On Jan. 1, 2011, a company had $260,000 of accounts receivable. During the year the company

recorded $735,000 of credit sales and wrote off $42,000 of accounts as uncollectible. If the Dec. 31,

2011 balance of accounts receivable was $337,000, how much cash did the company collect during the

year?

A. $770,000

B. $693,000

C. $658,000

D. $616,000

2.

On Jan. 1, 2011 Grey Co. purchased new equipment for $150,000. The equipment has a useful life of 5

years and an estimated salvage value of $15,000. How much depreciation expense will Grey record for

2012 (the second year of the assets life) using the double declining balance method?

A. $27,000

B. $36,000

C. $38,400

D. $48,000

3.

On Dec. 15, 2011 a company purchased company delivery vans by paying $40,000 in cash and signing a

7%, 3-year promissory note for $35,000. How did this transaction affect the companys accounting

equation?

A. Assets increased $35,000 and liabilities increased $35,000.

B. Assets decreased $40,000, liabilities increased $35,000, and stockholders equity decreased $75,000.

C. Assets increased $75,000 and liabilities increased $75,000.

D. Assets increased $40,000, liabilities increased $35,000, and stockholders equity increased $5,000.

4.

Zhao Corp. had 50,000 shares of 4%, $100 par cumulative preferred stock outstanding on Dec. 1, 2011.

Zhaos Board of Directors declared a $750,000 cash dividend, payable on Dec. 31, 2011. How much will the

preferred shareholders receive if no dividends were declared in 2010?

A. $200,000

B. $216,667

C. $400,000

D. $575,000

5.

Which one of the following should be subtracted from net income to calculate cash flow from

operating activities using the indirect method?

A. Depreciation expense

B. A decrease in inventory

C. An increase in accounts payable

D. An increase in office supplies

6.

On Sept. 1, 2011 Hernandez Corp. issued $7,000,000 of 6%, 15 year bonds. The market rate of interest

on that date was 8%. How much will Hernandez receive for the bonds?

A. $7,000,000

B. More than $7,000,000

C. Less than $7,000,000

D. $0

7.

Information about Monson Corp.s inventory for the month of November is given below:

# of Units

Cost/Unit

Beginning inventory

6,600

$30.00

Nov. 3

Purchased

3,500

$30.60

Nov. 6

Sold

2,100

Nov. 15

Purchased

4,000

$31.00

Nov. 22

Sold

3,200

Monson uses a periodic inventory system. How much is ending inventory using LIFO?

A. $265,320

B. $268,693

C. $267,183

D. $270,100

8.

On Dec. 5 a company received its bank statement for the month of November. Included with the

statement was a customers check stamped NSF. How will the NSF check appear on the bank

reconciliation for November?

A. As an addition to the balance per books.

B. As a subtraction from the balance per books.

C. As an addition to the balance per bank.

D. As a subtraction from the balance per bank.

9.

On Oct. 15, 2011 Nielsen Co. issued 50,000 shares of its $.20 par common stock for $750,000. How did

this transaction affect Nielsens accounting equation?

A. Cash increased $750,000 and revenue increased $750,000.

B. Cash increased $750,000, Common Stock increased $10,000, and Additional Paid-in Capital increased

$740,000.

C. Cash increased $750,000 and liabilities increased $750,000.

D. Cash increased $750,000 and Common Stock increased $750,000.

10. On Oct. 1, 2011 Albertson Corp. paid $3,120 to purchase a two-year insurance policy. What adjusting

entry should Albertson record on Dec. 31, 2011?

A. Decrease Cash $390 and increase Insurance Expense $390.

B. Increase Insurance Expense $2,730 and decrease Prepaid Insurance $2,730.

C. Increase Insurance Expense $390 and decrease Prepaid Insurance $390.

D. No adjusting entry is needed.

11. On June 30, 2011 Monroe Co. purchased 75,000 shares of its $.50 par common stock in the market for

$60 per share. Monroe later sold the shares on Dec. 1, 2011 when the market price was $65 per share.

How will the sale on Dec. 1 affect Monroes stockholders equity?

A. Common Stock will Increase $37,500 and Additional Paid-in Capital Common Stock will increase

$4,837,500.

B. Treasury Stock will decrease $4,500,000 and Additional Paid-in Capital Treasury Stock will increase by

$375,000.

C. Treasury Stock will decrease $4,500,000 and Gain on Treasury Stock will increase $375,000.

D. Treasury Stock will decrease $4,875,000 and Revenue from Treasury Stock will increase $4,875,000.

12. Daisy Corp. uses the aging method to record bad debt expense. Information about Daisys accounts

receivable is given below:

Age of Receivables

1-30 Days

31 60 Days

> 60 Days

Amount of Receivables

$650,000

$100,000

$20,000

Est. % Uncollectible

2%

18%

45%

On Dec. 31, 2011 the unadjusted balance in the Allowance for Doubtful Accounts was $8,000 credit. How

much bad debt expense should Daisy record?

A. $48,000

B. $40,000

C. $32,000

D. $19,000

13. On Jan. 1, 2011 Finkbine Corp. had $495,000 of retained earnings. Finkbine reported $893,000 of net

income for 2011. On Dec. 31, 2011 the balance in retained earnings was $1,137,000. What amount of

dividends were declared during 2011?

A. $251,000

B. $244,000

C. $398,000

D. $642,000

14. On Jan. 1, 2011 Donald Co. issued $3,000,000 of 8%, 10-year bonds. The bonds pay interest annually on

Dec. 31. The market rate of interest on Jan. 1 was 6%, and the selling price of the bonds was $3,441,624.

How much interest expense will Donald report for 2011 using the effective interest method?

A. $240,000

B. $206,497

C. $275,330

D. $180,000

15. The Board of Directors of Jules Corp. approved a 60% stock dividend on Nov. 15, 2011. Before the

dividend Jules had 200,000 shares of its $.25 par common stock outstanding. The market price of Jules

stock on Nov. 15 was $80. How did the stock dividend affect Jules accounting equation?

A.. Cash increased $9,600,000 and Retained Earnings decreased $9,600,000.

B. Common Stock increased $9,600,000 and Retained Earnings decreased $9,600,000.

C. Common Stock increased $30,000 and Retained Earnings decreased $30,000.

D. Retained Earnings decreased $30,000 and Dividend Expense increased $30,000.

16. On the statement of cash flows which one of the following items should not appear in the operating

section?

A Cash received from customers

B. Cash paid for employees salaries and wages.

C. Cash paid for dividends

D. Cash paid for income taxes

17. Which one of the following statements regarding LIFO and FIFO is true when prices are rising?

A. LIFO will result in the highest ending inventory.

B. LIFO will result in the lowest amount of net income.

C. FIFO will result in the highest cost of goods sold.

D. FIFO will result in lower income tax expense.

18. During August of 2011 Nickle Publishing received $24,000 for 1-year subscriptions to a new magazine.

Magazines are mailed to subscribers each month, starting in September of 2011. What adjusting entry

should Nickle make on Dec. 31, 2011?

A. No adjusting entry is needed.

B. Decrease Unearned Revenue $8,000 and increase Magazine Revenue $8,000.

C. Increase Cash $8,000 and decrease Unearned Revenue $8,000.

D. Decrease Unearned Revenue $16,000 and increase Magazine Revenue $16,000.

19. On Jan. 1, 2011 the balance in the Allowance for Doubtful Accounts was $12,000 credit. On Dec. 31, 2011

$19,000 of bad debt expense was recorded, which resulted in an adjusted balance of $16,000 credit in the

Allowance account. How much were accounts receivable writeoffs during 2011?

A. $3,000

B. $7,000

C. $15,000

D. $23,000

20. On Dec. 1, 2011 the Board of Directors of Jackson Corp. approved a 3 for 1 stock split. Prior to the split

there were 300,000 shares of its $.15 par common stock outstanding. The market price of the stock on

Dec. 1 was $135. Which one of the following statements is true?

A. Retained Earnings will decrease $45,000 as a result of the split.

B. After the split there will be 900,000 shares outstanding with a par value of $.05.

C. Additional Paid-in Capital on Common Stock will increase $13,485,000.

D. The market price of the stock will drop to approximately $33.00 as a result of the split.