ACCT 504 ACCT504 Week 4 Midterm Answers (Keller)

ACCT 504 ACCT504 Week 4 Midterm Answers (Keller)

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ACCT 504 Week 4 Midterm Answers

    1. (TCO A) Assets include
    2. (TCO B) For 2014, CAP Corporation reported net income of $96,000; net sales $1,440,000; and weighted average shares outstanding of 9,600. There were no preferred dividends. What was the 2014 earnings per share?
    3. (TCO C) Selling a long-term asset is an example of a(n)
    4. (TCO D) The ending Retained Earnings balance is found on which of the following statements?
    5. (TCO E) Which of the following describes the normal balance and classification of the Accumulated Depreciation account?
    6. (TCO F) Which of the following items is handled as a deferral?
    7. (TCO A) XYZ Company recorded the following events involving a recent merchandise purchase.
    8. (TCO B) In periods of rising prices, which of the following inventory methods results in the lowest income taxes?
    9. (TCO A) On a classified balance sheet, which is the least liquid asset listed below?
    10. (TCO E) Which of the following is a component of internal control?
    11. (TCOs A and E) Your friend, Ellen, has hired you to evaluate the following internal control procedures.
    12. Explain to your friend whether each of the numbered items below is an internal control strength or weakness. You must also state which internal control procedure relates to each of the internal controls.
    13. For the weaknesses, you also need to state a recommendation for improvement.
    14. (TCOs E and F) Please prepare the following journal entries. Indicate which account should be debited and which account should be credited, along with the dollar amount of the debit and credit.

      (1) Investors invest $70,000 in exchange for 1,000 shares of common stock.
      (2) Company paid a utility bill for $2,000. 
      (3) The unadjusted balance of the Supplies account is $5,200 and the total cost of supplies on hand is $4,000.
      (4) Company received $5,000 for services performed.
      (5) The company needs to record $15,000 for depreciation.
    15. (TCOs B and D) The following items are taken from the financial statements of Ashe Company for 2012:
  • Equipment
  • $100,000
  • Accounts Receivable
  • 12,000
  • Accounts Payable
  • 9,000
  • Cost of Goods Sold
  • 72,000
  • Utilities Expense
  • 11,000
  • Depreciation Expense
  • 17,000
  • Insurance Expense
  • 9,000
  • Common Stock
  • 200,000
  • Dividends
  • 12,000
  • Rent Expense
  • 3,000
  • Note Payable (due 2014)
  • 40,000
  • Advertising Expense
  • 14,000
  • Prepaid Insurance
  • 17,000
  • Retained Earnings (beginning)
  • 44,000
  • Accumulated Depreciation
  • 50,000
  • Salaries Expense
  • 60,000
  • Salaries Payable
  • 3,500
  • Net sales
  • 205,000
  • Supplies
  • 4,000
  • Supplies Expense
  • 5,000
  •  
  •  


      1. Instructions

        (a) Calculate the net income. (18 points)
        (b) Calculate the balance of Retained Earnings that would appear on a balance sheet at December 31, 2012. (7 points)
        (c) Calculate the gross profit percentage. (5 points)
      2. (TCO D) The following items are taken from the financial statements of SRW Company for 2012:

          
  • Cash
  • $375,000
  • Accounts Receivable
  • 125,000
  • Prepaid Insurance
  • 100,000
  • Accounts Payable
  • 88,000
  • Unearned Service Revenue
  • 15,000
  • Equipment, net of accumulated depreciation
  • 177,000
  • Common Stock
  • 125,000
  • Retained Earnings 12/31/2011
  • 106,000
  • Long-term debt
  • 336,500
  • Service revenue
  • 225,000
  • Cost of Goods Sold
  • 62,500
  • Rent expense
  • 30,000
  • Supplies expense
  • 8,000
  • Insurance expense
  • 18,000
    1. Instructions
        
      (a) Please create a classified Balance Sheet in good form for the year ended 2012. (25 points)
      (b) Please calculate the current ratio.  (5 points)

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