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Practice questions and solutions to possible exam questions...

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Dobson Corporation paid $1,200 for supplies previously purchased on account. The effect of this transaction on Dobson’s accounting equation is to:

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Which of the following is true? a.

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Owners’ Equity – Assets = Liabilities

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Which of the following statements is true? A. The income statement reports all changes in assets, liabilities, and stockholders’ equity of the business during the period.

D.

$(15)

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Use the following selected information for the Perriman Company to calculate the correct credit column total for a trial balance. Assume all given balances are normal (i.e. on the side where increases are recorded):

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Williams Corporation had the following accounting error: recorded payment of a utility bill as a debit to Utility Expense and a credit to Sales Revenue. Which of the following is true concerning

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E.

none of the above

Use the following information to answer Questions 1 and 2: On December 31, 20X1, Troy, Inc. had the following accounts and balances (before adjustment) on its books

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Use A co $50, $1,2 3)

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Given the following data, calculate the cost of ending inventory using the FIFO costing method.

Use the following information to answer questions 1) and 2): On January 1, 2015, Shandley 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. 1)

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What is the amount of depreciation expense for 2017, if Shandley Corporation uses the asset 3,800 hours and uses the double-declining-balance method of depreciation?

1. Ed Company purchased a building by paying $8,000 cash on the purchase date and agreeing to pay $15,000 for each of the next ten years beginning one-year from the purchase date. Ed’s incremental borrowing rate is 10%. The building value reported on the balance sheet is: Answer: the building purchase involves a couple components…an $8,000 payment today, and a 10year annuity payment of $15,000 each year. So, the cost of the building reported on the balance sheet is the present value of these payments. The present value of $8,000 today is simply $8,000 The present value of the annuity is calculated using the PV Annuity factor for n = 10 (i.e., 10 years), and r = 10%....looking in the factor table, you’ll get a factor of 6.14457. So, the present value of the annuity is 15,000 x 6.14457 = 92,169 (rounded). So, the building value is $8,000 + $92,169 = $100,169. As an aside, the journal entry would look like this: Building (+A) 100,169 Cash (-A) 8,000 Notes Payable (+L) 92,169 2. Ed Corporation purchased a building by paying $100,000 cash on the purchase date, agreeing to pay $80,000 every year for the next nine years and $125,000 ten years from the purchase date. The first payment is due one year after the purchase date. Ed’s incremental borrowing rate is 10%. The liability reported on the balance sheet as of the purchase date, after the initial $100,000 payment was made, is: Answer: similar to above, but this purchase has three components …a cash payment today, 9 year annuity, and another lump sum payment 10 years from today. So, the value of the building is the sum of these payments: Present value of $100,000 paid today is $100,000 To compute the present value of the 9-year annuity, you need the annuity factor for n = 9 and r = 10%, which is 5.75902. So, the present value of the annuity is $80,000 x 5.75902 = $460,722 To compute the present value of the lump sum payment in year 10, you need the lump sum factor for n = 10 and r = 10%, which is 0.38554. So, the present value of that lump sum is $125,000 x 0.38554 = $48,193 So, the value of the building is $100,000 + 460,722 + 48,193 = $608,915 However, the question asks for the value of the liability, which doesn’t include today’s payment of $100,000…so, the liability reported is $508,915. The journal entry would look like this: Building (+A) 608,915 Cash (-A) 100,000 Notes Payable (+L) 508,915

BUS 210, Spr 2015, ICP 17 (04/06/15) Name + ID ____________________________________________

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On January 1, a 3-year, $8,000, non-interest-bearing note payable was issued when the

BUS 210, Spr 2015, ICP 18 (04/08/15) Name + ID ____________________________________________

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BUS 210, Spr 2015, ICP 19 (04/13/15) Name + ID ____________________________________________

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If English Company issues their $5,000,000, 8% bonds payable at a premium,

BUS 210, Spr 2015, ICP 14 (03/25/15) Name + ID ____________________________________________

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In a corporation, the two basic sources of stockholders’ equity are: A. par value and no-par value stock al and retained earnings tal and contributed capital ck and common stock

d common stock instead of debt to finance the purchase of nony. Which statement is true? isting shareholders will be diluted. ebt/equity ratio will be higher. nse will be lower because expenses increase. be lower.

r value, common stock was selling for $20 per share. Simon Corp’s unts were as follows: Common stock Additional paid-in capital Retained earnings

$800,000 200,000 400,000

common stock are outstanding?

rmation to determine. acquisition of treasury stock have on shareholders' equity?

ther it cost more or less than the par value of the stock

BUS 210, Spr 2015, ICP 15 (03/30/15) Name + ID ____________________________________________

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A cash dividend becomes a legal liability of the corporation on the:

BUS 210, Spr 2015, ICP 16 (04/01/15) Name + ID ____________________________________________

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Chambers Corporation has total assets of $800,000 as of December 31, 2015 and total liabilities of $400,000. Contributed capital as of December 31, 2014 and December 31, 2015 is $150,000. Chambers Corporation incurred a $50,000 net loss for the year ended December 31, 2015. If Chambers declared and paid $80,000 in dividends in 2015, their retained earnings at the beginning of 2015 would have been.

BUS 210, Spr 2015, ICP 20 (04/15/15) Name + ID ____________________________________________

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BUS 210, Spr 2015, ICP 21 (04/20/15) Name + ID ____________________________________________

BUS 210, Spr 2015, ICP 22 (04/22/15) Name + ID ____________________________________________

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On an indirect method statement of cash flows, a gain on the sale of plant assets is: a. reported in the investing activities section b. reported in the financing activities section c. added to net income

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All of these answers are cash flows from financing activities.

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Use th

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Use the information below to answer the following question:...