Question;Please 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#39397 | Written in 18-Jul-2015Price : $37