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Unformatted text preview: Practice Exam Chapters 1-5 (2) Short answer exercises (Answer in the space provided) 1. On July 1, 2009, Doe Corp. agreed to sell the assets and product line of its Hart Division. The division qualifies as a component of the entity. The sale was completed on February 15, 2010. At the end of 2009, the book value of Hart’s assets was $300,000 less than their net fair value. The division’s operating losses for 2009 were $600,000. Disregarding income taxes, what should be reported in the 2009 income statement related to the discontinued operation? 2. Refer to question 1. Assume that at the end of 2009, the book value of Hart’s assets was $300,000 more than their net fair value. Disregarding income taxes, what should be reported in the 2009 income statement related to the discontinued operation? 3. Record year-end (December 31) adjusting entries for the following situations: a. An insurance policy covering three years was purchased on July 1, for $6,000. The entire amount was debited to insurance expense. b. The company borrowed $40,000 from a local bank on October 1. Principal and interest at 12% will be paid in one year. The Wanless Corporation provides Internet consulting services to a wide- range of customers. The company’s fiscal year ends on December 31. For the year ended December 31, 2009, the company collected $1,300,000 from regular customers and paid out $650,000 for various operating expenses (not including income taxes and...
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This note was uploaded on 05/22/2010 for the course ACC 1000 taught by Professor Lee during the Spring '10 term at École Normale Supérieure.
- Spring '10