Question;Accounting problemsPlease see instructions on the answer sheet;provided before completing the quiz.;Question 1 (3 points?25 minutes);The;following partial information is available from the A&O Company?s income;statement for the year ended 2014;Sales;$ 940,000;All operating;expenses except depreciation;624,000;Depreciation;expense;60,000;Loss on;sale of equipment;26,000;Income tax;expense;42,000;Net Income;145,000;In addition;partial information from A&O?s Balance Sheets for the year ending 2013 and;2014 is as follows;2013;2014;Accounts;Receivable;$94,000;$67,000;Accounts;Payable for operating expenses;41,000;51,000;Income;Taxes Payable;8,500;4,000;Instructions;a);Direct Method: Calculate cash received in 2014 from customers.;b);Direct Method: Calculate cash paid for operating expenses in 2014;c);Indirect Method: Prepare the operating activities section of the;statement of cash flows.;Question 2 (3 points?25 minutes);A&O;Corporation contracted to build an office building for $50,000,000. Construction;began in 2014 and is expected to be completed in 2016. Data for 2014 and 2015;are;2014;2015;Costs incurred to date;$14,600,000;$30,600,000;Estimated costs to complete;25,400,000;9,400,000;Progress billings to date;13,900,000;30,000,000;Cash collected to date;13,000,000;29,300,000;A&O uses the percentage-of-completion method.;Instructions;(a) Calculate the gross profit recognized in;2014.;(b) Calculate the gross profit recognized in;2015.;(c) Calculate the revenue recognized in 2015.;(d) Prepare one journal entry to;record the construction expense, revenue, and gross profit in 2015;Question 3 (4 points?15 minutes);Select the best answer for each of the following and write the letter;corresponding to your answer in the answer sheet provided.;1. Assume that;at year-end, the fair value of investments held by VAP Co. is $104,000 and the;carrying amount is $110,000. There is a zero prior balance in fair value;adjustment account. Which of the following statements would be correct for the;year-end adjusting entry?;a.;VAP will debit $6,000 to Unrealized Holding Gain or Loss- Income;if the investment is in available for sale debt securities;b. VAP will;credit $6,000 to Unrealized Holding Gain or Loss- Income if the investment is;in available for sale debt securities;c.;VAP will debit $6,000 to Unrealized Holding Gain or Loss- equity;if the investment is in available for sale debt securities;d. VAP will;credit $6,000 to Unrealized Holding Gain or Loss- Income if the investment is;in trading securities;2. Which of the;following statements is correct?;a.;Unrealized holding gains or losses on held to maturity debt;securities are reported as a separate component of stockholders' equity;b. Trading securities;are reported at fair value and available for sale debt securities are reported;at amortized cost;c.;Unrealized holding gains or losses on available for sale debt;securities are reported as a separate component of stockholders' equity, but;such gain or losses are not recognized for held to maturity debt securities.;d. Held to;maturity debt securities and available for sale debt securities are reported at;amortized cost.;3. Unrealized;holding gains and losses on investments in equity securities accounted;for using the equity method are;a.;Recognized in net income;b. Not recognized;c.;Recognized as other comprehensive income and as a separate;component of stockholders? equity;d. All of the;above statements are incorrect.;4.;Which of the;following statements is correct?;a.;A refund liability is recorded by the consignee upon receipt of;the goods on consignment.;b. When goods;are sold with a right of return, the transaction is recorded as a repurchase;agreement.;c.;Service type warranties are recorded as a separate performance;obligation.;d. Assurance type warranties are recorded as a;separate performance obligation.;5.;A contract;modification is accounted for using a prospective approach if;a.;The promised goods or services are distinct.;b. The company;has the right to receive an amount equal to the standalone price.;c.;The new products are not priced at the proper standalone price or;if they are not distinct.;d. Both a and b;are correct.;6.;When using the indirect method to;prepare the operating section of a statement of cash flows, which of the;following is subtracted from net income to compute cash flow from operating;activities?;a. Decrease in accounts receivable.;b. Gain on sale of land.;c. Amortization of patent.;d. Increase in accounts payable.;7. Under the;quantitative test, a segment is considered reportable if;a.;Both the segment revenues are 10% or more of the combined revenues;(excluding intersegment revenue) of all segments, and the Identifiable;assets are 10% or more of the combined assets of all segments.;b. Both the;segment revenues are 10% or more of the combined revenues (excluding;intersegment revenue) of all segments, and the net profit (loss) is 10%;or more of the combined net profit or loss.;c.;The absolute amount of a segment's profit or loss is 10% or more;of the greater (in absolute amount) of the combined operating profit of all;segments or the combined operating loss of all segments that reported a loss.;d. Both a and b;are correct.;8.;Which of the;following statements is correct, with respect to interim reporting?;a. Under the;discrete approach each interim period is treated as an integral part of the;annual report;b. Under the;integral approach each interim period is treated as an integral part of the;annual report;c. Under the;integral approach each interim period is treated as a separate accounting;period;d. All of the;above statements are incorrect;Question 4 (5 points?20 minutes);Show computations for each of the following, and clearly show your final;answer using the answer sheet provided.;1.;VAP company enters into a contract with a;customer to build a factory for $1,000,000 on January 10, 2014 with a performance bonus of $100,000;if the factory is completed by August 31, 2014. The bonus is reduced by $10,000;each week that completion is delayed. VAP commonly includes these completion;bonuses in its contracts and, based on prior experience, estimates the;following completion outcomes;Completed;by;Probability;August 31;2014;80%;September;7, 2014;10%;September;14, 2014;7%;September;21, 2014;3%;Show calculations to determine the;transaction price for this contract.;2.PVP Company sells products to customers with an unconditional right of;return if they are not satisfied. The right of returns extends 30 days. On;March 10, 2014, a customer purchases $20,000 of products (cost $12.000) paying;cash. Assuming that based on prior experience estimated returns are 4%, prepare;the journal entries to record (1) the sale and (2) cost of goods sold and the;estimated inventory returns.;3. The;following information is provided for A&E Company, which uses the equity;method.;?;On January 1, 2014, A&E Company acquired 100,000 shares of;PVP, Inc. (representing 30 percent ownership and significant influence) common;stock at a cost of $15 per share.;?;For the year 2014, PVP, Inc. reported net income of $500,000.;?;On January 28, 2015, PVP, Inc. announced and paid a cash dividend;of $100,000.;?;For the year 2015, PVP Inc. reported a net loss of $100,000.;Calculate the balance in the;Investment in PVP Stock account as of the end of 12/31/2015.;4. On December;31, 2014, A&E Co. provided the following information regarding its trading;securities;Investments;Cost;Fair Value;Unrealized;gain/(loss);A company;$40,000;$36,000;B company;$25,000;$20,000;C company;$25,000;$30,000;Totals;Previous market adjustment;balance;$(1,000);Show computations and prepare an adjusting;journal entry on December 31, 2014.;5. AM Company provided the following information on selected;transactions during 2014;Dividends paid to preferred stockholders $ 150,000;Loans;made to other corporations 500,000;Proceeds;from issuing bonds 900,000;Proceeds;from issuing preferred stock 1,050,000;Proceeds;from sale of equipment 1,000,000;Purchase;of land by issuing bonds 300,000;Show;calculations for net cash provided (used) by (a) investing activities and (b);financing activities during 2014.
Paper#39256 | Written in 18-Jul-2015Price : $37