Midterm exam

1.(TCO D) The basis for classifying assets as current or noncurrent is conversion

to cash within (Points : 5)

Question 2.

2. (TCO A) Why are some of the major differences between iGAAP and U.S. GAAP? Explain in detail.

(Points : 25)

Question 3.

3.(TCO C) Perry Corp. reports operating expenses in two categories: (1) selling and (2) general and administrative. The adjusted trial balance at December 31, 2010, included the following expense accounts.

Accounting and legal fees	$140,000
Advertising	$120,000
Freight-out	$75,000
Interest	$60,000
Loss on sale of long-term investments	$30,000
Officers' salaries	$180,000
Rent for office space	$180,000
Sales salaries and commissions	$110,000

One half of the rented premises are occupied by the sales department.

How much of the expenses listed above should be included in Perry's selling expenses for 2010? (Points : 15)395

Question 4.

4. (TCO C) For the year ended December 31, 2010, Transformers Inc. reported the following.

Net income $60,000

Preferred dividends declared $10,000

Common dividend declared$2,000

Unrealized holding loss, net of tax $1,000

Retained earnings, beginning balance $80,000

Common stock $40,000

Accumulated Other Comprehensive Income, Beginning Balance $5,000

What would Transformers report as the ending balance of retained earnings? (Points : 20)

5.(TCO C) For the year ended December 31, 2010, Transformers Inc. reported the following.

Net income	$60,000
Preferred dividends declared,	$10,000
Common dividend declared,	$2,000
Unrealized holding loss, net of tax; – Available-For-Sale-Securities	$1,000
Retained earnings	$80,000
Common stock,	$40,000
Accumulated Other Comprehensive Income, Beginning Balance	5,000

What would Transformers report as its ending balance of accumulated other comprehensive income? (Points : 20)

Question 6.

6. (TCO B) Prepaid rent at 1/1/10 was $30,000. During 2010, rent payments of $120,000 were made and charged to "rent expense." The 2010 income statement shows as a general expense the item "rent expense" in the amount of $125,000. You are to prepare the missing adjusting entry that must have been made, assuming reversing entries are not made. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment (Points : 10)

Question 7.

7. (TCO B) Retained earnings at 1/1/10 was $170,000 and at 12/31/10 it was $200,000. During 2010, cash dividends of $50,000 were paid and a stock dividend of $40,000 was issued. Both dividends were properly charged to retained earnings. You are to provide the missing closing entry. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment. (Points : 10)

Question 8.

8. (TCO B) Retained earnings at 1/1/10 was $150,000 and at 12/31/10 it was $200,000. During 2010, cash dividends of $50,000 were paid and a stock dividend of $40,000 was issued. Both dividends were properly charged to retained earnings. You are to provide the missing closing entry. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment. (Points : 10)

Question 9.

9. (TCO B) Allowance for doubtful accounts on 1/1/10 was $60,000. The balance in the allowance account on 12/31/10 after making the annual adjusting entry was $55,000, and during 2010, bad debts written off amounted to $40,000. You are to provide the missing adjusting entry. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment. (Points : 10)