Presented below is a partial stockholders' equity section of Ruple

Exercise #1

Points

Presented below is a partial stockholders' equity section of Ruple Corporation's balance sheet on
December 31, 2014:
Stockholders' Equity
Paid-In Capital
Capital Stock
Common Stock, $5 par value, 300,000 shares
authorized; _____ shares issued and _____ outstanding………….
Additional Paid-In Capital
In excess of par value………………………………………………..
Retained Earnings………………………………………………………..
Less: Treasury stock, 10,000 shares………………………………..
Total Stockholders' Equity…………...…………………………………......
Instructions
Complete the following statements and show your computations.
a.
The number of shares of common stock issued is __________.

b.

The number of shares of common stock outstanding is __________.

c.

The total paid in capital is $__________.

d.

The cost per share of the treasury stock was $__________.

e.

Total number of shares authorized is______________.

$1,200,000
120,000
500,000
(120,000)
$1,700,000

Exercise #2
Points
The Remove-U-Tattoo Clinic purchased a surgical laser for $84,000 on January 1, 2014. The estimated
salvage value is $4,000. The laser has a useful life of five years and the clinic expects to use it 10,000 hours.
It was used for 900 hours in 2014; 2,100 hours in 2015; 2,400 hours in 2016.
Instructions
Showing all of your computations, compute the book value and the accumulated depreciation for
December 31, 2015 under each of the following three methods:
(1) Straight-line:
2015 accumulated depreciation ____________________

2015 book value ____________________

(2) Units-of-activity:
2015 accumulated depreciation ____________________

2015 book value ____________________

(3) Double-declining balance:
2015 accumulated depreciation ____________________

2015 book value ____________________

Exercise #3

Points

The adjusted trial balance accounts:
Advertising Expense
Cost of Goods Sold
Depreciation Expens
Freight-out
Income Tax Expense
Interest Expense
Interest Revenue
Merchandise Invent
Prepaid Rent
Sales
Sales Discounts
Sales Returns and A
Store Salaries Expen
Unearned Revenue
Utilities Expense
Prepare a multiple-step income
statement, in proper form, for the
year ended December 31, 2014
for Cosey Inc.
Also known as a classified income statement

15,000
347,000
3,500
2,000
21,700
19,000
25,000
35,750
4,500
575,000
9,500
50,000
74,000
8,000
18,000

Answers to the 30 multiple choice questions
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
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23
24
25
26
27
28
29
30

< please record
answer here

1)

2)

Which of the following characteristics is considered to be an advantage of the corporate form of organization?

a.
b.
c.
d.

< please record
answer here
3)

< please record
answer here

2 points each, 30 questions, for 60 point total
Points
Which of the following represents the largest number of common shares?
a.
Treasury shares
b. Issued shares
c.
Outstanding shares
d. Authorized shares

very low regulation
limited liability
The absence of a perpetual existence

personal liability

The following data is available for Blaine Corporation at December 31, 2013:
Common stock, par $10 (authorized 25,000 shares)
Treasury Stock (at cost $15 per share)
Based on the data, how many shares of common stock are outstanding?
a.
25,000
b.
20,000
c.
24,940
d.
19,940

$200,000
900

4)

Treasury stock is
a.
stock issued by the U.S. Treasury Department.
b. stock purchased by a corporation and held as an investment in its treasury.
c.
corporate stock issued by the treasurer of a company.
d. a corporation's own stock which has been reacquired but not retired.

5)

Treasury stock should be reported in the financial statements of a corporation as a(n)
a.
investment.
b. liability.
c.
deduction from total paid-in capital.
d. deduction from total paid-in capital and retained earnings.

6)

Bonds payable should be disclosed on the balance sheet.

< please record
answer here

a.
b.
c.
d.
7)

At their face value minus any unamortized premiums.
At their face value plus any unamortized premiums.
At their maturity value.
At their face value.

When the contract interest rate for a bond exceeds the effective interest rate of the bond, then:

a.
b.
c.
d.

The price of the bond will be equal to the future cash flow associated with the bond.
The bond will be issued at a premium.
The bond will be issued at a discout.
The face value of the bond will fluctuate over its life.

8)

The date on which a cash dividend becomes a binding legal obligation is on the
a.
declaration date.
b. date of record.
c.
payment date.
d. last day of the fiscal year-end.

9)

Which of the following categories/methods would be used to account for an investment, where the intent of the investment was pri

a.
b.
c.
d.

Trading securities
Available-for-sale securities
Equity method
Held to maturity securities

10)

Which of the following is not a significant date with respect to dividends?
a.
The declaration date
b. The incorporation date
c.
The record date
d. The payment date

11)

Dividends Payable is classified as a
a.
long-term liability.
b. contra stockholders' equity account to Retained Earnings.
c.
current liability.
d. stockholders' equity account.

12)

The trading securities owned by a company are:

a.
b.
c.
d.
33)
a.
b.
c.

reported on the balance sheet as a contra-equity account.
reported on the balance sheet as a current asset.
reported on the balance sheet as a reduction of liabilities.
reported on the balance sheet as a noncurrent asset.

Which of the following are also called trade receivables?
Accounts receivable
Other receivables
Advances to employees

d.

Income taxes refundable

14)

Which of the following is not reported under additional paid-in capital?
(a) Paid-in capital in excess of par value.
(b) Treasury Stock
(c) Paid-in capital in excess of stated value.
(d) Paid-in capital from treasury stock.

15)

Depreciation is a process of:
(a) valuation.
(b) cost allocation.
(c) cash accumulation.
(d) appraisal.

16)

All of the following factors in computing depreciation are estimates except
a.
cost.
b. residual value.
c.
salvage value.
d. useful life.

17)
a.
b.
c.
d.

The maturity value of a $60,000, 10%, 60-day note receivable dated July 3 is
$60,000
$61,000
$66,000
$70,000

18)

The book value of an asset is equal to the
a.
asset's fair value less its historical cost.
b. blue book value relied on by secondary markets.
c.
replacement cost of the asset.
d. asset's cost less accumulated depreciation.

19)

In computing depreciation, salvage value is
a.
the fair value of a plant asset on the date of acquisition.
b. subtracted from accumulated depreciation to determine the plant asset's depreciable cost.
c.
an estimate of a plant asset's value at the end of its useful life.
d. ignored in all the depreciation methods.

20)
a.
b.
c.
d.

The best managed companies will have
no uncollectible accounts.
a very strict credit policy.
a very lenient credit policy.
some accounts that will prove to be uncollectible.

21)

The units-of-activity method is generally not suitable for
a.
airplanes.
b. buildings.
c.
delivery equipment.
d. factory machinery.

22)
a.
b.
c.
d.

Bad Debts Expense is considered
an avoidable cost in doing business on a credit basis.
an internal control weakness.
a necessary risk of doing business on a credit basis.
avoidable unless there is a recession.

23)

A gain or loss on disposal of a plant asset is determined by comparing the
a.
replacement cost of the asset with the asset's original cost.
b. book value of the asset with the asset's original cost.
c.
original cost of the asset with the proceeds received from its sale.
d. book value of the asset with the proceeds received from its sale.

24)

Receivables might be sold to
a. lengthen the cash-to-cash operating cycle.
b take advantage of deep discounts on the cash realizable value of receivables.
c. generate cash quickly.
d. finance companies at an amount greater than cash realizable value.

25)

An asset which costs $29,800 and has accumulated depreciation of $8,000 is sold for $21,600. What amount of gain of loss will be rec
a.
A gain of $200.
b. A loss of $200.
c.
A loss of $8,200.
d. A gain of $8,200.

26)

On a balance sheet, natural resources may be described more specifically as all of the following except
a.
land improvements.
b. mineral deposits.
c.
oil reserves.
d. timberlands.

27)

Depletion is
a.
a decrease in market value of natural resources.
b. the amount of spoilage that occurs when natural resources are extracted.
c.
the allocation of the cost of natural resources to expense.
d. the method used to record unsuccessful patents

28)
a.
b.
c.
d.

An item is considered material if
it doesn't costs a lot of money.
it is of a tangible good intended for re-sale.
it is likely to influence the decision of an investor or creditor.
the cost of reporting the item is greater than its benefits.

29)

Identify the item below where the terms are not related.
a.
Equipment-depreciation
b. Franchise-depreciation
c.
Copyright-amortization
d. Oil well-depletion

30)
a.
b.
c.
d.

From an internal control standpoint, the asset most susceptible to improper diversion and use is
prepaid insurance.
cash.
Equipment
Investments

primarily for short-term profits?

ecognized when the asset is sold?

Exercise #4

Points

The Stoney Company sells many products. Wolie is one of its popular items. Below is an analysis
of the inventory purchases and sales of Wolie for the month of March. Stoney Company uses
the periodic inventory system.

Units
1-Mar Beginning inventory
3-Mar Purchase
4-Mar Sales
16-Mar Purchase
25-Mar Purchase
30-Mar Sales

Units
Unit Cost Unit Selling Price
1,500 $0.80
6,000 $0.84
5,000
$2.00
3,000 $0.88
4,500 $0.96
4,000
$2.00

(a) Using the FIFO assumption, calculate the cost of goods sold and ending inventory for March.
(Show and label computations. Perform all calculations to two decimal places.)
b)

Using the Average Cost assumption, calculate the cost of goods sold
and ending inventory for March.
(Show and label computations. Perform all calculations to two decimal places.)

c)

Using the LIFO Cost assumption, calculate the cost of goods sold
and ending inventory for March.
(Show and label computations. Perform all calculations to two decimal places.)