FINANCE 50 MULTIPLE CHOICES PROBLEM

QUESTION 1

1.      The Don Corporation's July 31 unadjusted trial balance included many accounts, including the following.

2.       During June, the Corporation had received $12,000 from a customer for services to be provided to the customer during June, July, and August. In June, the Corporation provided services of $4,100 to the client and in July it provided services of $5,200 to the client. 

3.       Determine the dollar amount of fees revenue the Corporation would report on its July income statement.

2 points   

QUESTION 2

1.       The Stacey Corporation spent $5,000,000 for equipment. The equipment was expected to have a 8-year life and a residual value of $600,000. The Corporation intends to use the double-declining-balance method to depreciate all its assets.

Calculate the equipment depreciation expense the Corporation will record for the second year it uses the equipment.

2 points   

QUESTION 3

1.       The following information was taken from the financial statements of the David Company. All dollar amounts are in millions!

2.       Determine the dollar amount of the Company's revenues in 2002.

2 points   

QUESTION 4

1.       The founders of the Wilmington Corporation estimate that the corporation will need $15,000,000 in order for it to have a reasonable chance to succeed once it begins operations. The founders invested $9,000,000 in the Corporation and received 3,000,000 common shares.

Determine the effects of the founders' investment in the Corporation.

2 points   

QUESTION 5

1.       The Andover Corporation's March 31 unadjusted trial balance included many accounts, including the following.

2.       During February, the company had paid $13,200 to use office space for six months, beginning on February 1.

3.       Determine the dollar amount of prepaid rent the Corporation would report on its March 31 balance sheet.

2 points   

QUESTION 6

1.       The Billerica Company engaged in the following transactions with its customers in July. July 1: provided services to customers who agreed to pay $2,400 by August 1. July 8: received $2,900 from customers serviced in May. July 20: received $2,600 from customers for services to be provided to them in August. July 27: provided additional services to customers and received $4,000.

Show the total effects on the Company's assets, liabilities, and stockholders' equity resulting from its July cash transactions.

2 points   

QUESTION 7

1.       The Charlotte Corporation's February 28 unadjusted trial balance included many accounts, including the following.

2.       During February, the company used up a total of $15,900 supplies.

3.       Determine the dollar amount of supplies expense the Corporation would report on its February income statement.

2 points   

QUESTION 8

1.       At the beginning of the year, the Salem Corporation's liabilities were $600,000 and its stockholders' equity was $1,400,000. During the year, assets increased by $800,000 and stockholders' equity increased by $500,000.

Determine the Corporation's assets at the end of the year.

2 points   

QUESTION 9

1.       The Swansinger Corporation provided $7,100 services to a customer. The customer promised to pay for the services within 30 days.

Determine the effects on the Corporation's resources and sources of resources.

2 points   

QUESTION 10

1.       On January 1 the Whitehouse St Corporation had 40 units of merchandise inventory on hand. Each unit had cost the company $32. During January the company made the following purchases: January 8, 50 units at $34 each and January 21, 60 units at $37 each. The company made the following sales in January: January 10, 42 units at $60 each and January 26, 64 units at $60 each. The company uses the LIFO perpetual inventory method.

Calculate the cost of the Corporation's merchandise inventory on hand on January 31.

2 points   

QUESTION 11

1.      On May 31 the Amesbury Corporation had the following account balances:

2.       Calculate the dollar amount of the Corporation's total liabilities on May 31.

2 points   

QUESTION 12

1.      On October 31, the Gary Company's outstanding deposits were $1,198 and its outstanding checks were $864. The Company's checkbook balance on October 31 was $13,820. The Company's October 31 bank statement showed a balance of $13,481 after a $20 bank service charge and $15 interest revenue.

Determine the Company's October 31 adjusted checkbook balance.

2 points   

QUESTION 13

1.      During June, the Marcie Corporation issued 4,000,000 shares of $1.00 par common stock and received $14,000,000.

Show the effects of this transaction on the company's assets, liabilities, and stockholders' equity.

2 points   

QUESTION 14

1.       For this year, assume the OASDI FICA tax rate is 7% of the first $60,000 of each employee's earnings and the Medicare FICA tax is 2% of each employee's total earnings. Prior to October 2, Michelle had earned gross pay of $59,000. During the week ended October 8, Michelle earned $2,200. During the week, in addition to FICA taxes, Michelle had federal income taxes of $700, state income taxes of $120, and union dues of $7 withheld from her pay.

Calculate the dollar amount of Michelle's net pay for the week ended October 8.

2 points   

QUESTION 15

1.       Over the last several years, the Canton Corporation issued bonds many times.

Calculate the Corporation's 7-year cost of borrowing for the following bond: $10,000,000 principal, 9% annual interest, 7-year life. Cash received by the Corporation was $10,210,000.

2 points   

QUESTION 16

1.       The Bellows Falls Corporation's October 31 adjusted trial balance included many accounts, including the following.

2.       Determine the dollar balance in the supplies expense account on the Corporation's October 31 post-closing trial balance.

2 points   

QUESTION 17

1.       Prior to December 4, the Dracut Corporation's two employees had the following gross pay: Kevin $58,000 and Linda $6,600. During the week ended December 10, Kevin earned $2,500 and Linda $700. For this year, assume the OASDI FICA tax rate is 7% of the first $60,000 of each employee's earnings and the Medicare FICA tax is 1% of each employee's total earnings.

Calculate the Corporation's total FICA payroll taxes for the week ended December 10.

2 points   

QUESTION 18

1.      The following information was taken from the financial statements of the Scott Corporation:

2.       Determine the dollar amount of the Corporation's resources that had been borrowed as of December 31, 2002.

2 points   

QUESTION 19

1.       The Mykel Corporation paid $8,200 for supplies purchased in the previous month.

Determine the effects on the Corporation's assets, liabilities, and stockholders' equity.

2 points   

QUESTION 20

1.       The Winchester Corporation's October 31 adjusted trial balance included many accounts, including the following.

2.       Determine the dollar balance in the Corporation's income summary account before it was closed to retained earnings.

2 points   

QUESTION 21

1.       Prior to December 4, the Mark Corporation's two employees had the following gross pay: Kevin $58,500 and Linda $6,600. During the week ended December 10, Kevin earned $2,500 and Linda $800. The Corporation's federal unemployment tax rate is .8% of the first $7,000 earned by each employee and the state unemployment tax rate is 5% of the first $7,000 earned by each employee.

Calculate the Corporation's total unemployment payroll taxes for the week ended December 10.

2 points   

QUESTION 22

1.      The Salvatore Corporation spent $7,000,000 for buildings. The buildings were expected to have a 50-year life and a residual value of $2,000,000. The Corporation intends to use the straight-line method to depreciate all its assets.

Calculate the total buildings depreciation expense the Corporation will record over the 50-year life of the buildings.

2 points   

QUESTION 23

1.      The Jonathan Corporation's April balance sheet included the following information. Total assets = $325,000,000. Total liabilities = $200,000,000. Total stockholders' equity = $125,000,000. Stockholders' equity consisted of the following four items:

2.       All stock was issued five years ago. Dividends were paid to preferred stock in all previous years except for two years. Total dividends declared and paid in the year ended April 30 were $8,000,000.

3.       Calculate the total dollar amount of dividends paid to preferred stockholders and common stockholders in the year ended April 30.

2 points   

QUESTION 24

1.       The Eileen Corporation spent $4,000,000 for equipment. The equipment was expected to have a 5-year life and a residual value of $500,000. The Corporation intends to use the straight-line method to depreciate all its assets.

Calculate the equipment depreciation expense the Corporation will record for the second year it uses the equipment.

2 points   

QUESTION 25

1.       It is the credit policy of the Kamila Corporation to require credit customers to pay within 30 days from the date they purchase merchandise. An analysis of the Corporation's November 30 accounts receivable subsidiary ledger resulted in the following information. Green Corporation owes $4,800 for merchandise sold to them on November 16. Red Company owes $3,300 for merchandise sold to them on September 15. Yellow Corporation owes $3,700 for merchandise sold to them on July 20. Auburn Company owes $4,500 for merchandise sold to them on August 14. Brown Incorporated owes $6,500 for merchandise sold to them on October 20. Blue Company owes $5,700 for merchandise sold to them on June 17.

Determine the dollar amount of customer's account receivable between 1-30 days past due on November 30.

2 points   

QUESTION 26

1.       The following information was taken from the financial statements of the Billerica Corporation. All dollar amounts are in billions.

2.       Determine the dollar amount of the Corporation's retained earnings account on January 1, 2002.

2 points   

QUESTION 27

1.       The Las Vegas Corporation is considering expanding sales by $70,000 by selling on credit. The Corporation's cash sales averaged $400,000 per year for the last three years. Its cost of goods sold was approximately 60% of sales, its operating expenses were 30% of sales, and its income taxes expense averaged 35% of income before taxes. The company predicts that its cost and expense percentages will remain the same, but only 92% of the credit sales will be able to be collected. For the coming year, the company expects cash sales to be $420,000 and credit sales to be $70,000.

Determine the Corporation's expected net income for the coming year.

2 points   

QUESTION 28

1.       The Hull Corporation is considering retiring one of its bond issues. The bonds are $15,000,000, 8%, 8-year bonds, issued six years ago at par.

Calculate the gain or loss the company would recognize if it retired the bonds for $15,700,000. Assume that all appropriate interest payments have been made on the bonds before they are retired.

2 points   

QUESTION 29

1.      During the year, the Gregg Corporation reported expenses of $8,000, revenues of $11,000, and dividends of $600. At the end of the year, the Corporation reported liabilities of $27,000, assets of $78,000, and contributed capital (common stock + additional paid-in capital) of $18,000.

Determine the dollar amount of the Corporation's retained earnings at the end of the year.

2 points   

QUESTION 30

1.       The Nadres Corporation's July 31 unadjusted trial balance included many accounts, including the following.

2.       Employees provided service of $7,400 to the Corporation during the last week of July and had not received payment for their efforts as of July 31.

3.       Determine the dollar amount of wages expense the Corporation would report on its July 31 income statement.

2 points   

QUESTION 31

1.      In the preparation of its financial statements, the Linda Corporation uses FIFO inventory costing. In the preparation of its federal income taxes return, the Corporation uses LIFO inventory costing. For the year ended December 31, the following information was available from the Corporation's federal income taxes return:

2.       For the year ended December 31, the following information was available from the Corporation's financial statements distributed to owners:

3.       Calculate how much more cash the Corporation has available to use by using LIFO inventory costing for tax purposes instead of using FIFO.

2 points   

QUESTION 32

1.      On May 17, the Nicholas Company borrowed $30,000 from its bank by signing a 30-day, 9% note. The loan and interest are to be paid to the bank on June 16.

Determine the total dollar amount of cash the Company must pay to the bank on June 16.

2 points   

QUESTION 33

1.      On August 1, the Terrence Merchandising Corporation had 8,000 lava lamps in inventory. Each lava lamp had cost the Corporation $9. During August, the Corporation purchased 40,000 additional lava lamps at a cost of $9 each. During August the company sold 42,000 lava lamps at a price of $15 each. The company's operating expenses for August were $112,000 and its income taxes rate was 35% of income before taxes.

Determine the Corporation's August net income.

2 points   

QUESTION 34

1.       During August the Phillip Corporation received $8,700 from customers serviced in July.

Prepare the general journal entry required to record this transaction.

2 points   

QUESTION 35

1.       On June 30, the Lowell Corporation's total resources are $990,000. $270,000 of resources had been borrowed and $470,000 had been invested by owners.

What is the dollar amount of resources generated through management's operation of the company?

2 points   

QUESTION 36

1.      In business, the net dollar amount of resources generated by the management of the Sitha Corporation during a given year is known as

2 points   

QUESTION 37

1.      In business, the dollar amount of resources generated by the management of the Rebekah Corporation and kept in the Corporation is known as

2 points   

QUESTION 38

1.       On October 1, the Vincent Corporation had 30 units of merchandise inventory on hand. Each unit had cost the company $27. During October the company made the following purchases: October 9, 35 units at $25 each and October 23, 40 units at $24 each. The company made the following sales in October: October 12, 42 units at $50 each and October 28, 38 units at $50 each. The company uses the FIFO inventory method.

Calculate the Corporation's October cost of goods sold.

2 points   

QUESTION 39

1.       The McCraw Corporation depreciated its assets by $215,000 during the year.

Determine the effects of such depreciation on the Corporation.

2 points   

QUESTION 40

1.       During May the Patel Corporation recorded cash sales of $200,000 and credit sales of $350,000. Based on its experience, the company expects to be unable to collect 6% of its credit sales. On May 31 the Corporation's balance sheet reported balances in many accounts, including the following:

2.       Calculate the dollar amount of the Corporation's May uncollectible accounts expense.

2 points   

QUESTION 41

1.       The Bradford Corporation's March 31 balance sheet included the following information. Total assets = $325,000,000. Total liabilities = $200,000,000. Total stockholders' equity = $125,000,000. Stockholders' equity consisted of the following four items.

2.       All stock was issued five years ago. Dividends were paid to preferred stock in all previous years except one. Total dividends declared and paid in the year ended March 31 were $6,000,000.

3.       Calculate the total dollar amount of dividends paid to preferred stockholders and common stockholders in the year ended March 31.

2 points   

QUESTION 42

1.       On March 1, the Hoboken Corporation had cash of $33,000, supplies of $7,800, and accounts payable of $5,700. During March, the Corporation engaged in many events, including (a) paying $2,700 for supplies purchased in January, (b) paying $3,300 cash for additional supplies, (c) buying $1,600 additional supplies on account, and (d) using a total of $4,400 of supplies to provide services to customers in March.

Calculate the balance in the supplies T account at the end of March.

2 points   

QUESTION 43

1.       On December 31 the Derry Corporation had the following adjusted account balances.

2.       Calculate the dollar amount of the Corporation's net income.

2 points   

QUESTION 44

1.      During June, the Richard Corporation recorded credit sales of $300,000. Based on its experience, the company expects to be unable to collect 4% of its credit sales. On June 30, the Corporation's balance sheet reported balances in many accounts, including the following:

2.       Determine the dollar amount of cash the Corporation expects to eventually collect from those customers who owed the company as of June 30.

2 points   

QUESTION 45

1.       There are several differences between the accounting methods the Wilkins Corporation uses in the preparation of its financial statements and in the preparation of its federal income taxes return. For the year ended December 31 the company's taxable income on its income statement was $900,000, while it was $850,000 for income taxes purposes. For simplification, assume that the income taxes rate is 30%.

Calculate the deferred income taxes liability the Corporation would report.

2 points   

QUESTION 46

1.       The Kerlene Corporation is considering a plan in which it would increase the size of its operations. As a result of the increased operations, without considering the cost of borrowing, the company expects income before taxes to increase by $3,000,000 per year in years 1-3, and $5,000,000 per year in years 4-9. To increase its operations the company would issue $30,000,000, 11%, 9-year bonds. The company expects to be able to issue the bonds at their principal.

Calculate the Corporation's total expected 9-year increase in income before taxes after considering the cost of borrowing.

2 points   

QUESTION 47

1.      Owners of the Love Corporation invested $25,000,000 in the corporation and received 3,100,000 shares of the company's $2 par common stock. The corporation is authorized to issue a total of 5,000,000 common shares.

Determine the dollar amount reported in the Corporation's common stock account after the 3,100,000 shares were issued to the owners.

2 points   

QUESTION 48

1.      The following information was taken from the financial statements of the Gloria Corporation:

2.       Determine the net dollar amount by which the Corporation's resources changed through management operations in 2002.

2 points   

QUESTION 49

1.      On August 1, the Nicholas Corporation issued $48,000,000, 7%, 20-year bonds and received $48,000,000. Interest on the bonds is to be paid every six months beginning on January 1.

Calculate the Corporation's monthly cost of borrowing by issuing the bonds.

2 points   

QUESTION 50

1.       The Maryellen Company's July 31 bank reconciliation showed four outstanding checks: No. 930 $649, No. 933 $537, No. 934 $645, and No. 935 $613. The Company wrote and recorded the following five checks during August: No. 936 $682, No. 937 $932, No. 938 $5,102, No. 939 $945, and No. 940 $6,207. The Company's August 31 bank statement reported the following five checks were processed by the bank: No. 930 $649, No. 934 $645, No. 935 $613, No. 936 $682, and No. 937 $932. The bank charged the Company $56 for services during August.

Determine the total dollar amount of the Company's outstanding checks on August 31.

2 points   

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