Important BUBBLE your responses in the space provided next to each question on the attached Scantron sheet For the following Multiple Choice Questions identify the letter of the choice A B C or D that best completes the statement or answers the question 1 On January 1 2012 Kroger company s Stockholder s Equity account had a balance of 23 500 During the year 2012 the company issued additional stock for 6 000 generated revenues of 92 200 and recorded expenses of 64 100 They also paid dividends to their shareholders If the Stockholders Equity had a balance of 55 600 on December 31 2012 determine the amount of dividends paid by Kroger Company during 2012 A 4 000 B 3 000 C 2 000 D 1 000 2 The total transactions carried out by Palmer Corporation during 2012 caused an increase in total assets of 25 650 and a decrease in total liabilities of 12 250 If no additional investment was made by the investors during the year and dividends of 7 850 were paid what was Palmer Corporation s net income for the year A 53 600 B 45 750 C 21 250 D 30 050 3 A company pays each of its two office employees each Friday at the rate of 100 per day each for a five day week that begins on Monday If the monthly accounting period ends on Tuesday the journal entry on Friday will include A Debit Unpaid Salaries 400 and debit Salaries Expense 600 B Debit Salaries Expense 400 and credit Salaries Payable 400 C Debit Salaries Expense 400 and debit Salaries Payable 600 D Debit Salaries Payable 400 and debit Salaries Expense 600 4 On January 15 Peach Wholesale Company the seller sold 100 cases of peaches to Giant Company the buyer for 10 per case with terms of 2 10 n 30 On January 18 Giant returned 20 cases of rotten peaches to Peach Wholesale Company and received immediate credit On January 22 Giant Company paid Peach the amount due Given this information Peach Wholesale Company s journal entry on January 22 will include A A credit to Accounts Receivable of 200 B A credit to Accounts Receivable of 800 C A credit to Sales Discounts of 16 D A debit to Accounts Receivable of 800 5 The first in first out FIFO method of inventory valuation is characterized by lower compared to the last in first out method income taxes when prices are rising lower compared to the last in first out method income taxes when prices are declining A B C no correlation between cost of goods sold and current cost D more compared to the last in first out method complex record keeping 6 This year a company purchased less expensive merchandise inventory but sold them at last year s selling prices What effect will this change have on the company s gross profit rate this year in comparison to last year A The ratio will not change B The ratio will increase C The ratio will decrease D The change cannot be determined 7 A partial balance sheet for Fontana Company appears below December 31 2011 Accounts receivable net of allowance of 5 600 560 000 Which one of the following statements is true concerning the company s accounts receivable as of December 31 A The company expects to collect 565 600 from its customers B The net realizable value of the company s accounts receivable is 554 400 C The company thinks its customers will not pay 5 600 of the amount owed D The company wrote off 5 600 of uncollectible accounts during the year 8 Which of the following statements is NOT true 9 Intangible assets with indefinite lives are not amortized but tested for impairment A B Accelerated Depreciation allows a company to save on income taxes in an asset s early years C Most companies use the straight line method of depreciation for financial accounting purposes because they want to present the most favorable impression possible D Research and Development costs leading to successful patents are capitalized on balance sheets In a period when prices are rising and inventory quantities are stable the inventory method that would always result in the highest cost of ending inventory is the A Specific Identification Method B First In First Out FIFO Method C Last in First Out LIFO Method D Average Cost Method 10 Chen Company issues bonds with a par value of 800 000 on their issue date for 735 464 The bonds mature in 5 years and pay 6 annual interest in semiannual payments On the issue date the market rate of interest annual is 8 Compute the total cost of borrowing for Chen Company A 184 536 B 175 464 C 304 536 D 55 464 11 Sales taxes collected by a company on behalf of the state and local government are recorded by A A debit to an expense account B A credit to a revenue account C A debit to a revenue account D A credit to a liability account 12 Bonds payable should be reported as a long term liability on the balance sheet of the issuing corporation at A Face value less any unamortized discount or plus any unamortized premium B Current bond market price C Face value less any unamortized premium or plus any unamortized discount D Face value less accrued interest since the last interest payment date 13 A 500 000 bond issue sold for 98 Therefore the bonds A Sold at a discount because the contractual interest rate was lower than the market interest rate B Sold for the 500 000 face amount less 10 000 of accrued interest C Sold at a premium because the contractual interest rate was higher than the market interest rate D Sold at a discount because the market interest rate was lower than the contractual interest rate 14 Action Travel has 10 employees each working 40 hours per week and earning 20 an hour Federal income taxes are withheld at 15 and state income taxes at 6 FICA taxes are 7 65 and unemployment taxes are 3 8 of the first 7 000 earned per employee What is the actual direct deposit of payroll for the first week of January A 5 404 B 5 708 C 5 442 D 8 000 15 On December 1 2012 Weaver Inc retired 10 1 000 000 bonds at 102 The carrying value of the bonds on the date of retirement was 1 092 800 How much gain or loss should be recognized on this bond retirement A 0 gain B 111 800 gain C 72 800 gain D 102 800 gain 16 The declaration and issuance of a common stock dividend A Has no effect on assets liabilities or total shareholders equity B Decreases total shareholders equity and increases common stock C Decreases assets and decreases total shareholders equity D Does not change retained earnings or paid in capital 17 When dividends are declared in one fiscal year and paid in the next fiscal year the liability for the dividend should be recorded on the A Date the dividend is …
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