Mune Company recorded journal entries for the payment of $50,000 of dividends, the
$32,000 increase in accounts receivable for services rendered, and the purchase of
equipment for $21,000. What net effect do these entries have Owners Equity?
Except for the respective Contra Accounts, liability and stockholders equity accounts
are increased on the credit side and decreased on the debit side.
The book value of any depreciable asset is the difference between its cost and its
The two primary qualities that make accounting information useful for decision
a. Comparability and consistency
b. Materiality and timeliness
c. Relevance and reliability
d. Reliability and comparability
Financial information exhib
Which of the following is not an objective of financial reporting?
a. To provide information about economic resources, the claims to those resources,
and the changes in them.
b. To provide information that is helpful to investors and creditors and othe
Relevance and reliability are the two primary qualities that make accounting
information useful for decision making.
Revenues, gains and distributions to owners all increase equity.
Distribution to owners decrease equity
The role of the Securities and Exchange Commission in the formulation of accounting
principles can be best described as
a. Consistently primary.
b. Consistently secondary.
c. Sometimes primary and sometimes secondary.
Accrual accounting is used because
a. Cash flows are considered less important
b. It provides a better indication of ability to generate cash flows than the cash basis.
c. It recognizes revenues when cash is received and expenses when cash is paid.
Ethical issues in financial accounting are governed by the AICPA.
Users of financial reports include all of the following except:
b. Government agencies
d. All of these are users
Financial Accounting is the process of identifying, measuring, analyzing, and
communicating financial information needed by management to plan, evaluate, and
control an organizations operations.
F : Managerial Accounting is the process of identify
E11-17 (Impairment) Assume the same information as E11-16, except that Pujols intends to dispose of the
equipment in the coming year. It is expected that the cost of disposal will be $20,000.
Prepare the journal entry (if any) to record t
E11-11 (DepreciationChange in Estimate) Machinery purchased for $52,000 by Carver Co. in 2008 was
originally estimated to have a life of 8 years with a salvage value of $4,000 at the end of that time. Depreciation
has been entered for 5 years on this basi
E11-9 (Composite Depreciation) Presented below is information related to Morrow Manufacturing
Estimated Salvage Value
Estimated Life (in years)
E11-8 (Depreciation ComputationReplacement, Nonmonetary Exchange) Goldman
Corporation bought a machine on June 1, 2010, for $31,800, f.o.b. the place of manufacture. Freight
to the point where it was set up was $200, and $500 was expended to install it. T
E11-4 (Depreciation ComputationsFive Methods) Wenner Furnace Corp. purchased machinery for
$279,000 on May 1, 2012. It is estimated that it will have a useful life of 10 years, salvage value of
$15,000, production of 240,000 units, and working hours of 25
E10-14 (Purchase of Equipment with Zero-Interest-Bearing Debt) Sterling Inc. has decided to
purchase equipment from Central Michigan Industries on January 2, 2012, to expand its production
capacity to meet customers demand for its product. Sterling issues
E10-7 (Capitalization of Interest) McPherson Furniture Company started construction of a combination office and
warehouse building for its own use at an estimated cost of $5,000,000 on January 1, 2012. McPherson expected to
complete the building by Decemb
E10-4 (Purchase and Self-Constructed Cost of Assets) Dane Co. both purchases and constructs various equipment it
uses in its operations. The following items for two different types of equipment were recorded in random order during the
calendar year 2013.
E10-3 (Acquisition Costs of Trucks) Shabbona Corporation operates a retail computer store. To improve delivery
services to customers, the company purchases four new trucks on April 1, 2012. The terms of acquisition for each truck
are described below.
E10-1(Acquisition Costs of Realty) The expenditures and receipts below are related to land, land improvements, and
buildings acquired for use in a business enterprise. The receipts are enclosed in parentheses.
(a) Money borrowed to pay building contractor
P8-4 (Compute FIFO, LIFO, and Average Cost) Hull Companys record of transactions
concerning part X for the month of April was as follows.
April 1 (balance on hand)
100 @ $5.00
400 @ 5.10
300 @ 5.30
E8-16 (Compute FIFO, LIFO, Average CostPeriodic) Presented below is information
related to radios for the Couples Company for the month of July.
E8-14 (FIFO, LIFO, and Average Cost Determination) LoBianco Companys record of
transactions for the month of April was as follows.
April 1 (balance on hand)
@ $ 6.00
E8-3 (Inventoriable Costs) Assume that in an annual audit of Webber Inc. at December 31,
2012, you find the following transactions near the closing date.
1. A special machine, fabricated to order for a customer, was finished and specifically segregated in
P7-4 (Bad-Debt Reporting) From inception of operations to December 31, 2012, Fortner Corporation
provided for uncollectible accounts receivable under the allowance method: provisions were made
monthly at 2% of credit sales; bad debts written off were char
E7-12 (Journalizing Various Receivable Transactions) Presented below is information related
to Sanford Corp.
July 1 Sanford Corp. sold to Legler Co. merchandise having a sales price of $10,000 with
terms 2/10, net/60.
Sanford records its sales and receiva
E7-7 (Recording Bad Debts) Sandel Company reports the following financial information
Allowance for Doubtful Accounts
Sales Revenue (all on credit)
Sales Returns and Allowances
E7-5 (Record Sales Gross and Net) On June 3, Bolton Company sold to Arquette Company
merchandise having a sale price of $2,000 with terms of 2/10, n/60, f.o.b. shipping point. An invoice
totaling $90, terms n/30, was received by Arquette on June 8 from Jo
E7-2 (Determine Cash Balance) Presented below are a number of independent situations.
For each individual situation, determine the amount that should be reported as cash. If the item(s) is
not reported as cash, explain the rationale.
E6-4 (Computation of Future Values and Present Values) Using the appropriate interest
table, answer the following questions. (Each case is independent of the others).
(a) What is the future value of 20 periodic payments of $5,000 each made at the beginnin
P5-2 (Balance Sheet Preparation) Presented below are a number of balance sheet items for
Montoya, Inc., for the current year, 2012.
Payroll taxes payable
Discount on bonds payable
Notes payable (to banks)