ACC 291 Final Exam Solutions
ACC
291 Final Exam Solutions
1) Hahn
Company uses the percentage of sales method for recording bad debts expense.
For the year, cash sales are $300,000 and credit sales are $1,200,000.
Management estimates that 1% is the sales percentage to use. What adjusting
entry will Hahn Company make to record the bad debts expense?
2) Using
the percentage of receivables method for recording bad debts expense, estimated
uncollectible accounts are $15,000. If the balance of the Allowance for
Doubtful Accounts is $3,000 credit before adjustment, what is the amount of bad
debts expense for that period?
3)
Intangible assets
4)
Intangible assets are the rights and privileges that result from ownership of
long-lived assets that
5) The
book value of an asset is equal to the
6) Gains
on an exchange of plant assets that has commercial substance are
7)
Ordinary repairs are expenditures to maintain the operating efficiency of a
plant asset and are referred to as
8) Costs
incurred to increase the operating efficiency or useful life of a plant asset
are referred to as
9) When
an interest-bearing note matures, the balance in the Notes Payable account is
10) The
interest charged on a $200,000 note payable, at a rate of 6%, on a 2-month note
would be
11) If a
corporation issued $3,000,000 in bonds which pay 10% annual interest, what is
the annual net cash cost of this borrowing if the income tax rate is 30%?
12)
Hilton Company issued a four-year interest-bearing note payable for $300,000 on
January 1, 2011. Each January the company is required to pay $75,000 on the
note. How will this note be reported on the December 31, 2012 balance sheet?
13) A
corporation issued $600,000, 10%, 5-year bonds on January 1, 2011 for 648,666,
which reflects an effective-interest rate of 8%. Interest is paid semiannually
on January 1 and July 1. If the corporation uses the effective-interest method
of amortization of bond premium, the amount of bond interest expense to be
recognized on July 1, 2011, is
14) When
the effective-interest method of bond discount amortization is used
15) If a
corporation has only one class of stock, it is referred to as
16)
Capital stock to which the charter has assigned a value per share is called
17) ABC,
Inc. has 1,000 shares of 5%, $100 par value, cumulative preferred stock and
50,000 shares of $1 par value common stock outstanding at December 31, 2011.
What is the annual dividend on the preferred stock?
18)
Manner, Inc. has 5,000 shares of 5%, $100 par value, noncumulative preferred
stock and 20,000 shares of $1 par value common stock outstanding at December
31, 2011. There were no dividends declared in 2010. The board of directors
declares and pays a $45,000 dividend in 2011. What is the amount of dividends
received by the common stockholders in 2011?
19) When
the selling price of treasury stock is greater than its cost, the company
credits the difference to
20) The
purchase of treasury stock
21)
Marsh Company has other operating expenses of $240,000. There has been an
increase in prepaid expenses of $16,000 during the year, and accrued
liabilities are $24,000 lower than in the prior period. Using the direct method
of reporting cash flows from operating activities, what were Marsh’s cash
payments for operating expenses?
22)
Where would the event purchased land for cash appear, if at all, on the
indirect statement of cash flows?
23) In
performing a vertical analysis, the base for cost of goods sold is:
24)
Blanco, Inc. has the following income statement (in millions):
BLANCO, INC.
Income Statement
For the Year Ended December 31, 2011
Net Sales ………………………… $200
Cost of Goods Sold ………………………… 120
Gross Profit ………………………… 80
Operating Expenses ………………………… 44
Net Income ………………………… $ 36
Using vertical analysis, what percentage is assigned to Net Income?
BLANCO, INC.
Income Statement
For the Year Ended December 31, 2011
Net Sales ………………………… $200
Cost of Goods Sold ………………………… 120
Gross Profit ………………………… 80
Operating Expenses ………………………… 44
Net Income ………………………… $ 36
Using vertical analysis, what percentage is assigned to Net Income?
25)
Dawson Company issued 500 shares of no-par common stock for $4,500. Which of
the following journal entries would be made if the stock has a stated value of
$2 per share?
26)
Andrews, Inc. paid $45,000 to buy back 9,000 shares of its $1 par value common
stock. This stock was sold later at a selling price of $6 per share. The entry
to record the sale includes a:
27)
Which of the following is a fundamental factor in having an effective, ethical
corporate culture?
28) Two
individuals at a retail store work the same cash register. You evaluate this
situation as:
29) The
Sarbanes-Oxley Act imposed which new penalty for executives?
30) The
Sarbanes-Oxley Act requires that all publicly traded companies maintain a
system of internal controls. Internal controls can be defined as a plan to?
