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52.Which of the following statements is incorrect? A. Ordinary repairs and maintenance decrease net income. B. Capital expenditures decrease assets. C. Ordinary repairs and maintenance are recurring in nature. D. Additions and improvements to a depreciable asset occur infrequently. 53.Which of the following statements is incorrect? A. Replacement of a truck's tires would be.
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Essay Questions 112.McMillan Company uses the periodic inventory system. It has compiled the following information in order to prepare the financial statements at December 31, 2016: Gross sales during 2016$2,000,000 Sales returns and allowances during 201650,000 Beginning inventory, January 1, 2016100,000 Ending inventory, December 31, 2016120,000 Purchases during 2016750,000 Required: Calculate each of the following: A. Cost.
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117.Covey Company purchased a machine on January 1, 2016, by paying cash of $250,000. The machine has an estimated useful life of five years, is expected to produce 500,000 units, and has an estimated residual value of $25,000.Required: A. Calculate depreciation expense to the nearest whole dollar for each year.
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Essay Questions 113.Halbur Company reported total assets of $150,000, current assets of $60,000, total stockholders' equity of $60,000, and noncurrent liabilities of $65,000.Required: (show computations): 1. Determine the current liabilities. 2. Compute working capital.   114.Moore Company has the following partial list of account balances at year-end December 31, 2016: Accounts payable$1,800 Accounts receivable 4,600 Cost.
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Multiple Choice Questions 32.When a company prepares a bond indenture, certain provisions of the bonds are included. Which of the following is not specified in the indenture? A. Date of each interest payment. B. The coupon interest rate. C. The maturity date. D. The market rate of interest. 33.Which of the following is the title.
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124.Information Company purchased an asset with a cash equivalent value of $70,000 on January 1, 2016. Arrangements were made with the supplier to pay $10,000 cash on January 1, 2016, and the balance was to be paid over a three-year period, with equal annual payments of $24,553 to be made.
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125.The records of Atlantis Company reflected the following for the month of February: DateTransactionNumber of UnitsUnit Cost 2/1Beginning inventory600$3 2/2Purchase No.1500$4 2/5Sale No. 1700 2/12Purchase No. 2600$5 2/15Sale No. 2700 2/23Purchase No. 3900$6 2/28Ending inventory? Required: Determine the amount of ending inventory and cost of goods sold using the following periodic system inventory costing methods:  MethodInventoryCost of Goods Sold A.LIFO$$ B.FIFO$$   126.Rio Company.
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11.A liability that is estimated because the final settlement amount is unknown cannot be reported on the balance sheet. 12.Purchasing inventory on account increases the accounts payable turnover ratio. 13.The choice of inventory method has an impact on the accounts payable turnover ratio. 14.The accounts payable turnover ratio is calculated.
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Essay Questions 109.The following information is available for Coca-Cola and PepsiCo:  Coca-ColaPepsiCo Net fixed assets (beginning of year)$4,168$5,266 Net fixed assets (end of year)4,4355,438 Net sales for the year19,88920,438 Net income for the year2,1772,183 Required: Compute the fixed asset turnover ratio for both Coca Cola and PepsiCo. Round your answers to two decimal places.    110.The following information.
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True / False Questions 1.Tangible long-lived productive assets differ from intangible long-lived productive assets in that tangible assets have physical substance whereas intangible assets have no physical substance.  2.Patents, trademarks, and franchises are examples of tangible assets. 3.The fixed asset turnover ratio measures the amount of operating income generated per dollar.
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127.Commander Appliance Store prepares annual financial statements and at December 31, 2016. Commander needs to analyze the following items to determine the whether adjusting entries are required for 2016. 1. Twenty-two employees worked during 2016 and each of them will take two weeks of vacation in 2017. Twelve of these.
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44.Which of the following best describes the accrual of interest? A. Assets and stockholders' equity decrease. B. Assets and liabilities decrease. C. Net income and expenses decrease. D. Expenses and liabilities increase. 45.On October 1, 2016, Donna Equipment signed a one-year, 8% interest-bearing note payable for $50,000. Assuming that Donna Equipment maintains its books.
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130.Frankel Feed purchased a new machine on January 1, 2016. Relevant information is as follows: Cost when acquired$26,000 Estimated residual value2,000 Estimated useful life10 years Accumulated depreciation at the end of year 5 (assume straight-line depreciation) 12,000 It is now the beginning of year 6 and the management reevaluated the estimates related to the.
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134.Sideline Company reported net income for 2015 of $70,000 and in 2016 of $84,000 (both after income taxes at a 30% rate). It was discovered in 2016 that the ending inventory for 2015 was understated by $2,000 (before any income tax effect).Required: Calculate the correct net income (after income tax.
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95.Carr Corporation has provided the following information for its most recent month of operation: sales $8,000; beginning inventory $1,000; ending inventory $2,000 and gross profit $5,000. How much were Carr's inventory purchases during the period?  A. $9,000. B. $5,000. C. $6,000. D. $4,000. 96.Carp Corporation has provided the following information.
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128.Boulder, Inc. is computing its inventory at December 31, 2016. The following information relates to the five major inventory items regularly stocked for resale: ItemQuantity on HandEnding Inventory,December 31, 2016Unit Cost whenAcquired (FIFO)Net Realizable Value(Market) at December 31,2016 A100$40$35 B150$50$52 C25$100$80 D300$60$62 E700$15$12 Required: Using the lower of cost or market rule (LCM or net realizable value),.
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94.Straight Industries purchased a large piece of equipment from Curvy Company on January 1, 2016. Straight Industries signed a note, agreeing to pay Curvy Company $400,000 for the equipment on December 31, 2018. The market rate of interest for similar notes was 8%. The present value of $400,000 discounted at.
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115.How much were inventory purchases when cost of goods sold was $250,000, beginning inventory was $20,000, and ending inventory was $25,000?    116.How much was ending inventory when sales revenue was $500,000, purchases were $310,000, beginning inventory was $22,000, and gross profit was $200,000.    117.Compute the missing amounts that are numbered.
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105.Which of the following statements is correct when inventory unit costs are decreasing?  A. FIFO's cost of goods sold will be the largest among the inventory costing methods. B. LIFO's income tax will be the lowest among the inventory costing methods. C. Ending inventory using the FIFO cost method will.
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Multiple Choice Questions 32.Which of the following would not be classified as property, plant and equipment on a balance sheet? A. Land held for investment. B. Equipment used in the manufacturing process. C. A building used as corporate headquarters. D. A natural resource being mined. 33.Which of the following accounts would not be considered a.
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True / False Questions 1.An advantage of issuing a bond relative to stock is that the bond interest payments are tax deductible. 2.Issuing bonds dilutes the voting power of the common shareholders because bonds have preferential voting rights. 3.The major disadvantages of issuing a bond are the risk of bankruptcy and.
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54.Mission Corp. borrowed $50,000 cash on April 1, 2016, and signed a one-year 12%, interest-bearing note payable. The interest and principal are both due on March 31, 2017. A. Interest expensexxx B. Interest expensexxx C. Interest expensexxx D. Interest expensexxx 55.Mission Corp. borrowed $50,000 cash on April 1, 2016, and signed.
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120.Answer the following four questions. A. What is a contingent liability? B. When must a contingent liability be recorded through a journal entry? C. When should a contingent liability be disclosed in the footnotes to the financial statements? D. When is disclosure of a contingent liability not required?    121.In a.
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74.SRJ Corporation entered into the following transactions: • The accrual of interest expense on a six-month note payable. • Collected cash for services to be provided within the next six months. • The reclassification of short-term debt to long-term debt. A. The increase in interest payable for the accrual of interest expense is added.
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137.Prepare the journal entries for the transactions listed below under each: Periodic inventory system and Perpetual inventory system. A.Purchased merchandise for cash, $1,000. B.Sold merchandise for $600 cash that had cost $480 (cost is 80% of the sales price). C.Accepted a sales return from a customer: sales price $30. A cash refund was.
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62.On January 1, 2016, Woodstock, Inc. purchased a machine costing $40,000. Woodstock also paid $1,000 for transportation and installation. The expected useful life of the machine is 6 years and the residual value is $5,000. A. The annual depreciation expense is $6,000. B. The December 31, 2016 book value was $35,000..
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True / False Questions 1.When a liability is initially recorded, it is recorded at the future amount of all payments. 2.A current liability is always a short-term obligation expected to be paid within one year of the balance sheet date. 3.The accrual of interest results in an increase liabilities and a.
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102.Lincoln Restaurants reported net income in 2016 of $45.9 million and depreciation expense of $48.8 million. It also reported additions to property and equipment of $162.9 million. Which of the following disclosures would appear on the 2016 statement of cash flows? A. Depreciation of $48.8 million would be deducted from.
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122.Required: A. Compute the missing amounts in the income statement under three different inventory costing methods: (Ignore income taxes.)  FIFOLIFOAverageCost Sales revenue (3,000 units)$90,000$90,000$90,000 Cost of goods sold:   Beginning inventory (1,000 units @ $10 per unit)  10,000  10,000  10,000  Purchases (4,000 units @ $12 per unit) (1) (7)(13)  Goods available for sale(2)(8)(14)  Ending inventory (2,000 units)(3)(9)(15)     Cost of goods.
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119.William Company uses the periodic inventory system and has provided the following data:   Units Amount Beginning inventory 6,000$30,000 Purchases32,000 192,000 Sales28,000 280,000 Required: A. Calculate the following using both: FIFO and LIFO inventory methods.      FIFO    LIFO 1. Ending inventory$_______$_______ 2. Cost of Goods Sold$_______$_______ 3. Gross profit$_______$_______ B. In times of rising unit costs, how does pretax income using FIFO compare to pretax income.
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72.On January 1, 2016, Wasson Company purchased a delivery vehicle costing $40,000. The vehicle has an estimated 6-year life and a $4,000 residual value. Wasson uses the units-of-production depreciation method and Wasson estimates that the vehicle will be driven 100,000 miles. What is the vehicle's book value as of December 31,.
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132.Determine the effect of the following transactions on the financial statement components identified. Code each item listed under the transaction with the letter A, B, or C, as follows. A. If the transaction results in an increase in the financial statement component. B. If the transaction results in a decrease.
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11.Depreciation is the process of allocating a long-lived asset's cost over its productive life. 12.Depreciation is the process of estimating a long-lived asset's current market value. 13.If depreciation expense is calculated without taking into account the asset's residual value, depreciation expense will be overstated. 14.The book value of a depreciable.
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120.A company purchased equipment for $800,000 and has depreciated it using the straight-line method for the past 5 years when its original life was estimated to be 10 years with a $200,000 residual value. The equipment's utility to the company has declined because management expects the equipment to generate net.
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21.A contingent liability can not be disclosed in a note to the financial statements unless it can be estimated. 22.Working capital is a measure of short-run liquidity and is measured by dividing current assets by current liabilities. 23.Working capital is a measure of long-term liquidity and is calculated by subtracting.
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113.In Year 4, Landmark Restaurants reported the cost of property and equipment at $1,189.8 million and the accumulated depreciation at $224.2 million. In that same year, Coca Cola reported $10,149 million in long-lived, productive assets and accumulated depreciation on them of $4,058.Required: A. Estimate the approximate percent of remaining life.
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131.Dows Company prepared income statements that reflected pretax income of $21,000 for 2015 and $30,000 for 2016. An audit has determined that there were two errors in the inventory amounts as follows:  Amount ReportedCorrect Amount Ending inventory, 2015$15,000$14,000 Ending inventory, 201618,00016,000 Required: Determine the correct pretax income amount for each year (show computations; assume.
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64.Which of the following statements about contingent liabilities is incorrect? A. A disclosure note is required when the loss is reasonably possible and the amount cannot be reasonably estimated. B. A disclosure note is required when the loss is probable and the amount can be reasonably estimated. C. A disclosure note is.
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84.Rusty Corporation purchased a rust-inhibiting machine by paying $50,000 cash on the purchase date and agreeing to pay $10,000 every three months during the next two years. The first payment is due three months after the purchase date. Rusty's incremental borrowing rate is 8%. The liability reported on the balance sheet.
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Multiple Choice Questions 34.Which of the following statements is correct? A. Current liabilities are initially recorded at the amount of their principal plus interest. B. Current liabilities are those liabilities due within one year. C. Liquidity refers to the ability to pay all debts within one year. D. Current liabilities affect working capital and.
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122.Border Company purchased a truck that cost $17,000. The company signed a $17,000 note payable that specified four equal annual payments (at each year-end), each of which includes a payment on the principal and interest on the unpaid balance at 10% per annum.Required: A. Calculate the amount of each equal.
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