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Penn Foster Financial Accounting EXAMINATION NUMBER: 06169300

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Question;1. The following information was made available from;the income statement and balance sheet of Lauren Company.;Item;12/31/10;12/31/09;Accounts Receivable;$53,400;58,600;Accounts Payable;35,600;32,700;Merchandise Inventory;85,000;79,000;Sales (2010);243,000;Interest Revenue (2010);5,600;Dividend Revenue (2010);1,200;Tax Expense (2010);12,300;Salaries Expense (2010);28,000;COGS (2010);65,000;Interest Expense (2010);3,600;Operating Expenses;28,500;Complete the cash flow from operating;activities section for Lauren Company using the direct method for the year;ended December 31, 2010.;2. Given the following balance sheet;complete a horizontal analysis. Compute the percentage to the nearest tenth of;a percent.;Jill?s Bikes;Comparative Balance Sheet;For Years Ended December 31, 2011 and;2010;(in thousands);2011;2010;Difference;Percentage;Assets;Current Assets;Cash and Equivalents;$72;$94;Accounts Receivable, net;122;104;Inventory;288;232;Total Current Assets;482;430;Property, Plant and Equipment;638;358;Total Assets;$1,120;$788;Liabilities;Current Liabilities;Accounts Payable;$242;$148;Accrued Liabilities;48;66;Total Current Liabilities;290;214;Long-Term Liabilities;346;208;Total Liabilities;636;422;Stockholders? Equity;Common Stock;70;60;Retained Earnings;414;306;Total Stockholders? Equity;484;366;Total Liabilities and Stockholders? Equity;$1,120;$788;Part B: Answer each;of the following questions. Each answer is worth 4 points.;1. Record the following transactions;using the accounting equation.;Example;Assets = Liabilities + Equity;XXXX(cash) XXXX(accounts payable);A. Amanda invests $17,000 cash into;her merchandising business.;B. She buys $6,500 of office;equipment and $3,000 of office supplies with cash from Office Depot.;C. Additional purchases were supplies;for $35,000 on account from various suppliers.;2. Journalize the following;transactions and omit the explanations.;A. ABC Corporation purchased $15,000;of office furniture by putting $7,000 down in cash and the rest on account on;April 8.;B. The corporation paid $60,000 for a;two-year lease on April 19.;C. The corporation had sales of;$45,000, of which $35,000 were on account on April 20.;D. The corporation borrowed $25,000;by signing a note payable on April 22.;E. The corporation paid $1,250 on one;of its accounts payable on April 26.;3.;Prepare a trial balance from the following information for Learn a New;Language, Inc. for December 31, 2012.;Common stock;$9,692;Cash;$3,928;Notes payable;$1,439;Wages expense;$777;Marketing expense;$493;Equipment;$8,345;Accounts;receivable;$1,142;Inventory;$8,074;Sales;$6,616;4.;Compute the missing information from this post-closing trial balance.;Cash;$34,689;Accounts Receivable;9,467;Prepaid Rent;5,000;Prepaid Insurance;(A);Supplies;944;Accounts Payable;$5,389;Wages Payable;(B);Common Stock;37,049;Retained Earnings;8,234;Total;$52,356;$52,356;5.;Journalize the following transactions using the perpetual inventory method.;Aug.;6 Purchased $830 of inventory on account from Johnston with terms of 2/10;n/30.;Aug.;8 Purchased $2,611 of inventory for cash from Pillner Company.;Aug.15;Paid for August 6 purchase from Johnston.;Aug.;17 Purchased $1,743 of merchandise on account from Luis Company with Terms of;3/15, n/45.;6.;Given the following information, prepare a balance sheet for Isaiah?s Tool Shed;for the year ending December 31, 2012.;Cash;$65,750;Retained Earnings;$179,319;Common Stock;$35,000;Equipment;$27,500;Accounts Receivable;$11,478;Accounts Payable;$29,450;Land;$30,000;Inventory;$78,311;Prepaid Supplies;$7,357;Income Taxes Payable;$4,209;Office Computers;$11,345;Other PPE;$31,446;Accum. Depr. (all);$23,459;Prepaid Insurance;$8,250;7.;Rick Company?s beginning inventory and purchases during the fiscal year ended;December 31, 2012, were as follows;(Note;The company uses a perpetual system of inventory.);Units;Unit Price;Total Cost;January 1?Beginning inventory;18;$24;$432;March 12?Sold;13;April 11?Purchase;45;$29;$1,305;June 20?Sold;33;Aug 16?Purchase;35;$27;$945;Sept 11?Sold;Total Cost of Inventory;29;Ending inventory is 23 units.;$2,682;What;is the cost of goods sold for Rick Company for 2012 using LIFO?;8.;Assume that in Year 1, the ending merchandise inventory is overstated by;$30,000. If this is the only error in Years 1 and 2, fill in the items below;indicating which items will be understated, overstated, or correctly stated for;Years 1 and 2.;Item;Year 1 Year 2;Ending;inventory;Beginning;inventory;Cost;of goods sold;9.;Below is a list of treatments of accounting topics. Place GAAP on the line if;the treatment is GAAP-based and place IFRS on the line if the treatment is;IFRS-based.;A.;Interest and dividend income are reported in the investing section of the cash;flow statement.;B.;Interest expense is reported in the financing section of the cash flow;statement.;C.;The use of LIFO is prohibited.;10.;Record the necessary journal entries from the following bank reconciliation;information for July 31, 2011;Bank Balance, July 31, 2011;$36,739;Checkbook Balance, July 31, 2011;36,444;Bank collection of note receivable;1,200 + 165 Interest;Bank service charge;35;Deposits in transit;2,400;Outstanding checks;1,245;NSF check from customer;330;Correction of book error (check #456 written for;$160;recorded at $610)?gas expense;11.;Journalize the following transactions for Tammy Company;Sept.;1 Sold $3,500 of merchandise to Jim on account;Oct.;1 Exchanged Jim?s account receivable for a four month, 8% note for $3,500;Dec.;31 Recorded accrued interest on Jim?s note;Feb.;1 Jim paid off his note with interest (round to nearest dollar);12.;A truck was purchased on January 2 at a cost of $60,000. It?s expected to be;used for five years and to have a residual value of $5,000 after 120,000 miles;of service. The truck was driven for 23,000 miles the first year and 25,000;miles the second year. Calculate the depreciation expense to the nearest dollar;for the first and second years.;Method;Year 1 Year 2;Straight-line;Double-declining-balance;Units-of-production;13.;Prepare the general journal entries for the following transactions;Jan.;2, 2011 Purchased land with a building on it for $750,000. The land is worth;$300,000.;Paid;$150,000 cash down and signed a mortgage payable for the balance.;Dec.;31, 2011 Depreciation is computed using the straight-line method. The estimated;salvage value of the building is $75,000 and has an estimated life of 20 years.;July;1, 2012 The building and land are sold for $825,000 cash.;14.;Journalize the following treasury stock transactions;June;3 Reacquired 350 shares of $12 par common stock at $10 per share.;June;7 Sold 180 shares of treasury stock for $16 per share.;June;8 Sold 150 shares of treasury stock for $9 per share.;15.;Lowry Landscapes had net income of $50,000 for 2010. Land was sold for $40,000;of which $3,000 was a gain. The beginning cash balance was $53,000, and the;ending cash balance was $151,000. Depreciation expenses were $11,000. Prepare a;statement of cash flows for the year ended December 31, 2010, for Lowry;Landscapes using the indirect method.

 

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