ACCT504 Week 4 Midterm

ACCT504 Week 4 Midterm

Order 100% plagiarism free essay on ACCT504 Week 4 Midterm

ACCT504 Week 4 Midterm

Question 1. Question :

(TCO A) Assets include

prepaid insurance and prepaid rent.

dividends paid to shareholders.

loans obtained by the company.

stockholders’ investment in the business.

Question 2. Question :

(TCO B) For 2014, CAP Corporation reported net income of $96,000; net sales $1,440,000; and weighted average shares outstanding of 9,600. There were no preferred dividends. What was the 2014 earnings per share?

$100.00

$150.00

$10.00

$15.00

Question 3. Question :

(TCO C) Issuing debt is an example of a(n)

operating activity.

investing activity.

financing activity.

noncash investing and financing activity.

Question 4. Question :

(TCO D) What is the correct order to create the financial statements?

Balance Sheet, Income Statement, Statement of Retained Earnings, and Statement of Cash flows.

Statement of Cash flows, Balance Sheet, Statement of Retained Earnings, and Income Statement.

Income Statement, Statement of Retained Earnings, Balance Sheet, and Statement of Cash flows.

Income Statement, Balance Sheet, Statement of Retained Earnings, and Statement of Cash flows.

Question 5. Question :

(TCO E) Which of the following describes the normal balance and classification of the Accumulated Depreciation account?

ACCT504 Week 4 Midterm

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Debit, asset

Credit, liability

Credit, asset

Debit, expense

Question 6. Question :

(TCO F) Which of the following items is handled as a deferral?

Accrued Expenses

Accrued Revenues

Prepaid Expenses

Depreciation

Question 7. Question :

(TCO A) XYZ Company recorded the following events involving a recent merchandise purchase.

– Received goods for $50,000, terms 2/10, n/30.

– Returned $1,000 of the shipment for credit due to damaged goods.

– Paid $1,500 for freight-in.

– Paid the invoice within the discount period.

As a result of these events, the company’s merchandise inventory

increased by $50,500.

increased by 49,500.

increased by $49,470.

increased by $49,520.

Question 8. Question :

(TCO B) In a period of declining prices, which of the following inventory methods generally results in the highest gross profit figure?

Average cost method

LIFO

FIFO

Cannot be determined based on the information given

Question 9. Question :

(TCO A) On a classified balance sheet, which is the least liquid asset listed below?

Inventories

Cash and cash equivalents

Accounts receivable, net

Short-term investments

Question 10. Question :

(TCO E) Which of the following is an internal control procedure?

Control environment

Comparisons and compliance monitoring

Promote operational efficiency

Encourage employees to follow company policies

Question 11. Question :

ACCT504 Week 4 Midterm

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(TCOs A and E) Your friend, Lisa, has hired you to evaluate the following internal control procedures.

Explain to your friend whether each of the numbered items below is an internal control strength or weakness. You must also state which internal control procedure relates to each of the internal controls

For the weaknesses, you also need to state a recommendation for improvement.

(1) Paychecks are left on the desk for pick-up.

(2) Supervisors count cash receipts daily.

(3) Invoices are pre-numbered.

(4) Bonding of the cashiers is required.

(5) The accountant purchases and pays for supplies.

(1) Weakness; limited access; recommend someone personally hand out the checks or require direct deposit.

(2) Strength; comparisons and compliance monitoring.

(3) Strength; adequate records.

(4) Strength; smart hiring practices.

(5) Weakness, separation of duties; someone other than the accountant should purchase the supplies and the accountant can pay for them.

Question 12. Question :

(TCOs E and F) Please prepare the following journal entries. Indicate which account should be debited and which account should be credited, along with the dollar amount of the debit and credit.

(1) Investors invest $70,000 in exchange for 1,000 shares of common stock.

(2) Company paid a utility bill for $2,000.

(3) The unadjusted balance of the Supplies account is $5,200 and the total cost of supplies on hand is $4,000.

(4) Company received $5,000 for services performed.

(5) The company needs to record $15,000 for depreciation.

Question 13. Question :

(TCOs B and D) The following items are taken from the financial statements of Butler Company for 2012:
Accounts Receivable $20,000
Cost of Goods Sold 95,000
Utilities Expense 3,500
Accounts Payable 7,000
Common Stock 100,000
Rent Expense 5,500
Advertising Expense 9,000
Dividends 10,000
Insurance Expense 2,000
Note Payable (due 2014) 50,000
Depreciation Expense 10,000
Prepaid Insurance 18,000
Accumulated Depreciation 30,000
Retained Earnings (beginning) 33,000
Salaries Expense 40,000
Salaries Payable 4,500
Net sales 170,000
Supplies 3,000
Supplies Expense 2,500

(b) Calculate the balance of Retained Earnings that would appear on a Balance Sheet at December 31, 2012.
Retained Earnings, January 1 $33,000
Add: Net Income 2,500
35,500
Less: Dividends 10,000
Retained Earnings, December 31 $25,500

(c) Calculate the gross profit percentage.
Net sales $170,000
Less Cost of Goods Sold 95,000
Gross profit 75,000

Gross profit percentage $75,000 divided by $170,000 equals 44.1%.

Question 14. Question :

(TCO D) The following items are taken from the financial statements of BGS Company for 2012:
Cash $500,000
Accounts Receivable 200,000
Supplies 70,000
Accounts Payable 147,300
Unearned Service Revenue 18,000
Equipment, net of accumulated depreciation 212,000
Common Stock 500,000
Retained Earnings 12/31/2011 78,300
Long-term debt 142,400
Service revenue 240,000
Cost of Goods Sold 72,000
Rent expense 36,000
Supplies expense 12,000
Insurance expense 24,000

Instructions

(a) Please create a classified balance sheet in good form for the year ended 2012. (25 points)

(b) Please calculate the current ratio. (5 points)

(a) Please create a classified balance sheet in good form for the year ended 2012.

BGS Company
Balance Sheet
Year Ended December 31, 2012

Current assets:
Cash $500,000
Accounts Receivables 200,000
Supplies 70,000
Total current assets 770,000
Equipment, net of accumulated depreciation 212,000
Total assets $982,000

Current liabilities:
Accounts payable $147,300
Unearned service revenue 18,000
Total current liabilities 165,300
Long-term debt 142,400
Total liabilities 307,700

Shareholders’ equity:
Common Stock 500,000
Retained Earnings 174,300
Total shareholders’ equity 674,300
Total liabilities and shareholders’ equity $982,000

(b) Please calculate the current ratio.
Total current assets $770,000
Total current liabilities $165,300
Current ratio equals 4.66

ACCT504 Week 4 Midterm

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By admin in Blog on May 30, 2018