Accountancy Study Guide

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13. The interest on a $4,000, 6%, 60-day note receivable is
$40.
14. The maturity value of a $2,000, 6%, 60-day note receivable dated February 10th is
$2,020
15. A disadvantage of the corporate form of business is
government regulation..

16. James Corporation issued 2,000 shares of $5 par value common stock for $20 per share. The entry to record this transaction includes a credit to Paid-in Capital in Excess of Par for
$30,000.
17.The purchase of treasury stock
decreases total assets and decreases total stockholders' equity. 18.The ability of a corporation to obtain capital is
enhanced because of limited liability and ease of share transferability. 19.Par value
is the value assigned per share in the corporate charter 20.The Paid-in Capital in Excess of Par Value is increased in the accounting records when
capital stock is issued at an amount greater than par value. 21.Dividends in arrears are dividends on
cumulative preferred stock that have not been declared for a given period of time. 22. Ross Paints reported sales of $350,000, total assets of $150,000, total stock-holders' equity of $60,000, current assets of $50,000, current liabilities of $30,000, and cash of $15,000. In a vertical analysis of the balance sheet, cash would be shown as

10%
23.Richer Company paid $21,000 to buy 4,000 shares of its $6 par value common stock for the treasury. The stock was originally sold for $25,000. The entry to record the purchase includes a
debit to Treasury Stock for $21,000.
24.Indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections:
Total AssetsTotal LiabilitiesTotal Stockholders’ Equity
No changeIncreaseDecrease

1.The payment of a liability
decreases assets and liabilities.

2.A payment of a portion of accounts payable wil
not affect stockholders’ equity.

3.The current ratio is
used to evaluate a company's liquidity and short-term debt paying ability. 4.The unearned revenue account is classified as a
liability
5.The Land account would include all of the following costs except. the cost of building a fence.
9.The interest charged on a $100,000 note payable, at the rate of 9%, on a 90-day note would b. $2,250.
11.On January 1, 2003, Brunson Company, a calendar-year company, issued $200,000 of notes payable, of which $50,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2003, I Current Liabilities, $50,000; Long-term Debt, $150,000.

12.The ability of a corporation to obtain capital is
enhanced because of limited liability and ease of share transferability. 13.A corporation has the following account balances: Common Stock, $1 par value, $20,000; Paid-in Capital in Excess of Par Value, $900,000. Based on this information, the

.number of shares issued is 20,000
15.A common measure of liquidity is
receivable turnover
The Winslow Department Store had net credit sales of $13,000,000 and cost of goods sold of $10,000,000 for the year. The average inventory for the year amounted to $2,500,000.

20.The inventory turnover ratio for the year is
a.4 times.
21.The average days in inventory during the year was approximately
c.91 days.

Towleen Company purchased equipment on January 1, 2003, for $65,000. It is estimated that the equipment will have a $5,000 salvage value at the end of its 5-year useful life. It is also estimated that the equipment will produce 100,000 units over its 5-year life. Instructions

Answer the following independent questions.
1.Compute the amount of depreciation expense for the year ended December 31, 2003, using the straight-line method of depreciation. 2.If 16,000 units of product are produced in 2003 and 24,000 units are produced in...
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