Question 1 A&O Corp. had the following selected account balances as of 12/31/2012 before adjusting entries were made. Cash $90,000 Insurance expense 18,000 Accounts receivable 16,000 Supplies 6,400 Equipment 90,000 Accumulated depreciation 28,000 Unearned advertising revenue 5,000 Salaries expense 10,000 Rent expense 18,000 A&O’s accountant has provided you the following information: Insurance was paid in advance on 10/1/2012 for a one year period starting 10/1/2012 and the entire amount ($18k) was recorded in the insurance expense account.
Question 1 A&O Corp. had the following selected account balances as of 12/31/2012 before adjusting entries were made. Cash?$90,000??Insurance expense? 18,000??Accounts receivable?16,000??Supplies? 6,400??Equipment?90,000??Accumulated depreciation? 28,000??Unearned advertising revenue?5,000??Salaries expense? 10,000??Rent expense?18,000?? A&O’s accountant has provided you the following information: Insurance was paid in advance on 10/1/2012 for a one year period starting 10/1/2012 and the entire amount ($18k) was recorded in the insurance expense account. Supplies remaining on hand at the end of the year were $3,000. Equipment was purchased on 10/1/2012 and it is being depreciated over 10 years by the straight line method. The salvage value of the equipment is $0. A&O has completed 50% advertising services due to clients, whose advance cash payments were recorded above. Rent ($18,000) was paid in advance on 11/30/2012, for 6 months (11/30/2012 to5/31/2013) and A&O recorded the entire amount as rent expense on that date. Prepare the adjusting journal entries for each of the 5 items above (do not write any explanations). Show all supporting computations. Use the answer sheet provided. Question 2 Presented below is the pretax information for Aloma Corporation, for the year 2012: Sales?$6,000,000??Cost of goods sold? 2,950,000??Interest revenue?60,000??Loss from abandonment of plant assets?300,000??Selling expenses?600,000??Administrative expenses?440,000??Unusual and infrequent loss from earthquake?90,000??Gain on disposal of a segment of the business. The corporation will no longer be in that business in the future.? 290,000?? Instructions: Present all applicable information in a proper format (according to GAAP), to prepare a multiple step income statement. The company has 300,000 shares outstanding and a federal tax rate of 30%. Prepare an EPS section in proper format (round to two decimals). Use the answer sheet provided. Question 3…
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