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Given the information below about David Corporation, what was the amount of dividends the

company paid in the current period?

Beginning retained earnings $37,000


Ending retained earnings $96,000
Increase in cash $16,000
Net income $82,000
Change in stockholders equity $33,000
$152,000
$0
$23,000*
$33,000
Beginning Retained Earnings ($37,000) + Net Income ($82,000) Dividends = Ending
Retained Earnings ($96,000)

Emmitt had the following final balances after the first year of operations: assets, $36,900;
stockholders' equity, $13,500; dividends, $4,000; and net income, $9,700. What is the
amount of Emmitt's liabilities?
$9,700
$21,800
$23,400*
$36,900
Liabilities = Assets ($36,900) Stockholders' Equity ($13,500)
Liabilities = $23,400.

On January 1, Gucci Brothers Inc. started the year with a $701,000 balance in retained
earnings and a $605,000 balance in common stock. During the year, the company reported
net income of $97,000, paid a dividend of $14,100, and issued more common stock for
$23,500. What is total stockholders' equity at the end of the year?
$1,365,400
$1,306,000
$1,412,400*
$1,440,600
Shareholders Equity = Common Stock ($605,000 + $23,500) + Retained Earnings ($701,000
+ $97,000 $14,100)
Shareholders Equity = $1,412,400

DW has an ending retained earnings balance of $52,500. If during the year DW paid
dividends of $4,800 and had net income of $21,300, then what was the beginning retained
earnings balance?
$69,000
$26,400
$36,000*
$53,100
Beginning Retained Earnings + Net Income ($21,300) Dividends ($4,800) = Ending
Retained Earnings ($52,500)
Stimpleton Company engages in the following cash payments:

Purchase equipment $3,700


Pay rent 700
Repay loan to the bank 4,700
Pay workers salaries 1,150

What is the total amount of cash paid for operating activities?


$5,850
$3,700
$8,400
$1,850
Rent ($700) + Workers salaries ($1,150) = total amount of cash paid for operating activities
($1,850).

Assume that $18,800 cash is paid for insurance to cover the next year. The appropriate debit
and credit are:
Debit cash $18,800, credit prepaid insurance $18,800.
Debit prepaid insurance $18,800, credit insurance expense $18,800.
Debit prepaid insurance $18,800, credit cash $18,800*
Debit insurance expense $18,800, credit prepaid insurance $18,800.

**Summer Leasing received $11,900 for 24 months rent in advance. How should Summer
record this transaction?
Debit cash; credit deferred revenue*
Debit rent expense; credit cash
Debit cash; credit service revenue
Debit prepaid rent; credit rent expense

**The following amounts are reported in the ledger of Mariah Company:


Assets $79,000
Liabilities 44,000
Retained Earnings 11,000

What is the balance in the common stock account?


$68,000
$55,000
$35,000
$24,000*

A company received a bill for newspaper advertising services, $490. The bill will be paid in
10 days. How would the transaction be recorded today?
Debit advertising expense $490, credit cash $490
Debit accounts payable $490, credit advertising expense $490
Debit advertising expense $490, credit accounts payable $490*
Debit accounts payable $490, credit cash $490

When a company pays $3,200 dividends to its stockholders, the transaction should be
recorded as:
Debit dividends; credit accounts payable.
Debit retained earnings; credit dividends.
Debit cash; credit dividends.
Debit dividends; credit cash.*

At the beginning of December, Global Corporation had $1,800 in supplies on hand. During
the month, supplies purchased amounted to $3,900, but by the end of the month the supplies
balance was only $1,200. What is the appropriate month-end adjusting entry?
Debit cash $1,200, credit supplies $1,200
Debit supplies expense $4,500, credit supplies $4,500*
Debit supplies $4,500, credit supplies expense $4,500
Debit cash $4,500, credit supplies $4,500

Beginning supplies ($1,800) + purchases ($3,900) - ending supplies ($1,200) = $4,500.

**The following table contains financial information for Trumpeter Inc. before closing entries:

Cash $12,200
Supplies 5,800
Prepaid Rent 3,400
Salary Expense 6,200
Equipment 66,200
Service Revenue 29,000
Miscellaneous Expenses 20,500
Dividends 4,800
Accounts Payable 3,100
Common Stock 68,000
Retained Earnings 19,000

What is Trumpeter's net income?


$9,300
$2,800
$8,300
$2,300*
Revenues ($29,000) Expenses ($6,200 + $20,500) = $2,300.

During the year, Cheng Company paid salaries of $23,900. In addition, $9,600 in salaries
has accrued by the end of the year but has not been paid. The year-end adjusting entry
would include which one of the following?
Credit to salaries expense of $9,600
Debit to salaries expense for $33,500
Credit to salaries payable for $9,600*
Debit to salaries payable for $23,900

**The following financial information is from Shovels Construction Company.

Accounts payable $13,400


Buildings 84,000
Cash 10,700
Accounts receivable 10,700
Sales tax payable 3,400
Retained earnings 45,700
Supplies 40,400
Notes payable (due in 18 months) 30,000
Interest payable 1,700
Common stock 51,600

What is the amount of current assets, assuming the accounts above reflect normal activity?
$21,400
$61,800*
$145,800
$113,400
Cash ($10,700), Accounts Receivable ($10,700), and Supplies ($40,400) are normally
current assets.

The retained earnings account had a beginning credit balance of $26,450. During the period,
the business had a net loss $12,600, and the company paid dividends of $8,800. The ending
balance in the retained earnings account is:
$5,050.*
$39,050.
$13,850.
$30,250.
Beginning Retained Earnings ($26,450) Net Loss ($12,600) Dividends ($8,800) = Ending
Retained Earnings.

**The following information was taken from the bank reconciliation for Mooner Sooner Inc. at
the end of the year:

Bank balance: $8,700


Checks outstanding: $8,900
Note collected by the bank: $1,600
Service fee: $33
Deposits outstanding: $4,100
NSF check (bad check) returned for $450

What is the correct cash balance that should be reported in Mooner Sooner's balance sheet
at the end of the year?
$3,900*
$9,850
$8,250
$3,867
Bank balance ($8,700) + deposits outstanding ($4,100) - outstanding checks ($8,900) =
$3,900.

After preparing the bank reconciliation, an NSF check would result in which of the following
when recording the adjustment to the company's cash balance?
Debit to Service Fee Expense.
Credit to Accounts Payable.
Credit to Service Revenue.
Debit to Accounts Receivable.*
Which of the following items would cause the balance of cash in the bank statement to be
greater than the balance of cash in the accounting records?
The company wrote checks that have not cleared the bank.*
The company purchased supplies using a debit card.
The company has cash receipts that have not been deposited in the bank.
The company deposited a customer check that was found by the bank to have insufficient
funds.

A bank reconciliation reconciles the bank statement with the company's:

Cash from operating activities.


Net cash flow in the statement of cash flows.
Cash account in the balance sheet.*
Net income in the income statement.

When preparing a bank reconciliation, a deposit outstanding would be:


Added to the company's cash balance.
Added to the bank's cash balance.*
Subtracted from the company's cash balance.
Subtracted from the bank's cash balance.

On September 1, 2018, Middleton Corp. lends cash and accepts a $2,500 note receivable
that offers 5% interest and is due in six months. How much interest revenue will Middleton
Corp. report during 2018? (Do not round intermediate calculations. Round your answer
to the nearest dollar amount.)
$125.
$350.
$42.*
$400.
Interest revenue = $2,500 5% 4/12 = $42.

At December 31, Amy Jo's Appliances had account balances in Accounts Receivable of
$313,000 and in Allowance for Uncollectible Accounts of $780 (credit) before any
adjustments. An analysis of Amy Jo's December 31 accounts receivable suggests that the
allowance for uncollectible accounts should be 3% of accounts receivable. Bad debt expense
for the year should be:
$8,610.*
$9,911.
$10,170.
$9,390.
($313,000 3%) $780 = $8,610.

At December 31, Gill Co. reported accounts receivable of $289,000 and an allowance for
uncollectible accounts of $1,000 (credit) before any adjustments. An analysis of accounts
receivable suggests that the allowance for uncollectible accounts should be 5% of accounts
receivable. The amount of the adjustment for uncollectible accounts would be:
$13,450.*
$13,560.
$14,450.
$1,000.
($289,000 5%) $1,000 = $13,450.

On February 1, 2018, Sanger Corp. lends cash and accepts a $9,000 note receivable that
offers 20% interest and is due in six months. What would Sanger record on August 1, 2018,
when the borrower pays Sanger the correct amount owed? (Do not round intermediate
calculations.)
Cash 9,000
Notes Receivable 9,000
Cash 9,900

Notes Receivable 9,900


Cash 9,900
Interest Revenue 900
Notes Receivable 9,000
Cash 9,900
Interest Revenue 600
Notes Receivable 9,300
Interest revenue = $9,000 20% 6/12 = $900.

On December 31, 2018, Coolwear Inc. had balances in Accounts Receivable and Allowance
for Uncollectible Accounts of $48,000 and $2,200, respectively. During 2019, Coolwear wrote
off $575 in accounts receivable and determined that there should be an allowance for
uncollectible accounts of $4,100 at December 31, 2019. Bad debt expense for 2019 would
be:
$6,875.
$575.
$2,475.*
$1,975.
Bad debt expense = $4,100 ($2,200 $575) = $2,475.
The balance in the Colt Company's cash account on August 31 was $19,400 before the bank
reconciliation was prepared. After examining the August bank statement and items included
with it, the company's accountant found:

Checks outstanding $4,300


NSF check 170
Note collected by bank for the Colt Company 1,300
Deposits outstanding 3,800
Bank service fees 140

What is the amount of cash that should be reported in the balance sheet as of August 31?
$20,390*
$19,090
$18,900
$20,560
Book balance ($19,400) - bank service fees ($140) - NSF check ($170) + note collected
($1,300) = $20,390.

Oswego Clay Pipe Company provides services of $49,800 to Southeast Water District #45
on April 12 of the current year with terms 1/15, n/60. What would Oswego record on April
12?
Accounts Receivable 49,800
Sales Discounts 498
Sales Revenue 50,298
Accounts Receivable 49,302
Sales Revenue 49,302
Accounts Receivable 49,800
Sales Revenue 49,800
Accounts Receivable 49,800
Sales Revenue 49,302
Sales Discounts 498

On September 1, 2018, Middleton Corp. lends cash and accepts a $12,000 note receivable
that offers 12% interest and is due in six months. How much interest revenue will Middleton
Corp. report during 2019? (Do not round intermediate calculations.)
$240*
$360
$271
$480
Interest revenue = $12,000 12% 2/12 = $240.

Davis Hardware Company uses a perpetual inventory system. How should Davis record the
sale of inventory costing $540 for $1,050 on account?
Accounts receivable 1050
Sales revenue 1050
Cost of goods sold 540
Inventory 540
Inventory 540
Gain 510
Sales revenue 1050
Inventory 540
Cost of goods sold 540
Sales revenue 1050
Accounts receivable 1050
Accounts receivable 1050
Sales revenue 540
Gain 510

Inventory records for Dunbar Incorporated revealed the following:

Number Unit
Date Transaction of Units Cost
Apr. 1 Beginning inventory 500 $2.30
Apr. 20 Purchase 390 2.64

Dunbar sold 640 units of inventory during the month. Ending inventory assuming weighted-
average cost would be (Do not round your intermediate calculations. Round weighted-
average unit cost to four decimals if necessary. Round your answer to the nearest
dollar amount):
$712.
$612.*
$617.
$580.
Weighted-average cost = [(500 x $2.30) + (390 x $2.64)] / 890 = 2.4490.
Ending inventory = 250 x $2.4490 = $612 (rounded).

The following information pertains to Julia & Company:

March 1 Beginning inventory = 35 units @ $5.10


March 3 Purchased 21 units @ 4.50
March 9 Sold 28 units @ 8.60

What is the ending inventory balance for Julia & Company assuming that it uses FIFO? (Do
not round your intermediate calculations. Round your answer to the nearest dollar
amount.)
$130*
$143
$113
$95
Ending inventory = (21 x $4.50) + (7 x $5.10) = $130

Bahama Catering purchased a commercial dishwasher by paying cash of $6,000. The


dishwasher's fair value on the date of the purchase was $6,360. The company incurred $380
in transportation costs, $280 installation fees, and paid a $220 fine for illegal parking while
the dishwasher was being delivered. For what amount will Bahama record the dishwasher?
$6,660*
$6,360
$7,020
$6,880
$6,000 + $380 + $280 = $6,660. The parking ticket should be expensed as incurred since it
is not a cost necessary to get the asset ready for use.

Kansas Enterprises purchased equipment for $74,500 on January 1, 2018. The equipment is
expected to have a ten-year life, with a residual value of $6,450 at the end of ten years.

Using the straight-line method, depreciation expense for 2018 would be:
$14,900
$6,805*
$7,450
$8,095
Depreciation expense = (($74,500 $6,450) /10 years) = $6,805

A machine has a cost of $17,700, an estimated residual value of $4,170, and an estimated
useful life of eight years. The machine is being depreciated on a straight-line basis. At the
end of the second year, what amount will be reported for accumulated depreciation? (Do not
round your intermediate calculations. Round annual depreciation amount to the
nearest dollar amount.)
$14,318
$4,425
$1,691
$3,382*
($17,700 $4,170) / 8 years = $1,691 per year 2 years = $3,382.

On November 1, 2018, New Morning Bakery signed a $194,000, 6%, six-month note payable
with the amount borrowed plus accrued interest due six months later on May 1, 2019. New
Morning Bakery records the appropriate adjusting entry for the note on December 31, 2018.
What amount of cash will be needed to pay back the note payable plus any accrued interest
on May 1, 2019? (Do not round your intermediate calculations.)
$199,820*
$198,850
$194,970
$194,000
$194,000 + [194,000 6% 6/12] = $199,820

Union Apparel has sales including sales taxes for the month of $551,000. If the sales tax rate
is 6%, what are Union Apparel's sales for the month? (Do not round intermediate
calculations. Round your answer to the nearest whole dollar amount.)
$551,000
$519,811*
$520,111
$517,940
$551,000/1.06 = $519,811

United Supply has a $30 million liability at December 31, 2018, of which $6 million is payable
in each of the next five years. United Supply reports the liability on the balance sheet as:
A $6 million current liability and a $24 million long-term liability.*
A $30 million current liability.
A $24 million current liability and a $6 million long-term liability.
A $30 million long-term liability.

The balance sheet of Montezuma reports total assets of $900,000 and $1,100,000 at the
beginning and end of the year, respectively. The net income for the year is $100,000. What
is Montezuma's return on assets?
9%
25%
10%*
11%
[$100,000/($900,000 + $1,100,000)/2] = 10%

A bond issue with a face amount of $500,000 bears interest at the rate of 7%. The current
market rate of interest is 6%. These bonds will sell at a price that is:
Less than $500,000.
Equal to $500,000.
The answer cannot be determined from the information provided.
More than $500,000.*

When a company issues 30,000 shares of $4 par value common stock for $40 per share, the
journal entry for this issuance would include:
A debit to Cash for $120,000
A credit to Additional Paid-in Capital for $1,080,000*
A credit to Common Stock for $1,200,000
A debit to Additional Paid-in Capital for $120,000
The journal entry would be:
Cash 1,200,000
Common Stock 120,000
Additional Paid-in Capital 1,080,000

On December 2, Coley Corp. acquired 900 shares of its $4 par value common stock for $22
each. On December 20, Coley Corp. reissued 500 shares for $10 each. Which of the
following is correct regarding the journal entry for the reissued shares?
Debit Cash $9,000
Credit Additional Paid in Capital $3,000
Credit Treasury Stock $11,000*
Credit Treasury Stock $5,000
The journal entry for the reissued shares would be:
Cash (500 x $10) 5,000
Additional Paid-in Capital 6,000
Treasury Stock (500 x $22) 11,000

On February 22, Brett Corporation acquired 190 shares of its $4 par value common stock for
$26 each. On March 15, the company reissued 70 shares for $30 each. What is true of the
entry for reissuing the shares?
Credit Cash $1,820
Credit Additional Paid in Capital $280*
Debit Treasury Stock $1,820
Credit Treasury Stock $2,100
The journal entry to reissue the shares would be:

Cash (70 x $30) 2,100


Treasury Stock (70 x $26) 1,820
Additional Paid-in Capital (70 x $4) 280

Lense Laboratories' net income was $280,000. Given the account information below, what is
the net operating cash flows for Lense Laboratories?

Increase in Accounts Receivable $65,000


Increase in Salaries Payable $53,500
Decrease in Inventory $32,000
Depreciation Expense $46,500
Increase in Prepaid Insurance $3,300
$480,300
$286,300
$343,700*
$366,700
Net Income $280,000
Adjustments to reconcile net income to net cash flows from
operating activities:
Depreciation Expense 46,500
Increase in Accounts Receivable (65,000)
Decrease in Inventory 32,000
Increase in Prepaid insurance (3,300)
Increase in Salaries Payable 53,500
Net operating cash flows $343,700

Bad Brad's BBQ had cash flows for the year as follows ($ in millions):

CASH RECEIVED FROM:


Customers $ 2,400
Interest on investments 250
Sale of land 130
Sale of common stock 560
Issuance of debt securities 2,400

CASH PAID FOR:


Interest on debt $ 280
Income tax 80
Debt principal reduction 1,550
Purchase of equipment 3,600
Purchase of inventory 1,150
Dividends on common stock 230
Operating expenses 700
Bad Brad's would report net cash inflows (outflows) from financing activities in the amount of:
$1,310.
$1,180.*
$(1,310).
$880.
Sale of common stock $ 560
Issuance of debt securities 2,400
Debt principal reduction (1,550)
Dividends on common stock (230)
Net cash inflows from financing activities $1,180

Mary's Music Store reported net income of $143,000. Beginning balances in Accounts
Receivable and Accounts Payable were $23,500 and $17,500 respectively. Ending balances
in these accounts were $31,500 and $13,600, respectively. Assuming that all relevant
information has been presented, Mary's net cash flows from operating activities would be:
$131,100.*
$147,100.
$138,900.
$154,900.
Net income $143,000
Subtract increase in A/R (8,000)
Subtract decrease in A/P (3,900)
Net cash flows from operating activities $131,100