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Barton Company has a line of credit with Sea View Bank. Barton can borrow up to $219,000 at any time over the course of Year 2. The following table shows the interest rate expressed as an annual percentage along with the amounts borrowed and repaid during the first three months of Year 2. Funds are borrowed or repaid on the first day of each month. Interest is payable in cash on the last day of the month. The interest rate is applied to the outstanding monthly balance. MonthAmountAnnualBorrowed/(Repaid)Interest RateJanuary$ 44,0006%February(6,900)9%March39,0009% Which of the following shows how borrowing the $44,000 on January 1, Year 2 would affect Barton’s financial statements? Balance SheetIncome StatementStatement of Cash FlowsAssets=Liabilities+Stockholders’ EquityRevenues−Expenses=Net IncomeA.44,000=44,000+ − = 44,000 FAB.44,000=44,000+ − = 44,000 IAC.44,000= +44,000 − = 44,000 FAD.44,000= +44,000 − = 44,000 IA

Contingent liabilities are only recognized if they arise from past events.

On August 1, Year 1, Hernandez Company loaned $58,800 cash to Acosta Company. The one-year note carried a 5% rate of interest. Which of the following shows how the accrual of interest revenue in Year 2 will affect Hernandez’s financial statements? Balance SheetIncome StatementStatement of Cash FlowsAssets=Liabilities+EquityRevenues−Expenses=Net IncomeA.$ 1,715= +$ 1,715$ 1,715− =$ 1,715 B.$ 1,715= +$ 1,715$ 1,715− =$ 1,715$ 1,715 OAC.$ 1,225= +$ 1,225$ 1,225− =$ 1,225 D.$ 1,225= +$ 1,225$ 1,225− =$ 1,225$ 2,940 OA

The owner of Barnes Company established a petty cash fund amounting to $400. What is the effect on the financial statements of recording this transaction? Balance SheetIncome StatementStatement of Cash FlowsAssets=Liabilities+Stockholders’ EquityRevenue−Expense=Net IncomeA. = + − = (400) OAB.(400)= +(400) −400=(400)(400) OAC. = + − = D.(400)=(400)+ − = (400) OA

On January 1, Year 1, Friedman Company purchased a truck that cost $48,000. The truck had an expected useful life of 8 years and an $8,000 salvage value. Friedman uses the double-declining-balance method. What is the book value of the truck at the end of Year 1?

On October 1, Year 1, Coker Company issued a $4,800 face value discount note that carried a 6% annual interest rate and a one-year term to maturity. Based on this information, the:

Blain Company has $17,000 of accounts receivable that are current, $7,800 that are from 0 to 30 days past due, $4,400 that are from 31 to 60 days past due, and $1,500 that are more than 60 days past due. Blain estimates that 2% of the receivables that are current will be uncollectible, 5% of those from 0 to 30 days past due will be uncollectible, 10% of those from 31 to 60 days past due will be uncollectible, and 50% of those more than 60 days past due will be uncollectible. Just prior to recognizing uncollectible accounts expense, Blain’s allowance for doubtful accounts account has a $800 positive balance. Assuming Blain uses the aging method to estimate uncollectible accounts expense, the amount of uncollectible expense will be:

A review of the bank statement and accounting records of Blake Company revealed the following items: Item NumberDescription1)Three outstanding checks2)A debit memo showing a bank service charge3)A deposit in transit4)A NSF check written by one of Blake’s customers5)A certified check written by Blake that remains outstanding6)A credit memo reflecting interest revenue earned by Blake Which of the item(s) would be subtracted from the company’s unadjusted book balance to determine the true cash balance?

On January 12, Year 1, Gilliam Corporation issued 550 shares of $12 par-value common stock for $15 per share. The number of shares authorized is 5,000, and the number of shares outstanding prior to this transaction was 1,200. Which of the following describes the effect of the January 12 transaction on the financial statements? Balance SheetIncome StatementStatement of Cash FlowsAssets=Liabilities+Stockholders’ EquityCash+Accounts Receivable=Accounts Payable+Common Stock+Paid-in Capital in Excess of ParRevenue−Expense=Net IncomeA.(6,600)+ = +6,600+ − = 6,600 FAB.(8,250)+ = +8,250+ − = 8,250 FAC.(8,250)+ = +6,600+1,650 − = 8,250 FAD.(8,250)+ = +6,600+1,650 − = 6,600 IA

At the end of the accounting period, Houston Company had $7,000 of common stock, paid-in capital in excess of par value–common of $8,800, retained earnings of $7,500, and $4,750 of treasury stock. What is the total amount of stockholders’ equity?