Q: Cost flow is in the order in which costs were incurred when using a. weighted average cost b. last-in, first-out c. first-in, first-out d. first-in, last-out

Q: obligations in written form are called ______________ and usually require the borrower to pay interest.

Q: Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items? a. FIFO b. LIFO c. weighted average cost d. specific identification

Q: liabilities are classified on the balance sheet as being _______________ liabilities or ______________ liabilities.

Q: a current liability is a debt that can be expected to be paid within ____________ year(s) or the ______________, whichever is longer.

Q: Too much inventory on hand causes a. funds to be tied up that could be used to improve operations b. an increase to the cost of safeguarding assets c. an increase to the losses caused by price declines d. All of these choices

Q: If the cost of an item of inventory is $60 and the current replacement cost is $75, the amount included in inventory according to the lower-of-cost-or-market method is a. $15 b. $60 c. $75 d. $135

Q: perez co. receives $1,100,000 when it issues a $1,100,000, 8%, mortgage note payable to finance the construction of a building at december 31, 2012. the terms provide for semiannual installment payments of $70,410 on june 30 and december 3 instructions prepare the journal entries to record the mortgage loan and the first two installment payments.

Q: Moon Company issued $300,000, 10%, 5-year bonds on January 1, 2012, at 106. Interest is payable annually on January 1. Moon uses the effective-interest method of amortization and has a calendar year end and the bonds were issued for an effective interest rate of 8%.InstructionsPrepare all journal entries made in 2012 related to the bond issue.

Q: During a period of falling prices, which of the following inventory methods generally results in the lowest balance sheet amount for inventory? a. weighted average cost method b. LIFO method c. FIFO method d. cannot tell without more information

Q: Wynne Company issued $600,000 of 10%, 5-year bonds at 108. Interest is paid annually, and the effective interest method is used for amortization. Assume that the market rate for similar investments is 8%. The bonds are issued on the date of the bonds.a. What amount was received for the bonds?b. How much interest is paid each interest period?c. What is the premium amortization for the first interest period?d. How much bond interest expense is recorded on the first interest date?e. What is the carrying value of the bonds after the first interest date?

Q: Shannon Company issued $750,000, 8%, 10-year bonds on December 31, 2011, for $720,000. Interest is payable annually on December 31. Shannon uses the straight-line method to amortize bond premium or discount.InstructionsPrepare the journal entries to record the following events.(a) The issuance of the bonds.(b) The payment of interest and the discount amortization on December 31, 2012.(c) The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded.

Q: Stevens Company started the year with an inventory cost of $145,000. During the month of January, Stevens purchased inventory that cost $53,000. January sales totaled $140,000. Estimated gross profit is 35%. The estimated ending inventory as of January 31 is a. $58,000 b. $91,000 c. $107,000 d. $69,300

Q: The inventory method that assigns the most recent costs to cost of merchandise sold is a. FIFO b. LIFO c. weighted average cost d. specific identification

Q: garrison company issued $1,000,000, 7%, 20-year bonds on january 1, 2012, at 105. interest is payable annually on january garrison uses straight-line amortization for bond premium or discount. instructions prepare the journal entries to record the following events. (a)the issuance of the bonds. (b)the accrual of interest and the premium amortization on december 31, 2012. (c)the payment of interest on january 1, 2013. (d)the redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded.

Q: on january 1, 2011, powell corporation issued $800,000, 5%, 5-year bonds dated january 1, 2011, at 95. the bonds pay annual interest on january the company uses the straight-line method of amortization and has a calendar year end. instructions prepare all the journal entries that powell corporation would make related to this bond issue through january 1, 2012. be sure to indicate the date on which the entries would be made.

Q: Renfro Company issued $500,000 of 8%, 10-year bonds at 102. Interest is paid annually, and the straight-line method is used for amortization. Assume that the market rate for similar investments is 7%. The bonds are issued on the date of the bonds.a. What amount was received for the bonds?b. How much interest is paid each interest period?c. What is the premium amortization for the first interest period?d. How much bond interest expense is recorded on the first interest date?e. What is the carrying value of the bonds after the first interest date?

Q: If the revenues are correctly reported and the gross profit of a company is understated, what is the effect on owner’s equity? a. understated b. overstated c. correctly stated d. None of these choices

Q: When merchandise sold is assumed to be in the order in which the purchases were made, the company is using a. first-in, last-out b. last-in, first-out c. first-in, first-out d. weighted average cost

Q: mcdonald's financial statements contain the following selected data (in millions).Current assets $ 3,881.9Total assets 29,391.7Current liabilities 4,498.5Total liabilities 13,611.9Interest expense $ 410.1Income taxes 1,237.1Net Income 2,395.1instructions(a)compute the following values and provide a brief interpretation of each.(b)the notes to mcdonald's financial statements show that subsequent to this year the company will have future minimum lease payments under operating leases of $10,513.8 million. if these assets had been purchased with debt, assets and liabilities would rise by approximately $9,400 million. recompute the debt to total assets ratio after adjusting for this. discuss your result.

Q: During the taking of its physical inventory on December 31, Barry’s Bike Shop incorrectly counted its inventory as $350,000 instead of the correct amount of $280,000. The effect on the balance sheet and income statement would be a. assets overstated by $70,000; retained earnings understated by $70,000; and net income statement understated by $70,000 b. assets overstated by $70,000; retained earnings understated by $70,000; and no effect on the income statement c. assets, retained earnings, and net income all overstated by $70,000 d. assets and retained earnings overstated by $70,000 and net income understated by $70,000

Q: hensley, inc. reports the following liabilities (in thousands) on its january 31, 2012, balance sheet and notes to the financial statements.Accounts payable $3,963.9Accrued pension liability 1,215.2Accrued liabilities 1,158.1Bonds payable 1,961.2Current portion of long-term debt 1,992.2Income taxes payable 235.2Notes payable—long-term $9,546.7Operating leases 1,641.7Loans payable—long-term 435.6Payroll-related liabilities 558.1Short-term borrowings 2,563.6Unused operating line of credit 3,337.6Warranty liability— current 1,617.3instructionsprepare the liabilities section of hensley's balance sheet as at january 31,2012.

Q: The inventory costing method that reports the earliest costs in ending inventory is a. FIFO b. LIFO c. weighted average cost d. specific identification

Q: the adjusted trial balance for helton corporation at the end of 2011 contained the following accounts:instructions(a)prepare the long-term liabilities section of the balance sheet.(b)indicate the proper balance sheet classification for the accounts listed above that do not belong in the long-term liabilities section.

Q: Presented below are two independent situations:(a) Morten Corporation purchased $320,000 of its bonds on June 30, 2012, at 102 and immediately retired them. The carrying value of the bonds on the retirement date was $287,400. The bonds pay annual interest and the interest payment due on June 30, 2012, has been made and recorded.(b) McEvoy, Inc., purchased $550,000 of its bonds at 96 on June 30, 2012, and immediately retired them. The carrying value of the bonds on the retirement date was $535,000. The bonds pay annual interest and the interest payment due on June 30, 2012, has been made and recorded.InstructionsFor each of the independent situations, prepare the journal entry to record the retirement or conversion of the bonds.

Q: during the month of march, preston company's employees earned wages of $60,000. withholdings related to these wages were $4,590 for social security (fica), $9,500 for federal income tax, $4,100 for state income tax, and $400 for union dues. the company incurred no cost related to these earnings for federal unemployment tax, but incurred $900, for state unemployment tax. instructions (a)prepare the necessary march 31 journal entry to record wages expense and wages payable. assume that wages earned during march will be paid during april. (b)prepare the entry to record the company's payroll tax expense.

Q: Excess inventory results in all of the following except a. tied-up funds that could be used to improve operations b. lost sales c. increased storage expense d. increased risk of loss due to damage

Q: in providing accounting services to small business, you encounter the following situations pertaining to cash sales. (1)kushner company rings up sales and sales taxes separately on its cash register. on april 10 the register totals are sales $30,000 and sales taxes $2,100. (2)grant company does not segregate sales and sales taxes. its register total for april 15 is $19,080, which includes a 6% sales tax. instructions prepare the entries to record the sales transactions and related taxes for (a) company and (b) grant company.

Q: Control of inventory should begin as soon as the inventory is ordered. Which of the following internal control steps is not done to meet this goal? a. check the invoice to the receiving report b. check the invoice to the purchase order c. check the invoice with the person who specifically purchased the item d. check the invoice for mathematical accuracy

Q: On June 1, Huntley Company borrows $40,000 from the bank by signing a 60-day, 6%, interest-bearing note.InstructionsPrepare the necessary entries below associated with the note payable on the books of Huntley Company.(a) Prepare the entry on June 1 when the note was issued.(b) Prepare any adjusting entries necessary on June 30 in order to prepare the monthly financial statements. Assume no other interest accrual entries have been made.Prepare the entry to record payment of the note at maturity.

Q: Ending inventory is made up of the oldest purchases when a company uses a. first-in, first-out b. last-in, first-out c. weighted average cost d. retail method

Q: On March 1, Cooper Company borrows $90,000 from New National Bank by signing a 6-month, 8%, interest-bearing note.InstructionsPrepare the necessary entries below associated with the note payable on the books of Cooper Company.(a) Prepare the entry on March 1 when the note was issued.(b) Prepare any adjusting entries necessary on June 30 in order to prepare the semiannual financial statements. Assume no other interest accrual entries have been made.(c) Prepare the entry to record payment of the note at maturity.

Q: brewer company has the following selected accounts after posting adjusting entries:instructions(a)prepare the current liability section of brewer company's balance sheet, assuming $12,000 of the mortgage is payable next year.(b)comment on brewers liquidity, assuming total current assets are $450,000.

Q: frye company issued $500,000, 10%, 10-year bonds on january 1, 2012, at 105. interest is payable annually. frye uses the effective-interest method of amortization and has a calendar year end and the bonds were issued for an effective interest rate of 8%. instructions prepare all journal entries made in 2012 related to the bond issue.

Q: One of the two primary objectives of internal control procedures over inventory is to properly report inventory on the financial statements. a. True b. False

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