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157_46789_practicemc-1 - 1 Which of the foilowing changes...

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Unformatted text preview: 1) Which of the foilowing changes describes the deciaration of $1,000 in cash dividends payabte next month? Assets and owners' equity increase by $1,000 Assets and owners' equity decrease by $1,000 Liabilities increase and owners’ equity increases by $1,000 Liabilities increase and owners’ equity decrease by $ 1,000 No changes in totai assets, tiabitities, or owners' equity menus 2) An exampie of a cash equivaient is: Accounts receivable Certificates of deposit Compensating baiance Notes receivable Stock certificates weave 3) On duty 10, Aii Company made a $10,000 credit sale under the terms 3110, n130. if Aii receives full payment of the account on July 19, the amount of cash received is $ 9,700. $ 9,800. $3 0,000. $10,300. seem Sam’s Town had net income for 20x4 before tax and depreciation of $1,000,000. The corporate tax rate is 30%. Sam’s has $ 800,000 in fixed assets. Assume that the fixed assets are depreciated using the straight tine method for reporting purposes over 8 years with no salvage vaiue. Ali of the property is 5 year property for tax (MACRS) purposes. The five year percentages are 20.00, 32.00, 19.20, 11.52, 11.52, 5. 76. 111g eguigmeot was all purchased at the beginning of 20x3. Assume this is the company’s second year of operation and has no fixed assets other than the $800,000 which the company purchased on the day it opened. 4) How much is the debit to tax expense for 20x4? A. $ 240,000 8 $ 300,000 C. $ 46,800 D. $ 270,000 E $ Some other number 5) Still Sam’s Company—"- How much is the credit to deferred taxes in the 20x4 journat entry to record taxes? A. $ 240,000 8. $ 300, 000 C. $ 46,800 D. $ 270,000 E. 95 Some other number 6) Current portion of Leng~terrn Debt is: A. The totat payment on a loan due in the next 12 months B. The principal payment on a loan due in the next 12 months C. The baiioon portion of long—term debt 0. An example of a significant nencash transaction E. None of these Bella’s Baubtes, Inc. sold a piece of equipment on January 1, 2003. The company originally purchased the equipment 20 years ago for $200,000. Accumulated depreciation on the date of sale was $120,000. The sate resulted in a gain of $5,000. 7) The equipment was sold for: A. $ 205,000 3. $ 85,000 C. $ 125,000 D. $ 80,000 E. None of these. 8) Stilt Betta’s— On the income Statement, Belia would: A- Add $5,000 to revenue 8. Add $5,000 to "other revenue” G. Add $85,000 revenue 0. Add $85,000 to “other revenue” 9} On the cash flow statement, Betta would A. Subtract the gain from the inccme in the “Cash Ftow~ operations" B. Add the gain to the income in the “Cash Flow— investing” C. Subtract the gain in the “Cash Flownlnvesting” 0. Add $80,000 to the “Cash Flew— Financing” E. Subtract $80,000 from the “Cash Flow— Financing” 10) Bender Corporation is buying at: the assets and assuming all the iiabitities of Miller Company. The fottowing information is avaiiabie for A Mitler Company on the day of the purchase: Accounts payabie 50,000 Accounts Rec 300,000 Bond Payabie 100,000 Inventory 200,000 Common Stock 200,000 Land 400,000 Retained Earnings 550,000 The inventory is worth $175,000 and the iand is worth $500,000. Additionaiiy, the Bond Payabie debt is payabie interest onty at 10% per year for the next 3 years and then the principai is due. Current interest rates for simitar are debt is 6%. Bender wiil pay $1,000,000 for Miller Company. How much of the purchase price witi Bender debit to goodwilf? A. $ 100,000 B. $ 914,310 C. $ 175,000 D. $ 185,690 E- Some other number which is not here 11) A 10 year, $1,000,000 zero coupon bond is priced to yietd 10%. The amount the issuing company wilt receive when it is issued is: A. $ 620,900 B. $ 1,000,000 C. $ 998,980 D. $ 385,500 E. $ 613,900 12) if the above zero bond was soid on Jan 1 of 2002, the interest expense for 2003 (the second year) woutd be A. $ 38,550.00 [3. $ 42,405.00 C. $ 50,000.00 D. $ 54,448.00 E. Some other number 13) Fast Eddie wilt seil you a Thingie for $50,000. The deat is you pay for the Thingie in four equal annual payments that include interest at 2%. You cailed the bank and they said that they would charge you 10% for a simiter loan. How much are the payments if you take Fast Eddie’s deat? A.$13,131.29 B. $ 12,500.00 C. $ 14,500.00 0. $ 25,000.00 E, None of these 14) How much, to the nearest dollar, are you really paying for the Thingie under Fast Eddie’s deal? A. $ 30,375 B. $ 58,000 C. $ 50,000 9. $ 41,625 E. None of these 15) if you amortize the Fast Eddie Bob deat properly, the interest for the first year would be A. $ 5,000.00 8. $ 2,000.00 0. $ 4,162.50 D. $ 2,375.50 E. 35 none of these Cathy just bought a new truck -» cost $50,000. She will use it as a delivery truck for the next five years after which it wilt be worthtess. Cathy estimates that she will drive the truck approximateiy 100,000 mites. Her actual miieage was as follows: year 1, 30,000; year 2, 25,000; year 3, 20,000; year 4, 15,000; year 5, 15,000. For tRS purposes, the truck is considered 5 year property. Cathy will use the activity based depreciation method. 16) How much will be in accumulated depreication at the end of the fifth year? $ 10,000 $ 15,000 $ 50,000 $ 52,500 Flor-79> 17) Wl'iat was depreciation expense for year one? 18) 19) 20) 21) a. $ 10,000 b. $ 15,000 6. $ 50,000 (1. $ 52,500 J D Go. had a beginning balance (12/31/x5) in Accounts Receivable of $200,000 and a beginning credit baiance in the Allowance for Doubtful Accounts of $4,000. During 20x6 he sold $660,000 of goods on credit and collected $640,000. if J D estimates that 2% of his ending accounts receivable wilt eventually not be collected, his adjusting journal entry for the bad debt expense will include a credit to allowance for doubtful accounts of: A. $ 4,400 E. $ 4,000 C. $ 400 D. $ 5,300 E. None of the above Still J D Go. - The ending balance in the Allowance for Doubtful Accounts at December 31, 20x6 would be: A. $ 4,400 8. $ 4,000 C. $ 400 C). $ 5,300 E. None of the above Still J D Go. ~ It J 0 Co. had written off $5,000 of accounts receivable during 20x6, the debit to bad debt expense would have been: A. $4,400 B. $4,000 C. $ 400 D. $5,300 E. None of the above If a customer’s account is written off by the company and then the customer comes back and pays what they owe, A. you would only debit the accounts receivable for the amount 13. you would both debit and credit accounts receivable for the amount C. you would debit accounts receivable and credit cash for the amount 0. you would debit both bad debt expense and the allowance for doubtful accounts for the amount E. you would debit bad debt expense for the amount Kylie wilt sett you a Pumpkin for $500. The deal is you pay for the Pumkin in five aqua! 22) 23) annual payments that include interest at 5%. You put no money down and the first payment is not due until one year from todaylt You catted the bank and they said that they wouid charge you 10% for a simtlar loan. How much are the payments if you buy the Pumpkin from Kylie? A. $100 + interest at 5% B. $100 + interest at 10% C. $ 13190 D. $ 115.49 E. None ofthe above How much are you really paying for the Pumpkin under Kytie’s deal? A. $ 437.78 B. $ 500.00 C. $ 750.00 D $ 625.00 E.“ None of the above if you amortize the Kylie deal properly, the principal balance after the first payment wit! be: 24) A. $ 366.0? E. $ 415.89 C. $ 45000 D. $ 349.66 E. None of the above You are preparing a bid for a note that has exactly five years to go. It was originally for $100,000 payabte in 10 eguai annual payments which included interest at 8%. Current interest rates are 10%. How much do you offer for the note so that you witl earn 10%? Be carefui! A. $ 100,000.00 B. $ 94,943.27 C. $ 105,326.05 0. $ 58,493.95 E. None of these is close to the correct number 25) There are exactiy five years left on a bond you are considering buying. The face amount is $100,000 and the bond pays interest only for 5 more years. In five years, the company wit! pay the principat with the last interest payment. The company pays interest semi—annuaily at 10% (ie $ 5,000 each six months). Current interest rates are 12%. How much would you pay to buy the bond? A. $ 100,000 B. $ 55,840 0. $ 92,641 D. $ 84,091 E. None ofthe above 26) if you want to have $100,000 in 5 years and the bank pays interest at 8% compounded quarteriy, how much would you need to put in the bank today? A. $ 16,315 B. $ 6?,300 C. 5 68,060 D. 35 20,000 E. Some other number 27) Freeiand Company had wages payabie at the beginning of the year of $10,000. During the year her company paid cash wages of $100,000 and at the end of the year she owed wages of $ 8,000. Her income statement for the year wiii show wage expense of: A) $ 90,000 8) $ 92,000 C) $ 88,000 D) $ 98,000 E) $100,000 28) Your beginning batance in Equipment is $20,000 and the ending baiance is $25,000. During the year, you sold a piece of equipment that originatly cost $4,000. How much equipment did you purchase during the year? a. $ 9,000. b. $ 7,000. o. $ 5,000. d. $ 1,000. e. Some other number 29) Your club will seil MP3 players for $80.00. The players cost you $60 each. You rent a table in Wendy’s to sel1 the MP3s You pay Wendy’s $160 rent. How many players do you need to sell to make $200? A) 3 a) 6 o) 12 p) 18 E) Some other number 30) Susie Company has a balance in the treasury stock account of $5,000 representing 1,000 shares of stock she bought back last year, If she sells 700 shares of the stock for $ 7 per shares, the balance in treasury stock will be: A. $ 5,000 B. $ 2,500 C, $ 1,500 D. None of these For the next three questions, use the foliowing data: Per the company’s books Balance January 1, 2006 $1,200 Deposits Checks written 1/1 800 1201 50 1/7 4,300 1202 70 1/17 8,000 1203 120 1/28 9,400 1204 1,280 1/31 2,000 1205 14,8?0 1208 4,500 Per the bank statement Balance January 1, 2006 1,740 Deposits Checks cleared 1/15 800 1198 90 1/22 4,300 1 199 300 1/26 8,000 1200 150 1/30 0,400 1201 50 1203 120 1204 1,280 Bank Service Charge $10 Balance at 1/31/06 31) The reconcited cash balance at the and of January is A. $ 5,000 8. $ 22,320 C. $ 20,690 D. $ 2,000 E. 3 19.240 32) Deposits in transit for January are A. $ 5,000 B. $ 22,320 C. $ 20,690 D. $ 2,000 E. $ 19,240 33) Outstanding checks for January are A $ 5,000 B. $ 22,320 C. $ 20,690 D. $ 2,000 E. $ 19,240 ...
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