Thursday 1 August 2013

Which of the following statement is TRUE concerning the CMA?

Which of the following statement is TRUE concerning the CMA?
A. To earn the CMA, an examination must be passed.
B. Experience in the accounting field is not necessary to earn the CMA.
C. Compliance with the Institute of Management Accountants’ Statement of Ethical Professional Practice is not necessary to earn the CMA.
D. Both B and C above

Answer
Both B and C above.

Polzin Corporation is authorized to issue both preferred and common stock. The par value of the preferred is $50. During the first year of operations, the company had the following events and transactions pertaining to its preferred stock.



Polzin Corporation is authorized to issue both preferred and common stock. The par value of the preferred is $50. During the first year of operations, the company had the following events and transactions pertaining to its preferred stock.
Feb. 1

Issued 20,000 shares for cash at $53 per share.
July 1

Issued 12,000 shares for cash at $57 per share.

Journalize the transactions. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)
Post to the stockholders' equity accounts. (If answer is zero, please enter 0. Do not leave any fields blank.)


Correct.


Journalize the transactions. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)
Date
Account/Description
Debit
Credit
Feb. 1
Cash
1060000


        Preferred stock

1000000

        Paid-in cap. in excess of par value-Pref. stock

60000
July 1
Cash
684000


        Preferred stock

600000

        Paid-in cap. in excess of par value-Pref. stock

84000



Correct.


Post to the stockholders' equity accounts. (If answer is zero, please enter 0. Do not leave any fields blank.)
Preferred Stock

Date

Explanation
Ref.
Debit
Credit
Balance
Feb.
1


0
1000000
1000000
July
1


0
600000
1600000

Paid-in Capital in Excess of Par Value-Preferred Stock

Date

Explanation
Ref.
Debit
Credit
Balance
Feb.
1


0
60000
60000
July
1


0
84000
144000

On October 1, Milton Company sold merchandise in the amount of $5,200 to Larry Company, with credit terms of 2/10, n/30. The cost of the items sold is $3,600. Milton uses the perpetual inventory system. On October 4, Larry returns some of the merchandise. The selling price of the merchandise is $1,000 and the cost of the merchandise returned is $330. The entry or entries that Milton must make on October 4 is: A. Sales returns and allowances 1,000 Accounts receivable 1,000 Merchandise inventory 330 Cost of goods sold 330 B. Accounts receivable 1,000 Sales returns and allowances 1,000 Cost of goods sold 330 Merchandise inventory 330 C. Sales returns and allowances 330 Accounts receivable 330 D. Sales returns and allowances 1,000 Accounts receivable 1,000 E. Accounts receivable 1,000 Sales returns and allowances 1,000 A above. B above. C above. D above. E above. Answer is A. Sales returns and allowances 1,000 Accounts receivable 1,000 Merchandise inventory 330 Cost of goods sold 330


On October 1, Milton Company sold merchandise in the amount of $5,200 to Larry Company, with credit terms of 2/10, n/30. The cost of the items sold is $3,600. Milton uses the perpetual inventory system. On October 4, Larry returns some of the merchandise. The selling price of the merchandise is $1,000 and the cost of the merchandise returned is $330. The entry or entries that Milton must make on October 4 is:





A.  Sales returns and allowances
1,000

         Accounts receivable

1,000
     Merchandise inventory
330

         Cost of goods sold

330



B.  Accounts receivable
1,000

         Sales returns and allowances

1,000
     Cost of goods sold
330

         Merchandise inventory

330



C.  Sales returns and allowances
330

         Accounts receivable

330




D.  Sales returns and allowances
1,000

         Accounts receivable

1,000



E.  Accounts receivable
1,000

         Sales returns and allowances

1,000

      A above.
      B above.
      C above.
      D above.
      E above.





Answer is
A.  Sales returns and allowances
1,000

         Accounts receivable

1,000
     Merchandise inventory
330

         Cost of goods sold

330


The credit terms 11/12, n/30 are interpreted as: 30% discount if paid within 11 days 12% cash discount if the amount is paid within 11 days, with balance due in 30 days. 11% cash discount if the amount is paid within 12 days, with the balance due in 30 days. 30% discount if paid within 12 days. 11% discount if paid within 30 days. Answer is 11% cash discount if the amount is paid within 12 days, with the balance due in 30 days.



The credit terms 11/12, n/30 are interpreted as:

      30% discount if paid within 11 days
      12% cash discount if the amount is paid within 11 days, with balance due in 30 days.
      11% cash discount if the amount is paid within 12 days, with the balance due in 30 days.
      30% discount if paid within 12 days.
      11% discount if paid within 30 days.
Answer is
11% cash discount if the amount is paid within 12 days, with the balance due in 30 days.