Study help wiey

Manuel, Inc. reported net income of $1.6 million in 2014. Depreciation for the year was $169,570,

accounts receivable decreased $343,180, and accounts payable decreased $286,840.

Wiley CH 1, Quiz 1

Those most responsible for the major policy decisions of a corporation are the

board of directors.

employees.

management.

stockholders

If the board of directors authorizes a $100,000 restriction of retained earnings for a future plant expansion, the effect of this action is to

increase stockholders' equity and to decrease total liabilities.

reduce the amount of retained earnings available for dividend declarations.

decrease total retained earnings and increase total liabilities.

decrease total assets and total stockholders' equity.

The declaration and distribution of a stock dividend will

Incorrect.

increase total stockholders' equity.

increase total assets.

decrease total assets.

have no effect on total assets.

Nance Corporation's December 31, 2014 balance sheet showed the following:

8% preferred stock, $20 par value, cumulative, 30,000 shares authorized; 15,000 shares issued $300,000 Common stock, $10 par value, 3,000,000 shares authorized; 1,950,000 shares issued, 1,920,000 shares outstanding 19,500,000

Paid-in capital in excess of par value - preferred stock 60,000

Paid-in capital in excess of par value - common stock 27,000,000 Retained earnings 7,650,000 Treasury stock (30,000 shares) 630,000

Wiley Chapter 10quiz

Correct.

Dominic's Salon has total receipts for the month of $30,210 including sales taxes. If the sales tax rate is 6%, what are Dominic's sales for the month?

$28,398.30

$32,023.20

It cannot be determined.

$28,500.00

Incorrect.

Wolford Company borrowed $1,000,000 from U.S. Bank on January 1, 2013 in order to expand its

mining capabilities. The five-year note required annual payments of $260,436 and carried an annual interest rate of 9.5%. What is the amount of expense Wolford must recognize on its 2014 income statement?

$95,000

$79,284

$70,259

$62,073

Correct.

The following totals for the month of March were taken from the payroll records of Kern Company.

Salaries $54,000

FICA taxes withheld 4,131

Income taxes withheld 11,880

Medical insurance deductions 783

Federal unemployment taxes 432

State unemployment taxes 2,700

The entry to record the accrual of federal unemployment tax would include a

credit to Payroll Tax Expense for $432.

debit to Federal Unemployment Taxes Payable for $432.

Multiple Choice Question 102

Incorrect.

When an account is written off using the allowance method, the

net accounts receivable will stay the same.

cash realizable value of total accounts receivable will increase.

net accounts receivable will decrease.

allowance account will increase.

LINK TO TEXT


Correct.

The financial statements of the Melton Manufacturing Company reports net sales of $300,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days?

36.5

60.8

96.1

48.7


Correct.

The average collection period for receivables is computed by dividing 365 days by

ending accounts receivable.

accounts receivable turnover.

average accounts receivable.


Your answer is correct.

The following information was taken from Molina Company cash budget for the month of November:

Beginning cash balance

$96,000

Cash receipts

116,000

Cash disbursements

160,000 If the company has a policy of maintaining an end-of-the-month cash balance of $80,000, the amount the company would have to borrow is

$28,000.

$44,000.

$0.

$80,000.



Which one of the following would not cause a bank to debit a depositor's account?

Bank service charge.

Checks marked NSF.

Wiring of funds to other locations.

Collection of a note receivable.



A $100 petty cash fund has cash of $16 and receipts of $86. The journal entry to replenish the account would include a

credit to Cash Over and Short for $2.

credit to Petty Cash for $84.

credit to Cash for $86.

debit to Cash for $84.


Chapter 7

2,5,6,8,11,14,17,18,23,25

2. Fraud experts often say that there are three primary factors that contribute to employee fraud. Identify the

three factors and explain what is meant by each.

-opportunity

-financial pressure

-rationalization

5. Discuss how the Sarbanes-Oxley Act has increased the importance of internal control to top managers of a

company.

-The top managers of a company have more of a responsibility to make sure there is o fraud.

6. What principles of internal control apply to most businesses?

Hire Competent and Honest Personnel

Establishment of Responsibility

Segregation of Duties

Documentation Procedures

Physical Controls

Independent Internal Verification

Human Resource Controls

8. Donald Bowen is reviewing the principle of segregation of duties. What are the two common applications

of this principle?

1. Different individuals should be responsible for related activities.

2. The responsibility for record-keeping for an asset should be separate from the physical custody of that

asset.

11. 1. Explain the control principle of independent internal verification.

-Divides up the cash handling process in order to reduce risk of fraud

2. What practices are important in applying this principle?

Companies should verify records periodically or on a surprise basis.

An employee who is independent of the personnel responsible for the information should make the

verification.

Discrepancies and exceptions should be reported to a management level that can take appropriate

corrective action.

14. Hoskins Inc. owns the following assets at the balance sheet date.

Cash in bank—savings account $ 8,000

Cash on hand 1,100

Cash refund due from the IRS 1,000

Checking account balance 12,000

Postdated checks 500

What amount should be reported as Cash in the balance sheet?

22100 postdated checks should not be included.

17. At Solis Wholesale Company, two mail clerks open all mail receipts. How does this strengthen internal

control? -This strengthens internal control through monitoring

18. “To have maximum effective internal control over cash disbursements, all payments should be made by

check.” Is this true? Explain.

-True except for when payments for incidental amounts that are paid out of petty cash.

23. Chris Hite is confused about the lack of agreement between the cash balance per books and the balance

per bank. Explain the causes for the lack of agreement to Chris and give an example of each cause.

-Investigate the matter with employees there could be a problem with the transferring of cash from the

store to the bank.

Your answer is correct. Of the following companies, which one would not likely employ the specific identification method for inventory costing?

antique shop

hardware store

music store specializing in organ sales

farm implement dealership


The following information was available for Bowyer Company at December 31, 2014: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $880,000; and sales $1,200,000. Bowyer’s inventory turnover ratio in 2014 was

15.0 times.

11.0 times.

9.8 times.

12.6 times.

Your answer is correct. The following information was available for Bowyer Company at December 31, 2014: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $880,000; and sales $1,200,000. Bowyer’s days in inventory in 2014 was

24.3 days.

33.2 days.

29 days.

37.2 days.

Your answer is correct. Which of the following should not be included in the physical inventory of a company?

Goods shipped on consignment to another company.

All of these answer choices should be included.

Problem 5-9A (Part Level Submission)

At the beginning of the current season on April 1, the ledger of Flint Hills Pro Shop showed Cash

$ 3,098 ; Inventory $ 4,098 ; and Common Stock $ 7,196 . The following transactions occurred

during April 2014.

Apr.

5

Purchased golf bags, clubs, and balls on account from Akers Co. $ 1,860 , terms 3 /10,

n/60.

Wiley ch 5 quiz

The collection of an $900 account within the 2 percent discount period will result in a

debit to Accounts Receivable for $882.

credit to Cash for $882.

credit to Accounts Receivable for $882.

debit to Sales Discounts for $18.

Solution

CLOSE Multiple Choice Question 118

$900 × .02 = $18

Which of the following expressions is incorrect?

Net income + Operating expenses = Gross profit

WRONG

Gross profit - Operating expenses = Net income

Sales revenue - cost of goods sold - Operating expenses = Net income

Operating expenses - Cost of goods sold = Gross profit

Which of the following items does not result in an adjustment in the merchandise inventory account under a perpetual system?

Payment of freight costs for goods shipped to a customer

Payment of freight costs for goods received from a supplier

A return of merchandise inventory to the supplier

A purchase of merchandise

Davies Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Davies Company pays within the discount period?

Accounts Payable

$ 31,088

Accounts Receivable

19,952

Accumulated Depreciation—Equipment

78,880

Cash

9,280

Common Stock

40,600

Cost of Goods Sold

712,588

Freight-Out

7,192

Equipment

182,120

Depreciation Expense

15,660

Dividends

13,920

Gain on Disposal of Plant Assets

2,320

Income Tax Expense

11,600

Insurance Expense

10,440

Interest Expense

5,800

Inventory

30,392

Notes Payable

50,460

Prepaid Insurance

6,960

Advertising Expense

38,860

Rent Expense

39,440

Retained Earnings

16,472

Salaries and Wages Expense

135,720

Sales Revenue

1,048,640

Salaries and Wages Payable

6,960

Sales Returns and Allowances

23,200

Utilities Expense

12,296

Mar. 1 Stockholders invested $51,700 cash in the business in exchange for common stock of the corporation.

3 Purchased Arnie’s Golf Land for $40,600 cash. The price consists of land $23,300, building $8,360, and equipment $8,940. (Record this in a single entry.)

5 Advertised the opening of the driving range and miniature golf course, paying advertising expenses of $1,740 cash.

6 Paid cash $2,110 for a 1-year insurance policy.

10 Purchased golf clubs and other equipment for $5,660 from Golden Bear Company, payable in 30 days.

18 Received golf fees of $2,450 in cash from customers for golf services performed.

19 Sold 120 coupon books for $30 each in cash. Each book contains ten coupons that enable the holder to play one

round of miniature golf or to hit one bucket of golf balls. (Hint: The revenue should not be recognized until the

customers use the coupons.)

25 Paid a $600 cash dividend.

30 Paid salaries of $760.

30 Paid Golden Bear Company in full for equipment purchased on March 10.

31 Received $830 in cash from customers for golf services performed.

Date Account Titles and Explanation Debit Credit

Mar. 1

Common Stock

51700

Cash

51700

Mar. 3 Land

23300

Buildings

8360

Equipment

8940

Cash

40600

Mar. 5

Advertising Ex

1740

Cash

1740

Mar. 6

Prepaid Insura

2110

Cash

2110

Mar. 10

Equipment

5660

Accounts Pay

5660

Mar. 18

Cash

2450

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