ACC 111 Exam Questions

Term
1 / 37
Deacon Company had 10,000 shares of $10 par value common stock issued and outstanding when a stock dividend is declared of 3,000 shares. At the time, the market value per share is $12. What is the entry to record the declaration of this dividend?

a. Debit Retained Earnings 36,000 Credit Common Stock Dividends Distributable 36,000
b. a. Debit Retained Earnings 36,000 Credit Common Stock Dividends Distributable 30,000
c. Debit Common Stock Dividends Distributable 36,000 Credit Retained Earnings 36,000
d. Debit Retained Earnings 30,000 Credit Common Stock Dividends Distributable 30,000
e. No entry
Click the card to flip 👆
Terms in this set (37)
Deacon Company had 10,000 shares of $10 par value common stock issued and outstanding when a stock dividend is declared of 3,000 shares. At the time, the market value per share is $12. What is the entry to record the declaration of this dividend?

a. Debit Retained Earnings 36,000 Credit Common Stock Dividends Distributable 36,000
b. a. Debit Retained Earnings 36,000 Credit Common Stock Dividends Distributable 30,000
c. Debit Common Stock Dividends Distributable 36,000 Credit Retained Earnings 36,000
d. Debit Retained Earnings 30,000 Credit Common Stock Dividends Distributable 30,000
e. No entry
d
On the date of issuance, Deacon company recorded the following for bonds issued at 98:
Debit Cash 98,000
Credit Bonds Payable 98,000

Assets/Liabilities/Equity- overstated, understated, or no effect?
Assets= no effect
Liability= no effect
Equity= no effect
What is the gross profit?

Purchases= 32,000
Inventory, September 1= 5,700
Administrative Expenses= 910
Rent Revenue= 1,200
Delivery Expense= 960
Inventory, September 30= 6,370
Sales= 63,000
Interest Expense= 1,040

a. $25,300
b. $30,600
c. $31,670
d. $30,710
e. $62,840
c
COGAS must be allocated at the end of the period between:

a. beginning inventory and net purchases during the period
b. ending inventory and beginning inventory
c. net purchases during the period and ending inventory
d. ending inventory and COGS
e. beginning inventory and COGS
d
Deacon Company's inventory account had a balance in the general ledger at year end of $1,750 and market value of 1,500

Assets/Liabilities/Equity- increase, decrease, or no effect?
Assets= decrease
Liabilities= no effect
Equity= decrease
Included in Deacon Incorporation's warehouse is $4,000 of inventory that Duke Company shipped to Deacon on consignment. Deacon included this $4,000 of inventory in its ending inventory count for the current year (Note: consider the effect on the current year only)

Assets/Liabilities/Equity- overstated, understated, or no effect?
Assets= overstated
Liabilities= no effect
Equity= overstated
The balance for retained earnings in your company's adjusted trial balance at Dec. 31, 20X2, the end of your company's fiscal year, is $51,200. The adjusted trial balance also includes the revenue accounts totaling $89,300, expense accounts totaling $68,750, and a balance in dividends totaling $10,425 (all are normal balances). What is the retained earnings balance at Jan. 1 20X2, the beginning of the company's fiscal year?

a. 20,225
b. 51,200
c. 61, 325
d. 41,075
e. none
b
A capital expenditure for factory equipment (estimated useful life of 5 years) was erroneously charged to Maintenance Expense in 20X1. What is the effect of net income in 20X2?

a. overstated
b. understated
c. no effect
a
Deacon Incorporation began the year with PPE costing $1,020,000 and accumulated depreciation of $180,000. The only change affecting the PPE assets accounts during the year is the $82,500 of depreciation expense that must be recorded for this year. What is the amount of PPE (net) to be reported at the end of the year?

a. $1,020,000
b. $937,500
c. $757,500
d. $840,000
c
On January 1 20X2, repaid a 1 year Notes Payable plus interest when the note matured (Note: Appropriate adjusting entries had been made at Dec 31, 20X1.

Assets/Liabilities/Equity- increase, decrease, or no effect?
Assets= decrease
Liabilities= decrease
Equity= no effect
Deacon Company's fiscal year ends Dec. 31. At Dec 31, 20X1, Deacon's total assets= $500,000 and total liabilities= $325,000. Assume net income for fiscal year 20X2= $75,000 and that the company paid dividends to shareholders of $30,000 during 20X2. What is total equity on Dec 31, 20X2? a. $250,000 b. $220,000 c. $280,000 d. $370,000bThe balance in the prepaid rent account before adjustment at the end of year is $32,000, which represents 4 months rent paid on Dec 1, Year 1. The adjusting entry required on Dec 31, Year 1 is: a. Debit Rent Expense 8,000 Credit Prepaid Rent 8,000 b. Debit Prepaid Rent 24,000 Credit Rent Expense 8,000 c. Debit Rent Expense 24,000 Credit Prepaid Rent 8,000 d. Debit Prepaid Rent 8,000 Credit Rent Expense 8,000aWhich is false? a. a liability is created when cash is received prior to delivery of the goods to a customer b. revenue is recognized at the time of delivery of the goods if cash is received c. revenue is not recognized at the time of delivery of goods if cash is received after delivery d. collecting cash after delivery of a good to a customer doesn't create revenue on the income statement at the date of a collectioncFor the year ending Dec 31, Deacon Incorporation mistakenly omitted adjusting entries for 1) $1,500 of salaries and wages expense that had been incurred but not yet paid 2) interest revenue of $4,200 that was earned but not yet collected and 3) $5,000 of supplies that had been used. For the year ended Dec 31, what's the effect of these errors on revenue, expenses, and net income? a. Revenues overstated by $4,200 b. Net income overstated by $2,300 c. Expenses overstated by $6,500 d. Expenses understated by $3,500bOn December 24, Year 1, Deacon Corporation received a $3,000 advance from a customer for services to be provided in January, Year 2. The firm recorded the advance payment by debiting cash and crediting consulting revenue and has made no adjusting entries as of Dec 31, Year 1. What is the effect on the accounting equation for year 1? Assets/Liabilities/Equity- overstated, understated, or no effect?Assets= no effect Liabilities= understated Equity= overstatedIn Year 1, Deacon Company recorded accrued revenue by debiting Unearned Revenue and crediting Revenue Assets/Liabilities/Equity- overstated, understated, or no effect?Assets= understated Liabilities= understated Equity= no effectDeacon Company uses a periodic inventory system and the weighted average method. On Jan 1, Year 1, the company's first day of operations, Deacon purchased 400 units of inventory that cost $7.50 each. On Jan 10, Year 1, the company purchased an additional 600 units of inventory that cost $9 each. If the company sells 550 units of inventory, what is the amount of inventory that would appear on the balance sheet immediately following the sale? a. $3,780 b. $4,738 c. $3,080 d. $3,713aDuring Deacon Company's physical inventory count at the end of the year Year 1, merchandise was omitted from the count because it had not been placed with the rest of the inventory. What effect will this omission have on total assets and equity at end of year Year 1 and on Net Income of Year 1 and Year 2? Assets Year 1? Equity Year 1? Net Income Year 1? Net Income Year 2? Overstated, understated, or no effect?Assets Year 1= understated Equity Year 1= understated Net Income Year 1= understated Net Income Year 2= overstatedDeacon Company's inventory at Dec 31, 20X1 was $2 million based on a physical count and before any necessary adjustments for the following: - Merchandise costing $100,000 was shipped FOB destination point from a vendor on Dec 28, 20X1 and was received and recorded on Jan 3, 20X2 - Goods in the shipping inventory area were excluded from inventory although shipment was not made until Jan 2, 20X2. The goods, billed to the customer FOB shipping point on Dec 30, 20X1 had a cost of $30,000 What amount should Deacon Company report as inventory in the Dec 31, 20X1's balance sheet? a. $2,000,000 b. $2,100,000 c. $2,030,000 d. $2,130,000cDeacon Company sold inventory costing $600 to a customer on account for $900 with terms of 3/15, n/30. Which is not correct? a. Gross profit increased $300 on the date of sale b. Total current assets are not affected on the date of cash collection if the customer pays 30 days after the date of sale c. Total current assets increased $27 on the date of cash collection if the customer pays within 15 days of the sale d. Gross profit and net sales both decrease $27 on the date of cash collection if the customer pays within 15 days of the salecDeacon Company uses the perpetual inventory system. In the prior year, Deacon purchased inventory with shipping terms FOB shipping point. Transportation costs of $75 were paid and correctly reported (Note: I am looking for the effects of the transportation costs in the current year only) Assets/Liabilities/Equity- increase, decrease, or no effect?Assets= no effect Liabilities= no effect Equity= no effectDeacon Incorporation used the aging of Accounts Receivable. At Dec 31, management determined that the net realizable value of Accounts Receivable was $608,000. The balance in the Accounts Receivable was $768,000 and the unadjusted credit balance in the Allowance for Doubtful Accounts was $32,000. What was the amount of bad debt expense for the year? a. $192,000 b. $128,000 c. $160,000 d. $32,000bDeacon Incorporation has Accounts Receivable of $320,000 and an Allowance for Doubtful Accounts of $16,000. If it writes off a customer account balance of $1,600, what is the amount of its net Accounts Receivable after the write off? a. $318,400 b. $320,000 c. $304,00 d. $302,400cAt the end of the first year of an asset's life, the declining balance deprecation: a. causes an asset to be carried at a higher book value than that computed using straight line b. causes an asset to be carried at a lower book value than that computed using straight line c. causes an asset to be carried at the same book value than that computed using straight line d. can't be used if the resulting book value will be significantly different from that which would result from using straight linebThe company recorded the performance of services to satisfy a customer who had purchased a product under warranty and who came back to have the product fixed under the warranty. The company used $60 of parts inventory and paid $80 in labor to satisfy the customer under the warranty. The company had previously accrued for estimated warranty expense when the product was sold to the customer in the prior month Assets/Liabilities/Equity- increase, decrease, or no effect?Assets= decrease Liabilities= decrease Equity= no effectThe company erroneously used the Double Declining Balance method to depreciate an asset purchased in the current year instead of the straight line method. The asset has a 5 year useful life Assets/Liabilities/Equity- overstated, understated, or no effect?Assets= understated Liabilities= no effect Equity= understatedOn July 1, 20X9, Deacon Incorporation issued $300,000of 10 year, 7% bonds for $303,000. The bonds were dated July 1, 20X9 and semi-annual interest will be paid each Dec 31 and Jun 30. Deacon uses the straight line method of amortization. Which of the following is incorrect? a. The market rate of interest was less than the coupon rate of interest on July 1, 20X9 b. The total interest expense over the term of the bonds is $3,000 less than the total cash interests payments over the term of the bonds c. The carry value of the bond liability decreases by $300 per year d. The semiannual interest expense is $300 less than the semi annual interest paymentdDeacon Corporation issues $480,000, 10%, 5 year bonds on Jan 1, 20X2 for $469,000. Interest is paid annually on Jan 1. If Deacon Corp uses the straight line method of amortization of a bond discount, the amount of interest expense appearing on the income statement for the year ended Dec 31, 20X2 would be: a. $11,000 b. $45,800 c. $48,000 d. $50,200dA company reported total stocker's equity of $170,000 on its balance sheet dated Dec 31, 20X8. During the year ended Dec 31, 20X9, the company reported net income of $20,000, declared and paid a cash dividend of $4,000, declared and distributed a 10% stock dividend with a $5,000 total market value, and issued additional common stock for $40,000. What is the total stockholder's equity as of Dec 31, 20X9? a. $234,000 b. $226,000 c. $231,000 d. $221,000bJordan's net income for the year ended Dec 31, year 2 was $200,000 and Jordan only pays cash dividends. Info from Jordan's comparative balance sheet is given below. Compute the cash received from the sale of its common stock during year 2. At Dec 31: Year 2: Year 1: Common Stock, (5 par value) $515,000. $463,500 PIC 963,000. 866,500 Retained Earnings 703,000 595,500 a. $107,500 b. $148,000 c. $200,000 d. $96,500 e. $51,500bRetired bonds payable due in 4 years at a price above the carry value of the bonds in the accounting records Assets/Liabilities/Equity- increase, decrease, or no effect?Assets=decrease Liabilities=decrease Equity=decreaseRecorded a semiannual interest expense and made semiannual interest payment on bonds issued at a discount Assets/Liabilities/Equity- increase, decrease, or no effect?Assets=decrease Liabilities=increase Equity=decreaseDeclared a preferred stock cash dividend (Note: the date of record and date of payment were at a later date) Assets/Liabilities/Equity- increase, decrease, or no effect?Assets=no effect Liabilities=increase Equity=decreaseDeacon Company failed to record the first semiannual interest payment (and corresponding amortization) on bonds payable that were issued at a premium Assets/Liabilities/Equity- overstated, understated, or no effect?Assets=overstated Liabilities=overstated Equity=overstatedDeacon Corporation declared a stock dividend on 12/15/X1 but didn't record the transaction until the stock distribution date of 1/5/X2 Retained Earnings/Total Stockholders' Equity- overstated, understated, or no effect?Retained Earnings=overstated Equity=no effectDeacon Incorporation purchased 100 shares of its common stock for $5 per share several years ago, and sold all 100 shares of the stock in 20X1 for $3 per share. These were the only treasury stock transactions the company had since incorporating. The company recorded the 20X1 sale transaction as follows: Dr Cash 300 Cr Treasury Stock 300 Retained Earnings/Total Stockholders' Equity- overstated, understated, or no effect?Retained Earnings=overstated Equity=no effectA large stock dividend was accounted for as a small stock dividend on 12/31/X1, the date of declaration on that date, the market value of the stock was $15. The par value was $10. Retained Earnings/Total Stockholders' Equity- overstated, understated, or no effect?Retained Earnings=understated Equity=no effect