1 Under the alowance method, the year-end entry to record bad debts has the following effect on the financial statements: ) Decreases assets and increases equty ©) Increases expenses and decreases a contra asset 4) Has no effect on net income or net assets ‘An aging of a companys accounts receivable indicates that $5,800 are estimated fo be uncolectible. If Alowance {or Doubtful Accounts has a $1,200 credit balanco, the adjustment to record bad debts for tho poriod wil quire a ) debit to Allowance for Doubtul Accounts for $5,600 ©) debit to Bad Debts Expense for $6,800 4) credit to Alowance for Doubtful Accounts for $6,800, “The Hawaii Company purchases a machine on 1/121. Detals include: Cost $50,000 ‘Salvage value § 10,000 Estimated if 20 years ‘Assume SvaightLine depreciation. Indicate the folowing amounts: 9) $2,000 $2,000 » $20,000 2 82.600 $2,000 3 52.000 S1604. The Hawaii Company purchases a machine on 1/1/21. Details include Cost Salvage value Estimated ife Estimated units to be provided ‘Assume units-f-production depreciation. Actual units produced were: Year Units 2021 20,000 2022 15,000 2023 10.000 2024 8.000 Indicate the following amounts: a $4,000 $53,000 y $4,000, $18,000, $3,200 $21,200 4 $4,000 $4,000 8 533,200 $3,200 5. Amachine purchased on 1/1/21 for $24,000 and on which $14,400 of Accumulated Depreciation has been recorded through 12/31/23 was sald on 4/1/24. Straight-line depreciation was used. Salvage Value was zero, ‘Asset life was § years. Ifthe machine was sold for $16,000 cash, the journal entry to record this event would include a gain of: a) $1,600 ») $8,400, ©) $6,400 6. A.bond with a face value of $100,000 and a quoted price of 99 has a selling price of a) $91,000 b)_$109,000 ) $9,900 7. If Norben Company issues 4,000 shares of $5 par value common stock for $140,000 Working Capital decreases $20,000 ©) Contributed Capital increases $120,000 4) Total Assets decreases $100,0008. The folowing accounts appear in the ledger of Sayre Corporation on December 31, 2023: Preferred Stock $30,000 ‘Comman Stock ‘60,000 ‘Additional Paid-n Capital, Preferred "7,000 ‘Additonal Paid-n Capital, Common 18,000 Retained Earnings 40,000 Treasury Stock 40,000 ‘A balance sheet prepared on December 31, 2023, would report total equity of: $115,000, ©) $155,000 ) $165,000 8. Gault Corporation had the folowing shares of stock outstanding on December 31, 2022: ‘+ Common stock, $50 par value, 200,000 shares outstanding ++ Preferred stock, 8%, $100 par vaive, cumulative, 20,000 shares outstanding + Dividends were in arrears for 2020 and 2021. On December 31, 2022, total cash dividends of $400,000 ‘were declared The total amounts payable to prefered stockholders and common stockholders, respectively, ae: ')_ $320,000 and $80,000 ©) $160,000 and $240,000 @) $0.and 400,000 410. Indicate the usual chronological order of these dates: 2) Record, Payment, Declaration 1). Declaration, Payment, Record ia 11, Retained Earnings would be decreased by the: Declaration ofa Stock Dividend Purchase of Treasury Stock a) No No ») No Yes a12 A.company shows the following balances: Sales $1,000,000 Sales Retums and Alowances 175,000, ‘Sale Discounts 25.000 Gross Profit 600,000 Whats the ors profit ate? 2) 60% ©) 40% 8) 25% 13. Comparing periodic LIFO and periodic FIFO, which method resus in higher amounts of Net Income and Gross. Proftin periods of faling prices? Netincome Gioss Poot 3 FIFO FIFO. UO UFO 2 FIFO. ro a Lito FIFO 1 12101 Beginning Inventory TOO units @ SBiunt 12710 Purchase 100 units @ S8iunt 12720 Purchase 200 units @ $10tunit 42/31 Ending inventory 460 units ‘Assuming that aperiodic inventory system Is used, what ls the Costs of Goods Sold under the LIFO method? a) $1,000 ») $1,500 @) $1,900, 18, on 72101 Beginning Inventory 100 unis @ $10Tunt 12110 Purenase 100 units @ safunt 12720 Purchase 200 units @ $10!unit 42131 Ending Inventory __ 150 units Ascuming that a periodic inventory system is used, whats the Cast of Goad Sold under the weighted average ‘method? a) $1,350 by $3.600 ©) $2250 9) $2160,18. Year __Ending Inventory Exror "2020 Overstaled $30 2021 Understated $40 Indicate the error in the folowing items: ‘2022Net income 12/91/22 Retained Eamings ») Behan unuzeeaner 3 Georg Unsgamas 30 3 Grmatesa0 ‘orot 5) Umeneers ——_oveameas10 3 ‘Grenadin Groowe 50 17. Atte end ofthe curent year, the owner's equity in LaRose Corporation is $188,000. During the year, the assets ‘ofthe business had decreased by $30,000, andthe liabilites had decreased by $36,000. Owner's equity atthe beginning ofthe year must have been: 8) $224,000 ) $260,000, ©) $116,000 4)_ $194,000 18. Tho Hawaii Company purchases a machine on 1/1/21. Details include: Cost $120,000 ‘Salvage value $ 4,000 Estimated life 5 years ‘Assume Double-dectning balance depreciation. Indicate the following amount 19. The Hiton Company pala $100 for inventory it intendad to sell for $150. ton received a $10 rebate from the vendor one month after purchase. However. due to a change in demand, the item's current market valu is $160. ‘Wat amount should be Inventory on the balance sheet? a) $100 b) $25 ©) $150 e) $7520 a 2. 2. ‘The Gateway Company/s physical inventory at 12/31 was $10,000. In addition, two in-transit tems existed ‘+ 48200 item purchased from a vendor; FOB Destination ‘+ A§350 item sold to a customer; FOB Destination ‘+ In addition, Gateway was the consignor for $100 worth of goods held by the consignee ‘The 12131 Inventory forthe balance sheet is: a) $10,100 b) $10,350 ©) $10,250 )_$10.560 Given the folowing data for a bond issuance: Principal $10,000 4-year factors ‘Coupon (state) Rate 8% 8%, PV of $1 795 Market Rate 6% 8%, PV of Annuity 3.31213 Term 4 years 6%, PV of $1 7921 Interest paid annually (6%, PV of Annuity 3.546 ‘The sale price ofthe bond is approximately a) $8,275 b) $15271 ©) $10,049 ¢)_ $9,337 Which account is constantly updated during the year forthe perpetual method? 2) Purchases b)_ Purchase Discounts, 4). Purchase Returns Given the folowing for the Whittier Company: Freight-in 34,000 Sales Revenue {80,000 Inventory, January 1 72,000 Inventory. December 31 15,000 Sales Discounts 6.000 Bad Debt Expense 2,000 Purchases 38,000 Purchase Retums and Alowances | 2,000 Interest Revenue 5,000 Cost of Goods Sold is: a) $97,000. b) $33,000 ©) $43,000 4) $39,00024, Which is true for a 2or-1 stock spi? a), Retained Eamings decreases )_ Total Equity increases 4) Contibuted Capital increases 25, The collection ofa receivable results in: Assets Liabilives yt emeee arene 3) Deweased Decreased 7 fe Eos Uehanasd Unchanged ©) Deceased ‘nceaned 26. The entry to record the issuance of common stock would include: a) Debit to Assets & Credit to Equity b) Debit to Liabities & Credit to Assets €), Debitto Assets & Credit to Assets 4) Debit to Equity & Crecit to Liabilties @) Debit to Equity & Crecit to Assets 21. Failure to record the adjustment to recognize the used portion of prepaid insurance: a) Understates Liabiites b) Understates Revenue €) Oversiates Expenses 4)_Understates Assets 28, The folowing tems appeared on the January 31 bank reconciliations for Darron Company: Bank Service Charge: $8 NSF Check: $40 Outstanding Chocks: $80 ‘Deposit in Transit: $30 Error Deposit by Darren for $404 was correcly recorded by Darren, but recorded for $440 by the bank ‘+ Bank colection of Note Receivable for Darran: $170 “The unadjusted balance per the January 31 bank statement s $2,000, “The adjusted cash balance forthe January 31 balance sheet is a) $1,964 b) $2086 4) $1,986 ) $2,036,28. The folowing tems appeared on the January 31 bank reconcilations for Kelly Company: (utstanding Checks: $100 NSF Check: $6 Bank Service Charge: $8 Deposit in Transit: $80 ror: Deposit by Kelly for $440 was correct recorded by Kell, but racorded for $476 by the bank. ‘Bank collection of Note Receivable for Kelly: $170 “The unadjusted January 31 book balance is $3,000 ‘The adjusted cash balance forthe January 31 balance sheet is gee 4) $3,084 e) $3,19228. The folowing tems appeared on the January 31 bank reconciliations for Kelly Company: Outstanding Checks: $100 NSF Check: $6 Bank Service Charge: $8 Deposit in Transit: $60 Error Deposit by Kely for $440 was correctly recorded by Kelly, but recorded for $476 by the bank, ‘Bank collection of Note Receivable for Kelly: $170 ‘The unadjusted January 31 book balance is $3,000, “The adjusted cash balance forthe January 31 balance sheet is: 2) $2950, $2,988 9) $3,084 ©) $3,192,24, Which is true for a 2or-1 stock spi? a), Retained Eamings decreases )_ Total Equity increases 4) Contibuted Capital increases 25, The collection ofa receivable results in: Assets Liabilives yt emeee arene 3) Deweased Decreased 7 fe Eos Uehanasd Unchanged ©) Deceased ‘nceaned 26. The entry to record the issuance of common stock would include: a) Debit to Assets & Credit to Equity b) Debit to Liabities & Credit to Assets €), Debitto Assets & Credit to Assets 4) Debit to Equity & Crecit to Liabilties @) Debit to Equity & Crecit to Assets 21. Failure to record the adjustment to recognize the used portion of prepaid insurance: a) Understates Liabiites b) Understates Revenue €) Oversiates Expenses 4)_Understates Assets 28, The folowing tems appeared on the January 31 bank reconciliations for Darron Company: Bank Service Charge: $8 NSF Check: $40 Outstanding Chocks: $80 ‘Deposit in Transit: $30 Error Deposit by Darren for $404 was correcly recorded by Darren, but recorded for $440 by the bank ‘+ Bank colection of Note Receivable for Darran: $170 “The unadjusted balance per the January 31 bank statement s $2,000, “The adjusted cash balance forthe January 31 balance sheet is a) $1,964 b) $2086 4) $1,986 ) $2,036,