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19) In 2012, Jaycox Custom Bikes had net income of $575,000. Jaycox also recorded $215,000 in depreciation. The company also had the following changes in its balance sheet accounts. Accounts Receivable $26,000 increase Inventories 11,000 decrease Accounts Payable 19,000 decrease Compute the net cash provided by operating activities using the indirect method. 20) Bearington Motors Income.
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Learning Objective 7.3 Questions 1) In a transaction where the merchandise invoice indicates F.O.B. shipping point, who pays the cost of shipping? A) The buyer B) The seller C) The common carrier D) The freight forwarder E) None of the above 2) On March 1, 20X3, Environmental Impacts acquired inventory on account. The cost of the inventory.
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Learning Objective 6.5 Questions 1) Heintz Corporation wishes to borrow $83,000 at 11% interest from the local bank. However, the bank requires a compensating balance of 10%. The effective interest rate that Heintz Corporation will pay on the loan is which of the following? A) 10.1% B) 12.2% C) 13.2% D) 16.4% E) 14.1% 2) Which of.
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11) Which of the following transactions increase cash? 1. Sales of goods and services for cash 2. Receiving cash dividends 3. Collection of accounts receivable 4. Reclassifying long-term debt to short-term debt 5. Accruing interest revenue A) 1 and 2 B) 1 and 3 C) 1, 2, and 3 D) 1, 2, 3, and 4 E) 1, 2, 3, and.
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Learning Objective 7.2 Questions 1) The calculation of cost of goods sold under the periodic system is A) beginning inventory + purchases. B) beginning inventory + ending inventory - purchases. C) beginning inventory + ending inventory + purchases. D) beginning inventory + purchases - ending inventory. E) ending inventory + purchases - beginning inventory. 2) Which of.
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7) MLJ Manufacturing has prepared the following depreciation schedule: Straight-line depreciation schedule of snow blowers Annual depreciationBook value $85,000 Year 1 $21,25063,750 Year 2 21,25042,500 Year 3 21,25021,250 Year 4 21,250 0 Suppose at the beginning of year 3, MLJ Manufacturing no longer believes the snow blowers will last 4 years, but instead decides the snow blowers will.
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34) Tall Trees Gear uses the periodic inventory method and recorded the following inventory and purchase transactions for the month of August, 20X3. Date         Transaction              Units     Unit Cost Aug 1  Beginning inventory 2,800 units @ $1.10 Aug 3  Purchases 500 units@ $1.20 Aug 10  Purchases 300 units@ $1.30 Aug 17  Purchases 400 units@ $1.40 Aug 24.
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8) The following information is associated with the bank reconciliation of Tall Hills Ski Resort as of October 31, 20X4: Balance per bank $ 956 Balance per books 538 Bank service charge 31 Deposits in transit 108 NSF check from a credit customer 57 Outstanding checks 614 a. Prepare a bank reconciliation for Tall Hills Ski Resort.
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11) Neslund Ornamentals offered a 2% trade discount to Parsons Retail Outlet for all purchases over $200,000. Parsons Retail Outlet purchased $300,000 from Neslund Ornamentals on account. Neslund uses the periodic inventory system. Which of the following is the journal entry made by Neslund Ornamentals to recognize the sale and.
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Learning Objective 8.4 Questions 1) Dugger Excavating bought a machine for $24,000 on January 1, 20X3, with a useful life of 5 years and a salvage value of $4,000. At the beginning of 20X4, Dugger finds the residual value will be zero. Assuming Dugger employs straight-line depreciation, what will be the depreciation.
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31) There are no contra accounts on the income statement. 32) Net sales is always equal to total sales revenue less sales returns and allowances. 33) Net sales is equal to total sales revenue plus sales returns and allowances and sales discounts. 34) If a company normally sells merchandise for $5,000, but allows.
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Learning Objective 5.7 Questions 1) Which of the following statements is incorrect, regarding the effect of depreciation expense on a statement of cash flows using the indirect method? A) Depreciation expense is not an outflow of cash. B) Depreciation expense represents an inflow of cash. C) Depreciation expense is added in the operating activities.
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Learning Objective 7.6 Questions 1) If the ending inventory is overstated by $18,000 in 20X3, and assuming a constant 30% tax rate, then what will be the effect on net income in 20X4? A) Net income will be understated by $5,400 in 20X4. B) Net income will be overstated by $5,400 in 20X4. C).
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Learning Objective 6.7 Questions 1) The following represent common reconciling items within a bank reconciliation: 1. Bank service charges 2. Deposits in transit 3. Outstanding checks Which of the above items will be an adjustment to the balance per books? A) 1 only B) 2 only C) 3 only D) 1 and 2 E) 2 and 3 2) In a bank.
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21) Assume the periodic inventory system is used. Nicolla Company sold inventory for cash of $6,000. A week later, the inventory was returned and a cash refund was given to the customer. Nicolla's journal entry to record the return of the inventory would be which of the following? A) Cash 6,000 Accounts.
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22) Silver Line Transportation purchased inventory on account for $20,000 on April 2, 20X3. They use a periodic inventory system. The terms of the purchase were 3/10, n/45. Shipping was $800, FOB destination. On April 4, the inventory was inspected, and it was discovered that some was damaged. The seller.
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Learning Objective 6.3 Questions 1) Martin Optical has found that 2% of credit sales turn into bad debts and it costs the company $2,000 in administration expenses per year to manage the bad debts. Martin Optical obtains $30,000 of credit sales each year that it would not otherwise obtain if it.
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Learning Objective 6.4 Questions 1) Consider the following information: Cash sales $ 59,000 Credit sales 510,000 Beginning Cash 18,000 Ending Cash 11,500 Beginning Retained Earnings 32,300 Ending Retained Earnings 41,700 Beginning Accounts Receivable 40,000 Ending Accounts Receivable 50,000 Net Income 64,000 What is the accounts receivable turnover? A) 1.20 B) 2.92 C) 11.33 D) 12.64 E) 13.78 2) Consider the following information: Cash sales $ 59,000 Credit sales 510,000 Beginning.
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Learning Objective 7.4 Questions 1) Using the LIFO method, the earliest purchases of inventory are assumed to be contained A) on the balance sheet as part of ending inventory. B) on the income statement as part of cost of goods sold. C) equally split between the income statement and the balance sheet. D) Impossible to.
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Learning Objective 7.5 Questions 1) The lower-of-cost-or-market practice is based on the A) consistency principle. B) entity concept. C) reliability principle. D) conservatism principle. E) historical cost concept. 2) The replacement costs have increased from $5.60 per unit to $6.20 per unit from the time 200 units of inventory were purchased. The year-end audit found 120 units.
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Learning Objective 5.8 Questions 1) The balance sheet equation provides the conceptual basis for all financial statements and can be rearranged to incorporate the statement of cash flows as follows: A) Cash + Noncash assets = Liabilities + Stockholders' equity B) Cash - Noncash assets = Liabilities + Stockholders' equity C) Assets = Liabilities.
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7) Holton Automotive computed gross profit for the month ended January 31, 20X3 as follows: Sales $5,200 Cost of goods available for sale 4,800 Ending inventory (200 units) 1,900 Cost of goods sold 2,900 Gross profit$2,300 Holton Automotive experienced a sudden decline in the replacement cost of its inventory during the month of January with per.
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11) Queen Mattresses, Inc. had the following transactions occur during May 20X3. Assume there is no beginning inventory. May 2 Inventory was purchased on account for $5,000, terms 2/10, n/30. May 3 Inventory costing $1,000 was returned. May 9 Paid for the inventory. May 15Inventory costing $2,200 was sold on account for $3,800, terms.
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Learning Objective 8.5 Questions 1) Which of the following statements is TRUE? A) For most assets, MACRS approximates straight-line depreciation. B) MACRS depreciates assets over a longer useful life than would be expected from the asset. C) MACRS allows for greater depreciation expense in the later years of an asset's life, thus reducing the.
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11) Compatibility Services acquired an $80,000 machine on January 1, 20X3. The machine is estimated to have a useful life of 8 years, and a residual value of $4,000. For units-of-production depreciation purposes, the machine is expected to produce 400,000 units. What is the balance in the accumulated depreciation account.
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11) Biscuit Bakery had the following activity in its inventory account during August 20X3. Cost per Date        Activity                 Units     Unit Cost     Total August 1  Beginning inventory100 $3.00$300 August 3  Purchase 403.10 124 August 7  Sale 50 August 12  Purchase 503.20160 August 16  Sale 70 August 23  Sale 40 August 30  Purchase 603.30198 What is the ending inventory balance at August.
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21) Machiel Manufacturing acquired a $60,000 machine on January 1, 2009. The machine is estimated to have a useful life of 4 years, and a residual value of $10,000. For units-of-production depreciation purposes, the machine is expected to produce 500,000 units. If Machiel Manufacturing uses straight-line depreciation, what is the.
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Learning Objective 7.8 Questions 1) An increase in the replacement cost of the inventory held during the current period is called a A) holding gain. B) holding loss. C) unusual gain. D) operating gain. E) operating loss. 2) With inflation, a LIFO liquidation will A) decrease net income. B) increase cost of goods sold. C) increase gross profit. D) increase inventory. E).
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Learning Objective 8.2 Questions 1) Kolonial Township acquired a building and the 3 acres of land on which it is located. The total purchase price was $2,500,000. For valuation purposes, the company contacted three local commercial real estate agents, who gave the following valuation estimates: Land Building M. Mulhan $ 900,000 $2,100,000 H. Ivan.
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Learning Objective 6.2 Questions 1) Lazareth Machine Metals sold inventory to Talla Manufacturing for $5,000 cash. Which of the following is the journal entry made by Lazareth Machine Metals? Assume the periodic inventory system is used. A) Cost of Goods Sold 5,000 Sales 5,000 B) Cash 5,000 Inventory 5,000 C) Accounts Receivable 5,000 Sales 5,000 D) Cash 5,000 Sales.
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31) The accumulated depreciation account represents a growing amount of cash to be used to replace the asset. 32) In order to calculate depreciation, the current market value of the equipment, the salvage value, and the estimated useful life must be known. 33) Book value is determined by adding salvage value to.
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Learning Objective 8.3 Questions 1) Compatibility Services acquired an $80,000 machine on January 1, 20X3. The machine is estimated to have a useful life of 8 years, and a residual value of $4,000. For units-of-production depreciation purposes, the machine is expected to produce 400,000 units. What is the depreciable value of.
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11) A policy that requires organizations to use procedures manuals to specify the flow of documents and provide information and instructions to facilitate adequate record-keeping is an example of A) adequate documentation. B) general authorization. C) specific authorization. D) proper procedures. E) an independent check. 12) Which of the following tasks is not commonly performed by.
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Learning Objective 6.1 Questions 1) A long term contract to provide services for New York City was awarded to Mason Technology on December 30, 20X1. The 4-year contract is set for $160 million and payment is certain. Services are to be provided evenly over 20X2 through 20X5. Progress measures are dependable,.
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Learning Objective 7.1 Questions 1) Given the following data, what is cost of goods sold? Sales revenue $730,000 Beginning inventory 80,000 Ending inventory 95,000 Purchases of inventory160,000 A) $585,000 B) $145,000 C) $570,000 D) $175,000 E) $555,000 2) Given the following data, what is cost of goods sold? Sales revenue $10,000 Beginning inventory 3,000 Ending inventory 7,000 Purchases of inventory 5,000 A) $12,000 B) $ 9,000 C) $.
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Learning Objective 6.6 Questions 1) Good accounting controls A) include all methods and procedures that facilitate management's planning and control of operations. B) help maximize efficiency and minimize waste, unintentional errors, and fraud. C) are not concerned with the accuracy of the financial records. D) are not concerned with safeguarding assets. E) All of the above.
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Learning Objective 7.7 Questions 1) Fortune Company had sales during July 20X3 of $29,000. During the month, the company had purchases of $17,000. At July 1, 20X3, the company had inventory of $4,500. Assuming the company has a gross profit percentage of 40%, what is the estimated ending inventory for Fortune.
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21) If unit costs and prices did not fluctuate, specific identification, LIFO, FIFO, and weighted-average would show the same ending inventory and cost of goods sold balances. 22) The specific identification method is frequently used for items with common characteristics, such as tons of coal. 23) Under the FIFO method, ending inventory.
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9) For each of the following items, identify whether they are a capital expenditure or an expense: a. Built a new elevator in the office building. b. Acquired a trademark. c. Incurred research and development expense to develop a patent. d. Modified a machine, thus extending its useful life and capabilities. e. Paid wages for.
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44) Hartman Manufacturing acquired a vehicle on January 1, 20X2, for $78,000. The machine is estimated to have a 6-year life, with a residual value of $6,000. Hartman Manufacturing is not certain whether to use the straight-line or double-declining-balance method of depreciation. Straight-Line Double-Declining-Balance Depreciation Book Depreciation Book Date Expense Value Expense Value 01/01/2X02.
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Learning Objective 5.6 Questions 1) The indirect method of preparing the statement of cash flows A) is seldom used by companies because of the extra effort required to gather cash flow information. B) calculates only the cash effect of each operating activity. C) is the method preferred by the FASB. D) begins with net income,.
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Learning Objective 8.1 Questions 1) Repairs made to equipment as part of yearly maintenance would be recorded in the journal by A) debiting equipment. B) debiting repairs expense. C) debiting depreciation expense. D) debiting accumulated depreciation. E) crediting accumulated depreciation. 2) Treating a capital expenditure as repairs and maintenance expense A) understates expenses and overstates owners' equity. B) understates.
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25) Fill in the appropriate blank figures in the income statement below. Gross sales $7,500 Sales returns and allowances A Less: Cash discounts on sales 250 B _______________________ $7,100 Cost of goods sold Inventory, January 1, 2X10 200 Purchases (gross) $3,210 C _______________________ 275 Less: Cash discounts on purchases 280 Net Purchases D Add: Freight In 50 Total cost of merchandise acquired.
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Learning Objective 7.9 Questions 1) What order does inventory typically travel in an organization? A) Raw materials, customer, finished goods, work in process B) Raw materials, work in process, customer, finished goods C) Raw materials, work in process, finished goods, customer D) Work in process, raw materials, finished goods, customer E) Work in process, finished goods,.
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