2006WinterTest2 - Winter2006 Term Test#2 PART A ( 15 marks...

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Winter2006 Term Test#2 PART A ( 15 marks – 1 mark each) 1. If a company is using a perpetual inventory system, the balance in its inventory account three-quarters of the way through an accounting period would be equal to: a. the inventory on hand at the beginning of the period b. the inventory on hand at the beginning of the period plus goods purchased during the accounting period minus goods sold during the period c. the total of the beginning inventory plus goods purchased during the accounting period d. the amount of goods purchased during the period 2. On January 2, 2004, Kansas Corporation acquired equipment for $120,000. The estimated life of the equipment is 5 years or 20,000 hours. The estimated residual value is $20,000. What is the balance in Accumulated Amortization on December 31, 2005, if Kansas Corporation uses the double-declining-balance method of amortization? a. $23,200 b. $36,000 c. $43,200 d. $76,800 3. If year-end inventory is reduced from cost to a lower replacement cost, which of the following accurately depicts the results? a. Year-end inventory is reduced and cost of goods sold is reduced by the same amount. b. Cost of goods sold is reduced and beginning inventory of the next period is reduced by the same amount. c. The capital account balance is increased and beginning inventory of the next period is reduced by the same amount. d. Cost of goods sold is increased and beginning inventory of the next period is decreased by the same amount. 1. The shareholders’ equity section of the balance sheet for Minturn Mine Corporation is shown below: Share capital: Preferred shares, 10,000 shares authorized, 7,000 shares issued of $3.50 preferred, redemption value $56 per share $350,000 Common shares, 50,000 shares authorized, 18,000 shares issued 180,000 Total share capital $530,000 Retained earnings 300,000 Total share capital $830,000 Assume there are 2 years’ dividends in arrears on the preferred shares, including the current year. The book value per share for preferred shares is:
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a. $57.00 b. $60.50 c. $63.00 d. $66.50 4. Equipment acquired on January 1, 2003, is sold on June 30, 2006, for $4,500. The equipment cost $10,000, had an estimated residual value of $3,000, and an
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2006WinterTest2 - Winter2006 Term Test#2 PART A ( 15 marks...

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