The party who borrows money in a note payable is known as the Maker

The party who borrows money in a note payable is known as the Maker. Issuer. Payee. Both A and B.2.Munson Company issued an interest-bearing note payable with a face amount of $6,000 and a stated interest rate of 8% to the Capital Bank on August 1, 2013. The note carried a one-year term.The amount of cash flow from operating activities on the 2013 statement of cash flows would be: $480. $200. $6,000. zero.3.Issuing a note payable is a(n) claims exchange transaction. asset source transaction. asset use transaction. asset exchange transaction.4.Monthly remittance of sales tax: Reduces stockholders\' equity. Is a claims exchange transaction. Reduces liabilities. All of the above.5.In December 2013, Lucky Corporation sold merchandise for $5,000 cash. Lucky estimated that $350 of warranty claims might be filed in regard to these sales. On February 12, 2014, warranty work amounting to $275 was performed for one of the customers ($215 labor paid in cash and $60 from the materials inventory).Which of the following reflects the effect of the year-end adjusting entry to record estimated warranty expense? Assets = Liab. + Equity Rev. Exp. = Net Inc. Cash Flows A. - = NA + - NA - = - - OA B. NA = + + - NA + = - NA C. NA = - + + NA + = - - OA D. - = NA + - NA + = - NA Option A Option B Option C Option D6.What is the purpose of the Federal W-4 form? To allow an employee to lessen the amount of federal tax withheld due to withholding allowances. To notify the federal government when a new employee is hired. To remit monthly payments for FICA to the federal government. To notify the employee at year-end of the amount of federal tax withheld.7.Which of the following items is not classified as a current asset? Accounts Receivable. Merchandise Inventory. Office Equipment. Prepaid Rent.8.On a classified balance sheet, the financial statement user will be able to distinguish between: cash flow from operations and cash flow from investing activities. product and period costs. current and non-current assets. none of these.9.Which of the following items would be least likely to appear in the current liabilities section of a classified balance sheet? Bonds Payable. Wages Payable. Accounts Payable. Interest Payable.10.A company\'s classified balance sheet shows current assets of $8,650 and current liabilities of $6,000. The company\'s current ratio is: 0.69 to 1 1.16 to 1 1.44 to 1 3.26 to 111.The following information is taken from the balance sheet of Alberta Company: Current assets $ 960 Current liabilities $ 600 Property, Plant & Equip. 1,450 Noncurrent liabilities 770 Total assets $2,410 Total liabilities $1,370 Alberta Company\'s current ratio is: 2.5 to 1 1.6 to 1 1.76 to 1 .66 to 112-13Violet Company issued a $30,000 face value discount note payable to the First Federal Bank on September 1, 2012. The note carried a one-year term and a 4% discount rate. Assume interest is payable at maturity.12.As a result of the recognition of interest expense on 12/31/12, liabilities will increase and assets will decrease. assets and liabilities will decrease. assets will increase and retained earnings will increase. liabilities will increase and retained earnings will decrease.13.The amount of interest expense appearing on the 2012 income statement would be: $1,200. $400. $800. $2,400.14.How does the going concern assumption affect accounting for notes payable? It dictates that interest expense be accrued at the end of the accounting period. It dictates that notes payable be reported at their face value. It dictates that notes payable be reported at their net realizable value. It dictates that interest expense be paid when the note matures.15.Hamm Co. borrowed $10,000 from Townsend Co. on March 1, 2013. Hamm is to repay the principal and interest on March 1, 2014. The interest rate is 8%. If the year-end adjustment is properly recorded, what will be the effects of the accrual on Hamm\'s 2013 financial statements? Increase assets and increase liabilities Increase assets and increase revenues Increase liabilities and increase expenses No effect16.Ramon Company borrowed $18,000 on April 1, 2013 from the Lone Star Bank. The note issued by Ramon carried a one year term and a 7% annual interest rate. Ramon earned cash revenue of $850 in 2013 and $700 in 2014. Assume no other transactions, and interest is payable at maturity.The amount of net income on the 2014 income statement would be: $315. $385. $(95). $945.17.Which of the following represents the correct journal entry to record a taxable cash sale of $800 if the sales tax rate is 5%? A debit to cash for $840, a debit to sales tax expense for $40, and a credit to sales revenue for $800. A debit to cash for $840, a credit to sales tax payable for $40, and a credit to sales revenue for $800. A debit to cash for $800, a credit to sales tax payable for $40, and a credit to sales revenue for $760. None of the above.18.Under what condition should a pending lawsuit be recognized as a liability on a company\'s balance sheet? The outcome is reasonably possible. The outcome is probable. The amount can be reasonably estimated. Both B and C.19.Bacchus Co. had sales of $400,000 in 2013. The company expects to incur warranty expenses amounting to 3% of sales. There were $6,500 of warranty obligations paid in cash during 2013. Based on this information: Warranty expenses would decrease net earnings by $12,000 in 2013. Assets would decrease by $6,500 as a result of the accounting events associated with warranties in 2013. Total warranty obligations would increase by $5,500 in 2013. All of these.20.The current ratio is a measure of: Solvency. Profitability. Equity. Liquidity.

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Long-term debt would likely be used for which of the following

2.Long-term debt would likely be used for which of the following? acquisition of inventory paying premiums for insurance purchasing machinery paying salaries3.Regardless of the specific type of long-term debt, which of the following is normally required with debt transactions? to repay the debt to pay dividends to pay interest to repay the debt and to pay interest4.On January 1, 2013, the Grove Corporation arranges a $3,000 line of credit with the Commerce Bank. It accepted the bank\'s offer of 1% above the prime rate with interest payments on December 31 of each year. All borrowings and repayments are to take place on January 1 of each year.Grove begins his loan transactions with Commerce Bank by borrowing $1,000 on January 1, 2013. Which of the following answers shows the effect of this event on the financial statements?Assets = Liabilities + Equity Revenue - Expenses = Net Inc. Cash A. 1000 = 1000 + NA NA - NA = NA 1000 IA B. 1000 = NA + 1000 1000 - NA = 1000 1000 IA C. 1000 = 1000 + NA NA - NA = NA 1000 OA D. 1000 = 1000 + NA NA - NA = NA 1000 FA Option A Option B Option C Option D5.What is the name used for the type of secured bond that requires a pledge of a designated piece of real property in case of default? Debenture Bond. Indenture Bond. Mortgage Bond. Registered Bond.6.Bonds payable are usually classified on the balance sheet as: long-term liabilities. current liabilities. investments and funds. other assets.7.Unsecured bonds are called: debenture bonds. coupon bonds. discount bonds. par value bonds.8.Bonds that mature at specified intervals throughout the life of the issuance are called: term bonds. registered bonds. serial bonds. coupon bonds.9.Kline Company issued $400,000 in bonds on January 1, 2013. The bonds were issued at face value and carried a 4-year term to maturity. They had a 6 ½% stated rate of interest that was payable in cash on December 31st. Based on this information alone, the amount of interest expense shown on the 12/31/2013 income statement and the cash flow from operating activities shown on the 12/31/2013 statement of cash flows would be: InterestExpense Cash Outflow A. $26,000 $26,000 B. zero zero C. zero $26,000 D. $26,000 zero Option A Option B Option C Option D10.On January 1, 2013, The Hamilton Corporation issued $35,250 of 8%, 5-year bonds at 97. Hamilton uses the straight-line method of bond discount amortization. The interest payments are due on December 31 each year.Based on the above, how much interest expense will Hamilton report on its income statement on December 31, 2013? (rounded) $212 $1,058 $2,820 $3,03211.The reason bonds are sometimes issued at a discount is: the stated rate of interest is higher than the rate being paid on investments in the securities market with comparable risk. the stated rate of interest is the same as the rate being paid on investments in the securities market with comparable risk. the bonds are being issued between interest payment dates. the stated rate of interest is lower than the rate being paid on investments in the securities market with comparable risk.12.If a bond is sold at 101, its stated rate of interest would be: equal to the market rate. unrelated to the market rate. higher than the market rate. lower than the market rate.13-14Winfield Company issued bonds with a face value of $600,000, a 12% stated rate of interest, and a 10-year term. The bonds were issued on January 1, 2013, and Winfield uses the straight-line method of amortization. Interest is paid annually on December 31.13.Straight-line interest amortization of a premium or discount on bonds payable: assigns variable amounts of interest over the term of the liability. uses compound interest principles. assigns the same amount of interest to each interest period over the term of the liability. is required for U.S. income tax reporting.14.The carrying value of a bond issued at a premium: decreases by equal amounts each year if straight-line amortization is used. decreases by equal amounts each year if effective interest amortization is used. increases by equal amounts each year if straight-line amortization is used. decreases by smaller and smaller amounts each year if straight-line amortization is used15.Which of the following is one of the main advantages of using long-term debt financing instead of equity financing? Not having to pay back the principal. Ability to raise large amounts of capital. Tax-deductibility of interest. Tax-deductibility of dividends.16.Callable bonds may be: called for early retirement at the option of the bondholder. called for early retirement at the option of the issuer. converted to common stock at the option of the bondholder. converted to common stock at the option of the issuer.17.Parsons Company issued at 97 bonds with a face value of $500,000. As a result of the issue: Assets and liabilities would both increase by $500,000. Assets would increase by $485,000 and liabilities would increase by $500,000. Assets and liabilities would both increase by $485,000. Assets would increase by $500,000, and liabilities would increase by $485,000.18-19Joiner Company issued bonds with a $100,000 face value on January 1, 2013. The five-year term bonds were issued at 97 and had a 7 ½ % stated rate of interest that is payable in cash on December 31st of each year. Joiner amortizes the bond discount using the straight-line method. Based on this information:18.The amount of interest expense shown on Joiner\'s December 31, 2013 income statement would be: $6,900. $10,500. $7,500. $8,100. 19.The amount of cash outflow from operating activities shown on Joiner\'s December 31, 2014 statement of cash flows would be: $7,500. $8,100. $6,900. $8,700.20.A discount or premium on bonds payable can be defined by which of the following statements? The difference between the market price of the bond on the issue date and the face value of the bond. The difference between the call price of the bond and the face value of the bond. The market rate of interest on the date of the bond issue. The difference between the interest rate and the market price of the bond.

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Kelly Pitney began her consulting business, Kelly Consulting, P.C., on April 1, 2012

Completing the Accounting Cycle: Comprehensive Problem 1

✔ 8. Net income, $25,680

Kelly Pitney began her consulting business, Kelly Consulting, P.C., on April 1, 2012. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated on pages 163–173. During May, Kelly Consulting entered into the following transactions:

May 3. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $3,000.

5. Received cash from clients on account, $2,100.

9. Paid cash for a newspaper advertisement, $300.

13. Paid Office Station Co. for part of the debt incurred on April 5, $400.

15. Recorded services provided on account for the period May 1–15, $7,350.

16. Paid part-time receptionist for two weeks\' salary including the amount owed on April 30, $750.

Record the following transactions on Page 6 of the journal.

17. Recorded cash from cash clients for fees earned during the period May 1–16, $6,150.

20. Purchased supplies on account, $600.

21. Recorded services provided on account for the period May 16–20, $6,175.

25. Recorded cash from cash clients for fees earned for the period May 17–23, $3,125.

27. Received cash from clients on account, $11,250.

28. Paid part-time receptionist for two weeks\' salary, $750.

30. Paid telephone bill for May, $120.

31. Paid electricity bill for May, $290.

31. Recorded cash from cash clients for fees earned for the period May 26–31, $2,800.

31. Recorded services provided on account for the remainder of May, $1,900.

31. Paid dividends of $15,000.

Instructions

1. The chart of accounts for Kelly Consulting is shown on page 164, and the post-closing trial balance as of April 30, 2012, is shown on page 171. For each account in the post-closing trial balance, enter the balance in the appropriate Balance column of a four-column account. Date the balances May 1, 2012, and place a check mark (✔) in the Posting Reference column. Journalize each of the May transactions in a two-column journal starting on Page 5 of the journal and using Kelly Consulting\'s chart of accounts. (Do not insert the account numbers in the journal at this time.)

2. Post the journal to a ledger of four-column accounts.

3. Prepare an unadjusted trial balance.

4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6).

a. Insurance expired during May is $300.

b. Supplies on hand on May 31 are $750.

c. Depreciation of office equipment for May is $330.

d. Accrued receptionist salary on May 31 is $300.

e. Rent expired during May is $1,600.

f. Unearned fees on May 31 are $1,500.

5. Optional: Enter the unadjusted trial balance on an end-of-period spreadsheet (work sheet) and complete the spreadsheet.

6. Journalize and post the adjusting entries. Record the adjusting entries on Page 7 of the journal.

7. Prepare an adjusted trial balance.

8. Prepare an income statement, a retained earnings statement, and a balance sheet.

9. Prepare and post the closing entries. Record the closing entries on Page 8 of the journal. (Income Summary is account #34 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry.

10. Prepare a post-closing trial balance.

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Which form of business organization is established as a legal entity separate from its owners

1.Which form of business organization is established as a legal entity separate from its owners? Sole proprietorship Corporation Partnership None of these2.Which of the following is a disadvantage of a sole proprietorship? Entrenched management. Unlimited liability. Double taxation. Excessive regulation.3.Which of the following entities would have the \"Paid-in Capital in Excess\" account in the equity section of the balance sheet? A sole proprietorship. A municipality. A corporation. A partnership.4.Which of the following terms designates the maximum number of shares of stock that a corporation may issue? Number of shares authorized Number of shares issued Par value Number of shares outstanding5.The par value of a company\'s stock dictates the initial price of the stock. has little connection to the market value of the stock. is generally greater than market value. may be revised each time a company issues more shares of stock.6.Vargas Corp. issued 12,000 shares of no-par stock for $20 per share. Vargas was authorized to issue 35,000 shares. What effect will this event have on the company\'s financial statements? Increase assets by $700,000, increase equity by $700,000. Increase cash flow from investing activities by $240,000. Increase assets by $240,000, increase equity by $240,000. Increase cash flow from investing activities by $240,000, Increase assets and equity by $240,000.7.On January 2, 2013, Terra Corporation issued 20,000 shares of $20 par-value common stock for $22 per share. Which of the following statements is true? The Paid-in Capital in Excess of Par Value account will increase by $40,000. The Cash account will increase by $400,000. Total equity will increase by $400,000. The Common Stock account will increase by $440,000.8.When the Common Stock account is disclosed on the balance sheet, it is reported at: current market value average issue price lower of cost or market par or stated value9.Frazier Corporation shows a total of $660,000 in its Common Stock account and $1,600,000 in its Paid-in Capital Excess account. The par value of Frazier\'s common stock is $4. How many shares of Frazier stock have been issued? 165,000. 400,000. 235,000. It cannot be determined10.Which of the following statements about Treasury Stock is correct? The balance in the Treasury Stock account increases paid-in capital. The balance in the Treasury Stock account reduces total Stockholders\' Equity. The balance in the Treasury Stock account reduces paid-in capital. The balance in Treasury Stock reduces Retained Earnings.11.Which of the following is a negative or contra stockholders\' equity account? Treasury Stock Paid-in Capital in Excess of Par Retained Earnings Appropriated Retained Earnings12.Minerva Company was authorized to issue 100,000 shares of common stock. The company had issued 25,000 shares of stock when it purchased 5,000 shares of treasury stock. The number of outstanding shares of common stock was: 95,000. 30,000. 25,000. 20,000.13.What effect will the declaration and distribution of a stock dividend have on net income and cash flows? Net income Cash flows A. None None B. None Decrease C. Increase None D. Decrease Decrease Option A Option D Option B Option C14.The issuance of a stock dividend will not affect total equity. increase retained earnings. decrease paid-in capital. decrease total assets.15.At the time that Kaplan Company issued a 2-for-1 stock split, the company had 1,000 shares of $6 par value common stock outstanding. Stockholders\' equity also contained $15,000 of additional paid in capital and $22,000 of retained earnings. Immediately after the stock split, the balance in the common stock account would amount to $12,000. the amount of paid-in capital would be equal to $15,000. the balance in the retained earnings account would amount to $11,000. the balance in the common stock account would amount to $6,000.16/In accordance with restrictive debt covenants, Morris Company appropriated $30,000 of retained earnings. Which of the following entries would be required to recognize this appropriation?-Cash 30000- Appropriated retained earnings 30000- Appropriated retained earnings 30000- Cash 30000- Retained earnings 30000- Appropriated retained earnings 30000- Appropriated retained earnings 30000- Retained earnings 3000017.Chad Associates retained $825,000 of net income in the business in 2013. If $85,000 was appropriated to satisfy the restrictive covenant of a loan agreement, what are the financial statements effects of the appropriation? Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash FlowA. (65,000) NA (65,000) NA 65,000 (65,000) NAB. NA 65,000 (65,000) NA NA NA (65,000) FAC. NA NA NA NA NA NA NAD. (65,000) NA 65,000 NA NA NA (65,000) OA Option C Option A Option D Option B18.Kinco Industries had net income for the year 2013 of $650,000. Kinco had an average number of shares outstanding at the end of the year of 725,000 shares. The market price of Kinco\'s stock on January 1, 2013 was $14 per share. On December 31, 2013, the market price was $16 per share. The price-earnings ratio for Kinco at year end is closest to? 16.9:1 17.78:1 15.7:1 None of these is correct19.Which of the following is not a reason why a corporation may choose not to pay dividends? The board and management prefer to reinvest all net income for future growth. The corporation does not have adequate cash. The corporation does not have adequate retained earnings. All of these are valid reasons not to pay dividends.20.Curren Co. paid dividends of $3,000; $6,000; and $10,000 during 2010, 2011 and 2012, respectively. The company had 500 shares of 5%, $200 par value preferred stock outstanding that paid cumulative dividend. The amount of dividends received by the common shareholders during 2012 would be: $5,000. $4,000. $3,000. $2,000.


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Babbel Company is a manufacturing firm that uses job-order costing

Babbel Company is a manufacturing firm that uses job-order costing. The company’s inventory balances were as follows at the beginning and end of the year:





Beginning Balance

Ending Balance

Raw materials

$

21,000

$

24,000

Work in process

$

40,000

$

22,000

Finished goods

$

26,000

$

41,000



The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 38,000 machine-hours and incur $266,000 in manufacturing overhead cost. The following transactions were recorded for the year:



• Raw materials were requisitioned for use in production, $297,000 $(281,000 direct and $16,000 indirect).

• The following employee costs were incurred: direct labor, $389,000; indirect labor, $62,000; and administrative salaries, $176,000.

• Selling costs, $160,000.

• Factory utility costs, $19,000.

• Depreciation for the year was $143,000 of which $137,000 is related to factory operations and $6,000 is related to selling, general, and administrative activities.

• Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,000 machine- hours.

• Sales for the year totaled $1,283,000.



Required:

a.

Prepare a schedule of cost of goods manufactured in good form. (Input all amounts as positive values. Omit the \"$\" sign in your response.)

b. Was the overhead underapplied or overapplied? By how much? (Input the amount as positive value. Omit the \"$\" sign in your response.)

c. Prepare an income statement for the year in good form. The company closes any underapplied or overapplied overhead to Cost of Goods Sold. (Input all amounts as positive values. Omit the \"$\" sign in your response.)

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Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberia

Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberia. The cost of the musk oil is 150 roubles per kilogram. (Siberia is located in Russia, whose currency is the rouble.) Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3.Year 2 Quarter Year 3 QuarterFirst Second Third Fourth FirstBudgeted production, in bottles 60,000 90,000 150,000 100,000 70,000Musk oil has become so popular as a perfume ingredient that it has become necessary to carry large inventories as a precaution against stock-outs. For this reason, the inventory of musk oil at the end of the a quarter must be equal to 20% of the following quarter’s production needs. Some 36,000 grams of musk oil will be on hand to start the first quarter of Year 2.Required:Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. At the bottom of your budget, show the amount of purchases in roubles for each quarter and for the year in total.

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Murphy Inc., which produces a single product, has provided the following data for its most recent month of operation:

Murphy Inc., which produces a single product, has provided the following data for its most recent month of operation:

# of units produced 7,000

Variable costs per unit:

Direct Material $37

Direct Labor $43

Variable manufacturing overhead $5

Variable selling&administractive expense $1



Fixed Costs:

Fixed manufacturing overhead $84,000

Fixed selling&administrative expenses $119,000



No beginning or ending inventories



A) Compute the unit product cost under absorption costing.

B) Compute the unit product cost under variable costing.

C) If the selling price had been $150 per unit, what was the contribution margin per unit?

D) If the selling price had been $150, what is the gross profit per unit?

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