1. Bad Debts Expense should be recorded
a. whenever an account is written off as uncollectible.
b. each time a credit sale is made.
c. whenever an account written off is recovered.
d. at the end of each accounting period.
2. The principles of internal control do not include:
a. establishment of responsibility.
b. documentation procedures.
c. management responsibility.
d. independent internal verification.
3. The basis of computing uncollectible accounts that provides a reasonable matching of expenses with revenues is the
a. percentage of receivables basis.
b. percentage of doubtful accounts basis.
c. lower of cost or market basis.
d. direct write-off method.
4. The receivables turnover ratio is calculated by dividing
a. net credit sales by average receivables.
b. net credit sales by ending receivables.
c. total sales by average receivables.
d. total sales by ending receivables.
5. The amortization of premium on bonds payable
a. will increase bond interest expense.
b. should take place over a period not to exceed 40 years.
c. will decrease bond interest expense.
d. will increase bond interest revenue.
6. Retained earnings is affected by each of the following except a
a. cash dividend.
b. large stock dividend.
c. small stock dividend.
d. stock split.
7. The X Company has the following stock outstanding:
6% Preferred stock, $100 par value, cumulative $400,000
Common stock, $50 par value $600,000
Preferred stock dividends are in arrears for 2005 and 2004. If the company declares and pays $75,000 in dividends in 2006, the amount received by the preferred stockholders would be
8. The Ewing Company purchases 1,000 shares of its common stock for $20,000. The $20,000 amount should be debited to
a. an asset account.
b. Treasury Stock.
c. Common Stock.
d. Retained Earnings.
9. The Land account would include all of the following costs except
a. drainage costs.
b. the cost of building a fence.
c. commissions paid to real estate agents.
d. the cost of tearing down a building.
13. Which one of the following transactions does not affect cash?
a. Acquisition and retirement of bonds payable
b. Write-off of an uncollectible accounts receivable
c. Acquisition of treasury stock
d. Payment of cash dividend
14. The Paine Company had credit sales of $600,000. The beginning accounts receivable balance was $60,000 and the ending accounts receivable balance was $80,000. Cash collections from customers were
15. Panzer Clothing Store had a balance in the Accounts Receivable account of $780,000 at the beginning of the year and a balance of $820,000 at the end of the year. Net credit sales during the year amounted to $5,840,000. The receivable turnover ratio was
a. 7.1 times.
b. 7.3 times.
c. 7.5 times.
d. 7 times.
16. Hepford Company reported the following on its income statement:
Income before income taxes $420,000
Income tax expense 120,000
Net income $300,000
An analysis of the income statement revealed that interest expense was $80,000. Hepford Company's times interest earned was
a. 8 times.
b. 5.25 times.
c. 6.25 times.
d. 5 times.
17. If year one equals $800, year two equals $840, and year three equals $896, the percentage to be assigned for year three in a trend analysis, assuming that year 1 is the base year, is
18. The purchase of office equipment for $15,000 cash
a. is a cash outflow from financing activities.
b. is a cash outflow from operating activities.
c. is a cash outflow from investing activities.
d. does not affect cash flows.
19. Which of the following would be considered an "Other Comprehensive Income" item?
a. net income.
b. gain on disposal of discontinued operations.
c. extraordinary loss related to flood.
d. unrealized loss on available-for-sale securities.
20. Which of the following income statement figures would probably be the best indicatory of a company's future performance?
a. Total revenues
b. Income from operation
c. Net income
d. Comprehensive income
Part - II - Statement of Cash Flows
The comparative balance sheet for Hadford Company appears below:
Comparative Balance Sheet
Dec. 31, 2007 Dec. 31, 2006
Cash $38,000 $12,000
Accounts receivable 8,000 8,000
Inventory 14,000 7,000
Prepaid expenses 2,000 3,000
Equipment 24,000 20,000
Accumulated depreciation-equipment (7,000) (2,000)
Total assets $79,000 $48,000
Liabilities and Stockholders' Equity
Accounts payable $ 3,000 $ 4,000
Long-term note payable 9,000 14,000
Common stock 35,000 18,000
Retained earnings 32,000 12,000
Total liabilities and stockholders' equity $79,000 $48,000
The income statement for the year is as follows:
For the Year Ended December 31, 2007
Sales (all on credit) $250,000
Expenses and losses
Cost of goods sold $170,000
Operating expenses, exclusive of depreciation 37,000
Depreciation expense 5,000
Interest expense 2,000
Loss on sale of land 1,000
Income taxes 7,000
Total expenses and loss 222,000
Net income $ 28,000
Cash dividends of $8,000 were paid during the year. Land costing $17,000 was acquired by the issuance of common stock. The property was subsequently sold for $16,000 cash.
Prepare a statement of cash flows for the year ended December 31, 2007, using the indirect method.
Part - III - Calculation of Ratios
The financial information below was taken from the annual financial statements of Garney Company.
Current assets $192,000 $212,000
Current liabilities 80,000 90,000
Total liabilities 190,000 160,000
Total assets 525,000 475,000
Sales 420,000 370,000
Cost of goods sold 240,000 220,000
Inventory 105,000 125,000
Receivables (net) 80,000 60,000
Net income 55,000 48,000
Net cash provided by operating activities 65,000 25,000
Calculate the following ratios for Garney Company for 2007.
1. Current ratio.
2. Average collection period.
3. Current cash debt coverage ratio.
4. Debt to total assets ratio.
5. Cash debt coverage ratio.
6. Return on assets.
7. Profit margin ratio.
8. Asset turnover ratio.
9. Inventory turnover ratio.
Part - IV - Journal Entries
The Sextet Company uses the allowance method to account for uncollectible accounts. Prepare the appropriate journal entries to record the following transactions during 2007. You may omit journal entry explanations.
May 20 The account of Jose Castro for $950 was deemed to be uncollectible and is written off as a bad debt.
Aug. 14 Received a check for $700 from Jose Castro whose account had previously been written off as uncollectible.
Dec. 31 Use the following information for year-end adjusting entry:
The balances of Accounts Receivable and Allowance for Doubtful Accounts at year end are $175,000 and $900, respectively. Both have debit balances. It is estimated that bad debts will be 3% of accounts receivable.
Part - V - Bonds Payable (15 points)
1. On April 1, the Bently Company borrows $50,000 from New State Bank by signing a 6-month, 7%, interest-bearing note.
(a) Prepare the entry on April 1 when the note was issued.
(b) Prepare any adjusting entries necessary on June 30 in order to prepare the semiannual financial statements. Assume no other interest accrual entries have been made.
(c) Prepare the entry to record payment of the note at maturity.
The solution explains some multiple choice questions in accounting
Amino acids multiple choice questions
Which statement is incorrect about the classification of amino acids?
a. Alanine and valine are neutral, nonpolar amino acids.
b. Lysine and arginine are basic amino acids.
c. Tryptophan and phenylalanine are aromatic amino acids.
d. Aspartic acid and aspargine are acidic amino acids.
Which of the following amino acids is the least water soluble at pH 7.0?
b. Glutamic acid
Which amino acid would migrate the furthest toward the anode (positive electrode) during paper electrophoresis at pH 7.0?
a. Aspartic acid
Which of the following functional groups, attached to an inert matrix, could function as a cation exchanger?
Which of the following amino acids would make the best buffer at pH 4.5?
d. Aspartic acid
Which fact is incorrect about stereoisomers?
a. A diastereomer is a nonsuperimposable non-mirror image.
b. An enantiomer is a nonsuperimposible mirror image.
c. Diastereomers have different melting points.
d. Diastereomers rotate plane polarized light in equal but opposite direction.
Which statement is incorrect about L-isoleucine?
a. Its enantiomer is named O-isoleucine.
b. It contains a total of two asymmetric or chiral carbons.
c. It can also be named as (28, 38)-isoleucine using the (R,8) system.
d. Its diastereomer would be named O-alloisoleucine.
An isoelectric amino acid was dissolved in water and the resulting pH was approximately 7.6. What amino acid would possess this property?
b. Glutamic acid
What volume of NaOH is required to adjust the solution of monosodium aspartate to pH 9.8?
a. 1 ml
b. 2 ml
c. 3 ml
d. 6 ml or more
What volume of 2 N Hel is required to completely titrate the 4 mmol of monosodium aspartate?
a. 2 ml
d. 6 ml or more
Which statement is correct about the peptide ala-ser?
a. Alanine is at the N-terminal of the peptide.
b. There are a total six atoms that lie in the plane of the peptide bond linking alanine to serine.
c. The alpha-carbon of alanine is sp3 hybridized d All the above are correct statements.
What is the product formed from the acid hydrolysis of a simple amide?
a. Acid & base
b. Aldehyde & alcohol
c. Acid & amine
d. Ester & alcohol
The complete acid hydrolysis of the peptide ala-gln-trp-ser would yield:
a. Ala, gin, trp, ser
b. Ala, glu, ser
c. Ala, glu, trp, ser
d. Ala. ser
Fibrous proteins, such as collagen, have which of the following properties?
a. Highly soluble in water
b. Their hydrophilic residues are directed into the interior of the protein
c. Exhibit enzymatic activity
d. Serve structural roles in the cell
Quaternary structure is associated with:
a. The overall shape of a polypeptide chain
b. The sum of the secondary and tertiary interactions
c. Simple proteins with only one subunit
d. The relative orientation of one polypeptide to another polypeptide in a multi-subunit protein.
The information needed to define the structure of a protein is essentially contained in:
a. Amino acid composition
b. Amino acid sequence
c. Secondary structure
d. Tertiary structure.
Insulin is a polypeptide hormone that contains two short polypeptide chains linked by two interstrand disulfide bonds. The most logical order of events to perform in order to sequence this protein would be:
A: The peptides are reduced with mercaptoethanol.
B: The peptides are sequenced using Edman chemistry .
C: The peptides are separated by chromatography techniques. 0: The peptides are alkylated with iodoacetamide.
a. A, D,C, B b.C,A, 0, B
c. C, B, A, 0
d. A, B, C, 0
Which statement is incorrect about the peptide val-asp-trp-asn-ser?
a. This peptide would show a strong absorption band at 280 nm.
b. Reaction with chymotrypsin would yield two peptides.
c. To synthesize this peptide using the solid phase method of Merrifield, the amino acid directly attached to the resin would be serine.
d. After the second round of Edman chemistry using the reagent PITC, the PTH -amino acid residue released would be PTH-asn.
Which statement is incorrect about the reaction of the peptide ser-Iys-asp-trp-cys-metasn-phe-ala with the following reagents?
a. Reaction with cyanogens bromide would yield two peptides.
b. Reaction with trypsin would result in three peptides. The smallest of three peptides would have the highest pi of the three.
c. Reaciton with chymotrypsin would result in the peptides ser-Iys-asp & try-cys-met-Iysasn-phe-ala .
d. Reaction with chymotrypsin would yield a different set of peptides that overlap those obtained with tryspsin
Determine the amino acid sequence of the following oligopeptide from the experimental data below:
The amino acid composition is found the be ala, Iys, phe, met, cys plus some
2. The peptide has a molecular weight around 700 Da and absorbs at 280 nm.
3. Treatment with carboxypeptidase results in tryptophan and a peptide.
4. CNBr treatment yields a tetrapeptide and a dipeptide.
5. Trypsine digestion produces an amino acid and a pentapeptide with met on the amino end.
6. Chymotrypsin digestion yields a dipeptide and a tetrapeptide.
d. Iys-ala-cys-phe-met -trp