Q&A Hero

Q: on july 1, 2012, dillman kennels sells equipment for $44,000. the equipment originally cost $120,000, had an estimated 5-year life and an expected salvage value of $20,000. the accumulated depreciation account had a balance of $70,000 on january 1, 2012, using the straight-line method. the gain or loss on disposal is a.$6,000 gain b.$4,000 loss c.$6,000 loss d.$4,000 gain

Q: . Journalize the following transactions on the books of Sparky’s Pet Shop assuming a perpetual inventory system is used. DateTransactionAug. 1 Purchased $6,000 of merchandise on account, terms 2/10, n/30. 3 Returned $1,500 of merchandise purchased on August 1 due to defects. 7 Recorded cash sales for the first week of August, $9,750; cost of the merchandise was $4,000. 10 Made sale on account to a local breeder for $500, terms 1/10, net 30; cost of the merchandise was $200. 11 Paid for the merchandise purchased on August 1, less return. 20 Received payment from sale of August 10. The customer took the discount.

Q: equipment costing $140,000 was destroyed when it caught on fire. at the date of the fire, the accumulated depreciation on the equipment was $56,000. an insurance check for $160,000 was received based on the replacement cost of the equipment. the entry to record the insurance proceeds and the disposition of the equipment will include a a.gain on disposal of $20,000 b.credit to the equipment account of $84,000 c.credit to the accumulated depreciation account for $56,000 d.gain on disposal of $76,000

Q: Journalize the following transactions for both Abbott Co. (seller) and Dalton Co. (buyer). Assume both companies use a perpetual inventory system.July 3Abbott Co. sold merchandise on account to Dalton Co., $7,500, terms FOB shipping point, n/eom. The cost of the merchandise sold was $4,400. 5Dalton Co. paid $275 to freight company for purchase from Abbott Co. 9Abbott Co. issued Dalton Co. a credit memo for defective merchandise, $2,250. The merchandise was not returned. 11Abbott Co. received payment from Dalton Co. for purchase of July 3.Abbott Co. Dalton Co.DateDescriptionDebitCreditDescriptionDebitCredit

Q: mortons courier service recorded a loss of $4,500 when it sold a van that originally cost $42,000 for $7,500. accumulated depreciation on the van must have been a.$39,000 b.$12,000 c.$37,500 d.$30,000

Q: nix corporation sold equipment for $12,000. the equipment had an original cost of $36,000 and accumulated depreciation of $18,000. ignoriing the tax effect, as a result of the sale a.net income will increase $12,000 b.net income will increase $6,000 c.net income will decrease $6,000 d.net income will decrease $12,000

Q: sprague associates sold office furniture for $16,000. the furniture had an original cost of $48,000 and accumulated depreciation of $24,000. ignoriing the tax effect, as a result of the sale a.net income will increase $16,000 b.net income will increase $8,000 c.net income will decrease $8,000 d.net income will decrease $16,000

Q: Using the perpetual inventory system, journalize the entries for the following selected transactions:(a) Sold merchandise on account, for $12,000, terms n/30. The cost of the merchandise sold was $6,500.(b) Sold merchandise to customers who used MasterCard and VISA, $9,500. The cost of the merchandise sold was $5,300.(c) Sold merchandise to customers who used American Express, $2,900. The cost of the merchandise sold was $1,700.(d) Paid an invoice from First National Bank for $385, representing a service fee for processing MasterCard and VISA sales.(e) Paid a $75 processing fee associated with sales made to customers who used American Express.

Q: the following information is provided for nguyen company and northwest corporation.what is northwest's asset turnover ratio for 2012?a.1.17 timesb.1.05 timesc.1.52 timesd.1.03 times

Q: During the current year, merchandise is sold for $86,000 cash and for $93,950 on account. The cost of the merchandise sold is $76,240. What is the gross profit?

Q: For each of the following, determine the cost of inventory reported on the balance sheet.(a) The total merchandise on hand at the end of the year is $62,000. Of the $62,000, $8,000 has been sold FOB destination and is awaiting pickup by the carrier.(b) The total merchandise inventory at the end of the year was $63,000. Excluded from the amount were purchases of $6,000 in transit under FOB shipping point terms.(c) The total merchandise inventory at the end of the year was $75,000. Excluded from the amount were purchases of $5,000 in transit under FOB destination terms.

Q: the following information is provided for nguyen company and northwest corporation.what is nguyen's asset turnover ratio for 2012?a.4.00 timesb.1.36 timesc.0.25 timesd.0.73 times

Q: Using the following list of accounts, construct a chart of accounts for a merchandising business that rents out a portion of its building, and assign account numbers and arrange the accounts in balance sheet and income statement order (“1” for assets, and so on). Each account number should have three digits. Contra accounts should be designated with a decimal of the account (100.1 for contra of account 100). Assets and liabilities should be in order of liquidity; expenses should be in alphabetical order.Accounts PayableInterest ExpenseSalaries PayableAccounts ReceivableLandSalesAccumulated Depr.—EquipMerchandise Inventory Supplies ExpenseAdvertising Expense Notes PayableUnearned RevenueCashOffice SuppliesUtilities ExpenseCost of Merchandise SoldOwner, Capital Depreciation Expense—Equip.Owner, Drawing EquipmentRent Revenue Salaries Expense

Q: the following information is provided for nguyen company and northwest corporation.what is northwest's return on assets for 2012?a.12.7%b.11.4%c.13.0%d.11.1%

Q: During the current year, merchandise is sold for $117,500 cash and $241,750 on account. The cost of the merchandise sold is $157,400. What is the amount of the gross profit?

Q: the following information is provided for nguyen company and northwest corporation.what is nguyen's return on assets for 2012?a.400%b.136%c.25%d.73%

Q: Sampson Co. sold merchandise to Batson Co. on account, $46,000, terms 2/15, net 45. The cost of the merchandise sold is $38,500. Batson Co. paid the invoice within the discount period. Journalize these transactions for Sampson Co., assuming Sampson uses the gross method of recording sales discounts and has a perpetual inventory system.

Q: a plant asset with a cost of $360,000 and accumulated depreciation of $342,000 is sold for $42,000. what is the amount of the gain or loss on disposal of the plant asset? a.$42,000 loss b.$24,000 loss c.$24,000 gain d.$42,000 gain

Q: Details of a purchase invoice and related credit memo are summarized as follows:Invoice: Cost of merchandise listed on purchase invoice $6,500 Prepaid freight charge added to invoice 150 Terms, FOB shipping point, 1/10, n/eom Credit memo received for defective merchandise 1,500Assume that the credit memo was received prior to payment and that the invoice is paid within the discount period. Determine the following:(a) Amount of the purchase discount allowed.(b) Amount to be paid by the purchaser if the discount is taken.(c) Cost of the merchandise to the purchaser if the discount is not taken.

Q: on july 1, 2012, fleming company sells machinery for $96,000. the machinery originally cost $240,000, had an estimated 5-year life and an expected salvage value of $40,000. the accumulated depreciation account had a balance of $140,000 on january 1, 2012, using the straight-line method. the gain or loss on disposal is a.$16,000 gain b.$4,000 loss c.$8,000 loss d.$4,000 gain

Q: Describe the major differences in preparing the financial statements for a service business and a merchandising business.Service Business Merchandising BusinessIncome Statement: Income Statement:​​​​​ Balance Sheet: Balance Sheet:​​​​

Q: the following information is provided for nguyen company and northwest corporation.if nguyen and northwest are in the same industry and the industry average for return on assets is equal to 30%, which of the following statements is true?a.nguyen is more profitable than the average company in its industryb.northwest is more profitable than nguyenc.both nguyen and northwest are more profitable than the average company in their industryd.nguyen is more profitable than northwest

Q: The following data for the current year ended June 30 are from the accounting records of Zanadu Co.:Administrative expenses$ 28,750Cost of merchandise sold181,440Interest expense 3,600Rent revenue 1,500Sales 534,440Selling expenses65,000​Prepare a multiple-step income statement for the year ended June 30.

Q: the following information is provided for nguyen company and northwest corporation.if nguyen and northwest are in the same industry and the industry average for the asset turnover ratio is equal to 1.20 times, which of the following statements is true?a.nguyen is operating more efficiently than the industryb.northwest is operating more efficiently than nguyenc.both nguyen and northwest are operating more efficiently than the average company in their industryd.the asset turnover ratio does not address the question of efficient operations

Q: goodwill can be recorded a.when customers keep returning because they are satisfied with the company's products b.when the company acquires a good location for its business c.when the company has exceptional management d.only when there is an exchange transaction involving the purchase of an entire business

Q: . Using the letter preceding each account, arrange the following selected accounts in the order they would normally appear in a chart of accounts of a company that uses a multiple-step income statement.(a)Accounts Payable(b)Accounts Receivable(c)Merchandise Inventory(d)Miscellaneous Selling Expense(e)Interest Expense(f)Miscellaneous Administrative Expense(g)Delivery Expense

Q: an asset that cannot be sold individually in the market place is a.a patent b.goodwill c.a copyright d.a trade name

Q: Using the following data taken from Payton Inc., which uses a periodic inventory system, prepare the Cost of Merchandise Sold section of the income statement for the year ended May 31.Merchandise inventory, June 1$ 393,250Merchandise inventory, May 31380,100Purchases1,579,600Purchases returns and allowances81,200Purchases discounts16,500Sales2,060,000Freight in59,250

Q: the cost of successfully defending a patent in an infringement suit should be a.charged to legal expenses b.deducted from the book value of the patent c.added to the value of the patent d.recognized as a loss in the current period

Q: Madison Company’s perpetual inventory records indicate that $875,300 of merchandise should be on hand on October 31. The physical inventory indicates that $781,900 is actually on hand. Journalize the adjusting entry for the inventory shrinkage for Madison Company for the year ended October 31.

Q: a patent should a.be amortized over a period of 20 years b.not be amortized c.be amortized over its useful life or 20 years, whichever is longer d.be amortized over its useful life or 20 years, whichever is shorter

Q: Journalize the following transactions assuming the perpetual inventory system and adjustments for customer refunds and estimated returns inventory were made at year-end. The company uses the net method to record sales.Dec. 27Sold merchandise on account for $3,750, terms n/15. The cost of the merchandise sold was $2,000.Jan. 5Issued credit memo for $1,050 for merchandise returned from sale on December 27. The cost of the merchandise returned was $610. 6Received check for the amount due for sale on December 27 less return on January 5. 8Sold merchandise for $7,000 plus 6% sales tax to cash retail customers. The cost of the merchandise sold was $3,830.

Q: intangible assets are the rights and privileges that result from ownership of long-lived assets that a.must be generated internally b.are depreciated over their useful life c.have been exchanged at a gain d.do not have physical substance

Q: Explain the following statement:“Operating cycles for all merchandising businesses are the same, with similar profit margins.”​Include an example(s) to illustrate your explanation.

Q: during 2012, phelps corporation reported net sales of $5,000,000, net income of $2,200,000, and depreciation expense of $80,000. phelps also reported beginning total assets of $1,000,000, ending total assets of $1,500,000, plant assets of $800,000, and accumulated depreciation of $500,000. phelpss asset turnover ratio is a.2.5 times b.2.0 times c.3.3 times d.4.0 times

Q: On March 25, Osgood Company sold merchandise on account, $10,000, terms n/30. The applicable sales tax percentage is 7.5%. Journalize the transaction

Q: during 2012, ronald corporation reported net sales of $2,000,000, net income of $1,200,000, and depreciation expense of $100,000. ronald also reported beginning total assets of $1,000,000, ending total assets of $1,500,000, plant assets of $800,000, and accumulated depreciation of $500,000. ronalds asset turnover ratio is a.2 times b.1.6 times c.1.3 times d.0.96 times

Q: Determine the gross profit for Jonas Company based on the following data:Sales$764,000Selling expenses52,500Cost of merchandise sold538,000

Q: using the following data for stevenson industries, compute the return on assets ratio.a.5.0%b.10.4%c.5.5%d.11.4%

Q: which of the following is not considered an intangible asset? a.goodwill b.an oil well c.a franchise d.a patent

Q: which of the following is not an intangible asset arising from a government grant? a.goodwill b.patent c.trademark d.trade name

Q: Merchandise with a list price of $4,700 is purchased on account, terms FOB shipping point, 1/10, n/30. The seller prepaid freight costs of $100. Prior to payment, $1,600 of the merchandise is returned. The invoice is paid within the discount period.Journalize the foregoing transactions of the buyer in the following sequence, assuming a perpetual inventory system is used.(a) Purchased the merchandise.(b) Recorded receipt of the credit memo for merchandise returned.(c) Paid the amount owed.

Q: on may 1, 2012, irwin company purchased the copyright to quick computer tutorials for $75,000. it is estimated that the copyright will have a useful life of 5 years. the amount of amortization expense recognized for the year 2012 would be a.$15,000 b.$10,000 c.$7,500 d.$8,000

Q: Gadget Palace is a retailer selling unique hardware. Gadget Palace uses a perpetual inventory system. Journalize the following transactions:July 5 Gadget Palace purchases inventory for sale from Turbo Tools for $11,400 with terms 2/10, n/30.6 Gadget Palace pays Fast Truck Transport $75 for freight on the July 5 order.8 Gadget Palace receives a credit memo from Turbo Tools for $215 for damaged merchandise. The merchandise is not returned.15 Gadget Palace pays Turbo Tools the balance due.

Q: Based on the following information, journalize the entries for the seller and the buyer. Both use a perpetual inventory system.(a)Seller sold merchandise on account to the buyer, $4,750, terms 2/10, net 30, FOB shipping point. The cost of the merchandise is $2,850. The seller prepays the freight of $75.(b)Buyer issues a $700 debit memo for defective merchandise that is not returned. (c)Buyer pays within the discount period.Seller Buyer DescriptionDr.Cr. DescriptionDr.Cr.

Q: on july 1, 2012, linden company purchased the copyright to norman computer tutorials for $160,000. it is estimated that the copyright will have a useful life of 5 years. the amount of amortization expense recognized for the year 2012 would be a.$32,000 b.$15,000 c.$29,600 d.$16,000

Q: if a company incurs legal costs in successfully defending its patent, these costs are recorded by debiting a.legal expense b.the intangible loss account c.the patent account d.a revenue expenditure account

Q: a patent a.has a legal life of 20 years b.is not amortized c.can be renewed indefinitely d.is rarely subject to litigation because it is an exclusive right

Q: Journalize the following transactions for Evans Company. Assume the company uses a perpetual inventory system.(a) Sold merchandise for $645 cash. The cost of merchandise sold was $375.(b) Sold merchandise for $432 and accepted VISA as the form of payment. The cost of merchandise sold was $195.(c) Sold merchandise on account for $670. The cost of merchandise sold was $438.(d) Paid credit card fees for the month of $85.

Q: cost allocation of an intangible asset is referred to as a.amortization b.depreciation c.accretion d.capitalization

Q: the cost of an intangible asset with an indefinite life should a.be amortized over 20 years b.be amortized over the life of the creator plus 70 years c.not be amortized d.none of the above

Q: Journalize the following transactions on the books of Veronica Company, assuming a perpetual inventory system:May 5 Purchased merchandise from Archie Co., $6,000, terms FOB shipping point, 2/10, n/30. Prepaid freight costs of $100 were added to the invoice. 12 Issued a debit memo to Archie Co. for $2,500 of merchandise returned from purchase on May 5. 14 Paid Archie Co. for invoice of May 5, less debit memo of May 12 and discount.

Q: On March 4, Micro Sales makes $4,850 in sales on bank credit cards that charge a 2.5% service charge. Funds are deposited net of credit card expenses into Micro Sales' bank account at the end of the business day. Journalize the sales and recognition of expense as a single journal entry.

Q: research and development costs a.are classified as intangible assets b.must be expensed when incurred under generally accepted accounting principles c.should be included in the cost of the patent they relate to d.are capitalized and then amortized over a period not to exceed 20 years

Q: Travis Company purchased merchandise on account from a supplier for $5,700, terms 2/10, net 30. Travis Company paid for the merchandise within the discount period.​Under a perpetual inventory system, journalize these transactions

Q: in recording the acquisition cost of an entire business a.goodwill is recorded as the excess of cost over the fair value of identifiable net assets b.assets are recorded at the seller's book values c.goodwill, if it exists, is never recorded d.goodwill is recorded as the excess of cost over the book value of identifiable net assets

Q: Based upon the following data for a business with a periodic inventory system, determine the cost of merchandise sold for August.Merchandise inventory, August 1$ 75,560Merchandise inventory, August 3196,330Purchases373,880Purchases returns and allowances14,760Purchases discounts10,900Freight in4,135

Q: goodwill a.is only recorded when generated internally b.can be subdivided and sold in parts c.can only be identified with the business as a whole d.can be defined as normal earnings less accumulated amortization

Q: Prepare a multiple-step income statement for Armstrong Co. from the following data for the year ended December 31.​Sales, $755,000; cost of merchandise sold, $330,000; administrative expenses, $35,000; interest expense, $30,000; rent revenue, $25,000; selling expenses, $50,000.

Q: copyrights are granted by the federal government a.for the life of the creator or 70 years, whichever is longer b.for the life of the creator plus 70 years c.for the life of the creator or 70 years, whichever is shorter d.and therefore cannot be amortized

Q: The perpetual inventory records of Penny Co. indicate that $415,000 of merchandise should be on hand on December 31. The physical inventory indicates that $370,000 of merchandise is actually on hand. Journalize the adjusting entry for the inventory shrinkage for the year ended December 31.

Q: which of the following is not an intangible asset that is reported on the balance sheet? a.goodwill b.trademarks c.employees d.copyrights

Q: Selected data from the ledger of Burt Co., after adjustments, on September 30, the end of the fiscal year, are listed as follows:Accounts Receivable$ 39,120 Office Equipment$ 82,700Accumulated Depreciation60,540 Prepaid Insurance4,680Administrative Expenses90,000 Note Payable77,750Bob Burt, Capital85,000 Salaries Payable3,060Bob Burt, Drawing65,000 Sales950,000Cost of Merchandise Sold550,000 Selling Expenses102,000Interest Revenue10,000 Supplies3,125Prepare a single-step income statement and a statement of owner's equity.

Q: goodwill a.may be expensed upon purchase if desired b.can be sold by itself to another company c.can be purchased and charged directly to stockholders equity d.is only recorded when the purchase of an entire business occurs

Q: Merchandise with a list price of $4,200 and costing $2,300 is sold on account, subject to the following terms: FOB destination, 2/10, n/30. The seller pays the freight costs of $85 (debit Delivery Expense for the freight costs). Prior to payment for the goods, the seller issues a credit memo for $750 to the customer for merchandise that is defective and not returned. Payment is received within the discount period. The company uses a perpetual inventory system.Journalize the foregoing transactions of the seller in the following sequence:(a) Sold the merchandise, recognizing the sale and cost of merchandise sold.(b) Paid the freight charges.(c) Issued the credit memo.(d) Received payment from the customer.

Q: a computer company has $2,000,000 in research and development costs. before accounting for these costs, the net income of the company is $2,400,000. what is the amount of net income or loss before taxes after these research and development costs are accounted for? a.$400,000 loss b.$2,000,000 net income c.$400,000 net income d.cannot be determined from the information provided

Q: Prepare (a) a single-step income statement, (b) a statement of owner's equity, and (c) a balance sheet from the following data for Burt Co., taken from the ledger after adjustments on December 31, the end of the fiscal year.Accounts Payable $97,200Accounts Receivable 64,300Accumulated Depreciation—Office Equipment 72,750Accumulated Depreciation—Store Equipment 162,100Administrative Expenses 56,500Cash 53,000Cost of Merchandise Sold 121,700Interest Expense 12,000Maeve Burt, Capital 81,750Maeve Burt, Drawing 52,000Merchandise Inventory 93,250Note Payable (due in two years) 154,000Office Equipment 149,750Prepaid Insurance 6,500Rent Revenue 17,500Salaries Payable 28,700Sales 365,500Selling Expenses 41,500Store Equipment 325,000Supplies 4,000

Q: a computer company has $3,000,000 in research and development costs. before accounting for these costs, the net income of the company is $2,400,000. what is the amount of net income or loss before taxes after these research and development costs are accounted for? a.$600,000 loss b.$2,400,000 net income c.$0 d.cannot be determined from the information provided

Q: Selected accounts and amounts at the end of the period are as follows. Journalize the closing entry, assuming a perpetual inventory system.Merchandise Inventory $ 45,500Cost of Merchandise Sold 652,500

Q: given the following account balances at year end, compute the total intangible assets on the balance sheet of janssen enterprises.a.$11,500,000b.$7,500,000c.$5,500,000d.$9,500,000

Q: hopson company incurred $450,000 of research and development costs in its laboratory to develop a new product. it spent $60,000 in legal fees for a patent granted on january 2, 2012. on july 31, 2012, hopson paid $45,000 for legal fees in a successful defense of the patent. what is the total amount that should be debited to patents through july 31, 2012? a.$450,000 b.$105,000 c.$555,000 d.some other amount

Q: The following data were extracted from the accounting records of Dana Designs for the year ended March 31:Merchandise inventory, April 1 $530,000Merchandise inventory, March 31 375,000Purchases 270,000Purchases returns and allowances 25,000Purchases discounts 10,000Sales 770,000Freight in 3,000Prepare the Cost of Merchandise Sold section of the income statement for the year ended March 31, using the periodic method.

Q: On March 5, Blowout Sales makes $22,500 in sales on account. The cost of the merchandise sold is $16,825. Journalize the sales and recognition of the cost of merchandise sold.

Q: trademarks are generally shown on the balance sheet under a.intangibles b.investments c.property, plant, and equipment d.current assets

Q: Marshall Supplies is a janitorial supply store that uses a perpetual inventory system. Journalize the following transactions:July 4 Marshall purchases inventory for sale from Tidy Wholesalers for $8,500 with terms 1/10, n/30.5 Marshall pays Express Transfer $45 for freight on the July 4 order.7 Marshall buys an additional $11,985 in inventory from Tidy Wholesalers with terms 1/10, n/30.13 Marshall pays Tidy Wholesalers the balance due on both invoices.

Q: intangible assets a.should be reported under the heading property, plant, and equipment b.are not reported on the balance sheet because they lack physical substance c.should be reported as current assets on the balance sheet d.should be reported as a separate classification on the balance sheet

Q: Match each of the following accounts with the business in which the account would be included in the chart of accounts (a–c).a. Merchandising business with a periodic inventory systemb. Merchandising business with a perpetual inventory systemc. Merchandising business with either a periodic or perpetual inventory systemDelivery Expense

Q: which of the following statements concerning financial statement presentation is false? a.intangibles are reported separately under intangible assets b.the balances of major classes of assets may be disclosed in the footnotes c.the balances of the accumulated depreciation of major classes of assets may be disclosed in the footnotes d.the balances of all individual assets, as they appear in the subsidiary plant ledger, should be disclosed in the footnotes

Q: a company has the following assets:the total amount reported under property, plant, and equipment would bea.$23,500,000b.$18,000,000c.$20,500,000d.$19,000,000

Q: plant assets are ordinarily presented in the balance sheet a.at current market values b.at replacement costs c.at cost less accumulated depreciation d.in a separate section along with intangible assets