Transactions for Mehta Company for the month of May are presented below.
May 1 B.D. Mehta invests $3,091 cash in exchange for common stock of Mehta Company, a small welding corporation.
3 Buys equipment on account for $1,153.
13 Pays $659 to landlord for May rent.
21 Bills Noble Corp. $539 for welding work done.
Prepare journal entries for each of these transactions.
On July 1, 2012, Crowe Co. pays $18,673 to Zubin Insurance Co. for a 3-year insurance contract. Both companies have fiscal years ending December 31. For Crowe Co. journalize the entry on July 1 and the adjusting entry on December 31. (Round answers to zero decimal places, e.g. 2,555.)
Dresser Company’s weekly payroll, paid on Fridays, totals $7,700. Employees work a 5-day week. Prepare Dresser’s adjusting entry on Wednesday, December 31, and the journal entry to record the $7,700 cash payment on Friday, January 2. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Side Kicks has year-end account balances of Sales $886,140; Interest Revenue $15,570; Cost of Goods Sold $564,230; Operating Expenses $213,480; Income Tax Expense $37,660; and Dividends $21,348. Prepare the year-end closing entries. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Financial information exhibits the characteristic of consistency when
extraordinary gains and losses are not included on the income statement.
accounting procedures are adopted which give a consistent rate of net income.
expenses are reported as charges against revenue in the period in which they are paid.
companies apply the same accounting treatment to similar events, from period to period.
What is the relationship between the Securities and Exchange Commission and accounting standard setting in the United States?
The SEC coordinates with the AICPA in establishing accounting standards.
The SEC reviews financial statements for compliance.
The SEC requires all companies listed on an exchange to submit their financial statements to the SEC.
The SEC has a mandate to establish accounting standards for enterprises under its jurisdiction.
Starr Co. had sales revenue of $621,700 in 2012. Other items recorded during the year were:
Cost of goods sold $330,000
Wage expense 129,300
Income tax expense 26,400
Increase in value of company reputation 15,100
Other operating expenses 12,500
Unrealized gain on value of patents 20,600
Prepare a single-step income statement for Allen for 2012. Allen has 100,000 shares of stock outstanding. (List multiple entries from largest to smallest amount, e.g. 10, 5, 2. Round earnings per share to 2 decimal places, e.g. 0.20. Enter all amounts as positive amounts and subtract where necessary.)
Portman Corporation has retained earnings of $728,900 at January 1, 2012. Net income during 2012 was $1,897,010, and cash dividends declared and paid during 2012 totaled $77,690. Prepare a retained earnings statement for the year ended December 31, 2012. Assume an error was discovered: land costing $86,630 (net of tax) was charged to repairs expense in 2009. (Enter all amounts as positive amounts and subtract where necessary.)
On January 1, 2012, Richards Inc. had cash and common stock of $62,700. At that date the company had no other asset, liability or equity balances. On January 2, 2012, it purchased for cash $21,030 of equity securities that it classified as available-for-sale. It received cash dividends of $4,200 net of tax during the year on these securities. In addition, it has an unrealized holding gain on these securities of $5,520 net of tax. Determine the following amounts for 2012: (a) net income; (b) comprehensive income; (c) other comprehensive income; and (d) accumulated other comprehensive income (end of 2012).
(a) Net income $
(b) Comprehensive income $
(c) Other comprehensive income $
(d) Accumulated other comprehensive income $
Armstrong Corporation reported the following for 2012: net sales $1,286,800; cost of goods sold $763,800; selling and administrative expenses $331,100; and an unrealized holding gain on available-for-sale securities $23,000.
Prepare a statement of comprehensive income, using the two-income statement format. Ignore income taxes and earnings per share. (Enter all amounts as positive amounts and subtract where necessary.)
Lazaro, Inc. sells goods on the installment basis and uses the installment-sales method. Due to a customer default, Lazaro repossessed merchandise that was originally sold for $950, resulting in a gross profit rate of 40%. At the time of repossession, the uncollected balance is $550, and the fair value of the repossessed merchandise is $299. Prepare Lazaro’s entry to record the repossession. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Harding Corporation has the following accounts included in its December 31, 2012, trial balance: Accounts Receivable $110,620; Inventories $293,520; Allowance for Doubtful Accounts $9,270; Patents $73,940; Prepaid Insurance $9,710; Accounts Payable $78,930; Cash $34,760. Prepare the current assets section of the balance sheet listing the accounts in proper sequence.
Patrick Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2012: Prepaid Rent $20,500; Goodwill $54,940; Franchise Fees Receivable $2,200; Franchises $46,280; Patents $32,380; Trademarks $13,490. Prepare the intangible assets section of the balance sheet. (List amounts from largest to smallest, e.g. 10, 5, 3, 2.)
Hawthorn Corporation’s adjusted trial balance contained the following accounts at December 31, 2012: Retained Earnings $121,510; Common Stock $708,320; Bonds Payable $104,690; Additional Paid-in Capital $202,370; Goodwill $60,810; Accumulated Other Comprehensive Loss $151,950. Prepare the stockholders’ equity section of the balance sheet. (List entries in order of stock preferred status. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)
Keyser Beverage Company reported the following items in the most recent year.
Net income $45,500
Dividends paid 6,030
Increase in accounts receivable 11,770
Increase in accounts payable 7,510
Purchase of equipment (capital expenditure) 9,470
Depreciation expense 6,510
Issue of notes payable 20,990
Compute net cash flow provided by operating activities and the net change in cash during the year. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)
Compute free cash flow.
Free cash flow $
Linden Corporation is preparing its December 31, 2012, financial statements. Two events that occurred between December 31, 2012, and March 10, 2013, when the statements were issued, are described below.
1. A liability, estimated at $162,910 at December 31, 2012, was settled on February 26, 2013, at $181,060.
2. A flood loss of $79,500 occurred on March 1, 2013.
What effect do these subsequent events have on 2012 net income? (If there is no impact select not change and 0 for the amount.)
Net income will by $ as a result of the adjustment of the liability.
Net income will by $ as a result of the adjustment of the flood loss.
Roder Corporation has seven industry segments with total revenues as follows.
Penley $1,743 Cheng $581
Konami 1,992 Takuhi 498
KSC 664 Molina 2,075
Red Moon 747
Based only on the total revenues test, which industry segments are reportable?
Enter 1 if the segment is reportable. Enter 0 if the segment is not reportable.
Operating profits and losses for the seven industry segments of Roder Corporation are:
Penley $130 Cheng $(30)
Konami (60) Takuhi 45
KSC 40 Molina 215
Red Moon 75
Based only on the operating profit (loss) test, which industry segments are reportable?
Enter 1 if the segment is reportable. Enter 0 if the segment is not reportable.
Which of the following events will appear in the cash flows from financing activities section of the statement of cash flows?
Cash purchases of equipment.
Cash received as repayment for funds loaned.
Cash purchase of treasury stock.
Cash purchases of bonds issued by another company.
The financial statement which summarizes operating, investing, and financing activities of an entity for a period of time is the
retained earnings statement.
statement of cash flows.
statement of financial position.
Ames Company reported 2012 net income of $155,580. During 2012, accounts receivable increased by $15,020 and accounts payable increased by $9,900. Depreciation expense was $41,710. Prepare the cash flows from operating activities section of the statement of cash flows.(List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)
Martinez Corporation engaged in the following cash transactions during 2012.
Sale of land and building $197,470
Purchase of treasury stock 41,520
Purchase of land 38,050
Payment of cash dividend 86,150
Purchase of equipment 56,870
Issuance of common stock 153,880
Retirement of bonds 100,610
Compute the net cash provided (used) by investing activities. (List multiple entries from the largest positive to the smallest positive amount followed by the most negative to the least negative amount, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)
A comparative balance sheet for Orozco Corporation is presented below.
Assets 2012 2011
Cash $63,005 $22,000
Accounts receivable 84,797 68,792
Inventories 182,797 191,792
Land 73,797 112,792
Equipment 267,203 197,208
Accumulated depreciation-equipment (71,797) (44,792)
Total $599,802 $547,792
Liabilities and Stockholders’ Equity
Accounts payable $36,797 $49,792
Bonds payable 150,000 200,000
Common stock ($1 par) 214,000 164,000
Retained earnings 199,005 134,000
Total $599,802 $547,792
1. Net income for 2012 was $110,594.
2. Cash dividends of $45,589 were declared and paid.
3. Bonds payable amounting to $50,000 were retired through issuance of common stock.
(a) Prepare a statement of cash flows for 2012 for Orozco Corporation. (List multiple entries from the largest positive to the smallest positive amount followed by the most negative to the least negative amount, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)
Chris Spear invested $11,349 today in a fund that earns 8% compounded annually. To what amount will the investment grow in 3 years? To what amount would the investment grow in 3 years if the fund earns 8% annual interest compounded semiannually? (Round answers to 2 decimal places, e.g. 12,250.25. Hint: Use tables in text.)
Investment at 8% annual interest $
Investment at 8% annual interest compounded semiannually $
(Simple and Compound Interest Computations)
Lyle O ‘Keefe invests $32,100 at 8% annual interest, leaving the money invested without withdrawing any of the interest for 9 years. At the end of the 9 years, Lyle withdrew the accumulated amount of money.
(a) Compute the amount Lyle would withdraw assuming the investment earns simple interest.