On January 1, Multichip Corporation issued $2,000,000, 10-year, 8% bonds at 102. The journal entry to record this transaction would include a

(16.) On January 1, Multichip Corporation issued $2,000,000, 10-year, 8% bonds at 102. The journal entry to record this transaction would include a :

A- Debit to cash $2,000,000.

B- Credit to bond payable $2,040,000.

C- Debt to discount on bonds payable $40,000.

D- Credit to premium on bonds payable $40,000.

(17.) A disadvantage of using bonds as a method of long-term financing is that:

A- Issuing bonds results in higher earnings per share.

B- Interest’s expense is tax deductible.

C- Bond holders do not have voting rights.

D- Interest must be paid regardless of earnings.

(18.) If a corporation issues 5,000 shares of $5 par value common stock for $95,000, the entry would include a credit to:

A- Common stock for $70,000.

B- Paid-in capital in Excess of Par for $95,000.

C- Paid-in Capital in Excess of Par for $70,000.

D- Common stock for $95,000.

(19.) ABC Corporation purchases 40,000 shares of its own $10 par value, common stock for $25 per share. What will be the effect of stockholders equity?

A- Decrease $1,000,000.

B- Decrease $400,000.

C- Increase $400,000.

D- Increase $1,000,000.

(20.) If a corporation declares a $1,000,000 cash dividend, the account to be debited on the date of declaration is:

A- Paid-in Capital in Excess of Par.

B- Common stock.

C- Dividends payable.

D- Retained Earnings.

(21.) An increase in the number of authorized, issues and outstanding shares of stock along with a proportional reduction in the stock in the par value is a:

A- Stock dividend

B- Stock split

C- Cash dividend

D- Deficit

(22.) In general, the order of reporting stockholder’s equity on the balance sheet is:

A- Preferred stock, Common stock, Paid-in Capital, Retained Earnings, Treasury Stock.

B- Common Stock, Preferred Stock, Paid-in Capital, Retained Earnings, Treasury Stock.

C- Preferred Stock, Common Stock, Treasury Stock, Paid-in Capital, Retained Earnings.

D- Retained Earnings, Preferred Stock, Common Stock, Paid-in Capital, Treasury Stock.

(23.) Income tax payable appears on the:

A- Statement of stockholder’s equity.

B- Tax returns.

C- Balance Sheet.

D- Income Statement.

(24.) Changes in accounting estimates:

A- Require prior financial statements to be restated.

B- Are not allowed under GAAP.

C- Are a prior period adjustment.

D- Are reported for the current and future periods on the new basis.

(25.) Wildcat corporation reported net income for the current year of $700,000. Wildcat had 5,000 shares of $100 par value, 10% preferred stock outstanding and $40,000 shares of $1 par value common stock outstanding for the entire year. Earnings per share was:

A- $16.25

B- $17.50

C- $18.75

D- $16.67

(26.) A statement of cash flows:

A- May be combined with the balance sheet.

B- May be combined with the income statement at the option of management.

C- Is a basic financial statement recruited for publicly- held companies.

D- Is typically prepared for request of major creditors.

(27.) In addition to preparing the income statement, balance sheet, and statement of retained earnings, which of the following is also a required financial statement?

A- Statement of Cash flows.

B- Cash Reconciliation Statement.

C- Statement of cash inflows and outflows.

D- Cash Reform Statements.

(28.) Cash received from customers would be reported on the statement of cash flows under:

A- Investing activities.

B- Financing activities.

C- Operating Activities.

D- Non-cash activities.

(29.) The receipt of interest on loans would be reported on a statement of cash flows under:

A- Inventory activities

B- Financing Activities

C- Operating Activities

D- Non-cash activities

(30.) Horizontal analysis is performed on:

A- Only the income statement.

B- Only the balance sheet.

C- Only the statements of retained earnings.

D- The income statement, the balance sheet, and the statement of retained earnings.

(31.) Tech support corporation reports the following data:

Net Sales $275,000

Costs of goods sold $175,000

Gross profit $100,000

In a vertical analysis, the gross profit percentage is closest to:

A- 36%

B- 63%

C- 57%

D- 157%

(32.) In performing a vertical analysis, the base for interest expense is:

A- Net income.

B- Net sales.

C- Total operating expenses.

D- Interest incomes.

(33.) Depots Clothing Store had an accounts receivable balance of $420,000 at the beginning of the year and a year –end balance of $510,000. Net sales of the year totaled $2,100,000. The average collection period for the receivables was:

A- 162 days

B- 51 days

C- 41 days

D- 81 days

(34.) Thames, Inc’s inventory records for a particular development program shows the following at July 31:

Data Table

July 1 Beginning Inventory ……………….. 4 units @$150 = $600

15 Purchases…………………………….. 5 units @ 150 = $750

26 Purchases…………………………….. 9units @ 160 = $1,440

Requirements

(1.) Compute the costs of goods sold and ending inventory, using each of the following methods:

a.) Specific unit costs, with one $150 units and seven $160 units still on hand at the end.

b.) Average cost

c.) Firs-in, First-out

d.) Last-in, First-out

(2.) Which method produces the highest cost of goods sold?

What causes the difference in costs of goods sold?

Requirement 1: Compute the costs of goods sold and ending inventory, using each if the following for inventory methods:

First, calculate the total units and the cash goods available for sale:

July 1 Beginning Inventory 4@ $150 = $ 600

15 Purchase 5@ $150 = 750

26 Purchase 9@ $160 = 1,440

Goods available for sale:

(a.) Compute ending inventory and costs of goods sold using specific costs method with one $150 units and seven $160 units still on hand at the end.

Costs available for sale ___________________

Less. Total ending inventory ______________

Costs of goods sold _______________________-

(b.)Compute ending inventory and costs of goods sold using the average costs method. Begin by calculating the average costs per unit. ( Round the average costs per unit to the nearest cent).

The average cost per unit is $ _______-

Calculate the ending inventory and costs of goods sold. ( Use the average costs per unit to calculate ending inventory and costs of goods sold. Round your final answer to the nearest whole dollar).

Costs of goods available for sale ____________________________

Less. Total ending inventory ______________________________

Costs of goods sold _______________________________

(c.) Compute ending inventory and costs of goods sold, using the First-in, First-out method.

Costs of goods available for sale ____________________________

Less. Total ending inventory ____________________________

Costs of goods sold __________________________

(d.)Compute ending inventory and costs of goods sold using the Last-in, First-out method.

Costs of goods available for sale ___________________________

Less. Total ending inventory __________________________

Costs of goods sold __________________________

Requirement 2. Which method produces the highest costs of goods sold? Which method produces the lowest costs goods sold? Which causes the difference in costs of goods sold?

Which method produces the highest costs of goods sold? “FIFO, LIFO, or Specific Unit Cost” Please choose one.

Which method produces the lowest costs of goods sold? “FIFO, LIFO, or specific Unit Cost” Please choose one.

The difference in costs of goods sold under the two methods identified above was caused by: “ the decrease in inventory costs, the increase in inventory costs, or the difference in the number of units sold”, Please choose one.

(35.) Little Town’s Pizza- bought a used Toyota delivery van onJan2, 2012 for $18,000. The van was expected to remain in service for four years (39,250 miles). At the end of its useful life, Little Town’s officials estimated that the van’s residual value would be $2,300. The van traveled 13,000 miles the first year, 11,250 miles the second year, 6,000 miles the third year, and 9,000 miles in the fourth year.

Requirement 1: Prepare a schedule of depreciation expense per year for the van under the three depreciation methods. (For units-of –production, and double-declining-balance, round to the nearest two decimals after each step of the calculation. For years with $0 depreciation, make sure to enter “0” in the appropriate columns).

Year Straight-Line Units-of-production Double-declining-balance

2012 ____________ _______________ __________________

2013 ______________ _____________ _________________

2014 ______________ _____________ _________________

2015 ______________ ________________ ________________

Total _______________ ________________ ___________________

Requirements:

(1.) Prepare a schedule of depreciation expense per year for the van under the three depreciation methods.

(2.) Which method best tracks the wear and tear on the van?

(3.) Which methods would Little Town prefer to use for income tax purposes? Explain in detail why Little Town’s prefers this method?

Requirement 2:

Which method best tracks the wear and tear on the van?

The (double-declining-balance/straight-line or/units of production) please choose one, method tracks the wear and tear on the van most closely?

Requirement 3:

Which method would Little Town prefer to use for income tax purposes?

Explain in detail why Little Town’s prefer this method.

For income tax purposes, Little Town’s would prefer the please choose one, ( the double-declining balance/ straight-line/ or units-of-production)-method because it produces the, please choose one, (least or/most) depreciation, and thus, the, please choose one, ( largest, smallest) tax deductions in the early life of the asset.

(36.) Calculate the present value of the following amounts:

(1.) $5,000 at the end of ten years at 8%

(2.) $5,000 a year at the end of the next ten years at 8%

(Round your answers to the nearest whole dollar)

Future Value of $1

Periods 6% 8% 10% 12% 14%

1 1.060 1.080 1.100 1.120 1.140

2 1.124 1.166 1.210 1.254 1.300

3 1.191 1.260 1.331 1.405 1.482

4 1.262 1.360 1.464 1.574 1.689

5 1.338 1.469 1.611 1.762 1.925

6 1.419 1.587 1.772 1.974 2.195

7 1.504 1.714 1.949 2.211 2.502

8 1.594 1.851 2.144 2.476 2.853

9 1.689 1.999 2.358 2.773 3.252

10 1.791 2.159 2.594 3.106 3.707

15 2.397 3.172 4.177 5.474 7.138

20 3.207 4.661 6.728 9.646 13.743

Present Value of $1

Periods 6% 8% 10% 12% 14%

1 0.943 0.926 0.909 0.893 0.877

2 0.890 0.857 0.826 0.797 0.769

3 0.840 0.794 0.751 0.712 0.675

4 0.792 0.735 0.683 0.636 0.592

5 0.747 0.681 0.621 0.567 0.519

6 0.705 0.630 0.564 0.507 0.456

7 0.665 0.583 0.513 0.452 0.400

8 0.627 0.540 0.467 0.404 0.351

9 0.592 0.500 0.424 0.361 0.308

10 0.558 0.463 0.386 0.322 0.270

15 0.417 0.315 0.239 0.183 0.140

20 0.312 0.215 0.149 0.104 0.073