Excel in Accounting: Your Guide to Acing Quiz Modules
51) Depreciation of equipment was recorded twice this period. This would:
A) overstate expenses and overstate assets.
B) overstate expenses and understate assets.
C) understate expenses and overstate assets.
D) understate assets and understate assets.
52) Adjusting the supplies account will:
A) decrease the total assets and increase the total expenses.
B) decrease the total assets and decrease the total expenses.
C) increase the total assets and increase the total expenses.
D) increase the total assets and decrease the total expenses.
53) It's the end of the accounting period and no electric bill has been received (but the expense has been incurred); you should record an entry that:
A) increases the total assets and increases the total expenses.
B) decreases the total assets and increases the total expenses.
C) increases the total liabilities and increases the total expenses.
D) decreases the total liabilities and increases the total expenses.
54) The entry to record the expiration of part of the Prepaid Rent Expense will:
A) decrease total liabilities and increase total expenses at the end of the month.
B) decrease total assets and decrease total expenses at the end of the month.
C) increase total assets and increase total expenses at the end of the month.
D) increase total assets and decrease total expenses at the end of the month.
55) The depreciation of equipment will require an adjustment that results in:
A) total assets increasing and total expenses increasing.
B) total assets increasing and total expenses decreasing.
C) total assets and revenue decreasing.
D) total assets decreasing and total expenses increasing.
56) Which of the following would cause a liability to be credited and an expense to be debited?
A) Recording the adjustment for the expiration of rent
B) Recording the depreciation of equipment
C) Recording the accrual of salaries incurred
D) Purchasing equipment
57) Which of the following would cause a contra-asset to be credited and an expense debited?
A) Recording an accrued expense
B) Recording the consumption of supplies
C) Recording the building depreciation
D) All of the above would have that effect.
58) Which of the following would cause total assets to decrease and total expense to increase?
A) Recording the depreciation of equipment
B) Recording the consumption of supplies
C) Recording the expiration of Prepaid Rent Expense
D) All of the above would have that effect
59) It is the year end, but not the pay period end. How will this affect the balance sheet?
A) Assets will be decreased.
B) Liabilities will be increased.
C) Owner's equity will be increased.
D) This has no effect on the period end balance sheet.
60) At the start of this year 18 months rent was paid. At the year's end, how will this affect the balance sheet?
A) Assets will be decreased.
B) Liabilities will be increased.
C) Owner's equity will be increased.
D) This has no effect on the period end balance sheet.
106.On January 2, 2011, Worth Co. issued at par $2,000,000 of 7% convertible bonds. Each $1,000 bond is convertible into 10 shares of common stock. No bonds were converted during 2011. Worth had 200,000 shares of common stock outstanding during 2011. Worth’s 2011 net income was $600,000 and the income tax rate was 30%. Worth’s diluted earnings per share for 2011 would be (rounded to the nearest penny):
a.$3.49.
b.$3.17.
c.$3.00.
d.$3.36.
107.Beaty Inc. purchased Dunbar Co. and agreed to give stockholders of Dunbar Co. 10,000 additional shares in 2012 if Dunbar Co.’s net income in 2011 is $500,000; in 2010 Dunbar Co.’s net income is $520,000. Beaty Inc. has net income for 2010 of $200,000 and has an average number of common shares outstanding for 2010 of 100,000 shares. What should Beaty report as diluted earnings per share for 2010?
a.$2.22
b.$2.00
c.$1.82
d.$1.67
Use the following information for questions 108 and 109.
Hanson Co. had 200,000 shares of common stock, 20,000 shares of convertible preferred stock, and $1,000,000 of 10% convertible bonds outstanding during 2011. The preferred stock is convertible into 40,000 shares of common stock. During 2011, Hanson paid dividends of $1.20 per share on the common stock and $4 per share on the preferred stock. Each $1,000 bond is convertible into 45 shares of common stock. The net income for 2011 was $800,000 and the income tax rate was 30%.
108.Basic earnings per share for 2011 is (rounded to the nearest penny)
a.$2.94.
b.$3.22.
c.$3.35.
d.$3.60.
109.Diluted earnings per share for 2011 is (rounded to the nearest penny)
a.$2.77.
b.$2.81.
c.$3.05.
d.$3.33.
110.Fugate Company had 500,000 shares of common stock issued and outstanding at December 31, 2010. On July 1, 2011 an additional 500,000 shares were issued for cash. Fugate also had stock options outstanding at the beginning and end of 2011 which allow the holders to purchase 150,000 shares of common stock at $20 per share. The average market price of Fugate's common stock was $25 during 2011. What is the number of shares that should be used in computing diluted earnings per share for the year ended December 31, 2011?
a.1,030,000
b.870,000
c.787,500
d.780,000
111.Shipley Corporation had net income for the year of $480,000 and a weighted average number of common shares outstanding during the period of 200,000 shares. The company has a convertible bond issue outstanding. The bonds were issued four years ago at par ($2,000,000), carry a 7% interest rate, and are convertible into 40,000 shares of common stock. The company has a 40% tax rate. Diluted earnings per share are
a.$1.65
b.$2.23.
c.$2.35.
d.$2.58.
112.Colt Corporation purchased Massey Inc. and agreed to give stockholders of Massey Inc. 50,000 additional shares in 2012 if Massey Inc.’s net income in 2011 is $400,000 or more; in 2010 Massey Inc.’s net income is $410,000. Colt has net income for 2010 of $800,000 and has an average number of common shares outstanding for 2010 of 500,000 shares. What should Colt report as earnings per share for 2010?
Basic Earnings Diluted Earnings
Per SharePer Share
a.$1.60$1.60
b.$1.45$1.60
c.$1.60$1.45
d.$1.45$1.45
113.On January 2, 2010, Perez Co. issued at par $10,000 of 6% bonds convertible in total into 1,000 shares of Perez's common stock. No bonds were converted during 2010. Throughout 2010, Perez had 1,000 shares of common stock outstanding. Perez's 2010 net income was $3,000, and its income tax rate is 30%. No potentially dilutive securities other than the convertible bonds were outstanding during 2010. Perez's diluted earnings per share for 2010 would be (rounded to the nearest penny)
a.$1.50.
b.$1.71.
c.$1.80.
d.$3.42.
114.At December 31, 2010, Kifer Company had 500,000 shares of common stock outstanding. On October 1, 2011, an additional 100,000 shares of common stock were issued. In addition, Kifer had $10,000,000 of 6% convertible bonds outstanding at December 31, 2010, which are convertible into 225,000 shares of common stock. No bonds were converted into common stock in 2011. The net income for the year ended December 31, 2011, was $3,000,000. Assuming the income tax rate was 30%, the diluted earnings per share for the year ended December 31, 2011, should be (rounded to the nearest penny)
a.$6.52.
b.$4.80.
c.$4.56.
d.$4.00.
115.On January 2, 2011, Mize Co. issued at par $300,000 of 9% convertible bonds. Each $1,000 bond is convertible into 30 shares. No bonds were converted during 2007. Mize had 50,000 shares of common stock outstanding during 2011. Mize 's 2011 net income was $160,000 and the income tax rate was 30%. Mize's diluted earnings per share for 2011 would be (rounded to the nearest penny)
a.$2.71.
b.$3.03.
c.$3.20.
d.$3.58.
36. Record the following transactions for Sparky's Pet Shop, assume Sparky's uses a perpetual...
Record the following transactions for Sparky's Pet Shop, assume Sparky's uses a perpetual inventory system.
August 1- Purchased $6,000 of merchandise on account, terms 2/10, n/30.
August 3- Returned $1,500 of merchandise purchased on August 1 due to defects.
August 7- Recorded cash sales for the first week of August $9,750; cost of the merchandise was $4000.
August 10- Sale on account made to a local breeder for $500, terms 1/10 net 30; cost of merchandise was $200
August 11- Paid for the merchandise purchased on August 1, less return.
August 20- Received payment from sale of August 10. The customer took the discount.
37. The post-closing trial balances of two proprietorships on
The post-closing trial balances of two proprietorships on January 1, 2012, are presented below.
Williams and Jones decide to form a partnership, Wijo Company, with the following agreed upon valuations for non-cash assets.
All cash will be transferred to the partnership, and the partnership will assume all the liabilities of the two proprietorships. Further, it is agreed that Williams will invest an additional $5,000 in cash, and Jones will invest an additional $19,000 in cash.
Instructions
(a) Prepare separate journal entries to record the transfer of each proprietorship’s assets and liabilities to the partnership.
(b) Journalize the additional cash investment by each partner.
(c) Prepare a classified balance sheet for the partnership on January 1,2012.
Stellar Stores is a new company that started operations on March 1, 2017. The company has decided to use a perpetual inventory system. The following purchase transactions occurred in March: Mar. 1 Stellar Stores purchases $9,000 of merchandise for resale from Octagon Wholesalers, terms 2/10, n/30, FOB shipping point. 2. The correct company pays $155 for the shipping charges. 3. Stellar returns $1,000 of the merchandise purchased on March 1 because it was the wrong colour. Octagon gives Stellar a $1,000 credit on its account. 21 Stellar Stores purchases an additional $13,000 of merchandise for resale from Octagon Wholesalers terms 2/10, n/30, FOB destination. 22. The correct company pays $170 for freight charges. Stellar returns $400 of the merchandise purchased on March 21 because it was damaged. Octagon gives Stellar a $400 credit on its account. 30. Stellar pays Octagon the amount owing for the merchandise purchased on March 1. 31 Stellar pays Octagon the amount owing for the merchandise purchased on March 21. Instructions (a) Prepare Stellar Stores journal entries to record the above transactions. (b) Post the transactions to the Merchandise Inventory account. Compare the total in this account with the total of the cash paid during March by Stellar for the purchase of inventory.
39. JIT purchasing, relevant benefits, relevant costs.
JIT purchasing, relevant benefits, relevant costs. (CMA, adapted) The Margro Corporation is an automotive supplier that uses automatic turning machines to manufacture precision parts from steel bars. Margro’s inventory of raw steel averages $600,000. John Dates, president of Margro, and Helen Gorman, Margro’s controller, are concerned about the costs of carrying inventory. The steel supplier is willing to supply steel in smaller lots at no additional charge. Gorman identifies the following effects of adopting a JIT inventory program to virtually eliminate steel inventory:
Without scheduling any overtime, lost sales due to stockouts would increase by 35,000 units per year However, by incurring overtime premiums of $40,000 per year, the increase in lost sales could be reduced to 20,000 units per year This would be the maximum amount of overtime that would be feasible for Margro.
Two warehouses currently used for steel bar storage would no longer be needed. Margro rents one warehouse from another company under a cancelable leasing arrangement at an annual cost of $60,000. The other warehouse is owned by Margro and contains 12,000 square feet Three-fourths of the space in the owned warehouse could be rented for $1.50 per square foot per year. Insurance and property tax costs totaling $14,000 per year would be eliminated.
Margro’s required rate of return on investment is 20% per year Margro’s budgeted income statement for the year ending December 31, 2008 (in thousands) is as follows:
1. Calculate the estimated dollar savings (loss) for the Margro Corporation that would result in 2008 from the adoption of JIT purchasing.
2. Identify and explain other factors that Margro should consider before deciding whether to adopt JITpurchasing.
40. Can a business enter into a transaction that affect only the left side of the basic accounting...
Can a business enter into a transaction that affect only the left side of the basic accounting equation? If so, give an example.
The production department of Zan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 8,000 6,000 Units to be produced 5,000 7,000 In addition, 6,000 grams of raw materials inventory is on hand at the start of the 1st Quarter and the beginning accounts payable for the 1st Quarter is $2,880. Each unit requires 8 grams of raw material that costs $1.20 per gram. Management desires to end each quarter with an inventory of raw materials equal to 25% of the following quarter's production needs. The desired ending inventory for the 4th Quarter is 8,000 grams. Management plans to pay for 60% of raw material purchases in the quarter acquired and 40% in the following quarter. Each unit requires 0.20 direct labor-hours and direct laborers are paid $11.50 per hour. Required: 1-a. Prepare the company's direct materials budget for the upcoming fiscal year. (Round "Unit cost of raw materials" answers to 2 decimal places.) Zan Corporation Direct Materials Budget 4th 1st 2nd 3rd Quarter Quarter Quarter Quarter Year Required production in units of finished goods Units of raw materials needed per unit of finished goods Units of raw materials needed to meet production 0 0 0 0 0 Total units of raw materials needed 0 0 0 0 0 Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to be purchased
42. 1.You are the new marketing manager for a firm that produces a line of athletic shoes to be ta
1.You are the new marketing manager for a firm that produces a line of athletic shoes to be targeted to the college student subculture. In a memo to your boss, list some product attributes that might appeal to this subculture, the steps in your customers%u2019 purchase process, and recommend some marketing strategies that can influence their decision. How should the memo be written?
43. Given the following information for Rosato Pizza Co., calculate
Given the following information for Rosato Pizza Co., calculate the depreciation expense:
Sales = $41,000;
Costs = $19,500;
Addition to retained earnings = $5,100;
Dividends paid = $1,500;
Interest expense = $4,500;
Tax rate = 35 percent.
44. REPLACEMENT ANALYSIS The Erley Equipment Company purchased a machine 5 years ago at a cost of...
REPLACEMENT ANALYSIS The Erley Equipment Company purchased a machine 5 years ago at a cost of $90,000. The machine had an expected life of 10 years at the time of purchase, and it is being depreciated by the straight-line method by $9,000 per year. If the machine is not replaced, it can be sold for $10,000 at the end of its useful life. A new machine can be purchased for $150,000, including installation costs. During its 5-year life, it will reduce cash operating expenses by $50,000 per year. Sales are not expected to change. At the end of its useful life, the machine is estimated to be worthless. MACRS depreciation will be used. The machine will be depreciated over its 3-year class life rather than its 5-year economic life; so the applicable depreciation rates are 33%, 45%, 15%, and 7%. The old machine can be sold today for $55,000. The firm’s tax rate is 35%. The appropriate WACC is 16%.
a. If the new machine is purchased, what is the amount of the initial cash flow at Year 0?
b. What are the incremental net cash flows that will occur at the end of Years 1 through 5?
c. What is the NPV of this project? Should Erley replace the old machine? Explain.
Yashpal owed money to Srinivas and hence accepted two bills each of Rs. 4,850 of three months’ duration drawn on him by the latter, on July 1, 2015. Srinivas endorsed one of the bills in favour of Hariram on July 7, Rs. 015. On the same date he discounted the other bills with his bank and received net proceeds of Rs. 4,675 . Yashpal failed to meet both the bills on the due date. On 4th October, 2015, the bank debited the accoun t of Srinivas with the value of the second bill plus their charges of Rs. 20. Yashpal is declared insolvent and his estate paid 60 paise in the rupee, on 1st November, 2015. Show the Journal Entries in respect of the above in the books of Yashpal and Srinivas.
46. Ellas Real Estate Appraisal Adjusted Trial Balance June 30, 2018 Requirement 1. Prepare the compa...
Ellas Real Estate Appraisal Adjusted Trial Balance June 30, 2018 Requirement 1. Prepare the company's income statement for the year ended June 30, 2018. (If a bax is not used in the statement, leave the box empty; do not select a label or enter a zero. Use a minus sign or parentheses to show a net loss. Requirement 3, Prepao tho companys dasered balance shoot in report tomnt Requirement 4. Journal ze the dding om es (Record debes first, ? en aedts. June 30, 2018. If a ba is nat usod in the balanco shoot, loavo the box ompty: co Selact me xplanaion on tre last ine or e joumal antry table) not solocta Start by dlosing revenues Elias Real Estate Appraisal Account Title Cash Ellas Real Estate Appraisal Income Statement Year Ended June 30, 2018 4,300 June 30, 2018 2.200 2.400 Office Supplies 13.900 81,000 Curment Asses Cose expenses for the perod $ 28,700 Long-sem Lisbites Cradit Accounts Payable 8,900 Salarlos Payablo 2,100 Notes Payable (long-term) Elias, Capital Eligs, Withdrawals Service Revenue 7.100 36,000 43,000 Total Expenses Total Liablies Total Liabliios and Ownors Equty Total Property, Plant, and Equipment 26,600 4,500 32,000 Cose Income Supplies Expense Intcrost Expanso 8,900 2,200 Net Income (Loss) Usitas ation Expansa.30eoeceaEstate Requirement 2. Prepare the company's staterment of owners equity for the yaar 8,100 ended June 30, 2018. Assume that there were no contributions made by the owner 191,300 191,300 during the year. (Use a minus sign or parentheses to show a net loss. Exclude any S zero-balance events for the period from the statement of owner's equity.) Statement of Owner's Equity Yoar Ended June 30, 2018 Ei88, Capital, July 1, 2017 Owner's Equity Elas, Capital, June 30, 2018 adjusted trial balance. Post the doeing entriesto the T-accou Prepaid Insurance Unearned Revenue Supplies Expense Use "Clos. and the ccrresponding number as shown In the joumal entry as posting references-"Clos(1 y.·Clos. C2. etc. The adusted balance of ea? account has been entered for you. Pest any diosing entries to the accounts and then calauiate he post-closing balarce ("Bal.1of each account (includng these that were not clased). Far any accounts with a zero balance after dosing, enter a "D on the normal side of th? account. For income Summary, alculate and enter ths balance (Bal. before posting the entry to diose out the account. Post the entry to close ncome Summary account on the same ine as you entered the balance prier to cinang (the second linejand then show the postdosing balance ("Bal ? on the last (third) line ofthe account. June 30, 2018. 7,100 Bal Bal Review the ending balances of the T-accounts that you prepared in Requirement 5 Ellas Real Estate Appralsal Notes Payable Interest Expense June 30, 2018 38,000 Bal B 8,900 Elias, Capital Utilities Expense Rovilaw the closing journal entries you propared above. 3,000 Bal Bl 2,200 Service Revenue Bel. 4,300 19,300 Bal. 48,200 Bal peprElias Interest Payable al. 4,5cO 8,900 Bal. B. 4 26,700 Bal Bl. 26,600 Supplies Salaries Payable Salaries Expense Bal. 2,20o 2.100 Bal. B, 32,000 Total
47. Precision Manufacturing Inc. (PMI) makes two types of industrial component parts-th
Precision Manufacturing Inc. (PMI) makes two types of industrial component parts-the EX300 and the TX500. It annually produces 60,000 units of EX300 and 12,500 units of TX500. The company's conventional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company's two product lines is shown below: EX300 TX500 Total Direct materials $366,325 $162,550 $528,875 Direct labor $120,000 $42,500 $162,500 The company is considering implementing an activity-based costing system the distributes all of its manufacturing overhead to four activities as shown below: Activity Cost Pool(and activity measure) Manufacturing overhead Activity EX300 TX500 Total Machining(machine-hour) $198,250 90,000 62,500 152,500 Setups(setup hours) 150,000 75 300 375 Product-level(number of products) 100,250 1 1 2 General factory(direct labor dollars) 60,125 120,000 42,500 162,500 Total manufacturing overhead cost 508,625 REQUIRED: 1. Compute the plantwide overhead rate that would be used in the companys conventional cost system. Using the plantwide rate, compute the unit product cost for each product. 2. Compute the activity rate for each activity cost pool. Using the activity rates, compute the unit product cost for each product. 3. Why do the conventional and activity-based cost assignments differ from one another?
48. Andrew Clark Company discovered the following errors made in January 2015. 1. A payment of Salari...
Andrew Clark Company discovered the following errors made in January 2015.
1. A payment of Salaries and Wages Expense of $700 was debited to Equipment and credited to Cash, both for $700.
2. A collection of $1,000 from a client on account was debited to Cash $100 and credited to Service Revenue $100.
3. The purchase of equipment on account for $760 was debited to Equipment $670 and credited to Accounts Payable $670.
A. Correct the errors by reversing the incorrect entry and preparing the correct entry.
B. Correct the errors without reversing the incorrect entry.
Account Titles | Debit | Credit | |||
(a) | |||||
1. | Salaries And Wages Expense | 700 | |||
Equipment | 700 | ||||
2. | Cash | 1000 | |||
Service Revenue | 100 | ||||
Accounts Receivable | 100 | ||||
3. | Equipment | 335 | |||
Accounts Payable | 335 | ||||
(b) | |||||
1. | |||||
2. | |||||
3. |
| ||||
49. CVP analysis, margin of safety Suppose Doral Corp.’s breakeven p
CVP analysis, margin of safety Suppose Doral Corp.’s breakeven point is revenues of $1,100,000. Fixed costs are $660,000.
Required
1. Compute the contribution margin percentage.
2. Compute the selling price if variable costs are $16 per unit.
3. Suppose 95,000 units are sold. Compute the margin of safety in units and dollars.
50. Siena Industries (a sole proprietorship) sold three § 1231 assets during 2012. Data on these...
Siena Industries (a sole proprietorship) sold three § 1231 assets during 2012. Data on these property dispositions are as follows:
Asset | Cost | Acquired | Depreciation | Sold for | Sold on |
Rack | $100,000 | 10/10/08 | $62,000 | $75,000 | 10/10/12 |
Forklift | 35,000 | 10/16/09 | 23,000 | 5,000 | 10/10/12 |
Bin | 87,000 | 03/12/11 | 34,000 | 60,000 | 10/10/12 |
a. Determine the amount and the character of the recognized gain or loss from the disposition of each asset.
b. Assuming that Siena has no no recaptured net § 1231 losses from prior years, how much of the 2012 recognized gains is treated as capital gains?