Professional Documents
Culture Documents
N. Lasica
$ 34,000
$ 23,000
$ 320,000
$ 5,000
For the year ended December 31, 2006, May's bad debt expense would be
A. $14,000.
B. $20,000.
C. $23,000.
D. $19,000.
E. $16,000.
Question 2 (in class)
A debit balance in the Allowance for Uncollectible accounts
A. indicates that actual bad debt write-offs have exceeded previous provisions for bad debts.
B. indicates that actual bad debt write-offs have been less than what was estimated.
C. the allowance for uncollectible accounts cannot have a debit balance because it has a normal credit
balance.
D. is the normal balance for that account.
E. cannot occur if the percentage of receivables method of estimating bad debts is used.
Question 3 (in class)
Which of the following is a generally accepted method of determining the amount of
the adjustment to bad debts expense?
A. A percentage of accounts receivable not adjusted for the balance in the allowance
B. An amount derived from aging accounts receivable and not adjusted for the balance in the allowance
C. A percentage of sales not adjusted for the balance in the allowance
D. A percentage of sales adjusted for the balance in the allowance
E. None of the above
Question 4 (in class)
Bad debt losses on accounts receivable:
A. Are reported as extraordinary items if collected a number of years after their write-off.
B. Can be reported in all situations by using either the allowance method or the specific write off
method.
C. Include cash and trade discounts forfeited.
D. Are considered a normal business expense under the matching principle.
E. None of the above.
N. Lasica
$ 2,000,000
$ 2,300,000
$ 1,000,000
$ 30,000
$ 20,000 (Debit)
Question 7a)
Calculate the ending balance in the Allowance Account and the Net Realizable Value of Accounts
Receivable if Kazungu estimates that 4% of sales will be uncollectible (income statement method or
% of sales method).
Question 7b)
If instead, Kazungu used the aging method (balance sheet method) and had the following
schedule of outstanding accounts as at the end of January:
Due within 30 days
Past due 30-90 days
Past due more than 90 days
Amount
$500,000
$150,000
$ 20,000
Percent
1%
5%
50%
Calculate the Bad Debt Expense for January and the N.RV. of Accounts Receivable.
Question 10 (LC)
Under the direct write-off method, the entry to record the estimated bad debts:
A. is not done
B. includes a credit to Allowance for Uncollectible Accounts
C. includes a debit to Allowance for Uncollectible Accounts
D. includes a debit to Bad Debt Expense
N. Lasica
Question 11 (LC)
Under the allowance method for estimating uncollectible accounts, the entry to write off an
account:
A. reduces total assets
B. reduces net income
C. increases net income
D. has no effect on total assets
Question 12 (LC)
When an account is written off using the direct write-off method, total assets will:
A. remain the same
B. increase
C. decrease
D. cannot be determined
Question 13 (LC)
Smart-T Corporation uses the aging-of-accounts-receivable method to estimate uncollectible
receivables. At year end Smart-T estimates that $4,750 of its accounts receivable will be
uncollectible. Prior to adjustment, the Allowance for Uncollectible Accounts has a credit balance of
$200. Bad debt expense to be reported on the income statement is:
A. $4,750
B. $4,550
C. $4,950
D. $200
Chapter 6
Question 14 (Ch 5 in class)
Sebstu made a purchase with the terms 3/10, n/45. What is the annual interest rate if Sebstu does
not take advantage of the discount?
Question 15 (in class)
Which of the following statements pertaining to inventory errors is correct?
A.
B.
C.
D.
Over a two year period, inventory errors have no effect on cumulative earnings
Inventory errors are irreversible and can only be corrected through a Retained Earnings adjustment
Inventory errors do not have any effect on a company's Income Tax Expense during a specific period
Inventory errors have no effect on earnings because only Balance Sheet accounts are affected
N. Lasica
N. Lasica
Statement I
Statement II
Statement III
All the statements I,II, and III, are true
Question 20 (LC)
The following information is available for Nour Corp for 2015.
Date
Transaction
01-Jan
Beginning Balance
07-Jan
Sale
14-Jan
Purchase
05-Mar
Purcahse
06-Apr
Sale
07-Jun
Purchase
14-Sep
Sale
(Totals)
Units
Cost
8,000
Total
$5.50
$44,000.00
2,000
$12.00
$24,000.00
6,000
$14.00
$84,000.00
4,000
3,000
6,000
15.00 $90,000
6,000
22,000 13,000
$242,000.00
Question 20a)
What is the ending inventory for 2015 under FIFO?
Question 20b)
What is the ending inventory for 2015 using the Static Average method (periodic Weighted
Average)?
N. Lasica
Question 21 (LC)
When prices are rising, which method gives a higher Cost of Goods Sold?
A. FIFO periodic
B. FIFO perpetual
C. WAC periodic
D. WAC perpetual
E. Cannot be determined from the information given
Question 22 (LC)
When prices are rising, which method gives a higher Ending Inventory cost?
A. FIFO periodic
B. FIFO perpetual
C. WAC periodic
D. WAC perpetual
E. Both FIFO periodic and FIFO perpetual
Question 23 (LC)
When prices are rising, which method gives a higher Cost of Goods Sold?
WAC periodic
WAC perpetual
Either WAC periodic or WAC perpetual
Both WAC periodic and WAC perpetual
Cannot be determined from the information given
Question 24 (LC)
Tusker Inc., has a fiscal year end on December 31. On May 16, 2015, a flood damaged the entire
inventory. Since Tusker Inc. uses the periodic system, they need to estimate the cost of damaged
inventory. The following information was available:
Beginning Inventory $33,000
Sales $400,000
Purchases $300,000
Historical gross profit percentage 30%
The balance of inventory on the books of Tusker Inc. as of May 16, 2015 is:
Question 25 (LC)
The following information is available for Diamond Plaza Inc.:
Insurance Expense $4,000
Freight out $3,000
Ending inventory $17,000
Beginning inventory $14,000
Freight in $6,000
Sales returns and allowances $15,000
Purchase discounts $4,000
Purchase returns and allowances $10,000
Sales discounts $6,000
Sales $170,000
Cost of goods sold $77,000
Dividend declared $10,000
Interest revenue $12,000
Interest expense $13,000
Income tax expense $11,000
N. Lasica
N. Lasica
N. Lasica
Chapter 7
Question 30 (LC)
Simba Trailers specializes in assembling containers for trucks. They use heavy machinery in an
assembly plant with the following history:
January 1, 2007: Bought heavy duty equipment for $100,000 with a useful life of 10 years and a
salvage value of $10,000
September 1, 2010: Annual inspection this year indicates that the total useful life of the
equipment must be revised to 8 years due to heavy usage and the salvage value reduced to
$3,000
October 1, 2012: Simba Trailers decide to sell this equipment for $40,000 cash
Question 30a) (LC)
If Simba Trailers used the double declining balance of Depreciation, what is the depreciation
rate?
Question 30b) (LC)
What is the book value of the asset for the year ending December 31, 2007 under this
method?
For all remaining parts, assume Simba Trailers uses the Straight Line method of
depreciation
Question 30c) (LC)
What is the depreciation expense and the adjusting entry for the year ending December
31, 2007?
Question 30d) (LC)
What is the depreciation expense for 2010 and the adjusting entry to record it
Question 30e) (LC)
Show the journal entry to record the sale of the asset
Question 31 (LC)
Purchased Land and Building for $500,000 paid half in cash and half through issuance of a note
payable. Separately, the land had a market value of $150,000 and building had a market value of
$450,000.
What is the journal entry to record the purchase?
Question 32a) (LC)
Shamba Inc. purchased Equipment on 1/1/2000 for $80,000 and with a salvage value of
$20,000. The useful life of the asset is 20 years. What is the Book Value of the asset on
1/1/2020 under the double declining amortization method?
Question 32b) (LC)
B. Simba Inc. purchased Equipment on 1/1/2010 with a useful life of 10 years. What should the
cost of the asset be multiplied by to get the Book Value at 31/12/2013 under the double
declining amortization method?
N. Lasica
Question 33 (LC)
Which of the following statements is True:
A. Amortization Expense over the useful life of the asset will not differ amongst the different methods of
depreciation
B. Accumulated Amortization over the useful life of the asset will not differ amongst the different
methods of depreciation
C. Net Income over the useful life of the asset will not differ amongst the different methods of
depreciation
D. Capital expenditures lead to deferred depreciation expense
E. All of the above statements are True
Question 34 (LC)
Which of the following is an accelerated method of depreciation:
A. Straight Line
B. Double-Declining Balance
C. Sum Of Years Digits
D. All of the above are accelerated methods of depreciation
E. Both B and C above are accelerated methods of depreciation
Question 35 (LC)
Which of the following methods results in deferred tax savings for the company:
A. Straight Line
B. Double-Declining Balance
C. Sum Of Years Digits
D. All of the above result in deferred tax savings for the company
E. Both B and C result in deferred tax savings for the company
Question 36 (LC)
When the Useful Life of an asset in use increases, which of the following statements is True:
A. The Amortizable Cost of the asset will remain unchanged
B. The Historical Cost of the asset will remain unchanged
C. The Accumulated amortization over its useful life will decrease
D. All of the above statements are true
E. None of the above
Question 37 (LC)
For tax purposes in Canada, the CRA requires that company use:
A. Double-Declining method of depreciation
B. Straight Line method of depreciation
C. SYD method of depreciation
D. The units-of-activity method of depreciation
E. The CRA allows different methods of depreciation based on the classification and type of asset
Question 38 (LC)
Which of the following statements is True
A. Depreciation is reduction in the value of the asset while impairment is the reduction in the cost of the
asset
B. A gain on disposal of an asset arises when the Accumulated Depreciation of the asset is less than its
selling price
C. Depreciation is the spread of the amortizable cost of the asset over its useful life whereas impairment
reflects a permanent reduction in the fair market value of the asset
D. Depreciation is a special example of the application of the revenue recognition principle in IFRS
E. Both C and D above are correct
N. Lasica
N. Lasica
N. Lasica
N. Lasica
N. Lasica
Payment
$ 50,000
$ 6,165
$ 6,165
$ 6,165
$ 6,165
$ 6,165
$ 6,165
$ 6,165
$ 6,165
$ 6,165
$ 6,165
Interest
Principal
CV
$ 2,000
$ 1,833
$ 1,660
$ 1,480
$ 1,293
$ 1,098
$ 895
$ 684
$ 465
$ 237
$ 4,165
$ 4,331
$ 4,504
$ 4,685
$ 4,872
$ 5,067
$ 5,269
$ 5,480
$ 5,699
$ 5,927
$ 45,835
$ 41,504
$ 37,000
$ 32,315
$ 27,443
$ 22,377
$ 17,107
$ 11,627
$ 5,927
$0
01/10/2014
01/10/2015
01/10/2016
01/10/2017
01/10/2018
01/10/2019
Total Pmt
$100,000
$32,000
$29,600
$27,200
$24,800
$22,400
Loan
$12,000
$9,600
$7,200
$4,800
$2,400
$80,000.0
$60,000.0
$40,000.0
$20,000.0
$0.0
$20,000
$20,000
$20,000
$20,000
$20,000
Interest Payment
Interest Expense
Bond Amortization
B
$ 180,415.49
$ 5,207.20
$ 180,857.39
Book Value
$ 4,505,180.00
$ 4,510,387.20
$ 4,515,802.69
$ 4,521,434.80
D
$ 4,533,383
N. Lasica
Question 70a)
What is the value of A:
A. $175,000
B. $180,207.20
C. $200,000
D. $180,415.50
Question 70b)
What is the value of B:
A. $175,000
B. $180,207.20
C. $200,000
D. $157,681.30
Question 70c)
What is the value of C:
A. $478,565.20
B. $5,857.39
C. $5,415.49
D. $5,632.11
Question 70d)
What is the value of D:
A. $4,527,292.19
B. $478,565.20
C. $4,714,718
D. $5,200,000
Question 70e)
Alpha Inc. redeemed the bonds on August 2, 2015 at 104. The amount of cash that Alpha Inc. paid
to redeem the bonds is (rounded to nearest dollar):
A. $4,714,718
B. $104
C. $4,685,387
D. $5,200,000
Question 70f)
6. Alpha Inc. redeemed the bonds on August 2, 2015 at 104. The effect of redemption is
(rounded to nearest dollar):
A. $666,616 gain
B. $666,616 loss
C. $6,090.81 gain
D. $6,090.81 loss
Question 70g)
Alpha Inc. redeemed the bonds on August 2, 2015 at 104. Which of the following is correct?
A. Bonds Payable will be debited $5,000,000
B. Cash will be credited $5,200,000
C. Discount on bonds payable will be credited $466,617
D. All of the above statements are true
N. Lasica
Mar 1
Reacquired 10,000 common shares that were sold on Jan 1 and paid $90,000
June 1
Reacquired a further 10,000 common shares that were sold on Jan 1 and paid $130,000
Aug 1
The board of directors declares a 10% common stock dividend. The current selling price of
the common shares is $20 per share.
Sep 1
Nov 1
The board of directors declares a cash dividend of $1 per share payable to shareholders of
record on that date, payable on December 20
Question 75 (LC)
Which of the following statements is false:
A. Sale of common stock in the secondary market does not affect the books of the issuing corporation
B. Preferred Shares owners have a right to vote over major corporate issues while Common Shares
owners do not
C. A stock split does not have any effect on retained earnings or shareholders equity
D. A cash dividend becomes a binding legal obligation on the declaration date
N. Lasica
Question 76 (LC)
Which of the following statements is false regarding cash dividends:
A. Declaration of cash dividends increases total liabilities
B. Payment of cash dividends decreases total liabilities and total assets
C. The cumulative effect of the declaration and payment of a cash dividend will decrease total assets and
shareholders equity on a companys financial statements
D. The cumulative effect of the declaration and payment of a cash dividend will decrease total liabilities
and shareholders equity on a companys financial statements
Chapter 11
Question 77 (Quiz #8 Q2)
On January 1, 2013, Bogie Corporation had 40,000 common shares outstanding issued at $16 each
during 2012. On June 1, 2013, Bogie Corporation issued 5,000 shares of its common shares at $15
per share. On September 30, 2013, Bogie Corporation repurchased 3,000 shares of its common
shares for $17 per share. On November 30, 2013, Bogie Corporation reissued 2,000 shares of
repurchased shares at $18 per share. The balance in Share Capital on December 31, 2013, as shown
on the statement of shareholders equity, is:
A. $640,000
B. $703,333
C. $756,000
D. $700,000
Question 78 (Quiz #8 Q3)
Earnings per share (EPS) is calculated by:
A. dividing the number of common shares outstanding at the end of the year by net income
B. dividing the average number of common shares outstanding throughout the year
C. dividing net income by the average number of common shares outstanding at the end of the year
D. dividing net income by the number of common shares outstanding at the end of the year
Question 79 (Quiz #8 Q4)
When a company sells a segment of its business, the gain or loss on the disposal of the segment is
shown as:
A. part of the discontinued operations section on the income statement
B. an adjustment to the beginning balance of retained earnings
C. an extraordinary item appearing on the income statement
D. other gains or losses on the income statement
Question 80 (Quiz #8 Q6)
C-Series Corporations net income for the year ending on December 31, 2013, was $365,000. At the
end of 2013, the corporation had outstanding 4,000 shares of $10 non-convertible preferred shares
and 10,000 common shares issued at $20. No shares were issued or retired during 2013. The
numerator to be used in the earnings-per-share calculation is:
A. $325,000
B. $750,000
C. $365,000
D. $350,000
N. Lasica