Thefollowinginfcrmationwasmadeavailable fromtheincomestatementandbalance sheetofMeranda

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Thefollowinginfcrmationwasmadeavailable
fromtheincomestatementandbalance
sheetofMerandaCompany:/

Item

12/31/10

12/31/09

AccountsReceivable

$ 42,000

$45,100

AccountsPayable

27,900

24,500

MerchandiseInventory

68,000

63,000

Sales(2010)

170,000

InterestRevenue(2010)

3,200

DividendRevenue(2010)

1,800

TaxExpense(2010)

11,600

SalariesExpense
(2010)

22,400

COGS(2010)

57,000

InterestExpense(2010)

2,200

OperatingExpenes

19,400

.gif”>.gif”>Completethecashflo

usingthe directmetho

fromoperating
activitiessectionforMeranda Companyfortheyearended
December31,2010.

2. GiventhefollowiComputethepercentage

balantothe

cesheet,completeahorizontalanalysis.nearesttenthof
apercent.

Jessica’sJewelryStoreComparativeBalanceSheetForYearsEndedDecember 31

2011

and2010

(inthousands)

2011

2010

Difference

Percentage

Assets

CurrentAssets

CashandEquivalents

$319

$288

AccountsReceivable,net

166

173

Inventory

437

400

TotalCurrentAssets

922

861

Property,PlantandEquipment

TotalAssets

$1,299

$1,273

Liabilities

CurrentLiabilities

AccountsPayable

132

144

AccruedLiabilities

90

84

TotalCurrentLiabilities

222

228

Long-TermLiabilities

84

96

TotalLiabilities

306

324

Stockholders’Equity

CommonStock

288

255

RetainedEarnings

705

694

TotalStockholders’Equity

993

949

TotalLiabilitiesand

Stockholders’Equity

1,299

$1,273

ng

Part B: Answer each of the
following 15 questions. Each answer is worth

4 points.

1. Given the following information, show
the increase or decrease in the

accounting equation:

A. Deanne invests $45,000 and $10,000 of
office equipment into the

business.

B. Furniture is purchased for $8,000 cash.

C. Supplies are purchased on credit for
$2,300.

D. The month’s electric bill of $775 was
paid.

E. The month’s cash sales were $5,000.

2. Journalize the following transactions
and include the explanations.

A. Tammy invested $40,000 into her corporation
on June 11.

B. Tammy purchased inventory for $95,000,
of which $70,000 was on

account on June 14.

C. Tammy paid one month’s rent of $2,400
on June 16.

D. Tammy had sales of $15,000 on account
on June 19.

E. Tammy had paid $2,500 on her payables
account on June 21.

3. Prepare a trial balance from the
following information for Computer

Systems, Inc. for December 31, 2012:

Accounts payable $4,298

Common stock $4,073

Sales $8,302

Cash $1,902

Notes payable $888

Wages expense $777

Supplies expense $1,028

Equipment $5,183

Accounts receivable $1,733

Inventory $6,938

4. Compute the missing information from
this post-closing trial balance:

Cash
$38,502

Accounts Receivable 14,372

Prepaid Rent 18,229

Prepaid Insurance 4,583

Supplies (A)

Accounts Payable
(B)

Wages Payable 29,428

Common Stock
30,049

Retained Earnings
18,423

_______ _______

Total
$80,436 $80,436

5

5. Journalize the following transactions
using the perpetual inventory

method:

Nov. 1 Purchased $3,600 of merchandise
from Hilltop, terms 2/10, n/30.

Nov. 5 Purchased $1,750 of merchandise
for cash from Owen’s Supply.

Nov. 7 Purchased $3,400 of merchandise
from Seaside, terms 1/15, n/30.

Nov. 10 Returned $500 of merchandise to
Seaside. Credit Memo #131.

Nov. 11 Paid the invoice from Hilltop.

6. Given the following information,
prepare a balance sheet for Brandon’s

Campstore for the year ending December 31, 2012:

Cash

$38,745

Retained Earnings

$171,309

Common Stock

$43,500

Equipment

$37,200

Accounts Receivable

$14,109

Accounts Payable

$26,351

Land

$35,000

Inventory

$81,311

Prepaid Supplies

$9,003

Income Taxes Payable

$5,284

Office Computers

$16,399

Other PPE

$26,550

Accum. Depr. (all)

$21,013

Prepaid Insurance

$9,140

6

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

18

$24

432

inventory

March 12—Sold

13

April 11—Purchase

45

$29

$1,305

June 20—Sold

33

Aug 16—Purchase

35

$27

$945

Sept 11—Sold

29

Total Cost of Inventory

Ending inventory is 23 units.

$2,682

What is the
ending inventory of Rick Company for 2012 using FIFO?

7

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

Gross Profit _____________
______________

Net Income _____________ ______________

Ending Retained Earnings _____________ ______________

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. The use of LIFO is allowed.
___________________

B. Both research and development costs
are expensed as incurred.

___________________

C. Market is defined as current
replacement cost. ___________________

10. Record the necessary journal entries
from the following bank

reconciliation
information for July 31, 2011:

Bank Balance, July
31, 2011

$28,542

Checkbook Balance,
July 31, 2011

29,344

Bank collection of
note receivable

1,545 + 210
interest

Bank service charge

75

Deposits in transit

3,145

Outstanding checks

2,685

NSF check from
customer

770

Correction of book
error (check #456 written
for $280, recorded at $28)—maintenance
expense

11. Journalize the following transactions
for Ryan Company:

July 1 Sold $5,300 of merchandise to Rick
on account.

Nov. 1 Exchanged Rick’s account
receivable for an eight-month, 6% note for

$5,300.

Dec. 31 Recorded accrued interest on Jim’s
note (round to nearest dollar).

July 1 Rick paid off his note with
interest (round to nearest dollar).

12.
A computer system was purchased on July 1 at a cost of $125,000. It’s

expected to be used for four years and to have a residual value of
$5,000 after

8,000 hours of service. The system was
used for 1,750 hours the first year and

2,100 hours 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 ________ ________

10

13. Prepare journal entries for the
following transactions for Ryan Company

in the general journal:

Feb. 28 Machinery that cost $57,000 and
had accumulated depreciation of

$46,000 was sold for $2,500.

April 10 A van that cost $23,700 and had
accumulated depreciation of

$21,000 was sold for $1,250.

July 16 Equipment that cost $120,000 and
had accumulated depreciation

of $112,000 was traded in for new
equipment with a fair-market value of

$140,000. The old equipment and $135,000
in cash were given for the new

equipment.

14. Journalize the following treasury
stock transactions:

May 1 Reacquired 800 shares of $15 par
common stock for $13 per share.

May 7 Sold 400 shares at $11 per share.

May 9 Sold
250 shares at $17 per share

15. The following information was taken
from the financial statements of

Brandon Company for 12/31/10 and12/31/09:

Net income for 2010: $313,000

Depreciation expense for 2010: $28,400

Loss on sale of equipment: $7,300

Balance Sheet
12/31/10 12/31/09

Accounts Receivable $46,000 $50,000

Merchandise Inventory 35,000 28,000

Accounts Payable 27,000 24,000

Interest Payable
6,000
8,000

Prepare the operating activities section
of the statement of cash flows under the

indirect method for

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