1. A company has $123,000 in Assets and $65,000 in Liabilities.
How much does the company have in Stockholders’ Equity?
2. Beginning Retained Earnings are $65,000, sales are $29,500,
expenses are $33,000, and dividends paid are $3,500. How
much is the amount in ending Retained Earnings?
3. The Notes Payable account began with a zero balance and
then had the following changes: increase of $500, increase of
$200, decrease of $550, and increase of $250. What is the
final balance in the Notes Payable account, and is it a debit or credit?
4. The trial balance for Motor Work, Inc. contains the following balances:
What is the amount of total debits for this trial balance?
5. On January 1, 2014, a company paid $36,000 for a machine with a salvage value of
$4,000. If the company uses straight-line depreciation for 10 years, what is the
depreciation expense for 2014?
6. The total revenues of $6,500, total expenses of $3,500, and dividends of $500 were
recorded in the closing entries for September. What is the net change in Retained
Earnings for the month?
7. Cosmo Co. purchases goods for resale from Galaxy, Inc. The amount of a recent purchase
is $12,500 with terms of 3/10, n/30. Cosmo later returns $500 worth of the goods. Under
the perpetual inventory method, what is the journal entry to record the return?
8. A company has net sales of $126,000, cost of goods sold of $72,000, operating
expenses of $38,000, and other expenses of $3,000. What is the company’s operating
income?
9. Olympic Enterprises has the following inventory data:
Assuming average cost, what is the cost of goods sold for the June 7 sale?
Date Quantity Unit cost
June 1 Beginning inventory 5 $52
June 4 Purchase 10 $55
June 7 Sale 12
June 11 Purchase 9 $58
June 14 Sale 8
Accounts payable $267
Accounts receivable $429
Cash $367
Expenses $103
Revenue $632
10. A company has $8,200 in net sales, $1,100 in gross profit, $2,500 in ending inventory,
and $2,000 in beginning inventory. What is the company’s cost of goods sold?
11. Goods available for sale total $25,000, beginning inventory is $8,000, ending inventory
is $12,000, and cost of goods sold is $10,000. How many days is the days-sales-ininventory?
12. Identify the following two schemes:
1. An employee gives a false refund and pockets the cash.
2. An employee receives a check from a customer, endorses it, and then cashes it.
13. Which part of the Fraud Triangle relates to committing a fraud because one feels that it
will be easy to do?
14. A company has $317,000 in credit sales. The company uses the allowance method to
account for uncollectible accounts, and the Allowance for Doubtful Accounts now has
an $8,150 debit balance. If the company estimates 6% of credit sales will be uncollectible,
what is the amount of the journal entry for the estimated uncollectible
accounts?
15. Bestway, Inc. had credit sales of $142,000 for the period. The balance in Allowance
for Doubtful Accounts is a debit of $643. If Bestway ages accounts receivable and
determines estimated uncollectible accounts to be $2,840, what is the required
journal entry to record estimated uncollectible accounts?
16. After four years, a machine had an accumulated depreciation of $38,000. The machine
originally had an anticipated life of eight years and a salvage value of $5,000. If the
current book value after four years is $43,000 and the machine has only two years of
usable life left, how much will be depreciated in year five and in year six using the
straight-line method of depreciation, and assuming the salvage value is still $5,000?
17. Equipment costing $118,000 has accumulated depreciation of $92,000. The equipment
is a trade-in for new equipment costing $187,000. If the trade-in value received for
the old equipment is $30,000, what is the journal entry to record this transaction?
18. On January 1, Bestway, Inc. signed a $175,000, 8%, 30-year mortgage that requires
semiannual payments of $7,735 on June 30 and December 31 of each year. What is
the journal entry to record the second semiannual payment (round interest calculation
to the nearest dollar?
19. $200,000 of 6%, 25-year bonds were sold for $190,000 on January 1. The bonds
require semiannual interest payments on June 30 and December 31. What is the
journal entry to record the June 30 interest payment on the bonds?
20. Liberty Company declared a $40,000 cash dividend to shareholders. The company has
5,000 shares of $20-par, 6% preferred stock and 10,000 shares of $15-par common
stock. The preferred stock is cumulative. How much will be distributed to the preferred
and common stockholders on the date of payment if the preferred stock is $12,000
in arrears?
21. Arc Electric, Inc. has 400,000 shares of $10-par common stock outstanding. They
have declared a 5% stock dividend. The current market price of the common stock is
$18/share. What is the amount that will be credited to Paid-in Capital in Excess of Par
Common Stock on the date of declaration?
22. Prestige Auto’s records show net income of $30,000, depreciation expense of $10,000,
and cash dividends paid of $5,000. Using the indirect method, determine the cash flow
from operating activities on the cash flow statement.
23. Operating expenses for the year, other than depreciation, were $563,000. Accrued
expenses decreased by $47,000. Using the direct method, determine the cash payments
for operating expenses to be reported on the cash flow statement.
24. A company has $56,000 in cash, $12,000 in accounts receivable, $25,000 in shortterm
investments, and $100,000 in merchandise inventory. The company also has
$60,000 in current liabilities. What is the company’s quick ratio (rounded to the nearest
hundredth)?
25. If sales are $100,000, net income is $22,700, beginning stockholders’ equity is
$88,000, and ending common stockholders’ equity is $84,000, what is the return on equity?
2
Date Quantity Unit cost
June 1 Beginning inventory 5 $52
June 4 Purchase 10 $55
June 7 Sale 12
June 11 Purchase 9 $58
June 14 Sale 8
Accounts payable $267
Accounts receivable $429
Cash $367
Expenses $103
Revenue $632
