90,000.
Burke Company purchases land for $90,000 cash. Burke assumes $2,500 in property taxes due on the land. The title and attorney fees totaled $1,000. Burke has the land graded for $2,200. They paid $10,000 for paving of a parking lot. What amount does Burke
Total cost $75,750.
Carpino Company purchased equipment and these costs were incurred:
Cash price
$70,000
Sales taxes
3,500
Insurance during transit
750
Installation and testing
1,500
Total costs
$75,750
What amount should be recorded as the cost of the equipment?
amount charged to expense since the acquisition of the plant asset.
The balance in the Accumulated Depreciation account represents the
$4,100.
Stine Company purchased machinery with a list price of $64,000. They were given a 10% discount by the manufacturer. They paid $400 for shipping and sales tax of $3,000. Stine estimates that the machinery will have a useful life of 10 years and a residual
$10,500.
Equipment costing $70,000 with a salvage value of $14,000 and an estimated life of 8 years has been depreciated using the straight-line method for 2 years. Assuming a revised estimated total life of 6 years and no change in the salvage value, the deprecia
No, the correct entry would be a debit to Maintenance and Repairs Expense and a credit to Cash.
Compton Inc. made a $500 ordinary repair to a piece of equipment. Compton's accountant debited this amount to the asset account, Equipment and credited Cash. Was this the correct entry and if not, why not?
recorded for the fraction of the year to the date of the disposal.
If disposal of a plant asset occurs during the year, depreciation is
In the Other Expenses and Losses section of the income statement.
A loss on disposal of a plant asset is reported in the financial statements
$32,000 gain.
A plant asset with a cost of $480,000 and accumulated depreciation of $456,000 is sold for $56,000. What is the amount of the gain or loss on disposal of the plant asset?
6.8%
Using the following data for Stevenson Industries, compute the return on assets ratio.
Net Income
$150,000
Total Assets 12/31/14
2,410,000
Total Assets 12/31/13
1,980,000
Net Sales
250,000
1.2 times.
During 2014, Ronald Corporation reported net sales of $1,500,000, net income of $900,000, 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 acc
$12,000.
On May 1, 2014, Irwin Company purchased the copyright to Quick Computer Tutorials for $90,000. It is estimated that the copyright will have a useful life of 5 years. The amount of Amortization Expense recognized for the year 2014 would be
for the life of the creator plus 70 years.
Copyrights are granted by the federal government
must be expensed when incurred under generally accepted accounting principles.
Research and development costs
is only recorded when the purchase of an entire business occurs.
Goodwill
80000 + 60000 = $140,000.
Hopson Company incurred $600,000 of research and development costs in its laboratory to develop a new product. It spent $80,000 in legal fees for a patent granted on January 2, 2014. On July 31, 2014, Hopson paid $60,000 for legal fees in a successful def
$3,500,000.
Given the following account balances at year end, compute the total intangible assets on the balance sheet of Janssen Enterprises.
Cash
$1,500,000
Accounts Receivable
4,000,000
Trademarks
1,000,000
Goodwill
2,500,000
Research & Development Costs
2,000,000
should be reported as a separate classification on the balance sheet.
Intangible assets
at cost less accumulated depreciation.
Plant assets are ordinarily presented in the balance sheet
$23,000,000
A company has the following assets:
Buildings and Equipment,
less accumulated depreciation of $4,000,000
$18,000,000
Copyrights
1,500,000
Patents
3,000,000
Land
5,000,000
The total amount reported under Property, Plant, and Equipment would be
within one year, or the operating cycle, whichever is longer.
A current liability is a debt that can reasonably be expected to be paid
Interest Expense 1,000
Interest Payable 1,000
On October 1, Sam's Painting Service borrows $100,000 from National Bank on a 3-month, $100,000, 4% note. What entry must Sam's Painting Service make on December 31 before financial statements are prepared?
$700.
The interest charged on a $70,000 note payable, at the rate of 6%, on a 60-day note would be
credit to Sales Taxes Payable for $16.
A company receives $176, of which $16 is for sales tax. The journal entry to record the sale would include a
debit to Salaries and Wages Payable for $19,905.
The following totals for the month of April were taken from the payroll records of Metz Company.
Salaries $30,000
FICA taxes withheld 2,295
Income taxes withheld 6,600
Medical insurance deductions 1,200
Federal unemployment taxes 240
State unemployment ta
debit to Payroll Tax Expense for $4,035.
The following totals for the month of April were taken from the payroll records of Metz Company.
Salaries $30,000
FICA taxes withheld 2,295
Income taxes withheld 6,600
Medical insurance deductions 1,200
Federal unemployment taxes 240
State unemployment ta
debit Cash 750,000
credit Unearned Subscription Revenue 750,000
Madson Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 75,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?
have specific assets of the issuer pledged as collateral.
Secured bonds are bonds that
callable bonds.
Bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer are called
$394,000.
Bonds with a face value of $400,000 and a quoted price of 98? have a selling price of
stated rate.
The contractual interest rate on a bond is often referred to as the
a discount.
If the market interest rate for a bond is higher than the stated interest rate, the bond will sell at
a premium.
If the market rate of interest is lower than the contractual interest rate, the bonds will sell at
deducted from bonds payable.
In the balance sheet, the account Discount on Bonds Payable is
debit Cash 4,080,000
credit Premium on Bonds Payable 80,000
credit Bonds Payable 4,000,000
Four thousand bonds with a face value of $1,000 each, are sold at 102. The entry to record the issuance is
debit Cash 3,880,000
debit Discount on Bonds Payable 120,000
credit Bonds Payable 4,000,000
Four thousand bonds with a face value of $1,000 each, are sold at 97. The entry to record the issuance is
$4,400 gain
Hogan Company has $1,000,000 of bonds outstanding. The unamortized premium is $14,400. If the company redeemed the bonds at 101, what would be the gain or loss on the redemption?
$612,000
The current carrying value of Kennett's $600,000 face value bonds is $597,750. If the bonds are retired at 102, what would be the amount Kennett would pay its bondholders?
6.50
In a recent year Hart Corporation had net income of $125,000, interest expense of $30,000, and tax expense of $40,000. What was Hart Corporation's times interest earned for the year?
46.9%.
The 2014 financial statements of Harper Co. contain the following selected data (in millions).
Current assets $90
Total assets 160
Current liabilities 40
Total liabilities 75
Cash 8
Interest expense 5
Income taxes 10
Net income 16
The debt to assets ratio
board of directors.
Those most responsible for the major policy decisions of a corporation are the
enhanced because of limited liability and ease of share transferability.
The ability of a corporation to obtain capital is
Limited liability of stockholders.
Which of the following statements is not considered a disadvantage of the corporate form of organization?
is the value assigned per share in the corporate charter.
Par value
authorized stock.
The amount of stock that may be issued according to the corporation's charter is referred to as the
Common Stock $30,000 and Paid-in Capital in Excess of Par Value $12,000.
Alt Corp. issues 3,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to:
capital stock is issued at an amount greater than par value.
The Paid-in Capital in Excess of Par Value is increased in the accounting records when
a corporation's own stock, which has been reacquired and held for future use.
Treasury stock is
deduction from total paid-in capital and retained earnings.
Treasury stock should be reported in the financial statements of a corporation as a(n)
outstanding shares plus treasury shares.
The number of shares of issued stock equals
The right to vote.
Which of the following is not a right or preference associated with preferred stock?
cumulative preferred stock that have not been declared for a given period of time.
Dividends in arrears are dividends on
decrease assets and decrease stockholders' equity.
The net effects on the corporation of the declaration and payment of a cash dividend are to
preferred stockholders will receive the entire $30,000.
Sizemore, Inc. has 10,000 shares of 5%, $100 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2014. If the board of directors declares a $30,000 dividend, the
$20,000.
Watson, Inc. has 10,000 shares of 6%, $100 par value, cumulative preferred stock and 20,000 shares of $1 par value common stock outstanding at December 31, 2014. There were no dividends declared in 2012. The board of directors declares and pays a $100,000
item: Par value per share
Stock Split: Decrease
Stock Dividend: No change
Which of the following show the proper effect of a stock split and a stock dividend?
Item
Stock Split
Stock Dividend
$1,900.
The following selected amounts are available for Thomas Company.
Retained earnings (beginning)
$2,500
Net loss
200
Cash dividends declared
200
Stock dividends declared
200
What is its ending Retained Earnings balance?
$46,860,000.
Nance Corporation's December 31, 2014 balance sheet showed the following:
8% preferred stock, $20 par value, cumulative,
30,000 shares authorized; 15,000 shares issued
$300,000
Common stock, $10 par value, 3,000,000 shares authorized;
1,950,000 shares iss
9%.
The following information pertains to Marsh Company. Assume that all balance sheet amounts represent average balance figures.
Total assets
$400,000
Stockholders' equity-common
200,000
Total stockholders' equity
280,000
Sales
120,000
Net income
24,000
Numb
2-for-1 stock split.
Which one of the following events would not require a journal entry on a corporation's books?
operating activities.
Cash receipts from interest and dividends are classified as
Financing activities section.
Assume that the Fitzgerald Corporation uses the indirect method to depict cash flows. Indicate where, if at all, long-term debt retired with cash would be classified on the statement of cash flows.
a separate schedule or note to the financial statements.
Preferred stock issued in exchange for land would be reported in the statement of cash flows in
cash receipts from sales activities.
On the statement of cash flows, the cash flows from operating activities section would include
$180,000.
Zoum Corporation had the following transactions during 2014:
1. Issued $125,000 of par value common stock for cash.
2. Recorded and paid wages expense of $60,000.
3. Acquired land by issuing common stock of par value $50,000.
4. Declared and paid a cash d
$<105,000>.
Zoum Corporation had the following transactions during 2014:
1. Issued $125,000 of par value common stock for cash.
2. Recorded and paid wages expense of $60,000.
3. Acquired land by issuing common stock of par value $50,000.
4. Declared and paid a cash d
($18,000)
Zoum Corporation had the following transactions during 2014:
1. Issued $125,000 of par value common stock for cash.
2. Recorded and paid wages expense of $60,000.
3. Acquired land by issuing common stock of par value $50,000.
4. Declared and paid a cash d
$252,000.
McLaughlin Company issued common stock for proceeds of $372,000 during 2014. The company paid dividends of $66,000 and issued a long-term note payable for $250,000 in exchange for equipment during the year. The company also purchased treasury stock that h
$120,000
In Jackson Jones Company, land decreased $180,000 because of a cash sale for $180,000, the equipment account increased $60,000 as a result of a cash purchase, and Bonds Payable increased $200,000 from issuance for cash at face value. The net cash provided
decline phase.
Cash from investing becomes positive and cash from financing becomes more negative during the
maturity phase
Cash generated from operations exceeds investing needs, and the company can begin retiring debt during the
adjusted trial balance.
The information to prepare the statement of cash flows comes from all of the following sources except
Determine the cash in each of the bank accounts.
Which one of the following items is not necessary in preparing a statement of cash flows?
expenses on an accrual basis are greater than expenses on a cash basis.
If accounts payable have increased during a period
provided net cash of $3,000.
Catalina Company reported a net loss of $10,000 for the year ended December 31, 2014. During the year, accounts receivable decreased $5,000, inventory increased $8,000, accounts payable increased by $10,000, and depreciation expense of $6,000 was recorded
is added to net income.
Using the indirect method, patent amortization expense for the period
operating activities section.
The indirect and direct methods of preparing the statement of cash flows are identical except for the
is used to assess an entity's ability to pay dividends and meet obligations.
The statement of cash flows
$259,000,000.
During 2014, Ecuyer Industries reported cash provided by operations of $397,000,000, cash used in investing of $343,000,000, and cash used in financing of $95,000,000. In addition, cash spent for fixed assets during the period was $138,000,000. Average cu
Parksh Company
Using the following information, which company appears to be most liquid?
(in $ Millions)
Jones
Company
Parksh
Company
Brady
Company
Chambers
Company
Cash provided by operating activities for 2014
140
295
110
200
Current liabilities for 2013
230
335
205
3
The cost principle requires that companies record fixed assets at:
historical cost
When depreciation is recorded each period, what account is debited
Depreciation expense
Which of the following statements is true regarding depreciation methods
The use of a higher estimated life and higher residual value will lower the annual amount of depreciation expense recognized on the income statement
Normal repair and maintenance of an asset is an example of what?
Revenue expenditure
Chapman Inc. purchased a piece of equipment in 2012. Chapman depreciated the equipment on a straight-line basis over a useful life of 10 years and used a residual value of $12,000. Chapman's depreciation expense for 2013 was $11,000. What was the original
$122,000
Bradley Company purchased a machine for $34,000 on January 1, 2011. It depreciates the machine using the straight-line method over a useful life of 8 years and $2,000 redial value. On January 1, 2013, Bradley revised its estimate of residual value to $1,0
$6,250
Jerabek Inc. decided to sell one of its fixed assets that had a cost of $55,000 and accumulated depreciation of $35,000 on July 1, 2013. On the date, Jerabek sold the fixed asset for $15,000. What was resulting gain or loss from the sale of asset?
$5,000 loss
Which of the following statements is true?
The average age of the fixed assets is computed by dividing accumulated depreciation by expense.
Which of the following is NOT an intangible asset?
Research and development
Heston Company acquired a patent on January 1, 2013 for $75,000. The patent has a remaining legal life of 15 years, but Heston expects to receive benefits from the patent for only 5 years. What amount of amortization expense does Heston record in 2013 rel
$15,000
Howton Paper Company purchased $1,400,000 of timberland in 2012 for its paper operations. Howton estimates that there are 10,000 acres of timberland, and it cut 2,000 acres in 2013. The land is expected to have a residual value of $200,000 once all the ti
Depletion will causes Howton's timer inventory to increase
Murnane Company purchased a machine on February 1, 2009, for $100,000. January 2013, when the book value of the machine is $70,000, Murnane believes the machine is impaired due to recent technological advances. Murnane expects the machine to generate futu
$15,000