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  41) In what category in a classified balance sheet is Mortgage Payable found? A) Plant and Equipment B) Current Liabilities C) Long-term Liabilities D) Both B and C are correct.   42) The left and right columns on the financial statements are used for debits and credits.   43) The amount for Cost of Goods Sold is found on the worksheet.   44) Land is listed first under Plant, Property and Equipment.   45) The formal income statement can be prepared from the income statement columns of the worksheet.   46) Gross profit minus Operating Expenses equals Net Income. […]

  13.4   Learning Objective 13-4   1) No entry was recorded to reinstate a bad debt when making a collection. The allowance method is being used. This error would cause: A) total assets to be overstated. B) total liabilities to be understated. C) net income to be understated. D) None of these are correct. 2) The journal entry to write off an account judged to be uncollectible under the allowance would include a debit to: A) Sales. B) Accounts Receivable. C) Allowance for Doubtful Accounts. D) Bad Debts Expense.   3) Town and Country Saddle learns the account receivable for […]

21) Mr. Generous donated $100,000 to Excel Private School and specified that the principal amount not be spent but be maintained permanently. Interest on the invested funds can be used to award scholarships to those who excel in drama. How should the $100,000 contribution be presented on Excel Private School's financial statements? A) As a direct increase in net assets of the endowment fund B) As revenue of the operating fund C) As revenue of the endowment fund D) As deferred revenue of the operating fund 22) Sydney won a lottery and made a $500,000 endowment contribution to his alma […]

46) The contribution-margin ratio is A) 64.3 percent. B) 55.6 percent. C) 35.7 percent. D) 44.4 percent. 47) If total fixed costs increased to $156,750, then break-even volume in dollars would increase by A) 12.3 percent. B) 20.0 percent. C) 34.3 percent. D) 10.0 percent. Assume the following cost information for Quayle Corporation: Total fixed costs $50,000 Selling price per unit $90 Variable costs per unit $50 Tax rate 40 percent 48) What volume of sales dollars is required to earn an after-tax net income of $15,000? A) $196,875 B) $157,500 C) $135,000 D) $168,750 49) What is the number […]

33) Bowen Limited purchased 60% of Sloch Co. when Sloch's reported retained earnings of $330,000. Bowen also owns 80% in Zeek Limited, which was purchased when Zeek reported retained earnings of $575,000. For each acquisition, the purchase price was equal to the fair value of the identifiable net assets which was the same as the carrying value of their carrying values. An analysis of the changes in retained earnings of the three companies at December 31, 20X7 was: Bowen Sloch Zeek Retained earnings — January 1, 20X7 $1,020,000 $525,000 $875,000 Net income for the year 750,000 360,000 275,000 Dividends paid […]