ACT3392SpringTraditionalHWCh23&ARPsolution

ACT3392SpringTraditionalHWCh23&ARPsolution -...

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HOMEWORK - SPRING 2010 1. (7 points) using the indirect method. 1. After the retirement of an officer, the insurance policy was canceled, and a cash settlement was received by the firm. These proceeds were in excess of the book value of the policy. B____ 2. Amortization of the discount on a zero-interest bearing long-term note receivable. The AJE would be: dr Discount and cr Interest income – this increases NI but is not a cash inflow A____ 3. Accrued estimated income taxes for the period. These taxes will be paid next year. Assume there are no deferred tax assets or liabilities. The AJE would be: dr Expense and cr Payable – this decreases NI but is not a cash outflow A____ 4. Premium amortized on investment in bonds. Assume that the interest income on the bonds was recorded on the same day the cash interest was collected. The AJE would be: dr Cash and cr both Premium AND Interest income – there was more cash received than was reflected in net income A____ 5. The carrying value of trading securities was reduced to fair value. The AJE would be: dr Loss and cr Investments adjustment – this decreases NI but is not a cash outflow D____ 6. Purchase of available-for-sale securities. None_ 7. Declaration of stock dividends (not yet distributed). None_
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ACT3392SpringTraditionalHWCh23&ARPsolution -...

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