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Instructions

Quiz #2 Professor Talbot
Grade 0 Save this file as: Last Name_First name_ACCT 301_Quiz 2
Name______________________________________
Start time_________________ Finish time__________________
Fall 2015 ACCT 301 UMUC
Welcome to Quiz 3
Once you open up the exam found in the assignment section under quiz 3,
You will have 2.5 hours to complete the quiz, closed book with no resources other than one page of your personal notes.
Please turn in the one page of personal notes with this excel file after these instuctions in the assignment section.
Also on the top of the page annotate your start time and ending time and it should be no longer than 2 1/2 hours.
Please study for this quiz as a closed book test and study like you would any quiz that you take in the classroom.
Understand Stockholders’ Equity: Classes of Capital Stock, be able to prepare the Stockholders’ Equity section of the balance sheet.
Property, Plants, and Equipment / PPE (Capital Assets; Fixed Assets).
Understand journal entries for PPE and accumulated depreciation.
How are these values changing, from year to year?
PPE, Accumulated Depreciation, Net PPE.
Study inventory methods, FIFO, LIFO, avg cost
Study cash bank recociliations and internal control
Receivables and Payables
Paid In Capital, Retained Earnings, Owners’ Equity, Dividends, Treasury Stock
Study accounts recievable and the allowance method
Know the 3 depreciation methods, straight line, units of production and double declining balance methods.
Study the Excel homework and exercises, review the in class discussions and the reading material.
Good luck on the quiz and make sure that you upload the excel document by Thursday at 11:45 in the assignment section of the Leo classroom.
Save this file as:
Failure to follow these instructions will result in a reduction in points on Quiz 3
File name: Last Name_First name_ACCT 301_Quiz 2
Total Quiz is worth 100 points.
Each multiple choice question is worth 2 points, each exercise is worth 10 points.

Exercise 1

Exercise #1 Points
Presented below is a partial stockholders' equity section of Ruple Corporation's balance sheet on
December 31, 2014:
Stockholders' Equity
Paid-In Capital
Capital Stock
Common Stock, $5 par value, 300,000 shares
authorized; _____ shares issued and _____ outstanding…………. $1,200,000
Additional Paid-In Capital
In excess of par value……………………………………………….. 120,000
Retained Earnings……………………………………………………….. 500,000
Less: Treasury stock, 10,000 shares……………………………….. (120,000)
Total Stockholders' Equity…………...…………………………………...... $1,700,000
Instructions
Complete the following statements and show your computations.
a. The number of shares of common stock issued is __________.
b. The number of shares of common stock outstanding is __________.
c. The total paid in capital is $__________.
d. The cost per share of the treasury stock was $__________.
e. Total number of shares authorized is______________.

Exercise 2

Exercise #2 Points
The Remove-U-Tattoo Clinic purchased a surgical laser for $84,000 on January 1, 2014. The estimated
salvage value is $4,000. The laser has a useful life of five years and the clinic expects to use it 10,000 hours.
It was used for 900 hours in 2014; 2,100 hours in 2015; 2,400 hours in 2016.
Instructions
Showing all of your computations, compute the book value and the accumulated depreciation for
December 31, 2015 under each of the following three methods:
(1) Straight-line:
2015 accumulated depreciation ____________________ 2015 book value ____________________
(2) Units-of-activity:
2015 accumulated depreciation ____________________ 2015 book value ____________________
(3) Double-declining balance:
2015 accumulated depreciation ____________________ 2015 book value ____________________

Exercise 3

Exercise #3 Points
The adjusted trial balance accounts:
Advertising Expense 15,000
Cost of Goods Sold 347,000
Depreciation Expense 3,500
Freight-out 2,000
Income Tax Expense 21,700
Interest Expense 19,000
Interest Revenue 25,000
Merchandise Inventory 35,750
Prepaid Rent 4,500
Sales 575,000
Sales Discounts 9,500
Sales Returns and Allowances 50,000
Store Salaries Expense 74,000
Unearned Revenue 8,000
Utilities Expense 18,000
Prepare a multiple-step income statement, in proper form, for the year ended December 31, 2014 for Cosey Inc.
Also known as a classified income statement

Mult choice

Answers to the 30 multiple choice questions 2 points each, 30 questions, for 60 point total
Points
1 < please record 1) Which of the following represents the largest number of common shares?
2 answer here a. Treasury shares
3 b. Issued shares
4 c. Outstanding shares
5 d. Authorized shares
6
7 2) Which of the following characteristics is considered to be an advantage of the corporate form of organization?
8 a. very low regulation
9 b. limited liability
10 c. The absence of a perpetual existence
11 < please record d. personal liability
12 answer here
13 3) The following data is available for Blaine Corporation at December 31, 2013:
14 Common stock, par $10 (authorized 25,000 shares) $200,000
15 Treasury Stock (at cost $15 per share) 900
16 Based on the data, how many shares of common stock are outstanding?
17 a. 25,000
18 b. 20,000
19 c. 24,940
20 d. 19,940
21
22 < please record 4) Treasury stock is
23 answer here a. stock issued by the U.S. Treasury Department.
24 b. stock purchased by a corporation and held as an investment in its treasury.
25 c. corporate stock issued by the treasurer of a company.
26 d. a corporation's own stock which has been reacquired but not retired.
27
28 5) Treasury stock should be reported in the financial statements of a corporation as a(n)
29 < please record a. investment.
30 answer here b. liability.
c. deduction from total paid-in capital.
d. deduction from total paid-in capital and retained earnings.
6) Bonds payable should be disclosed on the balance sheet.
a. At their face value minus any unamortized premiums.
b. At their face value plus any unamortized premiums.
c. At their maturity value.
d. At their face value.
7) When the contract interest rate for a bond exceeds the effective interest rate of the bond, then:
a. The price of the bond will be equal to the future cash flow associated with the bond.
b. The bond will be issued at a premium.
c. The bond will be issued at a discout.
d. The face value of the bond will fluctuate over its life.
8) The date on which a cash dividend becomes a binding legal obligation is on the
a. declaration date.
b. date of record.
c. payment date.
d. last day of the fiscal year-end.
9) Which of the following categories/methods would be used to account for an investment, where the intent of the investment was primarily for short-term profits?
a. Trading securities
b. Available-for-sale securities
c. Equity method
d. Held to maturity securities
10) Which of the following is not a significant date with respect to dividends?
a. The declaration date
b. The incorporation date
c. The record date
d. The payment date
11) Dividends Payable is classified as a
a. long-term liability.
b. contra stockholders' equity account to Retained Earnings.
c. current liability.
d. stockholders' equity account.
12) The trading securities owned by a company are:
a. reported on the balance sheet as a contra-equity account.
b. reported on the balance sheet as a current asset.
c. reported on the balance sheet as a reduction of liabilities.
d. reported on the balance sheet as a noncurrent asset.
13) Which of the following are also called trade receivables?
a. Accounts receivable
b. Other receivables
c. Advances to employees
d. Income taxes refundable
14) Which of the following is not reported under additional paid-in capital?
(a) Paid-in capital in excess of par value.
(b) Treasury Stock
(c) Paid-in capital in excess of stated value.
(d) Paid-in capital from treasury stock.
15) Depreciation is a process of:
(a) valuation.
(b) cost allocation.
(c) cash accumulation.
(d) appraisal.
16) All of the following factors in computing depreciation are estimates except
a. cost.
b. residual value.
c. salvage value.
d. useful life.
17) The maturity value of a $60,000, 10%, 60-day note receivable dated July 3 is
a. $60,000
b. $61,000
c. $66,000
d. $70,000
18) The book value of an asset is equal to the
a. asset's fair value less its historical cost.
b. blue book value relied on by secondary markets.
c. replacement cost of the asset.
d. asset's cost less accumulated depreciation.
19) In computing depreciation, salvage value is
a. the fair value of a plant asset on the date of acquisition.
b. subtracted from accumulated depreciation to determine the plant asset's depreciable cost.
c. an estimate of a plant asset's value at the end of its useful life.
d. ignored in all the depreciation methods.
20) The best managed companies will have
a. no uncollectible accounts.
b. a very strict credit policy.
c. a very lenient credit policy.
d. some accounts that will prove to be uncollectible.
21) The units-of-activity method is generally not suitable for
a. airplanes.
b. buildings.
c. delivery equipment.
d. factory machinery.
22) Bad Debts Expense is considered
a. an avoidable cost in doing business on a credit basis.
b. an internal control weakness.
c. a necessary risk of doing business on a credit basis.
d. avoidable unless there is a recession.
23) A gain or loss on disposal of a plant asset is determined by comparing the
a. replacement cost of the asset with the asset's original cost.
b. book value of the asset with the asset's original cost.
c. original cost of the asset with the proceeds received from its sale.
d. book value of the asset with the proceeds received from its sale.
24) Receivables might be sold to
a. lengthen the cash-to-cash operating cycle.
b take advantage of deep discounts on the cash realizable value of receivables.
c. generate cash quickly.
d. finance companies at an amount greater than cash realizable value.
25) An asset which costs $29,800 and has accumulated depreciation of $8,000 is sold for $21,600. What amount of gain of loss will be recognized when the asset is sold?
a. A gain of $200.
b. A loss of $200.
c. A loss of $8,200.
d. A gain of $8,200.
26) On a balance sheet, natural resources may be described more specifically as all of the following except
a. land improvements.
b. mineral deposits.
c. oil reserves.
d. timberlands.
27) Depletion is
a. a decrease in market value of natural resources.
b. the amount of spoilage that occurs when natural resources are extracted.
c. the allocation of the cost of natural resources to expense.
d. the method used to record unsuccessful patents
28) An item is considered material if
a. it doesn't costs a lot of money.
b. it is of a tangible good intended for re-sale.
c. it is likely to influence the decision of an investor or creditor.
d. the cost of reporting the item is greater than its benefits.
29) Identify the item below where the terms are not related.
a. Equipment-depreciation
b. Franchise-depreciation
c. Copyright-amortization
d. Oil well-depletion
30) From an internal control standpoint, the asset most susceptible to improper diversion and use is
a. prepaid insurance.
b. cash.
c. Equipment
d. Investments

Exercise 4

Exercise #4 Points
The Stoney Company sells many products. Wolie is one of its popular items. Below is an analysis
of the inventory purchases and sales of Wolie for the month of March. Stoney Company uses
the periodic inventory system.
Units Units Unit Cost Unit Selling Price
1-Mar Beginning inventory 1,500 $0.80
3-Mar Purchase 6,000 $0.84
4-Mar Sales 5,000 $2.00
16-Mar Purchase 3,000 $0.88
25-Mar Purchase 4,500 $0.96
30-Mar Sales 4,000 $2.00
(a) Using the FIFO assumption, calculate the cost of goods sold and ending inventory for March.
(Show and label computations. Perform all calculations to two decimal places.)
b) Using the Average Cost assumption, calculate the cost of goods sold
and ending inventory for March.
(Show and label computations. Perform all calculations to two decimal places.)
c) Using the LIFO Cost assumption, calculate the cost of goods sold
and ending inventory for March.
(Show and label computations. Perform all calculations to two decimal places.)