Final Review
Supplemental Instruction
Iowa State University / Leader: / Austin E.
Course: / Accounting 284
Instructor: / Kreiser
Date: / 12/8/16

1.  On October 1, 2010, Jenson CO. paid $75,000 for its rent for the five months from October 2010 through February 2011. The entire amount of the payment was recorded in the Prepaid Rent account. No adjustments have been recorded relating to this account. If the company makes an adjustment as of December 31, 2010, what amount should be included in the related adjusting journal entry?

  1. $30,000
  2. $45,000
  3. $60,000
  4. $75,000

2.  The primary objective of financial reporting is to:

  1. provide accurate historical information.
  2. provide useful information to external decision makers.
  3. provide operating information to managers.
  4. meet legal requirements.

3.  Consider the following information: beginning inventory (physically counted) was $4,000, ending inventory (physically counted) was $2,000; purchases during the period totaled $10,000; and the recorded cost of goods sold during the period totaled $9,000. What was the amount of shrinkage during the period?

  1. $1,000
  2. $2,000
  3. $3,000
  4. $5,000

*Akin Corp had the following information:

Jan. 1 Beginning Inventory is comprised of 7 units @ $20 each

Apr. 13 Purchased 8 units @ $22 each

Aug. 31 Purchased 25 units @ $25 each

Dec. 28 Sold 30 units

4.  What is LIFO COGS using the above information?

  1. 735
  2. 710
  3. 800
  4. 691

5.  What is the FIFO COGS using the above information?

  1. 756
  2. 691
  3. 815
  4. 745

6.  On August 1st a company took out a loan for $12,000. The annual interest rate is 6%. What amount of interest expense should the company recognize on December 31st?

  1. $720
  2. $300
  3. $240
  4. $320

7.  On average, 5% of credit sales has been uncollectible in the past. At the end of the year, the balance of accounts receivable is $100,000 and the allowance for doubtful accounts has a credit balance of $500 net credit sales during the year were $150,000. Using the percentage of credit sales method, the estimated bad debt expense would be:

a.  $5,000.
b.  $7,000.
c.  $7,500.
d.  indeterminable;

8.  The amount of uncollectible accounts at the end of the year is estimated to be $25,000 using the aging of accounts receivable method. The balance in the Allowance of Doubtful Accounts account is an $8,000 credit before adjustment. Assuming no accounts are written off during the period, what will be the amount of bad debts expense for the period?

a.  $8,000.
b.  $17,000.
c.  $25,000.
d.  $33,000.

9.  Sure Company purchased a machine on January 1, 2004, at a cash cost of $12,000. The estimated useful life is 10 years, and the estimated residual value is $3,000. The company will use the double declining-balance method. Depreciation expense for the second year will be

a.  $2,400.

b.  $2,230.

c.  $1,920.

d.  $ 900.

10.  Simpkins Co. disposed of an asset at the end of year 8 of the asset's life originally estimated to be 10 years. The original cost was $50,000 with an estimated residual value of $5,000 and it was being depreciated under the straight-line method. It was sold for $10,000 cash. What was the gain or loss on the disposal at the end of year 8?

a.  $4,000 gain

b.  $4,000 loss

c.  $1,000 gain

d.  No gain or loss

Gerdin Corporation sold its $1,000,000, 7%, ten-year bonds to the public on January 1, 2004. The bonds pay interest annually, beginning on December 31, 2004. Austin received $1,153,420 in cash at the issuance of the bonds. The market rate of interest when the bonds were sold was 5%.

11. What is the carrying value of the bond on December 31, 2005 assuming the effective-interest method is used?

a.  $1,000,000

b.  $1,128,146

c.  $1,135,782

d.  $1,153,420

12. A stock split causes:

  1. The market value per share to increase
  2. A change in the par value per share
  3. A decrease in the number of shares outstanding
  4. A journal entry is made to record the changes made to stockholders’ equity

13. The following is selected financial information for Cowboy Corporation.

Net income $54,000

Decrease in accounts payable 3,000

Decrease in inventory 6,000

Depreciation expense 9,000

Increase in accounts receivable 15,000

What is the amount of cash flows provided by operating activities under the indirect method?

a.  $51,000

b.  $57,000

c.  $81,000

d.  $87,000

14. Cyclone Corporation was organized in 2010. Its corporate charter authorized the issuance of 50,000 shares of common stock (par value $5 per share).

Part A: Prepare journal entries for each of the following transactions.

January 1: Sold and issued 45,000 shares of common stock for cash at $25 per share.

June 1: Purchased 7,500 shares of common stock in the open market at $24 per share.

August 1: Sold 1,000 shares of treasury stock at $26 per share.

October 1: Sold another 1,500 shares of treasury stock at $23 per share.

Part B: Compute the number of shares outstanding at December 31st, 2010.