Devry ACCT 504 Week 4 Mid Term-Latest 2016 November

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Question

Question 1. Question :
(TCO A) Assets include
prepaid insurance and prepaid rent.
dividends paid to shareholders.
loans obtained by the company.
stockholders’ investment in the business.
Question 2. Question :
(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?
$100.00
$150.00
$10.00
$15.00
Question 3. Question :
(TCO C) Issuing debt is an example of a(n)
operating activity.
investing activity.
financing activity.
noncash investing and financing activity.
Question 4. Question :
(TCO D) What is the correct order to create the financial statements?
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. Question :
(TCO E) Which of the following describes the normal balance and classification of the Accumulated Depreciation account?
Debit, asset
Credit, liability
Credit, asset
Debit, expense
Question 6. Question :
(TCO F) Which of the following items is handled as a deferral?
Accrued Expenses
Accrued Revenues
Prepaid Expenses
Depreciation
Question 7. Question :
(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
increased by $50,500.
increased by 49,500.
increased by $49,470.
increased by $49,520.
Question 8. Question :
(TCO B) In a period of declining prices, which of the following inventory methods generally results in the highest gross profit figure?
Average cost method
LIFO
FIFO
Cannot be determined based on the information given
Question 9. Question :
(TCO A) On a classified balance sheet, which is the least liquid asset listed below?
Inventories
Cash and cash equivalents
Accounts receivable, net
Short-term investments
Question 10. Question :
(TCO E) Which of the following is an internal control procedure?
Control environment
Comparisons and compliance monitoring
Promote operational efficiency
Encourage employees to follow company policies
Question 11. Question :
(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.
(1) Weakness; limited access; recommend someone personally hand out the checks or require direct deposit.
(2) Strength; comparisons and compliance monitoring.
(3) Strength; adequate records.
(4) Strength; smart hiring practices.
(5) Weakness, separation of duties; someone other than the accountant should purchase the supplies and the accountant can pay for them.
Question 12. Question :
(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.
Question 13. Question :
(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

(b) Calculate the balance of Retained Earnings that would appear on a Balance Sheet at December 31, 2012.

Retained Earnings, January 1	$33,000
Add: Net Income	2,500
	35,500
Less: Dividends	10,000
Retained Earnings, December 31	$25,500

(c) Calculate the gross profit percentage.

Net sales	$170,000
Less Cost of Goods Sold	95,000
Gross profit	75,000

Gross profit percentage $75,000 divided by $170,000 equals 44.1%.
Question 14. Question :
(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)

(a) Please create a classified balance sheet in good form for the year ended 2012.

BGS Company
Balance Sheet
Year Ended December 31, 2012 

Current assets:

Cash	$500,000
Accounts Receivables	200,000
Supplies	70,000
Total current assets	770,000
Equipment, net of accumulated depreciation	212,000
Total assets	$982,000

Current liabilities:

Accounts payable	$147,300
Unearned service revenue	18,000
Total current liabilities	165,300
Long-term debt	142,400
Total liabilities	307,700

Shareholders’ equity:

Common Stock						500,000
Retained Earnings						174,300
Total shareholders’ equity						674,300
Total liabilities and shareholders’ equity						$982,000

(b) Please calculate the current ratio.

Total current assets	$770,000
Total current liabilities	$165,300
Current ratio equals	4.66

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