L1.(40 points) each multiple choice question, select the gne best answer and mark the appropriate box on the ntron form Gomel Corporation issues 800, 10-year, 8%, $1,000 bonds dated January 1, 2015, at 96, The j entry to record the issuance will show a a. debit to Cash of $800,000. 6 credit to Discount on Bonds Payable for $32,000. c. credit to Bonds Payable for $768,000. d. debit to Cash for $768,000. 2 Liquidity ratios measure a company's a. operating cycle b. revenue-producing ability. 2. short-term debt paying ability. d. long-range solvency 3. The amount of sales tax collected by a retail store when making sales is a. a miscellaneous revenue for the store. ba current liability c. not recorded because it is a tax paid by the customer. d. recorded as an operating expense. Goodwill can be recorded a. when customers keep returning because they are satisfied with the company's products. b. when the company acquires a good location for its business. c. when the company has exceptional management. d. only when a company purchases another existing business. 4. If Morgan Company issues 2,000 shares of $5 par value common stock for $140,000, the account a. Common Stock will be credited for $140,000. b. Paid-in Capital in Excess of Par Value will be credited for $10,000. c. Paid-in Capital in Excess of Par Value will be credited for $130,000 5. d. Cash will be debited for $130,000. 6. Stock dividends and stock splits have the following effects on retained earnings: Stock Splits Stock Dividends No change Decrease a. Increase b. No change c. Decrease d. No change No change Page 1 of 11 Tyler Company purchased machinery on January 1 at a list price of $200,000, with credit terms Payment was made within the discount period. Tyler paid $10,000 sales tax on the machinery, and paid mstallation charges of $3,520. Prior to installation, Tyler paid $8,000 to pour a concrete slab on which to place the machinery. What is the total cost of the new machinery? a. $209,520 $217,520 c. $221,520 d. $202,000 Failure to record depreciation expense causes which of the following to occur: a. Current assets are not affected and liabilities are understated. Current assets are overstated and retained earnings is overstated Current assets are not affected and retained earnings is overstated. d. Current assets are overstated and retained earnings is understated. A company sells a plant asset that originally cost $150,000 for $50,000 on December 31, 2015. The accumulated depreciation account had a balance of $60,000, which includes the current year's depreciation. The company should recognize a a. $100,000 loss on disposal. b $40,000 gain on disposal. 9. $40,000 loss on disposal. $25,000 loss on disposal. 10. Assume the following sales data for a company: 2012....$900,000 2011. 840,000 2010....s700,000 If 2010 is the base year, what is the percentage increase in sales from 2010 to 2011 a. 125% b. 16796 c. 25% d, 20% v/ 1. Gienthe following account balances at year end, compute the toal intangible assets on the at year end, compute the total intangible assets on the balance sheet of Fiorella Enterprises. Cash Accounts Receivable Trademarks Goodwill Research & Development Costs $1,500,000 4,000,000 1,000,000 4,500,000 2,000,000 a. $11,500,000 b. $7,500,000 c. $5,500,000 d. $9,500,000 On May 1, 2015, Wagner useful life of 5 years, and a 20-year legal life. The amount of Amortization Expense recognized for the year 2015 would be a. $15,000. v b. $10,000. c. $7,500 d. $3,750. 12. Company purchased a patent for $75,000. It is estimated that the patent will have a Page 2 of 11 The following totals for the month of April were taken from the payroll regisier of Main Company: Salaries FICA taxes withheld Income taxes withheld Medical insurance deductions Federal Unemployment Taxes State Unemployment Taxes $24,000 1,100 900 64 432 The entry to record acerual of employer's payroll taxes would inclade a a. debit to Payroll Tax Expense for $496. debit to Payroll Tax Expense for $1,596. credit to FICA Taxes Payable for $2,200. e. credit to Payroll Tax Expense for $496. 14. From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that bond interest is deductible for tax purposes interest must be paid on a periodic basis regardless of earnings. c income to stockholders may increase as a result of trading on the equity d. the bondholders do not have voting rights. 15. The interest charged on a S200 000 note payable at the rate of 8% on a 90-day note would be a. $16,000. $8,888. $4,000. d. $1,333. John Jackson purchases a house with a 30 year fixed mortgage with 360 equal monthly payments of s1,800. Which of the following statements best describes the behavior over time of the components of equal mortgage payments of S1,800? a. The proportion of interest expense to payment of principal remains the same. b. Interest expense increases and payment of principal decreases. c. Payment of principal increases and interest expense decreases. d. Both payment of principal and interest expense decrease. 16. 17. A successful grocery store would probably have a a low inventory turnover b. a high inventory turnover c. zero profit margin d. low volume. 18. Which one of the following would not be considered an advantage of the corporate form organization? a. Limited liability of ownens b. Separate legal existence Continuous life Government regulation