Fall 2020 - exam 1 blank

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Jan 9, 2024

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On the income statement, gains and losses from discontinued operations are reported below the line for income tax expense. A. True B. False On the income statement, gains and losses from discontinued operations are reported above the line for income tax expense. A. True B. False Which of the following is an ingredient of relevance? Neutrality Materiality Completeness Timeliness Which of the following is an ingredient of faithful representation? Materiality Timeliness Completeness Predictive value Which of the following is a nominal (temporary) account? Salaries payable Prepaid Rent Rent Expense Retained Earnings None of these are nominal/temporary accounts Which of the following could be part of closing entries? Unearned Revenue X Revenue X Accounts Receivable X Revenue X Cash X Unearned Revenue X Revenue X Income Summary X The correct order to present current assets on the balance sheet is cash, accounts receivable, inventories, prepaid items. cash, inventories, prepaid items, accounts receivable. cash, inventories, accounts receivable, prepaid items. cash, accounts receivable, prepaid items, inventories. Issuance of common stock for cash affects which basic element of financial statements? Liabilities Equity Revenues Losses

On September 1, 2020, Ferb lent $100,000 to Perry. Perry signed a note that requires principal and interest at 12% to be paid on March 1, 2021. Both Ferb and Perry have fiscal years that end in December. Ferb records which of the following as an adjusting entry on December 31? Interest expense 4,000 Prepaid interest 4,000 Interest expense 4,000 Cash 4,000 Interest receivable 4,000 Interest revenue 4,000 Interest expense 4,000 Interest payable 4,000 On August 1, 2020, Ferb lent $100,000 to Perry. Perry signed a note that requires principal and interest at 12% to be paid on March 1, 2021. Both Ferb and Perry have fiscal years that end in December. Ferb records which of the following as an adjusting entry on December 31? Interest expense 5,000 Cash 5,000 Interest receivable 5,000 Interest revenue 5,000 Interest expense 5,000 Interest payable 5,000 Interest expense 5,000 Prepaid interest 5,000 A partial adjusted trial balance of Piper Company at January 31, 2014 shows the following: Debit Credit Supplies 600 Prepaid Insurance 300 Salaries and Wages Payable 100 Unearned Service Revenue 700 Supplies Expense 200 Salaries and Wages Expense 400 Insurance Expense 500 Service Revenue 900 Assume the fiscal period started on January 1. If the amount in Supplies Expense is January 31 adjusting entry, and $500 of supplies was purchased in January, what was the balance in Supplies on January 1? 300 200 500 600 A partial adjusted trial balance of Piper Company at January 31, 2014 shows the following: Debit Credit Supplies 1,300 Prepaid Insurance 600 Salaries and Wages Payable 200 Unearned Service Revenue 1,400 Supplies Expense 400 Salaries and Wages Expense 800 Insurance Expense 1,000 Service Revenue 1,800 Assume the fiscal period started on January 1. If the amount in Supplies Expense is January 31 adjusting entry, and $1,000 of supplies was purchased in January, what was the balance in Supplies on January 1? 700 500 1,100 1,300

A partial adjusted trial balance of Piper Company at January 31, 2014 shows the following: Debit Credit Supplies 600 Prepaid Insurance 300 Salaries and Wages Payable 100 Unearned Service Revenue 700 Supplies Expense 200 Salaries and Wages Expense 400 Insurance Expense 500 Service Revenue 900 Assume the fiscal period started on January 1. Assume $700 was received in January for services performed in January. In addition, assume $300 was received in January for services to be performed in February. What was the balance in Unearned Service Revenue at December 31, 2019? 200 300 600 700 A partial adjusted trial balance of Piper Company at January 31, 2014 shows the following: Debit Credit Supplies 1,300 Prepaid Insurance 600 Salaries and Wages Payable 200 Unearned Service Revenue 1,400 Supplies Expense 400 Salaries and Wages Expense 800 Insurance Expense 1,000 Service Revenue 1,800 Assume the fiscal period started on January 1. Assume $1,400 was received in January for services performed in January. In addition, assume $600 was received in January for services to be performed in February. What was the balance in Unearned Service Revenue at December 31, 2019? 400 600 1,200 1,400 Salaries and Wages Payable balance of $0 before adjusting entries. There are eight employees. Salaries and wages are paid every Friday for the current week. Four employees receive $750 each per week, and two employees earn $1,000 each per week. December 31 is a Wednesday. Employees do not work weekends. All employees worked the last 3 days of December. What adjusting entry is necessary? Salaries expense 4,000 Salaries payable 4,000 Salaries expense 5,000 Salaries payable 5,000 Salaries expense 4,000 Cash 4,000 Salaries expense 3,000 Salaries payable 3,000 Salaries and Wages Payable balance of $0 before adjusting entries. There are eight employees. Salaries and wages are paid every Friday for the current week. Six employees receive $1,000 each per week, and two employees earn $2,000 each per week. December 31 is a Wednesday. Employees do not work weekends. All employees worked the last 3 days of December. What adjusting entry is necessary? Salaries expense 8,000 Salaries payable 8,000 Salaries expense 10,000 Salaries payable 10,000 Salaries expense 8,000 Cash 8,000 Salaries expense 6,000 Salaries payable 6,000

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Prepaid Advertising balance of $60,000 before adjusting entries. This balance consists of payments on two advertising contracts. The contracts provide for monthly advertising in two trade magazines. The terms of the contracts are as shown below: Contract Date Amount Number of magazine issues A June 1 $12,000 12 B Sept. 1 48,000 24 The adjusting entry on December 31 would include: Debit to Advertising expense of 12,000 Debit to Advertising expense of 9,000 Debit to Advertising expense of 15,000 Debit to Advertising expense of 18,000 Prepaid Advertising balance of $60,000 before adjusting entries. This balance consists of payments on two advertising contracts. The contracts provide for monthly advertising in two trade magazines. The terms of the contracts are as shown below: Contract Date Amount Number of magazine issues A July 1 $12,000 12 B Aug. 1 48,000 24 The adjusting entry on December 31 would include: Debit to Advertising expense of 14,000 Debit to Advertising expense of 12,000 Debit to Advertising expense of 16,000 Debit to Advertising expense of 18,000 On January 1, 2011, ABC purchased equipment for $820,000 which was estimated to have a useful life of 8 years with a salvage value of $20,000 at the end of that time. Depreciation has been recorded for 4 years on a straight-line basis. In 2015 (year 5), it is determined that the total estimated life should be 10 years with a salvage value of $15,000 at the end of that time. How much depreciation is recorded in 2015? 67,500 100,000 80,500 70,000 62,500 On January 1, 2011, ABC purchased equipment for $820,000 which was estimated to have a useful life of 8 years with a salvage value of $20,000 at the end of that time. Depreciation has been recorded for 4 years on a straight-line basis. In 2015 (year 5), it is determined that the total estimated life should be 10 years with a salvage value of $6,000 at the end of that time. How much depreciation is recorded in 2015? 69,000 100,000 80,500 70,000 64,000 Phineas Inc. Trial Balance December 31, 2019 Debit Credit Accounts payable 1,200 Accounts receivable (net) 600 Additional paid-in capital 1,000 Bonds payable (due in 2022) 2,300 Cash 400 Common stock 200 Cost of Goods Sold 900 Goodwill 100 Income tax expenses 200 Phineas Inc. Trial Balance December 31, 2019 Debit Credit Accounts payable 3,600 Accounts receivable (net) 1,800 Additional paid-in capital 3,000 Bonds payable (due in 2022) 7,200 Cash 1,200 Common stock 600 Cost of Goods Sold 2,700 Goodwill 300 Income tax expenses 600

Income taxes payable 100 Inventory 500 Net sales and other revenues 2,000 Prepaid rent 300 Property, plant, and equipment (net) 7,300 Rent Expense 100 Retained earnings, at 01/01/2019 3,200 Unearned revenue 400 10,400 10,400 Assume the prepaid rent relates to rent for the first six months of 2020 and the unearned revenue relates to service to be provided in during March of 2020. What amount would be reported as current assets on Phineas’ 12/31/2019 balance sheet? 1900 1500 1300 1800 Income taxes payable 300 Inventory 1,500 Net sales and other revenues 6,000 Prepaid rent 900 Property, plant, and equipment (net) 21,900 Rent Expense 300 Retained earnings, at 01/01/2019 9,600 Unearned revenue 900 31,200 31,200 Assume the prepaid expenses relates to rent for the first six months of 2020 and the unearned revenue relates to service to be provided in during March of 2020. What amount would be reported as current assets on Phineas’ 12/31/2019 balance sheet? 7700 4500 3900 5400

Presented below are changes in all account balances of ABC inc. during the current year, except for retained earnings. Increase (Decrease) Cash 68,000 Accounts Receivable (net) (40,000) Inventory 100,000 Investments 15,000 Accounts Payable 75,000 Bonds Payable (35,000) Common Stock 14,000 Paid-In Capital in Excess of Par-Common Stock 55,000 Assume there were no entries in the Retained Earnings except for net income and a dividend declaration. Assume net income was $50,000. What did ABC report for dividends declared during the current year? 28,000 16,000 34,000 42,000 50,000 Presented below are changes in all account balances of ABC inc. during the current year, except for retained earnings. Increase (Decrease) Cash 3,400 Accounts Receivable (net) (2,000) Inventory 5,000 Investments 750 Accounts Payable 3,750 Bonds Payable (1,750) Common Stock 700 Paid-In Capital in Excess of Par-Common Stock 2,750 Assume there were no entries in the Retained Earnings except for net income and a dividend declaration. Assume net income was $2,500. What did ABC report for dividends declared during the current year? 1,400 800 1,700 2,100 2,400

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ABC reported income from continuing operations before taxes during 2017 of $100,000. Additional transactions occurring in 2017 but not considered in the $100,000 are as follows: -The corporation experienced an uninsured flood loss in the amount of $20,000 during the year. -At the beginning of 2015, the corporation purchased a machine for $200,000 (salvage value of $50,000) that had a useful life of 10 years. The bookkeeper recorded depreciation for 2015, 2016, and 2017, but failed to deduct the salvage value in computing it depreciation base. -The corporation realized $50,000 from an insurance policy. The cash surrender value of the policy had been carried on its book as an investment with a book value of $10,000 (the gain is nontaxable). -The corporation disposed of its recreational division at a loss of $10,000 before taxes. Assume that this transaction meets the criteria of discontinued operations. -Assume a 30% tax rate where necessary. What does ABC report for income from continuing operations after tax? 70,000 87,500 99,500 92,500 ABC reported income from continuing operations before taxes during 2017 of $100,000. Additional transactions occurring in 2017 but not considered in the $100,000 are as follows: -The corporation experienced an uninsured flood loss in the amount of $30,000 during the year. -At the beginning of 2015, the corporation purchased a machine for $200,000 (salvage value of $50,000) that had a useful life of 10 years. The bookkeeper recorded depreciation for 2015, 2016, and 2017, but failed to deduct the salvage value in computing it depreciation base. -The corporation realized $50,000 from an insurance policy. The cash surrender value of the policy had been carried on its book as an investment with a book value of $30,000 (the gain is nontaxable). -The corporation disposed of its recreational division at a loss of $10,000 before taxes. Assume that this transaction meets the criteria of discontinued operations. -Assume a 30% tax rate where necessary. What does ABC report for income from continuing operations after tax? 70,000 66,500 72,500 65,500

SCF problem – version 1 Candace, Inc. Comparative Balance Sheets As of December 31, 2019 and 2018 2019 2018Change ASSETS: Cash 800 300 500 Accounts Receivable 800 400 400 Merchandise Inventories 900 1,400 (500) Land 300 500 (200) Buildings 5,200 3,000 2,200 Equipment 3,200 3,000 200 Accumulated Depr - Building (2,000) (1,500) (500) Accumulated Depr - Equipment (1,200) (1,000) (200) Total Assets 8,000 6,100 1,900 LIABILITIES AND SHAREHOLDERS' EQUITY: Accounts Payable 400 1,100 (700) Dividends Payable 200 100 100 Notes Payable 2,700 800 1,900 Common Stock 1,100 900 200 Retained Earnings 3,600 3,200 400 Total Liabilities and Equity 8,000 6,100 1,900 No land was purchased. The company sold land recording a gain of $300 Equipment was sold that had a historical cost of $800 that had been depreciated 50% for a loss of $200 A building was acquired by issuing notes payable in the amount of $1,500. No buildings were sold. Dividends were declared during 2019 The company reported net income of 1,000. Prepare a cash flow statement using the indirect method

SCF Problem Version 2 Candace, Inc. Comparative Balance Sheets As of December 31, 2019 and 2018 2019 2018Change ASSETS: Cash 1,500 300 1,200 Accounts Receivable 500 800 (300) Merchandise Inventories 1,300 900 400 Land 300 500 (200) Buildings 4,000 2,000 2,000 Equipment 3,200 3,000 200 Accumulated Depr - Building (1,600) (1,300) (300) Accumulated Depr - Equipment (1,100) (1,000) (100) Total Assets 8,100 5,200 2,900 LIABILITIES AND SHAREHOLDERS' EQUITY: Accounts Payable 900 400 500 Dividends Payable 100 200 (100) Notes Payable 2,700 800 1,900 Common Stock 1,100 900 200 Retained Earnings 3,300 2,900 400 Total Liabilities and Equity 8,100 5,200 2,900 No land was purchased. The company sold land recording a gain of $200 Equipment was sold that had a historical cost of $800 that had been depreciated 50% for a loss of $100 A building was acquired by issuing notes payable in the amount of $1,500. No buildings were sold. Dividends were declared during 2019 The company reported net income of 1,000. Prepare a cash flow statement using the indirect method

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