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Acct II final - /3rint Assignment Final Acct H r...

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Unformatted text preview: /3rint Assignment: Final Acct H r F2010 ::false 7 Page 1 of 11 Final Acct II r F2010 Start Date: 6 Dec 2010 at 06:00 PM Due Date: 15 Dec 2010 at 01:00 AM Student Access after Due Date: No Graded: Yes True False, Question 2 Pretax financial income is the amount used to compute income tax payable. (- True ‘ False Multiple Choice, Question 28 A major distinction between temporary and permanent differences is temporary differences reverse themselves in subsequent accounting periods, whereas permanent differences do not reverse. permanent differences are not representative of acceptable accounting practice. temporary differences occur frequently, whereas permanent differences occur only once. .33") once an item is determined to be a temporary difference, it maintains that status; however, a permanent difference can change in status with the passage of time. Multiple Choice, Question 34 Which of the following will not result in a temporary difference? Product warranty liabilities Advance rental receipts Installment sales .03”) All of these will result in a temporary difference. Multiple Choice, Question 47 Deferred taxes should be presented on the balance sheet to as one net debit or creditamount.~ G in two amountsrenevfepthe nebdebit amount and one for the net credit amount. (- as reductions of the related asset or liability accounts. p in two amounts: one for the net current amount and one for the net noncurrent amount. http://edugen.Wiley.com/edugen/shared/assignment/test/agprint.uni?titleType=false 12/6/2010 ‘ Assignment: Final Acct II t F2010 ::false 7 Page 2 of 11 Multiple Choice, Question 69 Ferguson Company has the folouing cumulative taxable temporary differences: ”a 12/31/11 12/31/10 $1,350,000 $960,000 X, 3/0, 050 LAq/f’ 1? x -K 7 11/ ., ’7 ‘ < The tax rate enacted for 2011 is 40%, while the tax rate enactfij for future ‘fiears'is 30%. TaxabIe ifi'tZée for 2011 is $2,400,000 and there are no permanent differencs. Ferguson's pretax financial income for 2011 is r“ $1,050,000. , . Q, [/W {290 a $2,790,000. ‘ 7‘“ /, 350,623 p $2 010 000. " QQQZE‘K? l I W r- $3,750,000. y/ 762:), £29 Multiple Choice, Question 79 Rowen, Inc. had pre-tax accounting income of $900,000 and a tax rate of 40% in 2010, its first year of operations. During 2010 the company had the following transactions: 6296/9519 Received rent from Jane, Co. for 2011 $32,000 Municipal bond income $40,000) Depreciation for tax purposes in excess of book depreciation $20,000 Installment sales revenue to be collected in 2011 654,000 H - - 2 ,1. For 2010, what is the amount of income taxes payable for Rowen, Inc. 3/ 3,000 ¥ (7/0627 /7 g 27’ 203 (- $386,400 ('- $343,200 f“ $301,600 8 $327,200 True False, Question 8 The interest component of pension expense in the current period is computed by multiplying the settlement rate by the beginning balance of the projected benefit obligation. {- False Pg IpséJ/Ji?’ 3 True ——————————————————~———————~——*—____ True False, Question 13 The difference between the expected return and the actual return is referred to as the unexpected gain or loss. , False (- True http ://edugen.wiley.com/edugen/shared/assignment/test/agprint.uni?tit1eType=false 1 2/ 6/ 20 1 0 Assignment: Final Acct 11 r F2010 ::false Page 3 of 11 True False, Question 17 When a company amends its defined benefit plan, and recognizes prior service, the projected benefit obligation is increased to recognize this additional liability. if . False ’ True P56. (6’0 / Multiple Choice, Question 53 According to the FASB, recognition of a liability is required when the projected benefit obligation exceeds the fair value of plan assets. Conversely, when the fair value of plan assets exceeds the projected benefit obligation, the Board {- requires recognition of an asset. , (- requires recognition of an asset if the excess fair value of plan assets exceeds the corridor amount. 3!“ recommends recognition of an asset but does not require such recognition. {- does not permit recognition of an asset. . W Multiple Choice, Question 77 On January 1, 2011, Newlin Co. has the following balances: I . Projected benefit obligation $2,100,000 \/ 1’0 3 02/in Fair value of plan assets 1,800,000 The settlement rate is 10%. Other data related to the pension plan for 2011 are: Service cost 4’ $180,000 Amortization of prior service costs due to increase in benefits 60,000 g #90 mg) Contributions . 300,000 / / Benefits paid - 105,000 ”L / 30, 0173 Actual return on plan assets 237,000 Amortization of net gain 18,000 ’ , J, 9 80, 000 The balance of the projected benefit obligation at December 31, 2011 is 2’ ’fi, 00‘) M , & / f 0 a) ('- $2,685,000. ’131/ 7 0 ‘ / 09 S, cm 0'“ $2,355,000. W 0 02,007,000. " 2, 335305229 0 $2,385,000. pg. [076 jib/0C 29”“: Multiple Choice, Question 79 Rathke, Inc. has a defined—benefit pension plan covering its 50 employees. Rathke agrees to amend its pension benefits. As a result, the projected benefit obligation increased by $1,500,000. Rathke determined that all its employees are expected to receive benefits under the plan over the next 5 years. In addition, 20% are expected to retire or quit each year. Assuming that Rathke uses the years—of-service method of amortization for prior service cost, the amount reported as amortization of prior service cost in year one after the amendment is http://edugen.wiley.com/edugen/shared/assignment/test/agprint.uni?titleType=false 12/6/2010 Assignment: Final Acct II 1' F2010 :2false $150,000. $500,000. 3.3"} $300,000. Mam 2/ True-False, Question 5 , ‘ A capitalized leased asset is always depreciated over the term of the lease by the lessee. (“- True 9 False True-False, Question 8 The distinction between a direct—financing lease and a sales-type lease is the presence or absence of a transfer of title. . False {- True True-False, Question 20 The FASB requires lessees and lessors to disclose certain information about leases in their financial statements or in th a True 5 False Objwl'w? 2 Multiple choice, Question 27 The amount to be recorded as the cost of an asset under capital lease is equal to the p present value of thevnnnfinmlease payments plus the present value of any unguaranteed residual value. (- carrying value of the asset Wheatesser's books. p present value of the minimum lease payments. . presentvalne ofrthe'm'ln'i'nmleasemments or the fair value of the asset, whichever is lower. % Multiple choice, Question 29 Which of the following is a correct statement of one of the capitalization criteria? http://edugen.wiley.com/edugen/shared/assignment/test/agprint.uni?titleType=false Page 4 of 11 flat/”'2 we :4: 3- j. i 2» $400,000.; $ 40 go 20 /0 g, /§0 , (1/54“ WOW 4 e notes. 12/6/2010 The minimum lease payments (excluding executory costs) equal or exceed 90% of the fair value of the leased property. The lease transfers ownership of the property to the lessor. 9’53“) The lease term is equal to or more than 75% of the estimated economic life of the leased property. Multiple choice, Question 31 Executory costs include \\2‘ _. > 0, l maintenance. Q (‘3 property taxes. insurance. gnaw All of these. . g . ”3‘” . AN} MultIple chOIce, Questlon 85 P rate implicit in the lease is 12%, the six beginning—of—the-year lease payments would be $92,361. 40a C290 The lease contains a purchase option. t { 9‘6 W3 ‘ \Dg ' Mays Company has a machine with a cost of $400,000 which also is its fair market value on the date the machine is leased to l’ark O s——<—x K9 Company. The lease is form and the machine is estimated to have an unguaranteed residual value of $40,000. If the lessor's interest r . r $66,667. 40000 Y Swag g0 Qafi M”; WJWJ 3 I W . $82,465. 27? 731/5 p $78,180. . . [/1 ”é Lg True- False, Question 11 d) 9} When accounts receivable decrease during a period, cash— basis revenues are higher than revenues reported on an accrual basis. 0 W5” ('- False ,, W l «W True-False, Question 18 M, (u False aTrue I , Va? ‘27)“ http://edugen.wiley.com/edugen/shared/assignment/test/agprint.uni?titleType=fa1se % Noncash investing and financing activities are disclosed either in a separate Schedule or in a separate note to the financial statements. 12/6/2010 7 77"fi_’___'—l t Assignment: Final Acct H r F2010 :zfalse Page 5 of 11 : § 133?”; ’ 04$ , , 7410 is?” 0' t Assignment: Final Acct II 1' F2010 :zfalse Multiple choice, Question 56 The following information on selected cash transactions for 2011 has been provided by Mancuso Company: M Proceeds from sale of land $160,000 Proceeds from long-term borrowings 400,000 Purchases of plant assets Purchases of inventories ¥0,000 Proceeds from sale of Mancuso common stock 240,000 Page 6 of 11 What is the cash [email protected] investing activities for the year ended December 31, 2011, as a result of the above information? A.— p- $800,000 /[email protected] ago (‘- $150,000. ‘7 </‘/ (SUD fl 0 $16,000 / (9&0 (- $256,000 {fl/ Multiple choice, Question 60 Harlan Mining Co. has recently decided to go public and has hired you as an independent CPA. One statement that the enterprise is anxious to have prepared is a statement of cash flows. Financial statements of Harlan Mining Co. for 2011 and 2010 are provided below. BALANCE SHEETS will 1.2m Cash $204,000 96,000, Accounts receivable M Merchandise inventory ' ,I I I , Property, plant and equipment $304,000 $430,000 Less accumulated depreciation (160,000) 144,000 1152.000) 323 000 m m Accounts payable " £33,000 $ 43,000 Income taxes payable 170,000 196,000 Bonds payable 130,000 300,000 Commnstock 103,000 108,000 Retained earnings 163,000 120,000 0120.000 $122,000 INCOME STATEMENT For the Year Ended December 31, 2011 Sales _',_1 200,000 Cost of sales 3,576,000 Gross profit 24,000 Selling expenses $300,000 Administrative expenses 96 000 396,000 Income from operations 223,000 Interest expense 36,000 Income before taxes 192,000 Income taxes 43,000 Net income W http://edugen.wiley .com/edugen/shared/assigmnent/test/agprint.uni?titleType=false 1 2/ 6/ 201 0 ,a t Assignment: Final Acct II I F2010 ::false Page 7 of 11 The following additional data were provided: 1. Dividends for the year 2011 were $96,000. 2. During the year, equipment was sold for $120,000. This equipment cost $176,000 originally and had a book value of $144,000 at the time of sale. The loss on sale was incorrectly charged to cost of sales. 3. All depreciation expense is in the selling expense category. The question relate to a statement of cash flows (direct method) for the year ended December 31, 2011, for Harlan Mining Company. Under the direct method, the cash received from customers is —————- /Q§ 0,510 f?“ 21:) 0 A/ 9622/ 0&0 9;qu 262/3 39:78 £567 (- $4,200,000. ., 4’7? 80, gm #fk: 34:92? ? $4, 220, 000. (we 7, ”law Multiple choice, Question 68 (3 74%; , ') W 0 ajwn 4,003 . " 1 "Mi Equipment that cost $300,000 and had a book value of $156, 000 was sold for $180,000. Data from the comparative balance sheets are. {- $4,272,000. , $4,128,000. 12 31 11 12(31[10 if“; Equipment $2,160,000 $1,950,000 WE? ”1 Accumulated Depreciation 660,000 570,000 ‘ (pm) aw i (3 Depreciation expense for 2011 was / xx W , 5’70 000 .3 $234,000. 1 (- $258,000. 90/ \ r” $36,000. w/ r. 503 $54,000. 15 ¢ , Multiple choice, Question 82 UZQ’ In preparing Titan Inc.’s statement of cash flows for the year ended December 31, 2011, the following amounts were available: 0% Collect note receivable $320,000 U Issue bonds payable 406,000 Purchase treasury stock 210,000 What amount should be reported on Titan, Inc.’s statement of cash flows for investing activities? %— 0 $320,000 $110,000 r‘ p $110,000 (- $726,000 01/192946“ 92 Multiple choice, Guam 95 http://edugen.Wiley.com/edugen/shared/assignment/test/agprint.uni?titleType=false 12/6/2010 The data shown below related to the statement of cash flows for Putnam, Inc.: Comparative Balance Sheets Assets: Current Assets: Cash Accounts Receivable (net) Merchandise inventory Prepaid Expenses Total Current Assets Long-Term investments Plant Assets: Property. Plant & Equipment Accumulated Depreciation Total Plant Assets Total Assets Equities: Current Liabilities: Accounts Payable Accrued Expenses Dividends Payable Total Current Liabilities Long-Term Notes Payable Stockholders Equity: Common Stock Retained Earnings Total Equities Putnam . inc. Putnam. inc. Wit. _21_3L._._EJ.LU_ $ 690.000 $ 540.000 . 1.560.000 1.080.000 -1 .950.000 1.260.000 anew _31a.u_nc 4.551.000 3.195.000 225.000 2.190.000 1.440.000 1450.000) [270 000) 1 740 000 1 170 000 WW $1.275.000 $1,095.000 309.000 232.000 201.000 1.735.000 1.377.000 825.000 3.000.000 2.400.000 906 000 538 000 Mil—00w Com parative income Stateme nts Net Credit Sales Cost of Goods Sold Gross Profit Expenses (including income Tax] Net income Additional Information: a. What amount of cash was paid on accounts payable to suppliers during 2011? "3’31“”: December 31 2011 2010 $7.020.000 $3.753.000 3.915.000 1881 000 3.105.000 1.372.000 2 536 000 1 374 000 WW Accounts receivable and accounts payable relate to merchandise held for sale in the normal course of business. The allowance for bad debts was the same at the end of 2011 and 2010, and no receivables were charged against the allowance. Accounts payable are recorded-aetsefeny amt-sand are always paid within the discount period. The proceeds from the note payable were used to finance the acquisition of property, plant, and equipment. Capital stock was sold to provide additional working capital. $4,425,000. $3,735,000. $4,095,000. $4,605,000. True-False, Question 5 W http://edugen.Wiley.com/edugen/shared/assignment/test/agprint.uni?tit1eType=false 12/6/2010 Page 9 ofll , nt Assignment: F‘MH tFZOlO ::false papa 22 When a command“ an accounting principle, it should report the change by reporting the cumulative effect of the change in the ‘ current year's m mnent. Fabe 575/2“; 0 , $0573 "T“ W'HSZF True-False, Question 10 When it is impossible to determine whether a change in principle or change in estimate has occurred, the change is considered a change in estimate. {- True (- False Multiple choice, Question 34 Which of the following statements is correct? Changes in accounting principle are always handled in the current or prospective period. Prior statements should be restated for changes in accounting estimates. Correction of an error related to a prior period should be considered as an adjustment to current year net income. 3’33”} A change from expensing certain costs to capitalizing these costs due to a change in the period benefited, should be handled as a change in accounting estimate. Multiple choice, Question 42 On January 1, 2008, Knapp Corporation a‘cquired machinery at a cost of $250,000. Knapp adopted the double«declining balance method of depreciation for this machinery and had been recording depreciation over an estimated useful life of ten years, with no residual value. At the beginning of 2011, a decision was made to change to the straight-line method of depreciation for the machinery. The depreciation expense for 2011 would be $12,800. $18,286. $25,000. 3’73“) $35,714. % True False, Question 4 In order to make adequate disclosure of related party transactions, companies should report the legal form, rather than the economic substance, of these transactions. (~ True . False http://edugen.wiley.com/edugen/shared/assignment/test/agprint.uni?titleType=false 12/6/2010 nt Assignment: W]! rF2010 ::false Page 10 of 11 Tme False, Question 10 Companies should generally use the same accounting principles for interim reports and for annual reports. l p False , (- True True False, Question 17 A financial projection is a set of prospective financial statements that present a oompanys expected financial position and results of operations. r True f“ False Multiple Choice, Question 29 Which of the following subsequent events (post-balance-sheet events) would require adjustment of the accounts before issuance of the financial statements? p Changes in the quoted market prices of securities held as an investment. p Loss on an uncollectible account receivable resulting from a customers major flood loss. (A Loss on a lawsuit, the outcome of which was deemed uncertain at year end. (- Loss of plant as a result of fire. % Multiple Choice, Question 69 The following data are provided: December 31 2011 2010 Cash ~$ 3755,on $ 250,000 Accounts receivable (net) 400,000 300,000 Inventories 6567960 550,000 Plant assets (net) 2,000,000 1,625,000 Accounts payable w275,960 200,000 Taxes payable 50,000 25,000 Bonds parable-r ’v 350,000 350,000 10% Preferred stock, $50 par 500,000 . 500,000 Common stock, $10 par . 600,000 450,000 Paid—in capital 400,000 325,000 http://edugen.wiley.com/edugen/shared/assignment/test/agprint.uni?titleType=false 12/6/2010 Acct 11 r F2010 ::false gage 11 0f 11 Retained W‘ 1,000,000 875,000 Net credit $ 3,200,000 Cost of goutsfl 2,100,000 Operafil‘g ms 725,000 Net m 375,000 Addiional ‘mformation: Depreciation included in cost of goods sold and operating m is $305,000. On May 1, 2011, 15,000 shares of oommm stock were issued. The preferred shed is cumulative. The preferred divide-ism not declared during 201 1. At December 31, 2011, the acid—test ratio was (- 1,425 + 325. r 1,050 + 400. p 775 + 325. p 775 + 540. http://edugen.wiley.com/edugen/shared/assignment/test/agprint.uni?titleType=false 12/6/201 0 ...
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