Question 1
Transactions for Mehta Company for the month of May are presented below.
|
May |
1 |
B.D. Mehta invests $3,091 cash in exchange for common stock of Mehta Company, a small welding corporation. |
|
3 |
Buys equipment on account for $1,153. |
|
|
13 |
Pays $659 to landlord for May rent. |
|
|
21 |
Bills Noble Corp. $539 for welding work done. |
Prepare journal entries for each of these transactions.
Question 2
On July 1, 2012, Crowe Co. pays $18,673 to Zubin Insurance Co. for a 3-year insurance contract. Both companies have fiscal years ending December 31. For Crowe Co. journalize the entry on July 1 and the adjusting entry on December 31. (Round answers to zero decimal places, e.g. 2,555.)
Question 3
Dresser Company’s weekly payroll, paid on Fridays, totals $7,700. Employees work a 5-day week. Prepare Dresser’s adjusting entry on Wednesday, December 31, and the journal entry to record the $7,700 cash payment on Friday, January 2. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Question 4
Side Kicks has year-end account balances of Sales $886,140; Interest Revenue $15,570; Cost of Goods Sold $564,230; Operating Expenses $213,480; Income Tax Expense $37,660; and Dividends $21,348. Prepare the year-end closing entries. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Question 5
Financial information exhibits the characteristic of consistency when
Question 6
What is the relationship between the Securities and Exchange Commission and accounting standard setting in the United States?
Question 7
Starr Co. had sales revenue of $621,700 in 2012. Other items recorded during the year were:
|
Cost of goods sold |
$330,000 |
|
Wage expense |
129,300 |
|
Income tax expense |
26,400 |
|
Increase in value of company reputation |
15,100 |
|
Other operating expenses |
12,500 |
|
Unrealized gain on value of patents |
20,600 |
Prepare a single-step income statement for Allen for 2012. Allen has 100,000 shares of stock outstanding. (List multiple entries from largest to smallest amount, e.g. 10, 5, 2. Round earnings per share to 2 decimal places, e.g. 0.20. Enter all amounts as positive amounts and subtract where necessary.)
Question 8
Portman Corporation has retained earnings of $728,900 at January 1, 2012. Net income during 2012 was $1,897,010, and cash dividends declared and paid during 2012 totaled $77,690. Prepare a retained earnings statement for the year ended December 31, 2012. Assume an error was discovered: land costing $86,630 (net of tax) was charged to repairs expense in 2009. (Enter all amounts as positive amounts and subtract where necessary.)
Question 9
On January 1, 2012, Richards Inc. had cash and common stock of $62,700. At that date the company had no other asset, liability or equity balances. On January 2, 2012, it purchased for cash $21,030 of equity securities that it classified as available-for-sale. It received cash dividends of $4,200 net of tax during the year on these securities. In addition, it has an unrealized holding gain on these securities of $5,520 net of tax. Determine the following amounts for 2012: (a) net income; (b) comprehensive income; (c) other comprehensive income; and (d) accumulated other comprehensive income (end of 2012).
Question 10
(Comprehensive Income)
Armstrong Corporation reported the following for 2012: net sales $1,286,800; cost of goods sold $763,800; selling and administrative expenses $331,100; and an unrealized holding gain on available-for-sale securities $23,000.
Prepare a statement of comprehensive income, using the two-income statement format. Ignore income taxes and earnings per share. (Enter all amounts as positive amounts and subtract where necessary.)
Question 11
Guillen, Inc. began work on a $7,081,900 contract in 2012 to construct an office building. Guillen uses the completed-contract method. At December 31, 2012, the balances in certain accounts were construction in process $1,748,100; accounts receivable $255,100; and billings on construction in process $1,119,000. Indicate how these accounts would be reported in Guillen’s December 31, 2012, balance sheet.
Question 12
Lazaro, Inc. sells goods on the installment basis and uses the installment-sales method. Due to a customer default, Lazaro repossessed merchandise that was originally sold for $950, resulting in a gross profit rate of 40%. At the time of repossession, the uncollected balance is $550, and the fair value of the repossessed merchandise is $299. Prepare Lazaro’s entry to record the repossession. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Question 13
Harding Corporation has the following accounts included in its December 31, 2012, trial balance: Accounts Receivable $110,620; Inventories $293,520; Allowance for Doubtful Accounts $9,270; Patents $73,940; Prepaid Insurance $9,710; Accounts Payable $78,930; Cash $34,760. Prepare the current assets section of the balance sheet listing the accounts in proper sequence.
Question 14
Patrick Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2012: Prepaid Rent $20,500; Goodwill $54,940; Franchise Fees Receivable $2,200; Franchises $46,280; Patents $32,380; Trademarks $13,490. Prepare the intangible assets section of the balance sheet. (List amounts from largest to smallest, e.g. 10, 5, 3, 2.)
Question 15
Hawthorn Corporation’s adjusted trial balance contained the following accounts at December 31, 2012: Retained Earnings $121,510; Common Stock $708,320; Bonds Payable $104,690; Additional Paid-in Capital $202,370; Goodwill $60,810; Accumulated Other Comprehensive Loss $151,950. Prepare the stockholders’ equity section of the balance sheet. (List entries in order of stock preferred status. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)
Question 16
Keyser Beverage Company reported the following items in the most recent year.
|
Net income |
$45,500 |
|
Dividends paid |
6,030 |
|
Increase in accounts receivable |
11,770 |
|
Increase in accounts payable |
7,510 |
|
Purchase of equipment (capital expenditure) |
9,470 |
|
Depreciation expense |
6,510 |
|
Issue of notes payable |
20,990 |
Compute net cash flow provided by operating activities and the net change in cash during the year. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)
Question 17
Linden Corporation is preparing its December 31, 2012, financial statements. Two events that occurred between December 31, 2012, and March 10, 2013, when the statements were issued, are described below.
- A liability, estimated at $162,910 at December 31, 2012, was settled on February 26, 2013, at $181,060.
- A flood loss of $79,500 occurred on March 1, 2013.
What effect do these subsequent events have on 2012 net income? (If there is no impact select not change and 0 for the amount.)
Question 18
Roder Corporation has seven industry segments with total revenues as follows.
|
Penley |
$1,743 |
Cheng |
$581 |
|
Konami |
1,992 |
Takuhi |
498 |
|
KSC |
664 |
Molina |
2,075 |
|
Red Moon |
747 |
Based only on the total revenues test, which industry segments are reportable?
Enter 1 if the segment is reportable. Enter 0 if the segment is not reportable.
Question 19
Operating profits and losses for the seven industry segments of Roder Corporation are:
|
Penley |
$130 |
Cheng |
$(30) |
|
Konami |
(60) |
Takuhi |
45 |
|
KSC |
40 |
Molina |
215 |
|
Red Moon |
75 |
Based only on the operating profit (loss) test, which industry segments are reportable?
Enter 1 if the segment is reportable. Enter 0 if the segment is not reportable.
Question 20
Which of the following events will appear in the cash flows from financing activities section of the statement of cash flows?
Question 21
Heartland Company’s budgeted sales and budgeted cost of goods sold for the coming year are $140,520,000 and $34,749,000 respectively. Short-term interest rates are expected to average 10%. If Heartland can increase inventory turnover from its present level of 9 times a year to a level of 12 times per year, compute its expected cost savings for the coming year.
Question 22
The financial statement which summarizes operating, investing, and financing activities of an entity for a period of time is the
Question 23
Ames Company reported 2012 net income of $155,580. During 2012, accounts receivable increased by $15,020 and accounts payable increased by $9,900. Depreciation expense was $41,710. Prepare the cash flows from operating activities section of the statement of cash flows.(List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)
Question 24
Martinez Corporation engaged in the following cash transactions during 2012.
|
Sale of land and building |
$197,470 |
|
Purchase of treasury stock |
41,520 |
|
Purchase of land |
38,050 |
|
Payment of cash dividend |
86,150 |
|
Purchase of equipment |
56,870 |
|
Issuance of common stock |
153,880 |
|
Retirement of bonds |
100,610 |
Compute the net cash provided (used) by investing activities. (List multiple entries from the largest positive to the smallest positive amount followed by the most negative to the least negative amount, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)
Question 25
Martinez Corporation engaged in the following cash transactions during 2012.
|
Sale of land and building |
$188,620 |
|
Purchase of treasury stock |
46,180 |
|
Purchase of land |
46,390 |
|
Payment of cash dividend |
89,690 |
|
Purchase of equipment |
58,090 |
|
Issuance of common stock |
152,810 |
|
Retirement of bonds |
101,810 |
Determine Martinez’s free cash flow, assuming that it reported net cash provided by operating activities of $408,610. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)
Question 26
(Preparation of a Statement of Cash Flows)
A comparative balance sheet for Orozco Corporation is presented below.
|
December 31 |
||
|
Assets |
2012 |
2011 |
|
Cash |
$63,005 |
$22,000 |
|
Accounts receivable |
84,797 |
68,792 |
|
Inventories |
182,797 |
191,792 |
|
Land |
73,797 |
112,792 |
|
Equipment |
267,203 |
197,208 |
|
Accumulated depreciation-equipment |
(71,797) |
(44,792) |
|
Total |
$599,802 |
$547,792 |
|
Liabilities and Stockholders’ Equity |
||
|
Accounts payable |
$36,797 |
$49,792 |
|
Bonds payable |
150,000 |
200,000 |
|
Common stock ($1 par) |
214,000 |
164,000 |
|
Retained earnings |
199,005 |
134,000 |
|
Total |
$599,802 |
$547,792 |
Additional information:
- Net income for 2012 was $110,594.
- Cash dividends of $45,589 were declared and paid.
- Bonds payable amounting to $50,000 were retired through issuance of common stock.
|
(a) |
Prepare a statement of cash flows for 2012 for Orozco Corporation. (List multiple entries from the largest positive to the smallest positive amount followed by the most negative to the least negative amount, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).) |
|
(b) |
Determine Orozco Corporation’s current cash debt coverage ratio, cash debt coverage ratio, and free cash flow. (Round ratios to 2 decimal places, e.g. 1.55. List multiple entries from the largest positive to the smallest positive amount followed by the most negative to the least negative amount, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).) |
Question 27
Chris Spear invested $11,349 today in a fund that earns 8% compounded annually. To what amount will the investment grow in 3 years? To what amount would the investment grow in 3 years if the fund earns 8% annual interest compounded semiannually? (Round answers to 2 decimal places, e.g. 12,250.25. Hint: Use tables in text.)
Question 28
Amy Monroe wants to create a fund today that will enable her to withdraw $32,450 per year for 8 years, with the first withdrawal to take place 5 years from today. If the fund earns 10% interest, how much must Amy invest today? (Round the answer to zero decimal places, e.g. 120,250. Hint: Use tables in text.)
Question 29
Zach Taylor is settling a $25,000 loan due today by making 6 equal annual payments of $5,909.41.
What payments must Zach Taylor make to settle the loan at the interest rate of 11%, but with the 6 payments beginning on the day the loan is signed? (Round answer to 2 decimal places, e.g. 2,250.25. Hint: Use tables in text.)
Question 30
(Simple and Compound Interest Computations)
Lyle O ‘Keefe invests $32,100 at 8% annual interest, leaving the money invested without withdrawing any of the interest for 9 years. At the end of the 9 years, Lyle withdrew the accumulated amount of money.
|
(a) |
Compute the amount Lyle would withdraw assuming the investment earns simple interest. |
|
(b) |
Compute the amount Lyle would withdraw assuming the investment earns interest compounded annually. (Round to 2 decimal places, e.g. 25,250.25. Hint: Use tables in text.) |
|
(c) |
Compute the amount Lyle would withdraw assuming the investment earns interest compounded semiannually. (Round to 2 decimal places, e.g. 25,250.25. Hint: Use tables in text.) |