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Penn Foster Financial Accounting EXAMINATION NUMBER: 06169300

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Question;Part A: Answer each of the following questions. Each answer is worth 20 points.1. The following information was made available from the income statement and balance sheet of Lauren Company.Item 12/31/10 12/31/09Accounts Receivable $53,400 58,600Accounts Payable 35,600 32,700Merchandise Inventory 85,000 79,000Sales (2010) 243,000Interest Revenue (2010) 5,600Dividend Revenue (2010) 1,200Tax Expense (2010) 12,300Salaries Expense (2010) 28,000COGS (2010) 65,000Interest Expense (2010) 3,600Operating Expenses 28,500Complete the cash flow from operating activities section for Lauren Company using the direct method for the year ended December 31, 2010.22. Given the following balance sheet, complete a horizontal analysis. Compute the percentage to the nearest tenth of a percent.Jill?s BikesComparative Balance SheetFor Years Ended December 31, 2011 and 2010(in thousands) 2011 2010 Difference PercentageAssetsCurrent AssetsCash and Equivalents $72 $94Accounts Receivable, net 122 104Inventory 288 232Total Current Assets 482 430Property, Plant and Equipment 638 358Total Assets $1,120 $788LiabilitiesCurrent LiabilitiesAccounts Payable $242 $148Accrued Liabilities 48 66Total Current Liabilities 290 214Long-Term Liabilities 346 208Total Liabilities 636 422Stockholders? EquityCommon Stock 70 60Retained Earnings 414 306Total Stockholders? Equity 484 366Total Liabilities andStockholders? Equity$1,120 $788Part 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 onApril 8.B. The corporation paid $60,000 for a two-year lease onApril 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 forLearn a New Language, Inc. for December 31, 2012.Accounts payable $5,012Common stock $9,692Cash $3,928Notes payable $1,439Wages expense $777Marketing expense $493Equipment $8,345Accounts receivable $1,142Inventory $8,074Sales $6,616344. Compute the missing information from this post-closing trial balance.Cash $34,689Accounts Receivable 9,467Prepaid Rent 5,000Prepaid Insurance (A)Supplies 944Accounts Payable $5,389Wages Payable (B)Common Stock 37,049Retained Earnings 8,234_______ _______Total $52,356 $52,3565. 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 fromPillner Company.Aug.15 Paid for August 6 purchase from Johnston.Aug. 17 Purchased $1,743 of merchandise on accountfrom Luis Company with Terms of 3/15, n/45.6. Given the following information, prepare a balance sheet forIsaiah?s Tool Shed for the year ending December 31, 2012.Cash $65,750 Retained Earnings $179,319Common Stock $35,000 Equipment $27,500Accounts Receivable $11,478 Accounts Payable $29,450Land $30,000 Inventory $78,311Prepaid Supplies $7,357 Income Taxes Payable $4,209Office Computers $11,345 Other PPE $31,446Accum. Depr. (all) $23,459 Prepaid Insurance $8,2507. 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 CostJanuary 1?Beginning inventory 18 $24 $432March 12?Sold 13April 11?Purchase 45 $29 $1,305June 20?Sold 33Aug 16?Purchase 35 $27 $945Sept 11?Sold 29Total Cost of InventoryEnding inventory is 23 units. $2,682What 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 2Ending 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. ___________5610. Record the necessary journal entries from the following bank reconciliation information for July 31, 2011:Bank Balance, July 31, 2011 $36,739Checkbook Balance, July 31, 2011 36,444Bank collection of note receivable1,200 + 165interestBank service charge 35Deposits in transit 2,400Outstanding checks 1,245NSF check from customer 330Correction of book error (check #456 written for $160, recorded at $610)?gas expense11. Journalize the following transactions for Tammy Company:Sept. 1 Sold $3,500 of merchandise to Jim on accountOct. 1 Exchanged Jim?s account receivable for a fourmonth,8% note for $3,500Dec. 31 Recorded accrued interest on Jim?s noteFeb. 1 Jim paid off his note with interest (round tonearest 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 2Straight-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 stockat $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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