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Wiley Plus AccWQuestion 1Transactions for Mehta Company for the month of May are presented below. May1 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. DateDescription/AccountDebitCreditMay 1             May 3            May 13             May 21            Question 2On 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.)DateDescription/AccountDebitCreditJuly 1             Dec. 31            Question 3Dresser 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.)DateDescription/AccountDebitCreditDec. 31             Jan. 2              Question 4Side 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.)Description/AccountDebitCredit            (To close sales account.)                                 (To close expense accounts.)             (To close net income to retained earnings.)             (To close dividends to retained earnings.)  Question 5Financial information exhibits the characteristic of consistency whenextraordinary 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.Question 6What 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.Question 7Starr Co. had sales revenue of $621,700 in 2012. Other items recorded during the year were:  Cost of goods sold$330,000 Wage expense129,300 Income tax expense26,400 Increase in value of company reputation15,100 Other operating expenses12,500 Unrealized gain on value of patents20,600Prepare 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.)STARR CO.Income StatementFor the Year 2012Revenues         $   Expenses        $                                   Total Expenses Net Income $   Earnings per share $Question 8 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 $86,630 (net of tax) was charged to repairs expense in 2009. (Enter all amounts as positive amounts and subtract where necessary.)PORTMAN CORPORATIONRetained Earnings StatementFor the Year Ended December 31, 2012$Add:  Less: $Question 9On 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$Question 10(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 $23,000. Prepare a statement of comprehensive income, using the two-income statement format. Ignore income taxes and earnings per share. (Enter all amounts as positive amounts and subtract where necessary.)ARMSTRONG CORPORATIONIncome Statement and Statement of Comprehensive IncomeFor the Year Ended December 31, 2012$Gross ProfitNet income$  Net income$Unrealized holding gainComprehensive income$Question 11Guillen, Inc. began work on a $7,081,900 contract in 2012 to construct an office building. Guillen uses the completed-contract method. At December 31, 2012, the balances in certain accounts were construction in process $1,748,100; accounts receivable $255,100; and billings on construction in process $1,119,000. Indicate how these accounts would be reported in Guillen's December 31, 2012, balance sheet. Current assets       $      Inventories            $           Less:                Question 12Lazaro, 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.)Description/AccountDebitCredit              Question 13Harding 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. Current assets         $      $             Less:                           Total current assets $Question 14Patrick 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.)Intangible assets  $          Total intangible assets$Question 15Hawthorn 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).)Stockholders equity  $          Total stockholders' equity$Question 16Keyser Beverage Company reported the following items in the most recent year.  Net income$45,500 Dividends paid6,030 Increase in accounts receivable 11,770 Increase in accounts payable7,510 Purchase of equipment (capital expenditure)9,470 Depreciation expense6,510 Issue of notes payable20,990Compute net cash flow provided by operating activities and the net change in cash during the year. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)Cash Flow StatementOperating ActivitiesNet income$      Net cash from operations  Investing Activities   Financing Activities       Net cash flow from financing activitiesNet change in cash$Compute free cash flow. Free cash flow$Question 17Linden 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. A liability, estimated at $162,910 at December 31, 2012, was settled on February 26, 2013, at $181,060.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.Question 18Roder Corporation has seven industry segments with total revenues as follows.  Penley$1,743Cheng $581Konami1,992 Takuhi498KSC664 Molina2,075Red Moon747   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.  Penley Konami KSC Red Moon Cheng Takuhi MolinaQuestion 19Operating profits and losses for the seven industry segments of Roder Corporation are:  Penley$130Cheng $(30)Konami(60) Takuhi45KSC40 Molina215Red Moon75   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.  Penley Konami KSC Red Moon Cheng Takuhi MolinaQuestion 20Which 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.Question 21Heartland Company's budgeted sales and budgeted cost of goods sold for the coming year are $140,520,000 and $34,749,000 respectively. Short-term interest rates are expected to average 10%. If Heartland can increase inventory turnover from its present level of 9 times a year to a level of 12 times per year, compute its expected cost savings for the coming year. $ Question 22The financial statement which summarizes operating, investing, and financing activities of an entity for a period of time is theretained earnings statement.statement of cash flows.income statement.statement of financial position.Question 23Ames 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).)Cash flows from operating activities   Net income $ Adjustments to reconcile net income to net cash        provided by operating activities         $                 Net cash provided by operating activities $Question 24Martinez Corporation engaged in the following cash transactions during 2012.  Sale of land and building$197,470 Purchase of treasury stock41,520 Purchase of land38,050 Payment of cash dividend86,150 Purchase of equipment56,870 Issuance of common stock153,880 Retirement of bonds100,610Compute the net cash provided (used) by investing activities. (List multiple entries from the largest positive to the smallest positive amount followed by the most negative to the least negative amount, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)$      Net cash provided by investing activities$Question 25Martinez Corporation engaged in the following cash transactions during 2012.  Sale of land and building$188,620 Purchase of treasury stock46,180 Purchase of land46,390 Payment of cash dividend89,690 Purchase of equipment58,090 Issuance of common stock152,810 Retirement of bonds101,810Determine Martinez's free cash flow, assuming that it reported net cash provided by operating activities of $408,610.  (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)Free Cash Flow AnalysisLess:                   Free cash flow$Question 26(Preparation of a Statement of Cash Flows)A comparative balance sheet for Orozco Corporation is presented below.   December 31 Assets20122011 Cash$63,005 $22,000  Accounts receivable84,797 68,792  Inventories182,797 191,792  Land73,797 112,792  Equipment267,203 197,208  Accumulated depreciation-equipment(71,797)(44,792)       Total$599,802 $547,792      Liabilities and Stockholders' Equity   Accounts payable$36,797$49,792 Bonds payable150,000200,000 Common stock ($1 par)214,000164,000 Retained earnings199,005134,000      Total$599,802$547,792Additional information: Net income for 2012 was $110,594. Cash dividends of $45,589 were declared and paid. 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).)  OROZCO CORPORATIONStatement of Cash FlowsFor the Year Ended December 31, 2012Cash flows from operating activities         $      Adjustments to reconcile net income to net cash         provided by operating activities:           $                                   Net cash provided by operating activities Cash flows from investing activities                      Net cash used by investing activities Cash flows from financing activities         Net increase in cash Cash at beginning of year Cash at end of year $Noncash investing and financing activities        Issued common stock to retire $ of bonds outstanding(b)Determine Orozco Corporation's current cash debt coverage ratio, cash debt coverage ratio, and free cash flow. (Round ratios to 2 decimal places, e.g. 1.55. 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).) Current cash debt coverage ratio: 1 Cash debt coverage ratio: 1 Free Cash Flow AnalysisNet cash provided by operating activities$Less:          Free cash flow$Question 27Chris 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$Question 28Amy Monroe wants to create a fund today that will enable her to withdraw $32,450 per year for 8 years, with the first withdrawal to take place 5 years from today. If the fund earns 10% interest, how much must Amy invest today? (Round the answer to zero decimal places, e.g. 120,250. Hint: Use tables in text.)Investment amount$Question 29Zach Taylor is settling a $25,000 loan due today by making 6 equal annual payments of $5,909.41. What payments must Zach Taylor make to settle the loan at the interest rate of 11%, but with the 6 payments beginning on the day the loan is signed? (Round answer to 2 decimal places, e.g. 2,250.25. Hint: Use tables in text.)Payments$Question 30(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.   $(b)Compute the amount Lyle would withdraw assuming the investment earns interest compounded annually. (Round to 2 decimal places, e.g. 25,250.25. Hint: Use tables in text.)   $(c)Compute the amount Lyle would withdraw assuming the investment earns interest compounded semiannually. (Round to 2 decimal places, e.g. 25,250.25. Hint: Use tables in text.)   $
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