On October 1, 2010, Jenson CO. Paid $75,000 for Its Rent for the Five Months from October

On October 1, 2010, Jenson CO. Paid $75,000 for Its Rent for the Five Months from October

Exam 2 Review: Handout
Supplemental Instruction
Iowa State University / Leader:
  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?
  2. $30,000
  3. $45,000
  4. $60,000
  5. $75,000
  6. The records of Greene Enterprises include the following as of June 1, 2010. The Property and Equipment has a balance of $600,000 and the Accumulated Depreciation account has a balance of $133,000. Depreciation for the month of June 2010 has been estimated at $12,500. What will the balance in the Accumulated Depreciation account be after the related adjustment is recorded on June 30, 2010?
  7. $120,500
  8. $145,500
  9. $587,500
  10. $612,500
  11. On February 1 Google borrowed $11,000 and signed a note that promises repayment in a year. The interest rate was 7% annually. The adjusting entry on December 31 will include (round to the nearest dollar)…
  12. Debit to Interest Expense of 706
  13. Debit to Interest Payable of 675
  14. Credit to Interest Expense of 706
  15. Credit to Interest Payable of 11,000
  16. Which of the following statements regarding closing journal entries is correct?
  17. Closing entries transfer net income (or loss) to the Retained Earnings account.
  18. The balance of the Dividends Declared account is transferred to the Retained Earnings account when closing entries are recorded
  19. All income statement accounts and the Dividends Declared account are reset to zero in the closing entry process
  20. All of the above are correct statements
  21. Toyota Inc. began the year with supplies on hand of $43,600. In May and October they purchased $4,700 in supplies (twice). A physical count at year end showed they had $21,850 of supplies left on hand. What amount should Toyota Inc. record as their supplies expense for the year?
  22. $9,400
  23. $21,850
  24. $31,150
  25. $25,550
  26. Which of the following is not a part of the fraud triangle?
  27. Opportunity to commit fraud
  28. Effective internal controls
  29. Incentive to commit fraud
  30. Character to rationalize and conceal fraud
  31. Which of the following is not a principle of internal controls?
  32. Establish responsibility
  33. Restrict Access
  34. Hire an auditor
  35. Document Procedures

Company A's bank statement dated Dec 31, 2011 shows a balance of $792.68. The company's cash records on the same date show a balance of $836.68. The following additional information is available:

Checks Outstanding:

No 846$300.00

No 847$ 50.00

Deposit in Transit: $250.00

NSF Check $102.00

Service fee$ 42.00

  1. What is the proper adjusted cash balance in the book and bank statement?
  2. $692.68
  3. $732.68
  4. $532.68
  5. $780.68
  6. Which of the following is not a subtotal shown on the multistep income statement?
  7. Gross profit
  8. Income before tax
  9. Sales Revenue
  10. Income from operations
  11. 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?
  12. $1,000
  13. $2,000
  14. $3,000
  15. $5,000
  16. Apple Inc. had beginning inventory of $379,000, ending inventory of $124,000, and purchases of $200,000. What was their cost of goods available for sale (COGAS) and cost of goods sold (COGS) for the year respectively?


  1. $579,000 and $455,000
  2. $455,000 and $579,000
  3. $179,000 and $55,000
  4. $579,000 and $179,000
  1. When a perpetual inventory system is used, recording a sale on account (on the day of the sale) would involve all of the following accounts except:
  2. Purchases
  3. Cost of Goods Sold
  4. Inventory
  5. Sales Revenue
  6. Klem Corp. makes a $1,000 sale to a customer with terms of 2/15.n/45. The customer then returns $200 of the merchandise. If the customer pays Klem within the discount period, what is the total amount that the customer will remit to Klem Corp. in full payment of its account?
  7. $780
  8. $784
  9. $980
  10. $1,000
  11. Wal-Mart purchases 500 boxes of apples from a supplier. The goods were purchased FOB shipping point and the goods are in transit (on the way). Who is the owner of the goods at this point in time?
  12. Wal-Mart
  13. Supplier
  14. Both
  15. Neither
  16. Which of the following statements regarding the lower-of-cost or market rule is correct?
  17. One of the most common types of financial statement errors is to estimate the market value of inventories incorrectly
  18. It ensures that inventories are always reported at what they are worth
  19. Replacement cost must be used when inventories fall below or rise above original cost
  20. Market value can fall below cost when an item can be easily replaced by identical goods at a higher cost

Akin Corp had the following information:

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

Apr. 13Purchased 8 units @ $22 each

Aug. 31Purchased 25 units @ $25 each

Dec. 28 Sold 30 units

  1. What is LIFO COGS using the above information?
  2. 735
  3. 710
  4. 800
  5. 691
  6. What is the FIFO COGS using the above information
  7. 756
  8. 691
  9. 815
  10. 745
  11. Which of the following is false regarding the understatement of inventory?
  12. COGS is overstated this year
  13. COGS is understated this year
  14. Net Income is understated
  15. Assets are understated
  16. Target had beginning inventory equal to 1,000 and ending inventory equal to 2000. COGS was equal to 6,000. What was there days to sell? Formula = (Average Inventory ÷ Cost of Goods Sold) x 365
  17. 84 Days
  18. 99 Days
  19. 91 Days
  20. 87 Days
  21. What does the gross profit percentage ratio tell a financial statement user?
  22. How much per dollar of sales is kept as net income
  23. How much per dollar of sales is kept after the product is paid for
  24. How much per dollar of sales is kept after operating expenses
  25. How much per dollar of sales is kept after tax