m6 midterm

A company purchases a remote site building for data warehouse operations. The building will be suitable for operations after expenditures. The wiring must be replaced to computer specifications and data specifications. The roof is leaky and must be replaced. All rooms must be repainted and and there will also be some plumbing work done. Which of the following statements is true?

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  • The cost of the building will not include the repainting and recarpeting costs.
  • The cost of the building will include the cost of replacing wiring and the roof.
  • The cost of the building is the purchase price of the building, while the additional expenditures are all capitalized as Building Improvements.
  • The wiring is part of the computer costs, not the building cost.

UnansweredQuestion 2

0 / 3 pts

The impact of starting to use a fully depreciated asset is:

  • ineffective and inefficient production.
  • difficult as the asset must be replaced expeditiously.
  • a reduction in expense.
  • a credit balance to the AFDA.

Question 3

3 / 3 pts

The amount of freight-in paid

  • is added to the cost of inventory purchased.
  • is contra to the Purchases account.
  • is a permanent account.
  • has a normal credit balance.

Question 4

3 / 3 pts

The Allowance for Doubtful Accounts is classified as a(n)

  • asset account.
  • contra asset account.
  • expense account.
  • contra revenue account.

Question 5

3 / 3 pts

The terms 2/10, n30 describe

  • when title is transferred.
  • an expected rate of return on Accounts Receivable.
  • the standard shipping terms.
  • an early payment incentive.

Question 6

3 / 3 pts

BVC Corp. purchased land for $90,000 cash. Real estate brokers’ commission was $5,000 and $7,000 was spent for demolishing an old building on the land before land could be used. Under the cost principle, the cost of land would be recorded at

  • $97,000.
  • $90,000.
  • $95,000.
  • $102,000.

Question 7

3 / 3 pts

VNN, Inc. purchased 100 pounds of cornflakes for $100. Transportation cost to VNN’s production facility was $25 for the barrel of cornflakes shipped FOB destination. VNN paid $60 for 100 one-pound biodegradable plastic bags into which the cornflakes were placed. The cost of each one-pound bag of cornflakes is:

  • $1.00.
  • $1.25.
  • $1.60.
  • $1.75.

IncorrectQuestion 8

0 / 3 pts

Which of the following statements is false regarding diluted earnings per share?

  • Reporting diluted earnings per share is required by GAAP when dilution of EPS exists.
  • Diluted earnings per share can be used to reflect the extent of potential share dilution.
  • Diluted earnings per share is not reported by some companies.
  • Diluted earnings per share is always the same as basic earnings per share.

IncorrectQuestion 9

0 / 3 pts

Assets are recorded at:

  • Proceeds paid.
  • Cost, net of preparation costs.
  • Net depreciable costs.
  • Aggregate cost.

Question 10

3 / 3 pts

Cost of goods sold can be computed from the following equation:

  • beginning inventory – cost of goods purchased + ending inventory.
  • sales – cost of goods purchased + beginning inventory – ending inventory.
  • sales + gross profit – ending inventory + beginning inventory.
  • beginning inventory + cost of goods purchased – ending inventory

Question 11

3 / 3 pts

In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the

  • FIFO method.
  • LIFO method.
  • average-cost method.
  • tax method.

Question 12

3 / 3 pts

Comprehensive income includes the following items:

  • Foreign currency translation, unrealized gains on investments, goodwill
  • Amortization of intangibles, Foreign currency translation, unrealized gains on investments
  • Foreign currency translation, unrealized gains on investments, pension gains or losses
  • Items with deeper impact than regular income

Question 13

3 / 3 pts

Under the allowance method, at the time a receivable is written off, net receivables

  • will increase due to bad account being eliminated.
  • will decrease as the allowance amount goes down.
  • remains the same.
  • will increase based on allowance account going up.

Question 14

3 / 3 pts

Cash and cash equivalents can be considered to be all of the following:

  • Checking account, petty cash, certificate of deposit bought 3/1/XX, due 5/15/XX, note due in 120 days.
  • Checking accounts, petty cash, certificates of deposit bought 3/1/XX, due 7/31/XX.
  • Checking account, petty cash, certificate of deposit bought 3/1/XX, due 5/15/XX, note due in 95 days.
  • Checking account, petty cash, certificate of deposit bought 3/1/XX, due 5/15/XX

Question 15

Not yet graded / 4 pts

Prepare a proper journal entry for the following: Brittco disposes of equipment after 4 years of its 5 year useful life. Equipment cost was $120,000, salvage value estimated at $20,000. Depreciated under the straight-line method. Cash received was $28,000.

Note: Make sure to format your entries properly, whether you are using a table or plain text entry.

Your Answer:

Question 16

Not yet graded / 5 pts

CMN, Inc. sold $60,000 of inventory to VNN, Inc. for $90,000 at 2/10, net 30. Record the appropriate journal entries for CMN at the time of sale.

Note: Make sure to format your entries properly, whether you are using a table or plain text entry.

Your Answer:

Question 17

Not yet graded / 6 pts

Make sure to answer BOTH parts of the question below.

BCN, Co accumulates the following cost and market data at 12/31/XX.

Product

Cost

Market

12GB memory cards

$53,000

$45,000

Camera mounts

$28,000

$27,000

Waterproof camera covers

$14,000

$21,000

Camera light assembly

$6,000

$8,000

total

$101,000

A. What, if any, is the amount of the lower cost or market adjustment?

B. What is the journal entry to record the adjustment?

Note: Make sure to format your entries properly, whether you are using a table or plain text entry.

Your Answer:

IncorrectQuestion 18

0 / 16 pts

BJN’s Bagel Company purchased a brand new shiny bagel oven for $370,000. The oven was shipped from Europe at a cost of $45,000 and while importing it, BJN paid $7,000 in customs levies. The oven was secured to the building foundation at a cost of $20,000 and $8,000 was spent testing the oven for quality production. It is estimated that the machine will have a $50,000 salvage value at the end of its 4-year useful service life. The maximum estimated bagel production is 1,000,000 bagels: 400,000 in year one, 300,000 in year two, 200,000 in year three, and 100,000 in year four, respectively.

Instructions: Compute the total cost, then using the straight line and units of activity methods, prepare a schedule that shows the 1) annual depreciation expense, 2) annual accumulated depreciation, and 3) net book value on the machine for each of the years in its 4-year life.

Important: Do NOT enter dollar signs, extra spaces, punctuation, or trailing zeroes. For example, enter $100,000 as 100

Depreciation Expense

(in thousands of dollars)

Accumulated Depreciation

(in thousands of dollars)

Net Book Value

(in thousands of dollars)

S/L

Yr 1

Yr 2

Yr 3

Yr 4

Activity

Yr 1

Yr 2

Yr 3

Yr 4

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IncorrectQuestion 19

0 / 12 pts

VN Company had the following purchases and sales during March.

  • On March 1, VN had beginning inventory of 110 units purchased at $42 per unit.
  • On March 3, she purchased 60 units at $52.
  • On March 10, she purchased 210 units at $57.
  • On March 17, she purchased 40 units at $60.
  • On March 25 she sold 345 units.

Instructions: Using the inventory and sales data above, calculate the value assigned to cost of goods sold in March and to the ending inventory at March 31 using (a) FIFO, (b) LIFO, and (c) Average cost.

Important: Do NOT enter dollar signs or punctuation. For example, enter $5,500 as 5500

A. FIFO

Cost of goods sold $

Ending inventory $

B. LIFO

Cost of goods sold $

Ending inventory $

C. Average

Cost of goods sold $

Ending inventory $

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Question 20

Not yet graded / 4 pts

List the period of amortization, if any, for the following four types of Intangible assets. If there is no period of amortization, please briefly (1-2 sentences) explain why.

  • Patents
  • Copyrights
  • Trademarks
  • Goodwill

Your Answer:

Questions 21-24

Use the following information to answer the next four questions.

BVC Supplies Inc. sells exercise equipment. BVC notes that at December 31, 20XX, it has the following aging schedule of Accounts Receivable. 20XX Sales were $3,000,000. The amount in the allowance account at 12/31/XX is a credit balance of $23,000, prior to the review.

Total

Current

1–30

31–60

61–90

Over 90

Accounts receivable

$625,000

300,000

150,000

100,000

50,000

25,000

% uncollectible

1%

5%

10%

20%

50%

IncorrectQuestion 21

0 / 6 pts

Important: Do NOT enter dollar signs or punctuation. For example, enter $5,500 as 5500

A. Net receivables using aging method (after adjustment):

B. Bad debt expense to be recorded using aging method:

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Answer 2:

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IncorrectQuestion 22

0 / 6 pts

Important: Do NOT enter dollar signs or punctuation. For example, enter $5,500 as 5500

A. What would the bad debt expense be using the sales method instead of aging method, if the expected uncollectible rate was 2.0%?

B. Net receivables using the sales method (after adjustment):

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Question 23

Not yet graded / 2 pts

BVC wrote off a $10,000 receivable on 12/23/XX. Record the journal entry for the write-off.

Note: Make sure to format your entries properly, whether you are using a table or plain text entry.

Your Answer:

Question 24

Not yet graded / 4 pts

On January 15, 20XY, BVC collected cash for a $15,000 receivable previously written off. Record the appropriate entries.

Note: Make sure to format your entries properly, whether you are using a table or plain text entry.

Your Answer:

Question 25

Not yet graded / 18 pts

This question has three parts. Make sure you enter your answers for all three questions.

The following information is available from a certain balance sheet and all income statement general ledger accounts for CVB Corporation, a Delaware Corporation, for the year ended December 31, 20XX:

  • Cost of Goods Sold 600,000
  • Purchased patents 50,000
  • Sales Returns 30,000
  • Sales 1,505,000
  • Allowance for Doubtful Accounts 60,000
  • Trademarks 15,000
  • Sales and marketing expenses 220,000
  • Accounts Payable 65,000
  • Engineering Expenses 300,000
  • Contributed Capital 300,000
  • G&A Expenses 165,000
  • Goodwill 150,000
  • Sales Discounts 18,000
  • Sales Tax Payable 5,000
  • Interest Expense 32,000
  • Tax rate 35%
  • Loss on investments 10,000
  • Copyrights 30,000
  • Wages payable 100,000
  • Losses on division scheduled for closing 100,000 before tax.
  • There are 500,000 average common shares outstanding and 100,000 equivalent shares.

A. Using only the income statement accounts, prepare a proper income statement.

Don’t forget to include section captions, properly labeled totals, and subtotals. If you have done this properly, you should have 21 rows. You can use a table or a plain text entry, or you can copy/paste your statement from another program such as Microsoft Word or Excel.

B. What is the Gross Margin %?

C. What is Basic EPS? What is Diluted EPS?

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