Penn Foster 061691RR THE VALUE OF MONEY
1. Casey Company’s bank statement shows a bank balance of $43,267. The statement shows a bank
service charge of $50. Casey’s book balance shows outstanding checks of $5,288 and deposits in transit of $9,325.
The bank-side reconciliation would show cash of
2. Nick Company has cash of $33,000; net accounts receivable of $41,000; short-term investments of $15,000; and inventory of $25,000. It also has $30,000 in current liabilities and $50,000 in long-term
liabilities. The quick ratio for Nick Company is
3. Tammy Industries inadvertently debited a $5,000 betterment as an ordinary expense. Which of the following will occur as a result of this mistake?
A. Net income will be overstated by $5,000.
B. The asset will be understated by $5,000.
C. Retained earnings will be overstated by $5,000.
D. The asset will be overstated by $5,000.
4. Using a 365-day year, the maturity value of a 180-day note for $2,700 at 9% annual interest is (rounded to the nearest cent)
5. Mackey Company has a five-year mortgage for $100,000. In the first year of the mortgage, Mackey will report this liability as a
A. current liability of $80,000 and a long-term liability of $20,000.
B. long-term liability of $100,000.
C. current liability of $100,000.
D. current liability of $20,000 and a long-term liability of $80,000.
6. Research and development costs (R&D) are generally
A. listed as “long-term assets” on the balance sheet.
B. expensed and become part of the income statement.
C. listed as “other intangibles” on the balance sheet.
D. listed as “current assets” on the balance sheet.
7. Jewell Company has current assets of $56,000; long-term assets of $135,000; current liabilities of $44,000; and long-term liabilities of $90,000. Jewell Company’s debt ratio is
8. A company receives a note payable for $3,500 at 9% for 45 days. How much interest (to the nearest cent) will the customer owe using a 360-day year?
9. Taylor Company has given you the following information from its aging of accounts receivable. The current amount in the allowance for doubtful accounts is a $958 credit.
Current $24,400 2% uncollectible
31–60 days 7,350 8% uncollectible
61–90 days 3,380 15% uncollectible
91 and up 1,220 30% uncollectible
Using this information, what is the amount of the journal entry to record the allowance for doubtful accounts?
Total Doubtful Amount = 24400*2% + 7350*8% + 3380*15% + 1220*30%
So amount for Journal Entry = 1949-958 = 991
10. A $400,000 issue of bonds that sold for $363,000 matures on August 1, 2015. The journal entry to record the payment of the bond on the maturity date is
A. debit cash, $363,000; credit bonds payable, $363,000.
B. debit cash, $400,000; credit bonds payable, $400,000.
C. debit bonds payable, $400,000; credit cash, $400,000.
D. debit bonds payable, $363,000; credit cash, $363,000.
11. A patent has amortization this year of $2,300. The journal entry would be
A. debit Amortization Expense— Patent, $2,300; credit Accumulated Depreciation— Patent, $2,300.
B. debit Amortization Expense—Patent, $2,300; credit Patent, $2,300.
C. debit Accumulated Amortization— Patent, $2,300; credit Patent, $2,300.
D. debit Accumulated Amortization— Patent, $2,300; credit Amortization Expense— Patent, $2,300.
12. Brandon Corporation purchased a vein of mineral ore for $3,250,000. It is estimated that 15,000,000 tons of ore are available to be extracted. The salvage value is determined to be $400,000. The estimation depletion expense for this year’s extraction of 1,760,000 tons of ore (rounded to the nearest dollar) is
13. A company purchased furniture on January 1, 2012. Its cost was $15,600, and it had a residual value of $1,600. Its useful life is determined to be three years. Using double-declining balance depreciation, the depreciation for 2012 to the nearest dollar will be
14. A warranty is an example of a/an _______ liability.
15. Casey Company’s bank statement shows a bank balance of $43,267. The statement shows a bank service charge of $50 and a bank collection of $760 in Casey Company’s behalf. Casey’s book balance should be adjusted by a total of
16. Ryan Corporation made a basket purchase of three items. Item A was appraised at $35,000; item B was appraised at $55,000; and item C was appraised at $60,000. The purchase price was $125,000. The amount at which item B should be recorded is
A. ($55,000/$125,000) × $150,000.
B. ($55,000/$95,000) × $150,000.
C. ($55,000/$150,000) × $125,000.
D. ($55,000/$95,000) × $125,000.
17. Which marketable securities are reported at cost on the balance sheet date?
A. Available-for-sale securities
B. Trading and held-to-maturity securities
C. Trading securities
D. Held-to-maturity securities
18. Amanda Industries had total assets of $600,000; total liabilities of $175,000; and total stockholders’ equity of $425,000. Amanda Industries’ debt ratio is
19. Which of the following would not be a liability according to FASB’s definition of a liability?
A. A note payable with no specified maturity date
B. An obligation that’s estimated in amount
C. An obligation to provide goods or services in the future
D. The signing of a three-year employment contract at a fixed annual salary
20. Ryan Corporation made a basket purchase of three items. Item A was appraised at $35,000; item B was appraised at $55,000; and item C was appraised at $60,000. The purchase price was $125,000. The amount at which item C should be recorded (rounded to the nearest dollar) is