prepaid insurance and prepaid rent.
dividends paid to shareholders.
loans obtained by the company.
stockholders’ investment in the business.
Question 2. 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? (Points :
3)
$100.00
$150.00
$10.00
$15.00
Question 3. 3.(TCO C)
Issuing debt is an example of a(n) (Points : 3)
Question 4. 4.(TCO D)
What is the correct order to create the financial statements? (Points :
3)
Balance Sheet, Income Statement, Statement of Retained Earnings, and
Statement of Cash flows.
Statement of Cash flows, Balance Sheet, Statement of Retained Earnings, and
Income Statement.
Income Statement, Statement of Retained Earnings, Balance Sheet, and
Statement of Cash flows.
Income Statement, Balance Sheet, Statement of Retained Earnings, and
Statement of Cash flows.
Question 5. 5.(TCO E)
Which of the following describes the normal balance and classification of
the Accumulated Depreciation account? (Points : 3)
Question 7. 7.(TCO A)
XYZ Company recorded the following events involving a recent merchandise
purchase.
- Received goods for $50,000, terms 2/10, n/30.
- Returned $1,000 of the shipment for credit due to damaged goods.
- Paid $1,500 for freight-in.
- Paid the invoice within the discount period.
As a result of these events, the company's merchandise inventory (Points
: 3)
increased by $50,500.
increased by 49,500.
increased by $49,470.
increased by $49,520.
Question 8. 8.(TCO B)
In a period of declining prices, which of the following inventory methods
generally results in the highest gross profit figure? (Points : 3)
Average cost method
LIFO
FIFO
Cannot be determined based on the information given
Question 9. 9.(TCO A)
On a classified balance sheet, which is the least liquid asset listed
below? (Points : 3)
Inventories
Cash and cash equivalents
Accounts receivable, net
Short-term investments
Question 10. 10.(TCO
E) Which of the following is an internal control procedure? (Points : 3)
Control environment
Comparisons and compliance monitoring
Promote operational efficiency
Encourage employees to follow company policies
Question 11. 11.(TCOs
A and E) Your friend, Lisa, has hired you to evaluate the following
internal control procedures.
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
For the weaknesses, you also
need to state a recommendation for improvement.
(1) Paychecks are left on the
desk for pick-up.
(2) Supervisors count cash receipts daily.
(3) Invoices are pre-numbered.
(4) Bonding of the cashiers is required.
(5) The accountant purchases and pays for supplies. (Points : 30)
Question 12. 12.(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. (Points : 30)
Question 13. 13.(TCOs B and D) The following items
are taken from the financial statements of Butler Company for 2012:
Accounts Receivable
$20,000
Cost of Goods Sold
95,000
Utilities Expense
3,500
Accounts Payable
7,000
Common Stock
100,000
Rent Expense
5,500
Advertising Expense
9,000
Dividends
10,000
Insurance Expense
2,000
Note Payable (due 2014)
50,000
Depreciation Expense
10,000
Prepaid Insurance
18,000
Accumulated Depreciation
30,000
Retained Earnings (beginning)
33,000
Salaries Expense
40,000
Salaries Payable
4,500
Net sales
170,000
Supplies
3,000
Supplies Expense
2,500
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) (Points : 30)
Question 14. 14.(TCO D) The following items are
taken from the financial statements of BGS Company for 2012:
Cash
$500,000
Accounts
Receivable
200,000
Supplies
70,000
Accounts
Payable
147,300
Unearned
Service Revenue
18,000
Equipment,
net of accumulated depreciation
212,000
Common
Stock
500,000
Retained
Earnings 12/31/2011
78,300
Long-term
debt
142,400
Service
revenue
240,000
Cost
of Goods Sold
72,000
Rent
expense
36,000
Supplies
expense
12,000
Insurance expense
24,000
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)
(Points : 30)
Solution: Devry ACCT504 midterm exam 2016