17. Corresponds to CLO 5(a) Lennox Corporation purchased a new delivery truck fo
ID: 2377288 • Letter: 1
Question
17. Corresponds to CLO 5(a) Lennox
Corporation purchased a new delivery truck for 35,000. The sales
taxes are $2,700. The logo is painted on the side of the truck for
$800. The truck's annual license is $200. Annual insurance on the
truck is $1,300. What should Lennox record as the cost of the new
truck? (Points : 5)
$40,000
$38,500
$37,700
$35,000
18. Corresponds to CLO 5(b) On April
1, 2013, Ballard Corporation purchased equipment for $65,000. It is
estimated that the equipment will have a $5,000 salvage value at
the end of its 5 year useful life. If Ballard uses the
straight-line method of depreciation, what is the accumulated
depreciation at December 31, 2013? (Points : 5)
$13,000
$12,000
$9,750
$9,000
19. Corresponds to CLO 5(c) Tyree
Company purchased equipment with a cost of $90,000 and an estimated
salvage value of $18,000. The equipment is expected to produce
120,000 units over its estimated useful life of 10 years. If Tyree
uses the units-of-activity method, what is the depreciation cost
per unit to be used in calculating depreciation? (Points : 5)
$1.67
$0.75
$0.60
$1.33
20. Corresponds to CLO 5(d) Kerns
Company purchased equipment with a cost of $200,000 and an
estimated salvage value of $10,000. The equipment has an estimated
useful life of 10 years. If Kerns uses the double-declining balance
method, what is the annual depreciation rate to be used in
calculating depreciation? (Points : 5)
5%
10%
20%
40%
21. Corresponds to CLO 6(a) Marshall
Machinery made a sale for $80,000 on January 6. The customer is
sent a statement on January 25 and payment is received on February
20. Marshall prepares January's monthly internal financial
statements on February 15. Marshall follows GAAP and applies the
revenue recognition principle. When is the $80,000 considered to be
earned? (Points : 5)
February
20
February
15
January
25
January
6
22. Corresponds to CLO 6(b) Mann
Corporation's employees worked overtime to complete an order that
is sold on July 27. The office sends a statement to the customer on
August 15, and payment is received on September 5. Mann follows
GAAP. In what month should the overtime wages be expensed? (Points
: 5)
either
July or August, depending on when the pay period ends
September
August
July
23. Corresponds to CLO 6(c) Sight
Company had the following transactions during 2013: sales of $6,000
on account; collected $1,800 for services to be performed in 2014;
paid $4,300 cash for 2013 salaries; purchased airline tickets for
$500 in December for a trip to take place in 2014. What is Sight's
2013 net income using accrual accounting? (Points : 5)
$1,700
$1,200
$3,500
$3,000
24. Corresponds to CLO 6(d) Lyme
Corporation had the following transactions during 2013: sales of
$8,000 on account; collected $4,500 for services to be performed in
2014; paid $3,000 cash for 2013 salaries; paid $400 for airline
tickets for a trip to take place in 2014. What is Lyme's 2013 net
income using cash basis accounting? (Points : 5)
$4,600
$9,100
$1,100
$1,500
25. Corresponds to CLO 7(a) Ping
Sports Company purchases $1,000 of merchandise on credit. Using the
perpetual inventory approach, the journal entry to record this
transaction would be: (Points : 5)
debit:
Inventory $1,000; credit: Accounts Payable $1,000
debit:
Accounts Payable $1,000; credit: Inventory $1,000
debit:
Accounts Payable $1,000; credit: Purchases $1,000
debit:
Purchases $1,000; credit: Accounts Payable $1,000
26. Corresponds to CLO 7(b) Gardner
Corporation had sales of $2,400 on account on January 9, 2013.
Gardner uses the periodic inventory method. The journal entry to
record this transaction would include: (Points : 5)
a
debit to Sales Revenue and a credit to Accounts Receivable.
a
debit to Accounts Receivable, a credit to Sales Revenue, a debit to
Cost of Goods Sold, and a credit to Inventory.
a
debit to Accounts Receivable and a credit to Sales Revenue.
a
debit to Accounts Receivable, a credit to Sales Revenue, a debit to
Cost of Goods Sold, and a credit to Purchases.
27. Corresponds to CLO 7(c) Rupert
Hobby's accounting records show the following for the year ending
December 31, 2014: Purchase Discounts…$15,600;
Freight-in…$14,000;
Purchases…$540,500; Beginning
Inventory…$54,200; Ending
Inventory…$58,600; Purchase
Returns…$20,000. Using the periodic inventory
system, what is the cost of goods sold? (Points : 5)
$573,100
$500,500
$536,100
$514,500
28. Corresponds to CLO 7(d) Bay
Company sold $100,000 of merchandise in the month of April, 2013.
Returns that month totaled $5,000. Bay Company uses the periodic
method to determine ending inventory each December 31. For interim
financial statements, cost of goods sold is estimated based on the
previous year's gross profit rate. If Bay Company's gross profit
rate for 2012 was 40%, what is the cost of goods sold for the month
of April? (Points : 5)
$60,000
$57,000
$40,000
$38,000
29. Corresponds to CLO 8(a) We Love
Pets, Inc. has the following inventory data: January 1, beginning
inventory of 50 units at $25; January 10, purchases of 70 units at
$27; January 25, purchases of 40 units at $28. A physical count of
inventory on January 31 reveals that there are 45 units on hand.
Using the FIFO inventory method, cost of goods sold for January is
(Points : 5)
$3,135
$3,005
$2,875
$1,255
30. Corresponds to CLO 8(b) Party
Retailers has the following inventory data: May 1, beginning
inventory of 200 units at $10; May 14, purchases of 300 units at
$12; May 23, purchases of 250 units at $15. A physical count of
inventory on May 31 reveals that there are 225 units on hand. Using
the LIFO inventory method, ending inventory for May is (Points :
5)
$2,300
$2,250
$7,050
$3,375
31. Corresponds to CLO 8(c) Halting
Corporation has the following inventory data: September 1,
beginning inventory of 430 units at $11; September 8, purchases of
350 units at $12; September 21, purchases of 460 units at $14. A
physical count of inventory on September 30 reveals that there are
400 units on hand. Using the weighted average inventory method,
rounding the unit cost to the nearest penny, what is cost of goods
sold for September? (Points : 5)
$10,357
$4,960
$10,416
$4,932
32. Corresponds to CLO 8(d) Unleash
Corporation is a retailer operating in an industry currently
experiencing high inflation. Unleash wants to show the highest cost
of goods sold possible in order to reduce the company's income tax
liability. Which inventory costing method should Unleash use?
(Points : 5)
FIFO
because cost of goods sold represents the earliest costs.
Average
because cost of goods sold will represent an average amount.
Specific
identification because it involves the actual costs.
LIFO
because cost of goods sold represents the latest costs.
33. Corresponds to CLO 9(a) The
following balance sheet and income statement data is available for
Gold River Corporation: Current
assets…$205,000; Total
assets…$520,000; Net
income…$345,000; Current
liabilities…$125,000; Total
liabilities…$250,000; Stockholders'
equity…$270,000; Average common shares
outstanding… 10,000. What is Gold River's
current ratio? (Points : 5)
2.08
1.64
1.56
0.82
34. Corresponds to CLO 9(b) The
following balance sheet data is available for Pinpoint Products:
Current assets…$25,000; Property, plant, and
equipment,…$100,000…Other
assets…$15,000; Current
liabilities…$15,000; Long-term
liabilities…$48,000; Stockholders'
equity…$77,000; Average common shares
outstanding… 10,000. What is Pinpoint's debt to
total assets, shown as a percentage? (Points : 5)
45%
60%
40%
81%
35. Corresponds to CLO 9(c) The
following balance sheet and income statement data is available for
Frame Manufacturing: Total assets…$420,000;
Total liabilities…$300,000; Stockholders'
equity…$120,000; Gross
profit…$54,000; Net
income…$42,000; Average common shares
outstanding… 12,000. What is Frame
Manufacturing's earnings per share? (Points : 5)
$10.00
$3.50
$1.60
$4.50
36. Corresponds to CLO 9(d) The
following financial information is available for Maroon
Corporation: Sales revenue…$200,000; Cost of
goods sold…$120,000; Operating
expenses…$40,000. What is Maroon's profit
margin ratio, shown as a percentage? (Points : 5)
20%
80%
60%
40%
37. Corresponds to CLO 10(a) Which of
the following is not true about a company's system of internal
controls? (Points : 5)
Internal
control procedures are designed to safeguard assets from employee
theft.
Internal
control measures can eliminate all irregularities in the accounting
process.
Internal
controls can be rendered ineffective by employee collusion.
Large
companies often assign internal auditors to continuously evaluate
the effectiveness of the company's internal control
systems.
38. Corresponds to CLO 10(b) At Speedy
Market, three cashiers handle cash sales from the same cash
register drawer. Which of the following internal control principles
does this violate? (Points : 5)
Segregation
of duties
Physical
controls
Human
resource controls
Establishment
of responsibility
39. Corresponds to CLO 10(c) At Stone
Pool Supplies, one person is responsible for the related activities
of ordering merchandise, receiving goods, and paying for them.
Which of the following internal control principles does this
violate? (Points : 5)
Physical
controls
Segregation
of duties
Human
resource controls
Establishment
of responsibility
40. Corresponds to CLO 10(d) At Beauty
Bargains, the employees that handle cash are all bonded. This is an
example of which of the following internal control procedures?
(Points : 5)
Physical
controls
Establishment
of responsibility
Segregation
of duties
Human
resource controls
Explanation / Answer
17.$40000
18. $9000
19.0.6
20.20%
21.Feb 15
22.september
23. $3000
24.$9100
25 debit
Purchases $1,000; credit: Accounts Payable $1,000
26.
debit to Sales Revenue and a credit to Accounts Receivable.
27.$514500
28.$38000
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