Question

15. At December 31, the stockholders’ equity of Smith Company was as follow:
Common stock, $5 par value: 1,100,000 shares issued
and 1,000,000 shares outstanding $5,500,000
Additional paid-in capital    1,400,000
Retained earnings 1,500,000
Treasury stock, (100,000 shares)     (700,000)
Total stockholders’ equity $7,700,000
The book value per share of common stock is
a. $7.00
b. $7.20
c. $8.40
d. $7.70

16. The fraud triangle applies to
a. U.S companies but not international companies.
b. international companies but not U.S. companies.
c. U.S. and Canadian companies but not other international companies.
d. U.S and international companies.

17.. Lewis Company gathered the following reconciling information in preparing its April bank reconciliation:
Cash balance per books, 4/30 $19,800
Deposits in transit 2,700
Notes receivable and interest collected by bank 6,600
Bank charge for check printing 150
Outstanding checks 13,500
NSF check 1,260
The adjusted cash balance per books on April 30 is
a. $12,930.
b. $14,190.
c. $23,730.
d. $24,990.

18. An aging of a company's accounts receivable indicates that $14,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a
a. debit to Bad Debt Expense for $14,000.
b. debit to Allowance for Doubtful Accounts for $12,900.
c. debit to Bad Debt Expense for $12,900.
d. credit to Allowance for Doubtful Accounts for $14,000.

19. Stockton Company uses the percentage of sales method for recording bad debt expense. For the year, cash sales are $600,000 and credit sales are $2,700,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Stockton Company make to record the bad debt expense?
a. Bad Debt Expense   33,000
  Allowance for Doubtful Accounts    33,000
b. Bad Debt Expense   27,000
  Allowance for Doubtful Accounts    27,000
c. Bad Debt Expense   27,000
  Accounts Receivable    27,000
d. Bad Debt Expense   33,000
  Accounts Receivable    33,000

20. Depreciation is a process of
a. asset devaluation.
b. cost accumulation.
c. cost allocation.
d. asset valuation.

21. On September 1, Joe's Painting Service borrows $150,000 from National Bank on a 4-month, $150,000, 6% note. The entry by Joe's Painting Service to record payment of the note and accrued interest on January 1 is
a. Notes Payable  153,000
  Cash   153,000
b. Notes Payable  150,000
Interest Payable  3,000
  Cash   153,000
c. Notes Payable  150,000
Interest Payable  9,000
  Cash   159,000
d. Notes Payable  150,000
Interest Expense  3,000
  Cash   153,000

22. All of the following are intangible assets except
a. copyrights.
b. goodwill.
c. patents.
d. research and development costs.

23.       If a corporation has only one class of stock, it is referred to as
a. classless stock.
b. preferred stock.
c. solitary stock.
d. common stock.

Answer 1

15

Answer: book value per share of common stock is =$7.70

Working notes for the above answer is as under.

book value per share of common stock

.= Total stockholders’ equity / number of share outstanding

=7,700,000/1,000,000

=$7.7

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16

The fraud triangle applies to

Answer: d. U.S and international companies.

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17

The adjusted cash balance per books on April 30 is =$24,990

Working notes for the above answer is as under.

Cash balance per books, 4/30	19800
Add: Notes receivable and interest collected by bank	6600
Less: Bank charge for check printing	-150
Less: NSF check	-1260
adjusted cash balance per books	24990

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18

c. debit to Bad Debt Expense for $12,900.

Working notes for the above answer is as under.

estimated to be uncollectible.	14000
Less: credit balance Allowance for Doubtful Accounts	-1100
Bad debt expanses	12900

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19

b. Bad Debt Expense   27,000
  Allowance for Doubtful Accounts    27,000

Working notes for the above answer is as under.

Description	Debit $	Credit $
bad debt expanses (2,700,000*1%)	27000
Allowance for Doubt full Accounts		27000

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20.

Depreciation is a process of
Answer: c. cost allocation.

_________________________________

21

d. Notes Payable  150,000
Interest Expense  3,000
  Cash   153,000

Working notes for the above answer is as under.

Description	Debit $	Credit $
Notes Payable	150,000
Interest Payable (150,000*6%*4/12)	3000
Cash		153,000

______________________________________________

22. All of the following are intangible assets except

Answer:d. research and development costs.

__________________________________

23 If a corporation has only one class of stock, it is referred to as
Answer: d. common stock.