Financial Accounting Comprehensive Problems

question

Meredith Company gathered the following reconciling information in preparing its May bank reconciliation: Cash balance per books, 5/31 $4,500 Deposits in transit 375 Notes receivable and interest collected by bank 650 Bank charge for check printing 40 Outstanding checks 2,400 Interest Revenue 140 The adjusted cash balance per books on May 31 is A) $5,250 B) $5,150 C) $7,550 D) $3,225
answer

$5,250 4,500 + 650 + 140 – 40 = 5,250
question

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.
answer

debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts.
question

A company uses the allowance method to measure bad​ debts, A) the Allowance for Bad Debts account is debited when the bad debts expense is estimated B) the Bad Debts Expense account is debited when an account is written off C) Accounts Receivable will be reported on the Balance Sheet at net realizable value D) the Allowance for Bad Debts account balance is added to the balance of the Accounts Receivable account to arrive at the net realizable value
answer

Accounts Receivable will be reported on the Balance Sheet at net realizable value
question

A new machine with a purchase price of $109, 000 with transportation costs of $12,000 installation costs of $5,000 and special acquisition fees of $6,000 would have a cost basis of A) $114,000 B) $126,000 C) $121,000 D) $132,000
answer

$132,000 109,000 + 12,000 + 5,000 + 6,000 = 132,000
question

Equipment with a cost of $220,000 has an estimated residual value of $30,000 and an estimated life of 10 years or 19,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 2,100 hours? A. $19,000 B. $21,000 C. $22,000 D. $30,000
answer

$19,000 (220,000-30,000)/10 = 19,000
question

This type of asset has no physical form and carry an exclusive right of use A) current asset B) plant, property, and equipment C) intangible assets D) liabilities
answer

intangible assets
question

A $30,000, 3-month, 5% note payable was issued on December 1, 2016. What is the amount of accrued interest on December 31, 2016? A) $500 B) $125 C) $1,500 D) $375
answer

$125 30,000 x .05 x 1/12 = 125
question

A company issues 12,000 shares of $5 stated value common stock for $75,000, the account A) Common stock will be credited for $75,000 B) Cash will be debited for $60,000 C) the difference between the issue price and the stated value is credited to Paid-in Capital in Excess of Stated D) the accounting is different than accounting for par value stock
answer

the difference between the issue price and the stated value is credited to Paid-in Capital in Excess of Stated cash 75,000 common stock 60,000 paid in capital in excess of stated 15,000
question

What is the total stockholders’ equity based on the following account balances? Common Stock $375,000 Paid-In Capital in Excess of Par 90,000 Retained Earnings 190,000 Treasury Stock 15,000 a. $670,000 b. $655,000 c. $640,000 d. $565,000
answer

$640,000 375,000 + 90,000 + 190,000 – 13,000 = 640,000
question

If bonds are issued at a premium, the stated interest rate is? A. higher than the market rate of interest. B. lower than the market rate of interest. C. too low to attract investors. D. adjusted to a higher rate of interest.
answer

higher than the market rate of interest.
question

the ___________ states whether the financial statements are presented in accordance with Generally Accepted Accounting Principles (GAAP). A) annual report B) statement of financial position C) auditor’s report D) income statement
answer

auditor’s report
question

Investing activities include A) increases and decreases in current assets B) increases and decreases in long-term assets C) increases and decreases in equity D) increases and decreases in operating
answer

increases and decreases in long-term assets
question

Which of the following should be a subtraction from net income in calculating net cash flow from operating activities using the indirect method? A) an increase to account receivable B) a decrease in accounts payable C) preferred dividends declared and paid D) a decrease in accounts receivable
answer

an increase to account receivable
question

The current ratio is A) used to evaluate a company’s liquidity and short-term debt paying ability. B) is a solvency measure that indicated the margin of safety of a noteholder or bondholder. C) calculated by dividing current liabilities by current assets. D) calculated by subtracting current liabilities from current assets.
answer

used to evaluate a company’s liquidity and short-term debt paying ability.
question

The balance sheets at the end of each of the first two years of operations indicate the following: 2017 2016 Cash and Receivables 600,000 560,000 Merchandise Inventory 60,000 40,000 Property, Plant, and Equipment, net 900,000 700,000 Total liabilities 475,000 315,000 for vertical analysis, what is the percentage of total liabilities to total assets for December 31, 2016? (round percent to one decimal point)? A) 45.0% B) 24.2% C) 30.4% D) 43.1%
answer

24.2% 560,000 + 40,000 + 700,000 = 1,300,000 315,000/1,300,000 = .24.2%

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