4) Which of the following changes describes the declaration of $1,000 in cash dividends payable next month? eaegDm Assets and owners’ equity increase by $1,000 ‘Assets and owners’ equity decrease by $1,000 Liabilities increase and owners’ equity increases by $1,000 Liabilities increase and owners’ equity decrease by $ 1,000 No changes in total assets, liabilities, or owners’ equity 2) An example of a cash equivalent is eapse Accounts receivable Certificates of deposit Compensating balance Notes receivable Stock certificates 3) On July 10, Ali Company made a $10,000 credit sale under the terms 3/10, n/30. If Ali receives full payment of the account on July 19, the amount of cash received is a b. c. d. $ 9,700. $ 9,800. $10,000, $10,300 Sam's Town had net income for 20x4 before tax and depreciation of $1,000,000. The corporate tax rate is 30%. Sam's has $ 800,000 in fixed assets. Assume that the fixed assets are depreciated using the straight line method for reporting purposes over 8 years with no salvage value. All of the property is 5 year property for tax (MACRS) purposes. The five year percentages are 20.00, 32.00, 19.20, 11.62, 11.52, 5.76. The ‘equipment was all purchased al the beginning of 20x3. Assume this is the company's second year of operation and has no fixed assets other than the $800,000 which the company purchased on the day it opened. 4) How much is the debit to tax expense for 20x47 moom> AORon 240,000 300,000 46,800 270,000 ‘Some other number5) Still Sam's Company— How much is the credit to deferred taxes in the 20x4 journal entry to record taxes? A $ 240,000 B. $ 300,000 Cc $ 46,800 D. $ 270,000 E. $ Some other number 6) Current portion of Long-term Debt is: A The total payment on a loan due in the next 12 months B. The principal payment on a loan due in the next 12 months C. The balloon portion of long-term debt D. An example of a significant noncash transaction E. None of these 's Baubles, Inc. sold @ piece of equipment on January 1, 2003. The company originally purchased the equipment 20 years ago for $200,000. Accumulated depreciation on the date of sale was $120,000. The sale resulted in a gain of $5,000 7) The equipment was sold for: A $205,000 B. $ 85,000 C. $125,000 BD. $ 80,000 E. None of these. 8) Still Bella’s- On the Income Statement, Bella would. A. Add $5,000 to revenue B. Add $5,000 to “other revenue” C. Add $85,000 revenue D. Add $85,000 to “other revenue” 9) On the cash flow statement, Bella would A. Subtract the gain from the income in the “Cash Flow- operations” B. Add the gain to the income in the “Cash Flow- Investing” C. Subtract the gain in the “Cash Flow-investing” D. Add $80,000 to the “Cash Flow- Financing” E. Subtract $80,000 from the “Cash Flow- Financing”10) Bender Corporation is buying alll the assets and assuming all the liabilities of Miller Company. The following information is available for A Miller Company on the day of the purchase: Accounts payable 50,000 Accounts Rec 300,000 Bond Payable 100,000 Inventory 200,000 Common Stock 200,000 Land 400,000 Retained Earnings 550,000 ‘The inventory is worth $175,000 and the land is worth $500,000. Additionally, the Bond Payable debt is payable interest only at 10% per year for the next 3 years and then the principal is due. Current interest rates for similar are debt is 6%. Bender will pay $1,000,000 for Miller Company. How much of the purchase price will Bender debit to goodwill? A. $100,000 B. $914,310 Cc. $175,000 D. $185,690 E. Some other number which is not here 14) A 10 year, $1,000,000 zero coupon bond is priced to yield 10%. The amount the issuing company will receive when it is issued is: ‘A. § 620,900 B. $1,000,000 C. $ 998,980 D. $ 385,500 E. § 613,900 12) If the above zero bond was sold on Jan 1 of 2002, the interest expense for 2003 (the second year) would be A $38,550.00 B. $42,405.00 C. $50,000.00 D. $54,448.00 E. Some other number13) Fast Eddie will sell you a Thingie for $50,000. The deal is you pay for the Thingie in four equal annual payments that include interest at 2%. You called the bank and they said that they would charge you 10% for a similar loan. How much are the payments if you take Fast Eddie's deal? A $13,131.29 B. $ 12,500.00 C. $ 14,500.00 D. $ 25,000.00 E. None of these 14) How much, to the nearest dollar, are you really paying for the Thingie under Fast Eddie's deal? A $30,375 B. $58,000 Cc. $50,000 D. $41,625 E. None of these 45) If you amortize the Fast Eddie Bob deal properly, the interest for the first year would be A$ 5,000.00 B. $ 2,000.00 C. $ 4,162.50 D. $ 2,375.50 E. $ none of these Cathy just bought a new truck — cost $50,000. She will use it as a delivery truck for the next five years after which it will be worthless, Cathy estimates that she will drive the truck approximately 100,000 miles. Her actual mileage was as follows: year 1, 30,000; year 2, 25,000; year 3, 20,000, year 4, 15,000; year 5, 15,000. For IRS purposes, the truck is considered 5 year property. Cathy will use the activity based depreciation method. 16) How much will be in accumulated depreication at the end of the fifth year? a $ 10,000 b. $ 15,000 c. $ 50,000 d $ 52,50017) What was depreciation expense for year one? a. $ 10,000 b. $18,000 c. — $ 50,000 d— $ 52,500 18) J D Co. had a beginning balance (12/31/x5) in Accounts Receivable of $200,000 and a beginning credit balance in the Allowance for Doubtful Accounts of $4,000 During 20x6 he sold $660,000 of goods on credit and collected $640,000. 1 JD estimates that 2% of his ending accounts receivable will eventually not be collected, his adjusting journal entry for the bad debt expense will include a credit to allowance for doubtful accounts of: A $4,400 B. $4,000 Cc. $ 400 D. $5,300 E. None of the above 19) Still J D Co. - The ending balance in the Allowance for Doubtful Accounts at December 31, 20x6 would be: $ 4,400 $ 4,000 $ 400 $ 5,300 None of the above moom> 20) Still JD Co. - J D Co. had written off $5,000 of accounts receivable during 20x6, the debit to bad debt expense would have been: A $4,400 B. $4,000 Cc. $ 400 D. $5,300 E. None of the above 21) Ifa customer's account is written off by the company and then the customer comes back and pays what they owe, ‘A. you would only debit the accounts receivable for the amount B. you would both debit and credit accounts receivable for the amount. . you would debit accounts receivable and credit cash for the amount D. you would debit both bad debt expense and the allowance for doubtful accounts for the amount E, you would debit bad debt expense for the amountKylie will sell you a Pumpkin for $500. The deal is you pay for the Pumkin in five equal 22) 23) annual payments that include interest at 5%. You put no money down and the first payment is not due until one year from today!! You called the bank and they said that they would charge you 10% for a similar loan How much are the payments if you buy the Pumpkin from Kylie? A. $ 100 + interest at 5% B. $ 100 + interest at 10% C. $ 131.90 D. $ 115.49 E. None of the above How much are you really paying for the Pumpkin under Kylie's deal? A $437.78 B. $500.00 C. $760.00 D. $625.00 E. None of the above If you amortize the Kylie deal properly, the principal balance after the first payment will be 24) A $366.07 B. $415.89 C. $450.00 D. $349.66 E. None of the above You are preparing a bid for a note that has exactly five years to go. It was originally for $100,000 payable in 10 equal annual payments which included interest at 8%. Current interest rates are 10%. How much do you offer for the note so that you will eam 10%? Be careful! A. $100,000.00 B. $ 94,943.27 C. $ 105,326.05 D. $ 56,493.95 E. None of these is close to the correct number25) There are exactly five years left on a bond you are considering buying. The face amount is $100,000 and the bond pays interest only for 5 more years. In five years, the company will pay the principal with the last interest payment. The company pays interest semi-annually at 10% (ie $ 5,000 each six months). Current interest rates are 12%. How much would you pay to buy the bond? A. $ 100,000 B.$ 55,840 C.$ 92,641 D. $ 84,091 E. None of the above 26) If you want to have $100,000 in 5 years and the bank pays interest at 8% compounded quarterly, how much would you need to put in the bank today? $ 16,315 $ 67,300 $ 68,060 $ 20,000 E. Some other number A B. c. D. 27) Freeland Company had wages payable at the beginning of the year of $40,000. During the year her company paid cash wages of $100,000 and at the end of the year she owed wages of $ 8,000. Her income statement for the year will show wage expense of ‘A) $ 90,000 B) $ 92,000 C) $ 88,000 D) $ 98,000 E) $100,000 28) Your beginning balance in Equipment is $20,000 and the ending balance is $25,000. During the year, you sold a piece of equipment that originally cost $4,000. How much equipment did you purchase during the year? $9,000. $7,000. $ 5,000. $ 1,000. Some other number eacge31) The reconciled cash balance at the end of January is 29) You..clgt6y00Gell MP3 players for $80.00. The players cost you $60 each. You Bntg 2ab82I Wendy's to sell the MP3s. You pay Wendy's $160 rent. How 'Gang p~eBEe do you need to sell to make $200? D. $2,000 &) $ 18240 B) 6 32) Soros in transit for January are 18 8) § Slogoe other number B. $22,320 30) Suge G>2mE99 has a balance in the treasury stock account of $5,000 representing 1,000 sparegs2,090ck she bought back last year. If she sells 700 shares of the stock for $ 7 pertshegeta M0 balance in treasury stock will be: A. $5,000 B. $2,500 33) — Outsfafdifg checks for January are D. None of these A. $5,000 B. $22,320 For thecnestabyeg0questions, use the following data: D. $2,000 Perghe $crgsaagy's books Balance January 1, 2006 $1,200 Deposits Checks written Ww 800 1201 50 UT 4,300 1202 70 117 8,000 1203 120 1/28 9,400 1204 1,280 1131 2,000 1205 14,670 1206 4,500 Per the bank statement Balance January 1, 2006 1,740 Deposits Checks cleared 115 800 1198 90 1122 4,300 1199 300 1/26 8,000 1200 160 1/30 9,400 1201 50 1203 120 1204 1,280 Bank Service Charge $10 Balance at 1/31/06 22328 aA, ato