Question- 1
FlipCorp.hasthefollowinginformationregardingitsallowanceforuncollectibleaccounts.
BalanceDecember31, 2014 $28,000
Write-offsduring2015 (27,000)
Recoveriesduring2015 7,000
RequiredallowanceatDecember31, 2015 31,000
Preparet hejournalentriesforthewrite-offsandrecoveriesfor2015,andforthe provisionfor
UncollectibleaccountsexpenseatDecember31,2015. Do not provide any journal explanations. If no entry is necessary, write "no
entry." (please be sure to fill the date, account name and debit/credit)
General Journal:
Write-offs:
Date Account Debit Credit
Question- 2
On January 1, 2014, Floppy enters into an agreement with State Finance Corporation to sell a group of receivables without
recourse. The total face value of the receivables is $150,000. State Finance Corp. will charge 15%interest on the weighted-average
time to maturity of the receivables of 95 days plus a 2%fee. Do
not provide any journal explanations. If no entry is necessary, write "no entry."
Date Account Debit Credit
Question- 3
Floopy uses the periodic inventory method for inventories. Prepare the journal entries for each of the following transactions. Do not
provide any journal explanations. If no entry is necessary, write "no entry." Floopy uses the net method for recording inventory
transactions.
>> On January 5, year 2, purchased $17,000 of garden tillers on account fromFlip, terms 2/10, n/30, FOB destination.
Freight charges were $200.
>> On January 10, year 2, returned garden tillers worth $2,000 to Flip due to defects.
>> On January 24, year 2, paid for tillers purchased fromFlip.
>> On January 28, year 2, purchased $30,000 of lawn mowers fromFlam, terms 3/10, n/30, FOB shipping point. The
freight charges were $820.
>> On February 6, year 2, paid for the lawn mowers purchased on January 28, year 2, fromFlam.
AllowanceforUncollectibleAccountsandProvisionforUncollectibleAccounts
Date Account Debit Credit
Question- 4
On January 2, 2014, Floppy Co. issued 6% bonds with a face value of $440,000 when the market interest rate was 8% for $380,208.
The bonds are due in ten years, and interest is payable every June 30 and December 31. Floppy does not elect the fair value option
for reporting its financial liabilities. Do not provide any journal explanations. If no entry is necessary, write "no entry." Round all
numbers to the nearest dollar.
Required:
a. Prepare the journal entries for the bond issue on January 2, 2014.
b. Prepare the journal entry for the interest payment on June 30, 2014.
c. Prepare any required end of 2014 adjusting entry.
General Journal:
Date Account Debit Credit
Question- 5
January 1, 2014, Frick Co. issued 3,000 of its 9%, $1,000 face value bonds at 101 1/2. In connection with the sale of these bonds,
Frick paid the following expenses:
Promotion costs $ 20,000
Engraving and printing 35,000
Legal fees & commissions 200,000
What amount should Frick record as:
a. bond issue costs to be amortized over the termof the bonds?
b. bond premium or discount?
Question- 6
On July 1, 2014, Day Co. received $103,288 for $100,000 face amount, 12%bonds, a price that yields 10%. Assuming management
does not elect the fair value option, interest expense & carrying value of the bond at December 31, 2014, should be? Round answers
to the nearest dollar.
Interest expense?
Carrying value of the bond at Dec 31,2014?
Question- 7
For the issuer of a ten-year termbond, the amount of amortization using the interest method would increase each year if the bond was sold at a
a. Discount Premium
No Yes
b. Discount Premium
NoNo
c. Discount Premium
d. Yes No
Discount Premium
Yes Yes
Question- 8
On July 1, 2014, Frick Co. purchased as a held-to-maturity investment $1,000,000 of Frack Inc.'s 8%bonds for $946,000, includingaccrued interest of $40,000.The bonds were purchased toyield 10%interest. The bonds mature on January 1, 2022, and pay interest annually on January 1. Frick uses the effective interest method of amortization. In its December 31, 2015 balance sheet, what amount should Frick report as investment in bonds? Round all numbers to nearest dollar.
Question- 9
On March 31, year 1, Frick, Inc.'s bondholders exchanged their convertible bonds for common stock. The carrying amount of these bonds on Frick's books was less than the market value but greater than the par value of the common stock issued. If Frick used the book value method of accounting for the conversion, which of the following statements correctly states an effect of this conversion?
a. Additional paid-in capital is decreased.
b. Retained earnings is increased.
c. An extraordinary loss is recognized.
d. Stockholders' equity is increased.
Question- 10
Flip Co. had the following balances at December 31, 2015:
Cash in checking account $35,000
Cash in money market account 75,000
US Treasury bill, purchased 12/1/2015, maturing 3/31/2016 350,000
US Treasury bill, purchased 11/1/2015, maturing 1/31/2016 400,000
Flip's policy is to treat as cash equivalents all highly liquid investments with a maturity of three months or less when purchased.
What amount should Flip report as cash and cash equivalents in its December 31, 2015 balance sheet?
Question- 11
In preparing its August 31, 2015 bank reconciliation, Floppy Corp. has available the following information:
Balance per bank statement, 8/31/15 $18,050
Outstanding checks, 8/31/15 3,250
Return of customer's check for insufficient funds,
8/31/15
600
Deposit in transit, 8/31/15 2,750
Bank service charges for August 100
At August 31, 2015, Floppy's correct cash balance is?
Question- 12
On the December 31, 2015 balance sheet of Flip Co., the current receivables consisted of the following:
Trade accounts receivable $ 93,000
Allowance for uncollectible accounts (3,000)
Claimagainst shipper for goods lost in transit (November 2015) 2,000
Selling price of unsold goods sent by Flap on consignment at 130%of cost
(not included in Flip's ending inventory) 26,000
Security deposit on lease of warehouse used for storing some inventories 30,000
Total $150,000
At December 31, 2015, the correct total of Filp's current net receivables was?
Question- 13
Flip Co. has an 8% note receivable dated June 30, 2014, in the original amount of $150,000. Payments of $50,000 in principal plus
accrued interest are due annually on July 1, 2015, 2016, and 2017. In its June 30, 2017 balance sheet what amount should Flipreport as a current asset for interest on the note receivable?
Question- 14
At December 31, 2014, Filp Co. had a balance sheet credit balance of $260,000 in its allowance for uncollectible accounts. Based on
past experience, 2%of Filp's credit sales have been uncollectible. During 2015 Filp wrote off $325,000 of uncollectible accounts.
Credit sales for 2015 were $9,500,000. In its December 31, 2015 balance sheet, what amount should Filp report as allowance foruncollectible accounts?
Question- 15
Floppy Corp. factored $600,000 of accounts receivable to Floozy Corp. on October 1, 2015. Control was surrendered by Floppy.
Floozy accepted the receivables subject to recourse for nonpayment. Floozy assessed a fee of 3%and retains a holdback equal to
5%of the accounts receivable. In addition, Floozy charged 15%interest computed on a weighted-average time to maturity of the
receivables of fifty-four days. The fair value of the recourse obligation is $9,000. Floppy will record:
a. cash of ?
b. a loss of ?
Question- 16
In its 2015 financial statements, FlamCo.reported interest expense of $85,000 in its income statement and cash paid for interest of
$68,000 in its cash flow statement. There was no prepaid interest or interest capitalization either at the beginning or end of 2015.
Accrued interest at December 31, 2014, was $5,000.What amount should Flamreport as accrued interest payable in its December31, 2015 balance sheet?
Question- 17
FlamCo.salaried employees are paid biweekly. Advances made to employees are paid back by payroll deductions. Information
relating to salaries follows:
12/31/14 12/31/15
Employee advances $24,000 $36,000
Accrued salaries payable 40,000 ?
Salaries paid during 2015 (gross) 420,000
Salaries expense during 2015 390,000
In Flam's December 31, 2015 balance sheet, accrued salaries payable was?
Question- 18
FlamCo.'s payroll for the month ended January 31, 2015, is summarized as follows:
Total wages $10,000
Federal income tax withheld 1,200
All wages paid were subject to FICA. FICAtax rates were 8% each for employee and employer. Flamremits payroll taxes on the 15th
of the following month. In its financial statements for the month ended January 31, 2015, what amounts should Flamreport as
a. total payroll tax liability?
b. payroll tax expense?
Question- 19
Floozy Co. sells its products in reusable containers. The customer is charged a deposit for each container delivered and receives a
refund for each container returned within two years after the year of delivery. Floozy accounts for the containers not returned
within the time limit as being retired by sale at the deposit amount. Information for 2016 is as follows:
Container deposits at December 31, 2015 fromdeliveries in
2014 $150,000
2015 430,000 $580,000
Deposits for containers delivered in 2016 870,000
Deposits for containers returned in 2016 fromdeliveries in
2014 $ 90,000
2015 250,000
2016 286,000 626,000
In Floozy's December 31, 2016 balance sheet, the liability for deposits on returnable containers should be?