Question;Please see instructions on the answer sheet provided before completing the quiz.Question 1 (3 points25 minutes)The following partial information is available from the A&O Companys income statement for the yearended 2014:SalesAll operating expenses except depreciationDepreciation expenseLoss on sale of equipmentIncome tax expenseNet Income$ 940,000624,00060,00026,00042,000145,000In addition, partial information from A&Os Balance Sheets for the year ending 2013 and 2014 is asfollows:2013$94,00041,0008,500Accounts ReceivableAccounts Payable for operating expensesIncome Taxes Payable2014$67,00051,0004,000Instructions:a) Direct Method: Calculate cash received in 2014 from customers.b) Direct Method: Calculate cash paid for operating expenses in 2014c) Indirect Method: Prepare the operating activities section of the statement of cash flows.Question 2 (3 points25 minutes)A&O Corporation contracted to build an office building for $50,000,000. Construction began in 2014 andis expected to be completed in 2016. Data for 2014 and 2015 are:2014$14,600,00025,400,00013,900,00013,000,000Costs incurred to dateEstimated costs to completeProgress billings to dateCash collected to date2015$30,600,0009,400,00030,000,00029,300,000A&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 2015Question 3 (4 points15 minutes)Select the best answer for each of the following and write the letter corresponding to your answer in theanswer sheet provided.1. Assume that, at year-end, the fair value of investments held by VAP Co. is $104,000 and thecarrying amount is $110,000. There is a zero prior balance in fair value adjustment account. Which ofthe 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 inavailable for sale debt securitiesb.VAP will credit $6,000 to Unrealized Holding Gain or Loss- Income if the investment is inavailable for sale debt securities1 of 3c.VAP will debit $6,000 to Unrealized Holding Gain or Loss- equity if the investment is inavailable for sale debt securitiesd.VAP will credit $6,000 to Unrealized Holding Gain or Loss- Income if the investment is intrading securities2. Which of the following statements is correct?a.Unrealized holding gains or losses on held to maturity debt securities are reported as aseparate component of stockholders' equityb.Trading securities are reported at fair value and available for sale debt securities arereported at amortized costc.Unrealized holding gains or losses on available for sale debt securities are reported as aseparate component of stockholders' equity, but such gain or losses are not recognized for heldto maturity debt securities.d.Held to maturity debt securities and available for sale debt securities are reported atamortized cost.3. Unrealized holding gains and losses on investments in equity securities accounted for using theequity method area.Recognized in net incomeb.Not recognizedc.Recognized as other comprehensive income and as a separate component ofstockholders equityd.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 repurchaseagreement.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 ifa. 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 ofthe 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 ifa. Both the segment revenues are 10% or more of the combined revenues (excluding intersegmentrevenue) of all segments, and the Identifiable assets are 10% or more of the combined assets of allsegments.b.Both the segment revenues are 10% or more of the combined revenues (excludingintersegment revenue) of all segments, and the net profit (loss) is 10% or more of the combined netprofit or loss.c. The absolute amount of a segment's profit or loss is 10% or more of the greater (in absoluteamount) of the combined operating profit of all segments or the combined operating loss of allsegments that reported a loss.d.Both a and b are correct.8. Which of the following statements is correct, with respect to interim reporting?2 of 3a.b.c.d.Under the discrete approach each interim period is treated as an integral part of the annual reportUnder the integral approach each interim period is treated as an integral part of the annual reportUnder the integral approach each interim period is treated as a separate accounting periodAll of the above statements are incorrectQuestion 4 (5 points20 minutes)Show computations for each of the following, and clearly show your final answer using the answer sheetprovided.1. VAP company enters into a contract with a customer to build a factory for $1,000,000 on January10, 2014 with a performance bonus of $100,000 if the factory is completed by August 31, 2014. Thebonus is reduced by $10,000 each week that completion is delayed. VAP commonly includes thesecompletion bonuses in its contracts and, based on prior experience, estimates the followingcompletion outcomes:Completed byAugust 31, 2014September 7, 2014September 14, 2014September 21, 2014Probability80%10%7%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 notsatisfied. The right of returns extends 30 days. On March 10, 2014, a customer purchases $20,000of products (cost $12.000) paying cash. Assuming that based on prior experience estimated returnsare 4%, prepare the journal entries to record (1) the sale and (2) cost of goods sold and theestimated 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. (representing30 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:InvestmentsA companyB companyC companyCost$40,000$25,000$25,000Fair Value$36,000$20,000$30,000Unrealized gain/(loss)TotalsPrevious market adjustment balance$(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 stockholdersLoans made to other corporationsProceeds from issuing bondsProceeds from issuing preferred stockProceeds from sale of equipmentPurchase of land by issuing bonds$ 150,000500,000900,0001,050,0001,000,000300,000Show calculations for net cash provided (used) by (a) investing activities and (b) financing activitiesduring 2014.
Paper#39430 | Written in 18-Jul-2015Price : $42