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Which Of The Following Journal Entries Is Correct

1. Which of the following...

1. Which of the following journal entries is correct when common stock is sold for cash at a price greater than par value?
A) Cash - Common Stock / Gain on Sale of Stock
B) Cash - Additional Paid In Capital / Common Stock
C) Cash - Common Stock
D) Cash - Common Stock / Additional Paid In Capital

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10/1/2011
F. Naz
F. Naz, Chartered Accountant
Category: Homework
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1. Which of the following journal entries is correct when common stock is sold for cash at a price greater than par value?
A) Cash - Common Stock / Gain on Sale of Stock
B) Cash - Additional Paid In Capital / Common Stock
C) Cash - Common Stock
D) Cash - Common Stock / Additional Paid In Capital

2. Which of the following statements is false?
A) The common stock account has a credit balance.
B) The additional paid-in capital account has a credit balance.
C) Contributed capital consists of common stock and additional paid-in capital.
D) The par value of a stock represents the stock's fair value.

3. Which of the following is true about gross profit (gross margin)?
A) It is net sales minus operating expenses.
B) It is net sales minus cost of goods sold.
C) It is the same as income from continuing operations.
D) It is net sales minus cost of goods sold and operating expenses.

4. Which of the following best describes income from operations?
A) It includes the results of discontinued operations.
B) It includes extraordinary items.
C) It is sales minus cost of goods sold and income tax expense.
D) It is net sales minus cost of goods sold and operating expenses.

5. The Callie Company has provided the following information:
· Operating expenses were $231,000;
· Cost of goods sold was $376,000;
· Net sales were $940,000;
· Interest expense was $32,000;
· Gain on sale of a building was $76,000;
· Income tax expense was $151,000.
What was Callie's gross profit?
A) $564,000
B) $188,000
C) $333,000
D) $232,000

6. Which of the following transactions does not affect gross profit?
A) A customer returning merchandise that was sold for a profit.
B) The collection of cash on an account receivable which was paid for by the customer within the discount period.
C) The journal entry to record bad debt expense.
D) Selling inventory for less than its cost.

7. Which of the following is not a component of the gross profit calculation?
A) Cost of goods sold
B) Sales returns and allowances
C) Allowance for doubtful accounts
D) Credit card discounts

8. The Soft Company has provided the following information:
· Allowance for doubtful accounts increased $19,000 and accounts receivable increased $390,000 during the year.
· Accounts written off as uncollectible totaled $20,000.
· Net sales totaled $2,700,000.
· The gross profit percentage was 40%.
· Sales discounts were $100,000.
How much was Soft's gross profit?
A) $1,040,000
B) $1,072,400
C) $1,032,400
D) $1,080,000

9. Redwing Company sold inventory costing $500 to a customer on account for $700. Which of the following correctly describes the collection of $686 cash when the customer takes advantage of a discount?
A) Operating expenses increase $14.
B) Accounts receivable decreases $686.
C) Current assets decrease $14.
D) Gross profit is not affected.

10. Which of the following statements is correct?
A) Revenue is recognized at the time of shipment when goods are shipped FOB destination.
B) Sales returns and allowances are reported as operating expenses on an income statement.
C) Revenue is recorded when title and risks of ownership transfer to the buyer.
D) Sales discounts are reported as operating expenses on an income statement.

11. Moore Company purchased an item for inventory that cost $20 per unit and was priced to sell at $30. It was determined that the replacement cost is $18 per unit. Using the lower-of-cost-or- market rule, what amount should be reported on the balance sheet for inventory?
A) $18
B) $20
C) $12
D) $30
Inventory is reported on the balance sheet at replacement cost when it is less than cost.

12. Iris Company has provided the following information regarding two of its items of inventory at year-end:
· There are 100 units of Item A having a cost of $20 per unit and a replacement cost of $18 per unit.
· There are 50 units of Item B having a cost of $50 per unit and a replacement cost of $55 per unit.
How much is the ending inventory using lower of cost or market on an item-by-item basis?
A) $4,300
B) $4,500
C) $4,750
D) $4,550

13. Carr Corporation has provided the following information for its most recent month of operation: sales $8,000; beginning inventory $1,000; ending inventory $2,000 and gross profit $5,000. How much were Carr's inventory purchases during the period?
A) $9,000
B) $5,000
C) $6,000
D) $4,000

14. Which of the following costs does not become a part of cost of goods manufactured?
A) The cost of raw materials used.
B) The cost of factory overhead.
C) The cost of rent on the factory building.
D) The salary of the company president.

15. Which of the following would not be a component of the year-end inventory balance?
A) Freight-in costs
B) Inventory inspection costs
C) Inventory preparation costs
D) Inventory related selling costs

16. Which of the following accounts would not be considered a tangible asset?
A) Buildings
B) Land
C) Equipment
D) Patents

17. Which of the following accounts would not be considered an intangible asset?
A) Goodwill
B) Patents
C) Research and development costs
D) Trademarks

18. Which of the following transactions would not increase the fixed asset turnover ratio?
A) A profitable sale of inventory on account.
B) A profitable sale of inventory for cash.
C) Selling equipment used in the manufacturing process for a loss.
D) A decrease in cash-based operating expenses.

19. A company has some bottling equipment which cost $8.5 million, has a net book value of $4.1 million, estimated future cash flows of $3.7 million, and a fair value of $3.1 million. How much is the asset impairment loss?
A) $5.4 million
B) $4.1 million
C) $0.4 million
D) $1.0 million

20. A company has some bottling equipment which cost $8.5 million, has a net book value of $4.1 million, estimated future cash flows of $3.7 million, and a fair value of $3.1 million. Which of the following correctly describes the recording of the asset impairment loss?
A) The loss account is debited for $1.0 million and the asset account is credited for $1.0 million.
B) The loss account is debited for $0.4 million and the asset account is credited for $0.4 million.
C) The loss account is debited for $5.4 million and the asset account is credited for $5.4 million.
D) The loss account is debited for $4.8 million and the asset account is credited for $4.8 million.

Ask Your Own Homework Question

1. Which of the following journal entries is correct when common stock is sold for cash at a price greater than par value?
D) Cash - Common Stock / Additional Paid In Capital

2. Which of the following statements is false?
D) The par value of a stock represents the stock's fair value.

3. Which of the following is true about gross profit (gross margin)?
B) It is net sales minus cost of goods sold.

4. Which of the following best describes income from operations?
D) It is net sales minus cost of goods sold and operating expenses.

5. The Callie Company has provided the following information:
• Operating expenses were $231,000;
• Cost of goods sold was $376,000;
• Net sales were $940,000;
• Interest expense was $32,000;
• Gain on sale of a building was $76,000;
• Income tax expense was $151,000.
What was Callie's gross profit?
A) $564,000

6. Which of the following transactions does not affect gross profit?
C) The journal entry to record bad debt expense.

7. Which of the following is not a component of the gross profit calculation?
C) Allowance for doubtful accounts

8. The Soft Company has provided the following information:
• Allowance for doubtful accounts increased $19,000 and accounts receivable increased $390,000 during the year.
• Accounts written off as uncollectible totaled $20,000.
• Net sales totaled $2,700,000.
• The gross profit percentage was 40%.
• Sales discounts were $100,000.
How much was Soft's gross profit?
D) $1,080,000

9. Redwing Company sold inventory costing $500 to a customer on account for $700. Which of the following correctly describes the collection of $686 cash when the customer takes advantage of a discount?
C) Current assets decrease $14.

10. Which of the following statements is correct?
C) Revenue is recorded when title and risks of ownership transfer to the buyer.

11. Moore Company purchased an item for inventory that cost $20 per unit and was priced to sell at $30. It was determined that the replacement cost is $18 per unit. Using the lower-of-cost-or- market rule, what amount should be reported on the balance sheet for inventory?
A) $18
Inventory is reported on the balance sheet at replacement cost when it is less than cost.

12. Iris Company has provided the following information regarding two of its items of inventory at year-end:
• There are 100 units of Item A having a cost of $20 per unit and a replacement cost of $18 per unit.
• There are 50 units of Item B having a cost of $50 per unit and a replacement cost of $55 per unit.
How much is the ending inventory using lower of cost or market on an item-by-item basis?
A) $4,300

13. Carr Corporation has provided the following information for its most recent month of operation: sales $8,000; beginning inventory $1,000; ending inventory $2,000 and gross profit $5,000. How much were Carr's inventory purchases during the period?
D) $4,000

14. Which of the following costs does not become a part of cost of goods manufactured?
D) The salary of the company president.

15. Which of the following would not be a component of the year-end inventory balance?
D) Inventory related selling costs

16. Which of the following accounts would not be considered a tangible asset?
D) Patents

17. Which of the following accounts would not be considered an intangible asset?
C) Research and development costs

18. Which of the following transactions would not increase the fixed asset turnover ratio?
C) Selling equipment used in the manufacturing process for a loss.

19. A company has some bottling equipment which cost $8.5 million, has a net book value of $4.1 million, estimated future cash flows of $3.7 million, and a fair value of $3.1 million. How much is the asset impairment loss?
D) $1.0 million

20. A company has some bottling equipment which cost $8.5 million, has a net book value of $4.1 million, estimated future cash flows of $3.7 million, and a fair value of $3.1 million. Which of the following correctly describes the recording of the asset impairment loss?
A) The loss account is debited for $1.0 million and the asset account is credited for $1.0 million.

F. Naz
F. Naz, Chartered Accountant
Category: Homework
Satisfied Customers: 5,480
Experience: Experience with chartered accountancy
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