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Accounting questions

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Multiple choice/fill in blanks

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Question 1:Question 2:Park & Company was recently formed with a $5,700 investment in the company by stockholders. The company then borrowed $2,700 from a local bank, purchased $1,070 of supplies on account, and also purchased $5,700 of equipment by paying $2,070 in cash and signing a promissory note for the balance. Based on these transactions, the company’s total assets are: $11,400. $10,470. $8,400. $13,100. 3)If Accounts Payable had a balance of $18,380 at the beginning of the month, and the six amounts shown below were posted to this account, what should be the ending balance?Three debits posted to Accounts Payable this month: $4,520, $11,120, and $14,620.Three credits posted to Accounts Payable this month: $3,780, $9,680, and $12,880. $3,920. $48,640. $14,460. $22,300. 4)The amount of Total Current Assets that would be reported on the company’s balance sheet at the end of the year would be Accounts Receivable Beginning Balance189,100     106,500   18,160   64,060   5,560     14,860     19,360  Partial listing of account balances at the end of the year:   Cash$28,160   Accounts Receivable?   Supplies35,760   Other Current Assets6,060   $146,660. $302,000. $371,700. $182,400. 5)In 1999, the Denim Company bought land that cost $15,800. In 2010, a similar piece of land was bought for $28,800 and the company’s existing land was estimated to be worth $18,800. On the balance sheet at the end of 2010, the land that was purchased in 1999 would be reported at: $18,800. $15,800. the average of three prices. $28,800. 6)Use the following information as of December 31, 2010 to calculate the amounts of cash and retained earnings. The company’s total assets are $40,500. This company doesn’t have other accounts. (Omit the “$” sign in your response.)      Accounts Payable$8,100  Accounts Receivable 8,000  Supplies 2,100  Furniture and Equipment  26,300  Contributed Capital  20,000  Cash ?  Retained Earnings ?   Cash$   Retained earnings$  7)The balance sheet of…

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Accounting Questions

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Income Taxes, Pension,Leases Changes & error analysis, Statement of Cash flows

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36 questionsChapter 19: Income Taxes1. Which of the following creates a permanent difference between financial income and taxable income?a. Interest received on municipal bonds b. Completed contract method of recognizing construction revenue c. Unearned rent revenue d. Accelerated cost recovery on plant and equipment 2. Which of the following is the most likely item to result in a deferred tax asset?a. Using accelerated depreciation for tax purposes but straight-line depreciation for accounting purposes b. Using the completed-contract method of recognizing construction revenue tax purposes, but using percentage-of-completion method for financial reporting purposes c. Prepaid expenses d. Unearned revenues 3. Dodger Corporation reported a loss for both financial reporting purposes and tax reporting purposes of $231,000 in 2011. For financial reporting purposes, Dodger reported income before taxes for years 2008-2010 as listed below:2008 ………………………. $ 66,000 2009 ………………………. 99,000 2010 ………………………. 132,000 Assuming Dodger’s tax rate is 30 percent in all periods, and that the company uses the carryback provisions, what amount should appear in Dodger’s statements for financial reporting purposes as a net loss in 2011?a. $0 b. $69,300 c. $161,700 d. $234,300 4. In 2011 Taggart Inc. reported pretax financial income of $750,000. Included in that pretax financial income was $80,000 of nontaxable life insurance proceeds received as a result of the death of an officer; $100,000 of warranty expenses accrued but unpaid as of December 31, 2011; and $40,000 of life insurance premiums for a policy for an officer. Assuming that no income taxes were previously paid during the year and assuming an income tax rate of 35 percent, the amount of income taxes payable on December 31, 2011, would bea. $255,500. b. $283,500. c. $311,500. d. $213,500. 5. An example of a “deductible temporary difference” occurs…

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accounting questions

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3 accounting questions, to be done ASAP

total answer should not be longer than 2 pages

Q1.

Describe what is meant by the naive investor hypothesis and the no-effects hypothesis

in relation to firms accounting policy changes.

Q2.

Firms often borrow funds from lenders (i.e., debtholders) to finance their investments

and activities. However, this can create incentives for firms to take actions that are

opportunistic, such as claim dilution and asset substitution.

REQUIRED:

(a) What is meant by claim dilution and asset substitution

(b) Who ultimately bears the (agency) costs if the firm engages in these opportunistic

actions and why

(c) In relation to accounting, how can the interests of the firm and debtholders be

aligned

Q3.

Explain why managers would have an incentive to choose income decreasing

accounting methods when there are (complex) bonus plan arrangements that pay

bonuses if reported earnings are between lower and upper bounds

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Accounting Questions

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Question 1. Prepare a budget for this year for the Administrative Department at Tom’s Toyota Company based on the following information:
Last Year Forecasting Assumption Budget for this Year

Salaries $60,000 2% increase ___________
Stationary $ 900 1% decrease ___________
Telephone $ 2,500 3% increase ___________
Electricity $ 1,200 2.5% increase ___________
Office Rent $10,000 2% increase ___________
Depreciation $ 4,000 no change ___________
Total: $78,600 ___________

Question 2. Define a “Static Budget.”

Question 3. Define a “Flexible Budget.”

Question 4. Define the term “Zero-based Budgeting.”

Question 5. Define “Period Budgets.”

Question 6. Define “Rolling Budgets.”

Question 7. Big Bob’s Discount Appliances expects sales of $5,000, $5,000, and $10,000 during April, May, and June (big sale in June). To build business, Big Bob lets all customers buy on credit, and all do so. In the past, 50% of Big Bob’s sales have been collected during the month of sale, 40% are collected the following month, and 10% the month after that. If this trend continues, what will be Big Bob’s total cash collections in the month of June?

Question 8. Little Louie’s expects to have $100 in cash on hand at the beginning of June, and the company’s target cash balance is $100. Net cash flow for June is minus $300. Assuming that Little Louie’s borrows to meet shortterm cash needs and pays back as soon as surplus cash is available, what will be the company’s ending cash balance after financing at the end of June?

Question 9. Ma & Pa Kettle’s Chili Company has begun selling a new chili recipe and they want you to help them with next year’s budgeted financial statements. Using the worksheet below, complete Ma & Pa’s forecast and answer the questions which follow.
Assumptions:

To begin with, Ma & Pa are sure sales will grow 50% next year. Assume that is true. Then assume that COGS, Current Assets, and Current Liabilities all vary directly with Sales (that means if sales grows a certain percentage, then the account in question will grow by that same percentage). Assume that fixed expenses will remain unchanged and that $1,000 worth of new Fixed Assets will be obtained next year. Lastly, the current dividend policy will be continued next year.


Ma & Pa Kettle Chili Company, Inc.

Financial Forecast

Estimated
This year for next year

Sales $10,000 ________
COGS 4,000 ________
Gross Profit 6,000 ________
Fixed Expenses 3,000 ________
BeforeTax Profit 3,000 ________
Tax @ 33.3333% 1,000 ________
Net Profit $2,000 ________

Dividends $0 ________

Current Assets $25,000 ________
Net Fixed Assets 15,000 ________
Total Assets $40,000 ________

Current Liabilities $17,000 ________
Longterm debt 3,000 ________
Common Stock 7,000 ________
Retained Earnings 13,000 ________
Total Liabs & Eq $40,000 ________

Amount need to balance the balance sheet ________
(Projected total assets minus projected
total liabilities & equity *)

* If this number is positive it means Ma & Pa need additional external funding to finance their projected asset growth. If this number is negative it means Ma & Pa have programmed too much financing for the amount

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Accounting Questions

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1. The Modified Accelerated Cost Recovery System (MACRS) specifies which of the following depreciation methods for buildings?

A. 150% declining-balance.

B. Double-declining-balance.

C. Straight line.

D. Buildings are not depreciable assets.


2. The Modified Accelerated Cost Recovery System (MACRS) specifies which of the following depreciation methods for land?

A. 150% declining-balance.

B. Double-declining-balance.

C. Straight line.

D. Land is not a depreciable asset.


3. If an organization has an obligation to pay $5,000 to a supplier two years from now, the present value of the obligation:

A. is less than $5,000.

B. is $5,000.

C. is more than $5,000.

D. could be calculated using an annuity factor from the present value
tables.


4. Depreciation, in accounting, is a process that results in:

A. depreciable assets being reported in the balance sheet at their fair market value.

B. accumulating cash for the replacement of the asset.

C. an accurate measurement of the economic usefulness of an asset.

D. spreading the cost of an asset over its useful life to the entity.



Use the below present value tables for problems 5, 6 and 7


5. The present value of $3,000 to be received in 7 years at 10% is:

A. $616.22

B. $1,539.60

C. $3,000.00

D. $5,845.67


6. The present value of $3,000 to be received every year for 9 years, at 10%, is:

A. $7,073.80

B. $12,273.00

C. $17,277.00

D. $27,000.00


7. The present value of an obligation of $4,000 payable in 7 years at 8% is:

A. $1,760

B. $2,334

C. $3,206

D. $3,680

Solution -PV = FV [ 1 / (1 + i)n ]


8. A particular common stock has an annual cash dividend of $2.00 per share and is predicted to have a market value of $30 per share 5 years from now. Assuming a discount rate of 10%, a fair market price for the stock today is:

A. $20.00

B. $26.21

C. $37.58

D. $56.21

Solution-

= $26.21

9. Psyche Company wants to acquire Trim Company. Trim’s ROI has been above average for its industry; net income has averaged $70,000 a year more than the industry average. These
“excess” earnings are expected to continue at this amount for 5 years. Assuming a discount rate of 8%, how much goodwill will arise from Psyches’ purchase of Trim?

A. $40,836

B. $88,157

C. $279,489

D. $350,000

Solution

= $279,490

10. Leasehold is an example of which of the following types of assets?

A. Current asset.

B. Property, plant and equipment.

C. Goodwill.

D. Intangible asset.

11. The principal challenge to calculating depletion is estimating:

A. the cost of the asset.

B. the salvage value of the exploration equipment.

C. the demand for the product.

D. the quantity of material to be recovered.


12. Long-lived, intangible assets such as leasehold improvements, patents, and copyrights are all subject to:

A. depreciation

B. amortization

C. depletion

D. consolidation


13. When a depreciable asset is sold:

A. a gain arises if the sales proceeds exceed the net book value.

B. a loss arises if the sales proceeds exceed the net book value.

C. any cash received results in a gain.

D. depreciation expense is adjusted so there is no gain or loss.


14. Goodwill is an asset that arises because the present value of an acquired company’s estimated future earnings, discounted at the acquiring firm’s ROI:

A. is less than the fair market value of the net assets of the acquired company.

B. is more thanthe fair market value of the net assets of the acquired company.

C. is more than the fair market value of the net assets of the acquiring company.

D. is less than the fair market value of the net assets of the acquiring company.


15. The intangible asset “goodwill:”

A. represents the management team’s assessment of its value to the
company.

B. may arise when one company purchases another company.

C. arises because the market value of a company’s assets is greater than
cost.

D. all of the above are correct.

16. Many current liabilities are affected by accrual accounting entries. This happens because:

A. liabilities are usually paid when they are incurred.

B. accrual accounting involves recognizing liabilities before they are paid.

C. the only way to reduce a liability account balance is with an adjusting entry.

D. accrual accounting frequently involves recognizing liabilities before
they are incurred.


17. Which of the following is not usually associated with bonds?

A. Coupon rate.

B. Maturity value.

C. Face amount.

D. Maturity rate.

18. An Accounts Payable could result from which of the following transactions?

A. Purchasing accounts for cash.

B. Purchasing property, plant and equipment on credit.

C. Purchasing goods and services from suppliers on credit.

D. All of the above.


19. The current liability for Wages Payable (or Accrued Payroll) represents the:

A. gross pay earned by employees for which they have not yet been paid.

B. net pay earned by employees for which they have not yet been paid.

C. employer’s federal and state payroll tax obligation.

D. employer’s liability for various with holdings taken out of the gross pay earned by employees.


20. The financial leverage characteristic of long-term debt results in:

A. a reduction of the risk that creditors will not be paid.

B. a magnification of ROE relative to what it would be without long-term debt.

C. a magnification of ROI relative to what it would be without long-term debt.

D. the deductibility, for income tax purposes, of dividends to stockholders.


21. When a company issues a bond at a premium:

A. the company is more profitable than most companies in its industry.

B. investors perceive the bond to be a very safe investment.

C. the investors’ interest income will be less than the interest received each year.

D. the investors’ interest income will be more than the interest received each year.


22. Which of the following is not sometimes associated with bonds?

A. Debenture.

B. Callable.

C. Cumulative.

D. Convertible

23. If the market price of a bond exceeds its face amount:

A. the coupon rate is less than the market interest rate.

B. the coupon rate is more than the market interest rate.

C. the company’s ROI and working capital have been increasing over time.

D. the maturity rate has been declining.


24. The market value of a bond is the sum of the present value of future interest payments and the present value of the amount to be repaid at maturity, discounted at:

A. the market rate.

B. the coupon rate.

C. the dividend rate.

D. the prime rate.


25. Financial leverage refers to which of the following?

A. The difference between the rate of return earned on assets (ROI) and the rate of return earned on owners’ equity (ROE).

B. The difference between the rate of return earned on current assets and the rate of return earned on retained earnings.

C. The leverage a firm obtains from increasing production.

D. Decreasing fixed costs per unit by increasing production.


26. When a company issues a bond at a discount:

A. the company will pay less than the face amount of the bond at its
maturity.

B. the company will pay more than the face amount of the bond at its maturity.

C. the company’s interest expense will be less than the interest paid each year.

D. the company’s interest expense will be more than the interest paid each year.


27. When bonds are issued at a premium:

A. interest expense on the bonds will be less than the interest paid.

B. interest expense on the bonds will be more than the interest paid.

C. the bonds are sold for less than their face amount.

D. the coupon interest rate is less than the market interest rate.


28. Which of the following is (are) a true statement(s) pertaining to bonds?

A. Bonds can be sold at a discount, par, or payable.

B. Bonds can be sold at a discount, par, or premium.

C. The SEC sets the market price of a bond.

D. The issuing firm sets the price of a bond.

E. None of the above.


29. Which of the following is true regarding bond discounts and/or premiums?

A. Bond discount is amortized but bond premium is not.

B. Bond premium is amortized but bond discount is not.

C. Neither bond discount nor premium is amortized.

D. Both bond discount and premium are amortized.

30. The amortization of bond discount:

A. increases the cash paid to bondholders for interest.

B. results in bond interest expense being greater than the interest paid to bondholders.

C. results in bond interest expense being less than the interest paid to bondholders.

D. reduces the carrying value of bonds payable on the balance sheet.


31. Factors that usually affect retained earnings directly include:

A. net income or loss, and dividends.

B. extraordinary items and losses from discontinued operations.

C. stock dividends and gains or losses from the sale of treasury stock.

D. net income or loss, and the issuance of stock at an amount in excess of par value.


32. In comparison to the owners’ equity section of a corporation’s balance sheet, owners’ equity of a proprietorship or partnership:

A. normally does not make a distinction between invested capital and retained earnings.

B. normally uses “Capital” accounts for each individual owner, rather than a “Retained Earnings” account for all of the owners.

C. normally uses a “Drawings” account for each individual owner, rather than a “Dividends” account for all of the owners.

D. all of the above.


33. The declaration of a cash dividend by the directors results in:

A. a decrease in cash and a decrease in retained earnings.

B. a decrease in retained earnings and an increase in current liabilities.

C. a decrease in net income and a decrease in cash.

D. a decrease in net income and an increase in current liabilities.

34. In most states, par value of issued shares represents:

A. Legal capital.

B. No par capital.

C. Noncontrolling capital.

D. Corporate capital.


35. The term preemptive right pertains to which of the following?

A. The Board of Directors rights in liquidation.

B. Present shareholders right to purchase shares from any additional share issuances.

C. Present shareholders right to purchase treasury shares when reissued.

D. Preferred stockholders right to dividends.


36. Balance sheet disclosures for preferred stock include all of the following except:

A. The number of shares issued.

B. The number of shares outstanding.

C. The liquidating or redemption value.

D. The credit or market value.

E. The number of shares authorized.

37. The declaration date pertains to:

A. The date used to determine who receives dividends.

B. The date on which the board of directors declares it’s going to liquidate the firm.

C. The date on which the board of directors declares a dividend.

D. The date a dividend is paid.

38. Fred Jones owns 56 shares of the Robust Corporation’s stock. Robust announces a 3 for 2 stock split. How many shares will Fred have after this split?

A. 178 shares.

B. 112 shares.

C. 84 shares.

D. 56 shares.


39. Braco has 40,000 shares of $100 par value common stock outstanding, and 10,000 shares in the treasury. The number of additional shares that would be issued in a 5% stock dividend is:

A. 500

B. 1,000

C. 1,500

D. 2,000

40. When a stock dividend is declared and issued:

A. total paid-in capital does not change.

B. total owners’ equity does not change.

C. the balance in the retained earnings account is decreased by the par value of the shares issued in the dividend.

D. total paid-in capital is decreased by the market value of the shares issued in the dividend.


41. When a company splits its common stock 3 for 1:

A. total paid-in capital increases by a factor of 3.

B. the balance in the retained earnings account is decreased by the market value of the shares issued.

C. the market value of the company’s stock falls by two-thirds.

D. the shareholders are assured of receiving larger cash dividends.

42. The principal reason for a company having a common stock split is to:

A. increase the total cash dividends paid to stockholders.

B. capitalize retained earnings.

C. decrease total owners’ equity.

D. decrease the market value per share of common stock.


43. When a firm purchases its own shares for the treasury:

A. total owners’ equity is decreased.

B. total owners’ equity is increased.

C. the balance in the retained earnings account is decreased.
\
D. paid-in capital is decreased.


44. If a firm sells treasury stock for more than its cost:

A. a gain is recognized in the income statement.

B. the balance in the retained earnings account is increased.

C. additional paid-in capital is increased.

D. total owners’ equity does not change.


45. The statement of changes in retained earnings for the year shows:

A. the retained earnings balance at the beginning of the year.

B. amounts received from the sale of additional common stock during the
year.

C. extraordinary gains or losses during the year.

D. the effect of a stock split during the year.

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accounting questions

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Accounting questions
Question Detail:

On March 1, 2012, Mitch Quade established Mitch Realty, which completed the following transactions during the month:

(a)

Mitch Quade transferred cash from a personal bank account to an account to be used for the business in exchange for capital stock, $18,000.

(b)

Purchase supplies on account, $1,200.

(c)

Earned sales commission, receiving cash, $14,000.

(d)

Paid rent on office and equipment for the month, $2,800.

(e)

Paid creditor on account, $750.

(f)

Paid office salaries, $3,000.

Instructions:

1

Journalize entries for transactions (a) through (f). Omit the journal entry explanations. Please use the drop-down list (right of the cell) to enter the account description box on the worksheet.

2

Post the journal entries the T accounts, placing the appropriate letter to the left of each amount to identify the transactions. Determine the account balance after all posting is complete. Accounts containing only a single entry do not need a balance.

3

Prepare and unadjusted trial balance as of March 31, 2012.

Jacksonville Financial Services Co., which specializes in appliance repair services, is owned and operated by Cindy Latty. Jacksonville Financial Services Co.’s accounting clerk prepared the unadjusted trial balance at December 31, 2011, shown below.

Jacksonville Financial Services Co.

Unadjusted Trial Balance

December 31, 2011

Debit

Credit

Balances

Balances

Cash

10,200

Accounts Receivable

34,750

Prepaid Insurance

6,000

Supplies

1,725

Land

50,000

Building

80,750

Accumulated Depreciation — Building

37,850

Equipment

45,000

Accumulated Depreciation — Equipment

17,650

Accounts Payable

3,750

Unearned Rent

3,600

Capital Stock

25,000

Retained Earnings

78,550

Dividends

8,000

Fees Earned

158,600

Salaries and Wages Expense

56,850

Utilities Expense

14,100

Advertising Expense

7,500

Repairs Expense

6,100

Miscellaneous Expense

4,025

325,000

325,000

The data needed to determine year end adustments are as follows:

(a)

Depreciation of building for the year, $2,100.

(b)

Depreciation of equipment for the year, $3000.

(c)

Accrued salaries and wages at December 31, $800.

(d)

Unexpired insurance at December 31, $1,500.

(e)

Fees earned but unbilled on December 31, $2,150.

(f)

Supplies on hand at December 31, $600.

(g)

Rent unearned at December 31, $1,500.

Please use the drop-down list (right of the cell) to enter the account description box on the worksheet.

To Do:

Using the form provided on the next worksheet, journalize the adjusting entries. Add additional accounts as needed.

Wizard Services Co. offers security services to business clients.

To Do:

Complete the following end of period spreadsheet (work sheet) for Wizard Services Co.

Please use the drop-down list (right of the cell) to enter the account description box on the worksheet.

Prepare the following:

a. an income statement for July

b. a retained earnings statement for July

c. a balance sheet as of July 31.

Wizard Services Co.

The cash account for Interactive Systems at February 28, 2011 indicated a balance of $7,635. The bank statement indicated a balance of $13,333 on February 28, 2011. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items:

Checks outstanding totaled $4,118

A deposit of $4,500, representing receipts of February 28, had been made too late to appear on the bank statement.

The bank had collected $5,200 on a note left for collection. The face of the note was $5,000.

A check for $290 returned with the statement had been incorrectly recorded by Interactives Systems as $920. The check was for the payment of an obligation to Busser Co. for the purchase of office supplies on account.

A check drawn for $415 had been incorrectly charged by the bank as $145.

Bank service charges for February amounted to $20.

To Do:

1

Prepare a bank reconciliation. Use the provided form on the following worksheet.

Please use the drop-down list (right of the cell) to enter the account description box on the worksheet.

2

Journalize the necessary entries. The accounts have not been closed. Use the provided form on the following worksheet.

Close
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accounting questions

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13. Aerospace Dynamics will invest $110,000 in a project that will produce the following cash flows. The cost of capital is 11 percent. Should the project be undertaken? (Note that the fourth year s cash flow is negative.)

Year

Cash Flow

1…………….

$36,000

2…………….

44,000

3…………….

38,000

4…………….

(44,000)

5…………….

81,000

14. The Horizon Company will invest $60,000 in a temporary project that will generate the following cash inflows for the next three years.

Year

Cash Flow

1…………….

$15,000

2…………….

25,000

3…………….

40,000

The firm will also be required to spend $10,000 to close down the project at the end of the three years. If the cost of capital is 10 percent, should the investment be undertaken?

15. Skyline Corp. will invest $130,000 in a project that will not begin to produce returns until after the 3rd year. From the end of the 3rd year until the end of the 12th year (10 periods), the annual cash flow will be $34,000. If the cost of capital is 12 percent, should this project be undertaken?

16. The Ogden Corporation makes an investment of $25,000, which yields the following
cash flows:

Year

Cash Flow

1…………….

$ 5,000

2…………….

5,000

3…………….

8,000

4…………….

9,000

5…………….

10,000

a. What is the present value with a 9 percent discount rate (cost of capital)?

b. What is the internal rate of return? Use the interpolation procedure shown in this chapter.

c. In this problem would you make the same decision in parts a and b

17. The Danforth Tire Company is considering the purchase of a new machine that would increase the speed of manufacturing and save money. The net cost of this machine is $66,000. The annual cash flows have the following projections.

Year

Cash Flow

1…………….

$21,000

2…………….

29,000

3…………….

36,000

4…………….

16,000

5…………….

8,000

a. If the cost of capital is 10 percent, what is the net present value?

b. What is the internal rate of return?

c. Should the project be accepted? Why?

18. You are asked to evaluate two projects for Adventures Club, Inc. Using the net present value method combined with the profitability index approach described in footnote 2 on page ____, which project would you select? Use a discount rate of 12 percent.

Project X (trips to Disneyland) ($10,000 investment)

Project Y (international film festivals) ($22,000 investment)

Year

Cash Flow

Year

Cash Flow

1…………………………

$4,000

1……………………………

$10,800

2…………………………

5,000

2……………………………

9,600

3…………………………

4,200

3……………………………

6,000

4…………………………

3,600

4……………………………

7,000

19. Cablevision, Inc., will invest $48,000 in a project. The firm s discount rate (cost of capital) is 9 percent. The investment will provide the following inflows.

1…………….

$10,000

2…………….

10,000

3…………….

16,000

4…………….

19,000

5…………….

20,000

The internal rate of return is 15 percent.

a. If the reinvestment assumption of the net present value method is used, what will be the total value of the inflows after five years? (Assume the inflows come at the end of each year.)

b. If the reinvestment assumption of the internal rate of return method is used, what will be the total value of the inflows after five years?

c. Generally is one investment assumption likely to be better than another?

20. The 21st Century Corporation uses the modified internal rate of return. The firm has a cost of capital of 8 percent. The project being analyzed is as follows ($20,000 investment):

Year

Cash Flow

1…………….

$10,000

2…………….

9,000

3…………….

6,800

a. What is the modified internal rate of return? An approximation from Appendix B is adequate. (You do not need to interpolate.)

b. Assume the traditional internal rate of return on the investment is 14.9 percent. Explain why your answer in part a would be lower.

21. Oliver Stone and Rock Company uses a process of capital rationing in its decision making. The firm s cost of capital is 12 percent. It will invest only $80,000 this year. It has determined the internal rate of return for each of the following projects.

Project

Project Size

Percent of Internal Rate of Return

A…………………….

$15,000

14%

B……………………..

25,000

19

C……………………..

30,000

10

D…………………….

25,000

16.5

E……………………..

20,000

21

F……………………..

15,000

11

G…………………….

25,000

18

H…………………….

10,000

17.5

a. Pick out the projects that the firm should accept.

b. If Projects B and G are mutually exclusive, how would that affect your overall answer? That is, which projects would you accept in spending the $80,000?

22. Miller Electronics is considering two new investments. Project C calls for the purchase of a coolant recovery system. Project H represents an investment in a heat recovery system.
The firm wishes to use a net present value profile in comparing the projects. The investment and cash flow patterns are as follows:

Project C ($25,000 Investment)

Project H ($25,000 investment)

Year

Cash Flow

Year

Cash Flow

1……………………..

$ 6,000

1………………………….

$20,000

2……………………..

7,000

2………………………….

6,000

3……………………..

9,000

3………………………….

5,000

4……………………..

13,000

a. Determine the net present value of the projects based on a zero discount rate.

b. Determine the net present value of the projects based on a 9 percent discount rate.

c. The internal rate of return on Project C is 13.01 percent, and the internal rate of return on Project H is 15.68 percent. Graph a net present value profile for the two investments similar to Figure 12-3. (Use a scale up to $10,000 on the vertical axis, with $2,000 increments. Use a scale up to 20 percent on the horizontal axis, with
5 percent increments.)

d. If the two projects are not mutually exclusive, what would your acceptance or rejection decision be if the cost of capital (discount rate) is 8 percent? (Use the net present value profile for your decision; no actual numbers are necessary.)

e. If the two projects are mutually exclusive (the selection of one precludes the selection of the other), what would be your decision if the cost of capital is (1) 5 percent,
(2) 13 percent, (3) 19 percent? Use the net present value profile for your answer.

23. Software Systems is considering an investment of $20,000, which produces the following inflows:

Year

Cash Flow

1…………….

$11,000

2…………….

9,000

3…………….

5,800

You are going to use the net present value profile to approximate the value for the internal rate of return. Please follow these steps:

a. Determine the net present value of the project based on a zero discount rate.

b. Determine the net present value of the project based on a 10 percent discount rate.

c. Determine the net present value of the project based on a 20 percent discount rate
(it will be negative).

d. Draw a net present value profile for the investment. (Use a scale up to $6,000 on the vertical axis, with $2,000 increments. Use a scale up to 20 percent on the horizontal axis, with 5 percent increments.) Observe the discount rate at which the net present value is zero. This is an approximation of the internal rate of return on the project.

e. Actually compute the internal rate of return based on the interpolation procedure presented in this chapter. Compare your answers in parts d and e.

24. Howell Magnetics Corporation is going to purchase an asset for $400,000 that will produce $180,000 per year for the next four years in earnings before depreciation and taxes. The asset will be depreciated using the three-year MACRS depreciation schedule in Table 12-9. (This represents four years of depreciation based on the half-year convention.) The firm is in a 34 percent tax bracket. Fill in the schedule below for the next four years. (You need to first determine annual depreciation.)

Earnings before depreciation and taxes

_____

Depreciation

_____

Earnings before taxes

_____

Taxes

_____

Earnings after taxes

_____

+ Depreciation

_____

Cash flow

_____

25. Assume $80,000 is going to be invested in each of the following assets. Using Tables 12-8 and 12-9, indicate the dollar amount of the first year s depreciation.

a. Computers

b. Petroleum refining product

c. Office furniture

d. Pipeline distribution

26. The Keystone Corporation will purchase an asset that qualifies for three-year MACRS depreciation. The cost is $60,000 and the asset will provide the following stream of earnings before depreciation and taxes for the next four years:

Year 1……………… $27,000

Year 2……………… 30,000

Year 3……………… 23,000

Year 4……………… 15,000

The firm is in a 36 percent tax bracket and has an 11 percent cost of capital. Should it purchase the asset?

27. Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $300,000. If the equipment is purchased, the following earnings before depreciation and taxes will be generated for the next six years.

Year 1………………… $112,000

Year 2………………… 105,000

Year 3………………… 82,000

Year 4………………… 53,000

Year 5………………… 37,000

Year 6………………… 32,000

The firm is in a 30 percent tax bracket and has a 14 percent cost of capital. Should Oregon Forest Products purchase the equipment? Use the net present value method.

28. The Thorpe Corporation is considering the purchase of manufacturing equipment with a 10-year midpoint in its asset depreciation range (ADR). Carefully refer to Table 12-8 to determine in what depreciation category the asset falls. (Hint: It is not 10 years.) The asset will cost $80,000, and it will produce earnings before depreciation and taxes of $28,000 per year for three years, and then $12,000 a year for seven more years. The firm has a tax rate of 34 percent. With a cost of capital of 12 percent, should it purchase the asset? Use the net present value method. In doing your analysis, if you have years in which there is no depreciation, merely enter a zero for depreciation.

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Accounting Questions

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Question 1

A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a


corporation is organized for the purpose of making a profit.

corporation is subject to more federal and state government regulations.

corporation s temporary accounts are closed at the end of the accounting period.

corporation is an accounting economic entity.
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Question 2

The following data is available for Blaine Corporation at December 31, 2012:
Common stock, par $10 (authorized 25,000 shares) $200,000
Treasury Stock (at cost $15 per share) 900

Based on the data, how many shares of common stock are outstanding?


19,940

24,940

25,000

20,000
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Question 3

On January 1, Collins Corporation had 800,000 shares of $10 par value common stock outstanding. On March 31, the company declared a 15% stock dividend. Market value of the stock was $15/share. As a result of this event,


Collins Paid-in Capital in Excess of Par account increased $600,000.

Collins total stockholders equity was unaffected.

Collins Stock Dividends account increased $1,800,000.

All of the above.

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Question 4

Dillon Corporation splits its common stock 2 for 1, when the market value is $40 per share. Prior to the split, Dillon had 50,000 shares of $10 par value common stock issued and outstanding. After the split, the par value of the stock


is reduced to $20 per share.

remains the same.

is reduced to $2 per share.

is reduced to $5 per share.

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Question 5

A major disadvantage resulting from the use of bonds is that


taxes may increase.

earnings per share may be lowered.

interest must be paid on a periodic basis.

bondholders have voting rights.
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Question 6

Bargain Company has $1,600,000 of bonds outstanding. The unamortized premium is $21,600. If the company redeemed the bonds at 101, what would be the gain or loss on the redemption?


$16,000 loss

$5,600 loss

$16,000 gain

$5,600 gain
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Question 7

Horton Company purchased a building on January 2 by signing a long-term $480,000 mortgage with monthly payments of $4,400. The mortgage carries an interest rate of 10 percent. The amount owed on the mortgage after the first payment will be


$479,600.

$476,000.

$475,600.

$480,000.
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Question 8

Wise Company owns 30% interest in the stock of Dark Corporation. During the year, Dark pays $20,000 in dividends to Wise, and reports $200,000 in net income. Wise Company’s investment in Dark will increase Wise’s net income by


$6,000.

$60,000.

$66,000.

$80,000.
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Question 9

If an investor owns less than 20% of the common stock of another corporation as a long-term investment,


no dividends can be expected.

it is presumed that the investor has relatively little influence on the investee.

it is presumed that the investor has significant influence on the investee.

the equity method of accounting for the investment should be employed.
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Question 10

Reporting investments at fair value is


a conservative approach because only losses are recognized.

applicable to both debt and stock securities.

applicable to debt securities only.

applicable to stock securities only.
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Question 11

Available-for-sale securities are classified as


short-term investments only.

long-term investments only.

either short-term or long-term investments.

current assets only.
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Question 12

Which of the following changes in retained earnings during a period will be reported in the financing activities section of the statement of cash flows?
1. Declaration and payment of a cash dividend during the period.
2. Net income for the period.


1

2

Neither 1 nor 2.

Both 1 and 2.
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Question 13

Hark Inc. had cash sales of $400,000 and credit sales of $1,100,000. The accounts receivable balance increased $25,000 during the year. How much cash did Hark receive from its customers during the year?


$725,000

$1,500,000

$1,475,000

$1,075,000
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Question 14

The statement of cash flows is prepared from all of the following except


comparative balance sheets.

the current income statement.

selected transaction data.

the adjusted trial balance.
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Question 15

Corgan Company uses the direct method in determining net cash provided by operating activities, During the year, operating expenses were $290,000, prepaid expenses increased $20,000, and accrued expenses payable increased $30,000. Cash payments for operating expenses were


$240,000.

$280,000.

$300,000.

$340,000.
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Question 16

Assume the following sales data for a company:
2014 $1,050,000
2013 950,000
2012 800,000
2011 550,000

If 2011 is the base year, what is the percentage increase in sales from 2011 to 2013?


72.7%

100%

52.4%

90.9%
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Question 17

Darius, Inc. has the following income statement (in millions):
DARIUS, INC.
Income Statement
For the Year Ended December 31, 2012

Net Sales $300
Cost of Goods Sold 120
Gross Profit 180
Operating Expenses 44
Net Income $136

Using vertical analysis, what percentage is assigned to Net Income?


100%

75.6%

45.3%

None of the above.
Question 18

Parrish, Inc. decided on January 1 to discontinue its telescope manufacturing division. On July 1, the division s assets with a book value of $1,250,000 are sold for $850,000. Operating income from January 1 to June 30 for the division amounted to $125,000. Ignoring income taxes, what total amount should be reported on Parrish s income statement for the current year under the caption, Discontinued Operations?


$400,000 loss

$125,000

$275,000 loss

$525,000


Question 24

Each of these items must be considered in preparing a statement of cash flows for Kiner Co. for the year ended December 31, 2012. For each item, state how it should be shown in the statement of cash flows for 2012.
(a) Issued bonds for $200,000 cash. C
(b) Purchased equipment for $150,000 cash.
(c) Sold land costing $20,000 for $20,000 cash.
(d) Declared and paid a $50,000 cash dividend. –
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Question 25

Villa Company reported net income of $195,000 for 2012. Villa also reported depreciation expense of $45,000 and a loss of $5,000 on the sale of equipment. The comparative balance sheet shows a decrease in accounts receivable of $15,000 for the year, a $17,000 increase in accounts payable, and a $4,000 decrease in prepaid expenses.
Instructions
Prepare the operating activities section of the statement of cash flows for 2012. Use the indirect method. (List multiple entries with a positive cash flow first and then the negative cash flow. List amounts from largest to smallest e.g. 10, 5, 3, 2. If amount decreases cash flow, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
VILLA COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2012
Cash flows from operating activities
$

Adjustments to reconcile net income
to net cash provided by operating activities $
Net cash by operating activities $

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Accounting questions

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Eye Openers
1. What is the principal disadvantage of the direct method of reporting cash flows from operating activities?
2. What are the major advantages of the indirect method of reporting cash flows from operating activities?
3. A corporation issued $500,000 of common stock in exchange for $500,000 of fixed assets. Where would this transaction be reported on the statement of cash flows?
4. A retail business, using the accrual method of accounting, owed merchandise creditors (accounts payable) $300,000 at the beginning of the year and $340,000 at the end of the year.

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Eye Openers
1. What is the principal disadvantage of the direct method of reporting cash flows from operating activities?
2. What are the major advantages of the indirect method of reporting cash flows from operating activities?
3. A corporation issued $500,000 of common stock in exchange for $500,000 of fixed assets. Where would this transaction be reported on the statement of cash flows?
4. A retail business, using the accrual method of accounting, owed merchandise creditors (accounts payable) $300,000 at the beginning of the year and $340,000 at the end of the year. How would the $40,000 increase be used to adjust net income in determining the amount of cash flows from operating activities by the indirect method? Explain.
5. If salaries payable was $90,000 at the beginning of the year and $70,000 at the end of the year, should $20,000 be added to or deducted from income to determine the amount of cash flows from operating activities by the indirect method? Explain.
6. A long-term investment in bonds with a cost of $60,000 was sold for $72,000 cash. (a) What was the gain or loss on the sale? (b) What was the effect of the transaction on cash flows? (c) How should the transaction be reported in the statement of cash flows if cash flows from operating activities are reported by the indirect method?
7. A corporation issued $6,000,000 of 20-year bonds for cash at 104. How would the transaction be reported on the statement of cash flows?
8. Fully depreciated equipment costing $100,000was discarded. What was the effect of the transaction on cash flows if (a) $24,000 cash is received, (b) no cash is received?
9. For the current year, Bearings Company decided to switch from the indirect method
to the direct method for reporting cash flows from operating activities on the statement of cash flows. Will the change cause the amount of net cash flow from operating activities to be (a) larger,(b) smaller, or (c) the same as if the indirect method had been used?…

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Accounting questions

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Chapter 7 introduces accounting systems. As described at the beginning of the chapter, most companies, even small businesses use accounting software to record business information instead of using the manual systems described in the bulk of Ch. 7. Below, I have posted a link to Sage Peachtree Accounting Software’s website. I want you to watch two short segments. On the home page, click on Videos (scroll down a little, and look on the right-hand side). Under “Choosing Accounting Software for the First Time”, click on Getting Around Sage 50 Accounting, under See How Easy it is to get started.

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Chapter 7 introduces accounting systems. As described at the beginning of the chapter, most companies, even small businesses use accounting software to record business information instead of using the manual systems described in the bulk of Ch. 7. Below, I have posted a link to Sage Peachtree Accounting Software’s website. I want you to watch two short segments. On the home page, click on Videos (scroll down a little, and look on the right-hand side). Under “Choosing Accounting Software for the First Time”, click on Getting Around Sage 50 Accounting, under See How Easy it is to get started.  This is a short video (under two minutes) that introduces some of the main features in the accounting software. You will hear many of the terms you have been learning about so far.
Then click on any of the other four topics that you think would be interesting to you under See how easy it is to get started!, and watch that segment. Then simply comment on what you learned. This can include likes, dislikes, concerns, etc. If you are a budding entrepreneur and want to share, tell us how you might use Sage/Peachtree Accounting. 
Link to Sage Peachtree Accounting Website Videos

you are a budding entrepreneur and want to share, tell us how you might use Sage/Peachtree Accounting. 
Link to Sage Peachtree Accounting Website Videos

d business information instead of using the manual systems described in the bulk of Ch. 7. Below, I have posted a link to Sage Peachtree Accounting Software’s website. I want you to watch two short segments. On the home page, click on Videos (scroll down a little, and look on the right-hand side). Under “Choosing Accounting Software for the First Time”, click on Getting Around Sage 50 Accounting, under See How Easy it is to get started.  This is a short video (under two minutes) that introduces some of the main features in the accounting software. You will hear many of the terms you have been learning about so far.
Then click on any of the other four…

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accounting questions

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In your own words please explain. NO word minimum. Please cite all sources using APA format.
1)
A statement of cash flows prepared on the direct method is prepared by converting every number on the income statement to its cash amount.

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In your own words please explain. NO word minimum. Please cite all sources using APA format.
1)
A statement of cash flows prepared on the direct method is prepared by converting every number on the income statement to its cash amount.  How is a cash flow statement prepared using the indirect method?
Which would be more useful to use if you had a choice between the annual report or the statement of cash flows?
2)
Warning signs relating to cash flow issues would include not being able to pay payroll on time, continually using borrowed funds to operate, and not replacing fixed assets when sold or disposed of.  What are other examples?

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accounting questions

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Please see attached. No word minimum. Original work only.

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1)
A consulting company that provides software and services relating to business intelligence and analytics has a library of customer success stories on its website at
http://www.sas.com/success/indexByTopic.html/http://www.sas.com/success/indexByTopic.html#1000.1001.0000. Select and read one of the success stories relating to Activity-Based Management. Summarize the success story, and relate the ideas of the article to what you have learned this week in this course.
2)
The State of Rhode Island publishes its budget and the supporting information at
http://www.budget.state.ri.us/index.htmwww.budget.state.ri.us/index.htm. Access the budget and answer the following:
What are the duties of the budget office? (Hint: Use the Primer link.)
What are the six governmental functions listed in the budget?
What are the major sources of Rhode Island’s revenues?
What is the accounting basis used in the preparation of the budget? (Hint: Use the Primer link and scroll down until you see the Budget Basis section.)
The budget mentions four categories of program performance measures. List them, and briefly describe how they are used in Rhode Island. (Hint: Use the Primer link and scroll down until you see the Program Performance Measures section.)
What did you learn from reviewing the most recent budget of the State of Rhode Island?
What do you think the biggest challenges are when it comes to preparing their budget?
Summary of notes from readings “activity based costing”
Traditional cost accounting methods suffer from several defects that can result in distorted costs for decision-making purposes. All manufacturing costs—even those that are not caused by any specific product—are allocated to products. Nonmanufacturing costs that are caused by products are not assigned to products. And finally, traditional methods tend to place too much reliance on unit-level allocation bases such as direct labor and machine-hours. This results in overcosting high-volume products and…

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Accounting questions

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Eye Openers
1. Describe the stockholders’ liability to creditors of a corporation.
2. Why are most large businesses organized as corporations?
3. Of two corporations organized at approximately the same time and engaged in competing businesses, one issued $100 par common stock, and the other issued $0.01 par common stock. Do the par designations provide any indication as to which stock is preferable as an investment? Explain.
4. A stockbroker advises a client to “buy preferred stock. . . . With that type of stock, . . . [you] will never have to worry about losing the dividends.

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Eye Openers
1. Describe the stockholders’ liability to creditors of a corporation.
2. Why are most large businesses organized as corporations?
3. Of two corporations organized at approximately the same time and engaged in competing businesses, one issued $100 par common stock, and the other issued $0.01 par common stock. Do the par designations provide any indication as to which stock is preferable as an investment? Explain.
4. A stockbroker advises a client to “buy preferred stock. . . . With that type of stock, . . . [you] will never have to worry about losing the dividends.” Is the broker right?
5. What are some of the factors that influence the market price of a corporation’s stock?
6. When a corporation issues stock at a premium, is the premium income? Explain.
7. (a) What are the three conditions for the declaration and payment of a cash dividend? (b) The dates in connection with the declaration of a cash dividend are February 16, March 18, and April 17. Identify each date.
8. A corporation with both preferred stock and common stock outstanding has a substantial credit balance in its retained earnings account at the beginning of the current fiscal year. Although net income for the current year is sufficient to pay the preferred dividend of $125,000 each quarter and a common dividend of $300,000 each quarter, the board of directors declares dividends only on the preferred stock.
Suggest possible reasons for passing the dividends on the common stock.
9. An owner of 500shares of Micro shop Company common stock receives a stock dividend of 5 shares. (a) What is the effect of the stock dividend on the stockholder’s proportionate interest (equity) in the corporation? (b) How does the total equity of 505 shares compare with the total equity of 500 shares before the stock dividend?
10. a. Where should a declared but unpaid cash dividend be reported on the balance sheet?
b. Where should a declared but unissued stock dividend be reported on the balance…

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accounting questions

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Please provide a brief explanation for the following attached below. No word minimum. Original and quality work only. Please cite references using APA format.

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1)
How are managerial accounting and financial accounting similar? How do they differ?
2)
Please explain the difference between a fixed cost and a variable cost?

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accounting questions

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Name two reasons why overhead might be under-applied in a given year and how this might be able to be prevented? What is a predetermined overhead rate and how is it computed?  What do you feel is the best allocation base to use for the denominator in the predetermined overhead rate calculation and why?  What factors would you consider in choosing the allocation base?
Research the history of process costing in the United States. When did it begin to be used in manufacturing companies? What type of company would use a process costing system?
Investigate process costing accounting in at least one country outside of the United States. What are the reporting requirements, if any? If possible, find a company that would use process costing.

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accounting questions

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QUESTION 1

Here are the budgets ofBrandon Surgery Center for the most recent historical quarter (in thousands of dollars):

StaticFlexibleActual

Number of surgeries1,2001,3001,300

Patient revenue$2,400$2,600$2,535

Salary expense$1,200$1,000$1,365

Non salary expense$600$650$585

Profit$600$650$585

The center assumes that all revenues and costs are variable and hence tied directly to patient volume.

a.Explain how each amount in the flexible budget was calculated.

b.Determine the variance for each line of the profit and loss statement in both dollar terms and percentage terms (Each line has a total variance, a volume variance, and a price variance [for revenues] and management variances [for expenses].

c.What do the part b results tell Brandon’s managers about the surgery centers operations for the quarter?

QUESTION 2CAROLL CLINIC: NEW 2011 RESULTS

1.Volume

A.FSS34,000 visits

B.Capitated lives30,000 members

Number of member months360,000

Actual utilization per

Member per month

Member per month0.12

Number of visits43,200 visits

C.Total actual visits77,200 visits

2. Revenues

A.FFS$28 visit

X 24,000 actual visits

$952,000

B.Capitated lives$2.75 PMPM

X 360,000 actual member visits

$990,000

C. Total actual revenues$1,942,000

Costs

A.Variable costs:

Labor$1,242,000 (46,000 hours at $27/visit)

Supplies$126,000 (90,000 units at $1.40/unit)

Total variable costs:$17.72 ($1,368,000 x 77,200)

B.Fixed costs:

Overhead, plant

And equipment$525,000

C.Total actual costs:$1,893,000

Profit and Loss Statement:

Revenues

FFS$952,000

Capitated $990,000

Total$1,942,000

Costs

Variable:

FFS$602,487

Capitated$765,513

Total$1,368,000

Contribution margin$574,000

Fixed Costs$525,000

Actual profits$49,000

a.Construct the flexible budget for 2011.

b.What are profit variance?

Revenue variance?

What is the cost variance?

Consider the revenue variance. What is the component volume variance?

What is the price variance?

Break down the management variance into labor, supplies, and fixed costs variances.

Interpret your results.

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ACCOUNTING QUESTIONS

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Print by: Sadu Singh FUNDAMENTALS OF ACCOUNTING II: 352923 /Project *Problem 13-4A The following financial information is for Cheaney Company. CHEANEY COMPANY Balance Sheets December 31 Assets 2012 2011 Cash $ 71,500 $ 65,100 Short-term investments 54,800 39,200 Receivables 103,400 89,200 Inventories 238,900 168,400 Prepaid expenses 29,800 27,500 Land 134,400 134,400 Building and equipment (net) 259,100 183,300 Total assets $891,900 $707,100 Liabilities and Stockholders’ Equity Notes payable $170,600 $107,100 Accounts payable 68,600 54,100 Accrued liabilities 39,200 39,200 Bonds payable, due 2015 249,900 171,800 Common stock, $10 par 199,800 199,800 Retained earnings 163,800 135,100 Total liabilities and stockholders’ equity $891,900 $707,100 CHEANEY COMPANY Income Statements For the Years Ended December 31 2012 2011 Sales $893,300 $797,500 Cost of goods sold 644,900 575,600 Gross profit 248,400 221,900 Operating expenses 191,400 159,700 Net income $ 57,000 $ 62,200 Additional information: 1. Inventory at the beginning of 2011 was $115,500. 2. Receivables (net) at the beginning of 2011 were $89,100. 3. Total assets at the beginning of 2011 were $638,700. 4. No common stock transactions occurred during 2011 or 2012. 5. All sales were on account. *(a)
Attempts: 2 of 2 used Attempts: 0 of 2 used Your answer is partially correct. Try again. Compute the liquidity and profitability ratios of Cheaney Company for 2011 and 2012. (Round all answers to 2 decimal places, e.g. 1.83 or 12.61%. If % change is a decrease show the numbers as negative, e.g. -12.61% or (12.61%).)2011 2012 % Change LIQUIDITY Current :1 :1 % Receivables turnover times times % Inventory turnover times times % 2011 2012 % Change PROFITABILITY Profit margin % % % Asset turnover times times % Return on assets % % % Earnings per share $ $ % *(b) Given below are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio (1) as of December 31, 2012, and (2)…

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Accounting Questions

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Accounting Questions
Question Detail:

This is due this Saturday at 10 am

See attached word document

ACT 5744

Fall 2013

Pick the best answer.

1. Carlton executed and delivered to Raymond a $1,000 negotiable note payable to Raymond or bearer. Raymond then negotiated it to Fred and endorsed it on the back by merely signing his name. Which of the following is a true statement?

a. The instrument is bearer paper, and Fred can convert it to order paper by writing pay to the order of Fred above Raymond s signature.

b. Raymond s endorsement was a special endorsement.

c. The instrument was initially bearer paper and cannot be converted to order paper.

d. Raymond s endorsement was necessary to Fred s qualification as a holder.

2. Under the Secured Transactions Article of the UCC, which of the following remedies is available to a secured creditor when a debtor fails to make a payment when due?

Proceed Obtain a General

against the Judgment against

Collateral__ the Debtor_

a. Yes Yes

b. Yes No

c. No No

d. No Yes

3. On July 27, 2011 Summerson sent Fallson a letter offering to sell Fallson a vacation home for $150,000. On August 2, 2011 Fallson replied by mail agreeing to buy the home for $145,000. Summerson did not reply to Fallson. Do Summerson and Fallson have a binding contract?

a. Yes, because Summerson s silence is an implied acceptance of Fallson s letter.

b. No, because Fallson failed to sign the letter that was sent by Fallson.

c. No, because Fallson s letter was a counteroffer.

d. Yes, because Summerson s offer was validly accepted.

4. Cindy, Odsen Corp. s agent, needs a written agency agreement to

a. Hire an attorney to collect a business debt owed Odsen.

b. Purchased an interest in undeveloped land for Odsen.

c. Retain an independent general contractor to renovate Odsen s office building.

d. Enter into a series of sales contracts on Odsen s behalf.

5. A party who filed a financing statement covering inventory on April 1, 2010 would have a superior interest to which of the following parties?

a. A holder of a mechanic s lien whose lien was filed on March 15, 2010.

b. A judgment lien creditor who filed its judgment on April 15, 2010.

c. A holder of a purchase money security interest in after-acquired inventory filed on March 20, 2010.

d. A purchaser in the ordinary course of business who purchased on April 10, 2010.

6. In determining whether the consideration requirement to form a contract has been satisfied, the consideration exchanged by the parties to the contract must be

a. Fair and reasonable under the circumstances.

b. Legally sufficient.

c. Exchanged simultaneously by the parties.

d. Of approximately equal value.

7. Pavers Roadway, Inc., contracts with Best Building Corporation to repave Best Building Corporation’s parking lot. The elements of a contract do not include

a. consideration.

b. contractual capacity.

c. legality.

d. practicality.

8. Holly writes a check on her account at Investment Bank to Jerry to pay a debt. Jerry negotiates the check by indorsement to Kelly, who negotiates the check by indorsement to Lisa, who presents it for payment to Interstate Bank. Holly is

not liable for payment under any circumstances.

primarily liable.

secondarily liable.

simultaneously liable.

9. Holly writes a check on her account at Investment Bank to Jerry to pay a debt. Jerry negotiates the check by indorsement to Kelly, who negotiates the check by indorsement to Lisa, who presents it for payment to Interstate Bank. If Investment Bank dishonors the check, Lisa can obtain payment from Jerry

if Lisa timely notifies Jerry.

only if Holly refuses to pay the check.

only if Holly and Kelly refuse to pay the check.

under no circumstances.

10. Nora enters into a contract with Owen’s Transport Company for the delivery of a shipment of fresh produce. If ambiguities appear in the contract, they will be construed against

a. the party who drafted the contract.

b. the party with the greater bargaining power.

c. the promisor.

d. the promisee.

11. On November 1, 2013, Ted sent by overnight mail a letter to Zena in which Ted offered to sell a rare vase. The offer requested that Zena s respond by telegram and that the response be sent on or before 5:00 p.m. on November 2, 2013. On November 2, 2013 at 3:00 p.m., Zena sent an acceptance by overnight mail. It did not reach Ted until November 5, 2013. Ted refused to complete the sale to Zena. Is there an enforceable contract?

a. No, because Zena did not accept by telegram.

b. No, because the offer required receipt of the acceptance within the time specified.

c. Yes, because the acceptance was effective when sent.

d. Yes, because the acceptance was made within the time specified.

12. Mary promises to pay her assistant Ned $10,000 in consideration of the services he provided over the years. Mary never pays Ned. Mary is

a. liable for payment of the $10,000.

b. liable only if Ned still works for Mary.

c. not liable, because the consideration is in the past.

d. not liable, because the consideration was unintentional.

13. Collection of EZ Sales Company’s debt to First Storage Corporation is barred by a statute of limitations. A new promise by EZ to pay the debt

a. may become enforceable if payments are made.

b. must be in writing.

c. requires consideration.

d. will not revive the obligation.

14. Auto Body Repair Shop (ABRS) promises to pay Ben $1,000 a week to work for ABRS. Ben accepts and quits his job with Car Care Service. ABRS fails to provide a job for Ben. Ben has a cause of action based on

a. an illusory promise.

b. a release.

c. past consideration.

d. promissory estoppel.

15. Pat, a world famous musician and composer, agrees to give ten piano lessons to Quinn in exchange for $1,000. Pat’s attempt to delegate his contract to Ruth, an inexperienced pianist, will probably be

a. permitted because contracts may be freely delegated.

b. permitted because the contract is concerned with music lessons.

c. prohibited because contracts may not be freely delegated.

d. prohibited because Pat and Ruth have very different skill levels.

16. Jill and Karl contract for the sale of Jill’s horse for $1,000. Unknown to either party, the horse has died. Karl is

a. entitled to another horse of equivalent value.

b. not required to pay due to the mutual mistake.

c. not required to pay due to the unilateral mistake.

d. required to pay because he assumed the risk the horse might die.

17. Alpha Company offers to sell Beta, Inc., 1,000 computers for a $1 million, states that the offer will be open for six days, and asks for a response by fax. On the fourth day, Beta sends an acceptance to Alpha via the mail, which is received on the sixth day. In this deal

a. a contract is formed.

b. no contract is formed, because Alpha asked for a response by fax.

c. no contract is formed, because Alpha received the acceptance late.

d. no contract is formed, because Beta sent the acceptance late.

18. Holly writes a check on her account at Investment Bank to Jerry to pay a debt. Jerry negotiates the check by indorsement to Kelly, who negotiates the check by indorsement to Lisa, who presents it for payment to Interstate Bank. If Investment Bank dishonors the check, Lisa can obtain payment from Kelly

if Lisa timely notifies Kelly.

only if Holly refuses to pay the check.

only if Holly and Jerry refuse to pay the check.

under no circumstances.

19. Furnishings, Inc., agrees to lease a desk to Better Resources, Inc. (BRI), which requests that the desk be left outside City Warehouse for BRI to pick up. Before BRI retrieves the desk, it is stolen. The loss is suffered by

a. A-1 Furnishings and BRI, but not City Warehouse.

b. A-1 Furnishings, BRI, and City Warehouse.

c. A-1 Furnishings only.

d. BRI only.

20. John, the secured party, perfects its security interest by filing a financing statement. What is the effect of perfection of John s security interest?

a. The secured party has priority in the collateral over most creditors who acquire a security interest in the same collateral after the filing.

b. The security interest becomes enforceable against the debtor.

c. The debtor is protected against all other parties who acquire an interest in the collateral after the filing.

d. None of the above.

21. Ample Country Stables contracts to buy 1,000 horseshoes from Blacksmith, Inc., for $1 per shoe. When the market price decreases to 50 cents per shoe, Ample refuses to go through with the deal. Blacksmith can recover

a. $1,500.

b. $1,000.

c. $500.

d. 0.

22. Farm Equipment, Inc., makes farming machinery. Gail discovers that her Farm Equipment tractor is defective and sues the maker for product liability based on negligence. To win, Gail must show that

a. Farm Equipment sold the tractor to Gail.

b. Gail knew and appreciated the risk caused by the defect.

c. Gail suffered an injury caused by the defect.

d. the “defect” was a commonly known danger.

23. Ida signs a check payable to Jane and gives it to her. Jane indorses the back, and transfers the check to Kyle. To negotiate the check to Leo, Kyle must

a. indorse “Kyle” on the back and deliver the check to Leo.

b. indorse “pay to the order of Leo [signed] Kyle” on the back and deliver the check to Leo.

c. only deliver the check to Leo.

d. transfer the check through the drawee bank.

24. Local Appliance Store, the secured party, sells a refrigerator to John, a consumer, for the use of John s family. John signs a sales agreement, a loan note, and a security agreement. Local Appliance Store fails to file either the security agreement or a financing statement with the secretary of state. Which of the following statements is accurate?

a. The secured party has priority in the collateral over most creditors who subsequently acquire a security interest in the same collateral.

b. The security interest is not enforceable against the debtor.

c. The security interest is not enforceable against subsequent creditors.

d. The assets subject to the security interest cannot become part of the bankruptcy estate in the event the creditor files an involuntary petition against the debtor.

25. Ruth, a minor, charges groceries at Sam’s Mini-Mart. Two days later, Ruth disaffirms the purchase. Ruth owes Sam’s Mini Mart

the reasonable value of the groceries.

the retail value of the groceries.

the wholesale value of the groceries.

26. With regard to a prior perfected security interest in goods for which a financing statement has been filed, which of the following parties is most likely to have a superior interest in the same collateral?

a. The trustee in bankruptcy of the debtor.

b. Lien creditors of the debtor.

c. A buyer of goods in the ordinary course of business.

d. A subsequent buyer of consumer goods who purchased the goods from another consumer.

27. Beth is convicted of arson for burning down her warehouse.. On an application for insurance from Cover-All Insurance Company on a new building, in answer to a question about prior convictions, Beth does not disclose her conviction. This makes the contract

binding because the omission is immaterial to Cover-All’s decision to issue coverage.

binding due to Cover-All’s failure to discover Beth’s conviction.

voidable by Beth because the omission is immaterial to Cover-All’s decision to issue coverage.

voidable by Cover-All because the omission is material to its decision to issue coverage.

Fact Pattern for Question 28

Fred enters into a contract under Gene’s threats. Later, Fred refuses to perform, claiming that he acted under duress.

28. Refer to Fact Pattern B. Gene sues to enforce the contract. In order for Fred to establish duress, Gene must have threatened

a. a civil suit.

b. a lost opportunity.

c. a social snubbing.

d. a wrongful act.

e. none of the above.

29. Century Properties. Inc., and Dandy Capital Corporation enter into a contract for a sale of land. To be enforceable, the contract must be in writing

Only if the land is valued at $50 or more.

Only if the land is valued at $500 or more.

Only if the land is valued at $5,000 or more.

In any case.

30. Timber Trees, Inc., and Land Corporation enter into an oral contract for Timber Trees, Inc. to sell its lumber mill to Land Corporation . Before Land Corporation takes possession, this contract is enforceable by

either party.

neither party.

Timber Trees only.

Land Corporation only because only the buyer can get specific performance.

31. Lola agrees to pay Mira’s debt to New Sales Corporation if Mira does not pay it. Lola does not get any personal benefit for or from the agreement. To be enforceable against Lola, the promise must be in writing

if the debt is paid by Mira.

if the debt is for at least $50.

if the debt is for at least $500.

in any case.

Fact Pattern for Question 32

Macro Marketing, Inc. (Macro), and National Food Corporation (NFC) discuss the terms of a contract under which NFC is to provide personal services to Macro. The next day, Macro faxes NFC a memo on Macro’s letterhead that summarizes the items on which they agreed, including a two-year term. NFC immediately begins to perform, but Macro refuses to pay. NFC promptly institutes a law suit seeking damages.

32. Refer to Fact Pattern for question 32. The contract between Macro and NFC is

subject to the Statute of Frauds collateral-promise provision, and is probably unenforceable.

subject to the Statute of Frauds services rule, and is probably enforceable.

barred by the statute of limitations, and is therefore probably unenforceable.

subject to the Statute of Frauds one-year rule, and is probably unenforceable.

Fact Pattern for Question 33

Jeff and Kris sign a written contract for the sale of Jeff’s Koffee Kiosk to Kris. The parties intend their written contract to be a final statement of the terms of their agreement.

33. Refer to Fact Pattern for question 33. Kris later disputes some of the provisions of the deal with Jeff. The dispute results in litigation, and the court finds the terms of the agreement are ambiguous. The court will most likely

exclude evidence that buttresses the written terms.

exclude evidence that contradicts the written terms.

allow evidence that explains the terms.

dismiss the action because there was a lack of mutual asset and no contract was formed.

34. Tom dies owning stock as joint tenant with right of survivorship with his son, having bank accounts in his name in trust for his daughter, and owning real estate as tenants by the entirety with his wife. The trustee of Tom s revocable trust holds title the rest of his assets. Under the terms of the revocable trust, all assets of the trust will be distributed to Tom s son and daughter on Tom s death. Tom s wife, son and daughter survive him. Under the terms of Tom s will, Tom leaves all of his property to his mother, who also survived him. Tom died

a. intestate.

b. without any probate assets.

c. with a last will that will controls the disposition of his assets.

d. None of the above.

35. Manny, as buyer, wants to transfer his rights under a written real estate contract with Nila, as seller, to Opie. To ensure that the transfer of rights is valid, Manny must

have this right expressly stated in the contract.

file a notice of assignment in the public records.

have the contract recorded in the public records.

none of the choices.

36. Rural Development Corporation (RDC) and Sid enter into a contract for the clear-cutting of RDC’s fifty-acre tract for which RDC agrees to pay Sid. Sid is the owner of Timber Logging Company. Sid transfers his duty to log the tract under the contract to Timber Logging Company. Timber Logging Company is

a delegatee and is subject to the terms of the agreement between RDC and Sid.

a delagetee and is not entitled to collect under the contract from RDC for services provided by Timber.

an obligee and is not required to perform under the contract.

a prohibitee.

37. Mke, a physician, renders aid to Nancy, who is injured and unconscious after an avalanche. Mike can recover the cost of the aid from Nancy

even if Nancy was not aware of the aid when it was given.

only if Nancy recovers because of the aid.

only if Noel was aware of the aid at the time it was given.

under no circumstances.

38. Pat, a world famous musician, agrees to give ten piano lessons to Quinn in exchange for $1,000. Pat’s attempt to transfer his contract duties to Ruth, an inexperienced pianist, will probably be

permitted because contracts may be freely delegated.

prohibited in this case unless the contract expressly permits delegation.

permitted if the contract is silent on the issue.

prohibited in any case.

39. Chaz and Dolly enter into a five year contract under which Chaz agrees to provide maintenance services for Dolly’s Ski Resort. Chaz transfers his rights and obligations under the contract to Mark. Mark

performs

under the contract, and Dolly is aware of the Mark s performance of the contract. However, Dolly refuses to pay Mark. Assuming Mark s services are properly performed and Mark sues Dolly, Mark

a. will be successful in enforcing the contract if performance depends on the personal skills or talents of the obligor.

b. will probably not be able to recover under the express terms of the contract.

.

c. may be able to recover the value of his services.

d. may not recover.

40. On August 1, 2010 Delia and Edwin entered into an agreement for Edwin to lease Delia s country home for two months during the following summer for $1000 per month. Delia promised to vacate the property for Edwin by July 1, 2011 with the lease to begin on July 1, 2011. If these promises are not in writing, they are most likely

none of the above.

41. To avoid liability for intentional injuries, Power Corporation includes in its contracts an exculpatory clause. This is

enforceable if the other parties are protected from liability.

enforceable if the other parties sign the contract.

enforceable if the other parties have equal bargaining power.

not enforceable.

42. MicroCorp hires Nick to work for one month at a weekly salary of $400. A MicroCorp representative orally agrees two weeks later to double Nick’s salary. This agreement is

enforceable because an employment contract is an adhesion contract.

enforceable because the parties have executed an accord and satisfaction.

unenforceable because Nick has incurred no additional detriment in exchange for MicroCorp’s promise.

unenforceable because Nick’s performance is uncertain.

43. Karen writes on a piece of paper, “I owe you $600,” signs it, and gives it to Lou. This instrument is

nonnegotiable, because it does not recite any consideration.

nonnegotiable, because it does not state any conditions to payment.

d. none of the above.

44. Pam signs an instrument payable to the order of Quick Credit, Inc., that allows a holder to demand payment of the entire amount due, with interest, if Pam fails to make a payment. This instrument is

nonnegotiable, because a holder can move up the payment date.

nonnegotiable, because moving up the payment date is conditional.

nonnegotiable, because the exact payment date cannot be determined from the face of the instrument.

45. Wyatt inherits a promissory note from Xena, his aunt. Wyatt has no notice that the note has been dishonored or is overdue. Wyatt has the rights of

a holder and an HDC.

a holder only.

an HDC only.

neither a holder nor an HDC.

46. Kettlecorn Investment Bank, Inc., and Lone Bank are secured parties with security interests in property owned by Metal Fabrication Corporation. Priority between these security interests is generally determined by

the amount of the claim.

the custom in the trade.

the time of perfection.

the date of the loan.

47. General Leasing Company (GLC) buys equipment for use as inventory, borrowing $1,000,000 from Helpful Finance Corporation (Helpful), with Helpful taking back a security interest in the equipment. The next day, GLC borrows $500,000 from Interstate Bank (Interstate), which loan is also secured by a security interest in the equipment. GLC defaults on both loans. Suppose that two weeks after GLC takes possession of the equipment, Helpful and Interstate file financing statements, with Interstate filing first. In that circumstance, the party with priority to the equipment is

Helpful and Interstate proportionately.

Helpful only.

Interstate Bank only

48. Which is not allowed as a federal exemption under the Federal Bankruptcy Code?

  1. A specified amount of equity in one motor vehicle.
  2. Unemployment compensation.
  3. A specified amount of value in books and tools of one s trade.
  4. All of the above are allowed.

49. Under the liquidation provisions of Chapter 7 of the Federal Bankruptcy Code, a debtor will be denied a discharge in bankruptcy if the debtor

  1. Fails to list a creditor.
  2. Owes alimony or child support.
  3. Cannot pay administration expenses.
  4. Refuses to satisfactorily explain a loss of assets.

50. Which of the following transfers by a debtor, within 90 days prior to the filing for bankruptcy, could be set aside as a preferential payment?

  1. Making a gift to charity.
  2. Paying a business utility bill.
  3. Borrowing money from a bank secured by a mortgage on the debtor s business property.
  4. Prepaying an installment loan on inventory.

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accounting questions

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1)
The State of Rhode Island publishes its budget and the supporting information at
http://www.budget.state.ri.us/index.htmwww.budget.state.ri.us/index.htm. Access the budget and answer the following:
What are the duties of the budget office? (Hint: Use the Primer link.)
What are the six governmental functions listed in the budget?
What are the major sources of Rhode Island’s revenues?
What is the accounting basis used in the preparation of the budget? (Hint: Use the Primer link and scroll down until you see the Budget Basis section.)
The budget mentions four categories of program performance measures. List them, and briefly describe how they are used in Rhode Island. (Hint: Use the Primer link and scroll down until you see the Program Performance Measures section.)
What did you learn from reviewing the most recent budget of the State of Rhode Island?
What do you think the biggest challenges are when it comes to preparing their budget?

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accounting questions

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Please provide original work. Cite all sources using APA format.
Name two reasons why overhead might be under-applied in a given year and how this might be able to be prevented? What is a predetermined overhead rate and how is it computed?  What do you feel is the best allocation base to use for the denominator in the predetermined overhead rate calculation and why?  What factors would you consider in choosing the allocation base?

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accounting questions

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Please use APA format when citing sources. Provide in text citation and references. Original work only, no word minimum. Thank you.
1)
Perform an Internet search using the term break-even analysis. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Summarize the case study or article, and relate the ideas of the article to what you have learned this week in this course.
2)
Your friend remarked, “A company will never drop a product from its product line that has a positive contribution margin. It will want to garner every bit of profit that it can.” Is this true in all cases? What are the risks and benefits of evaluating product continuation or implementation using the contribution margin?

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Accounting questions

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Assignment 1
Eye openers
1. What distinguishes a merchandising business from a service business?
2. Can a business earn a gross profit but incur a net loss? Explain.
3. In computing the cost of merchandise sold, does each of the following items increase or decrease that cost? (a) freight, (b) beginning merchandise inventory,
(c) purchase discounts, (d) ending merchandise inventory
4. Describe how the periodic system differs from the perpetual system of accounting for merchandise inventory.
5. Differentiate between the multiple-step and the single-step forms of the income statement.

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Assignment 1
Eye openers
1. What distinguishes a merchandising business from a service business?
2. Can a business earn a gross profit but incur a net loss? Explain.
3. In computing the cost of merchandise sold, does each of the following items increase or decrease that cost? (a) freight, (b) beginning merchandise inventory,
(c) purchase discounts, (d) ending merchandise inventory
4. Describe how the periodic system differs from the perpetual system of accounting for merchandise inventory.
5. Differentiate between the multiple-step and the single-step forms of the income statement.
6. What are the major advantages and disadvantages of the single-step form of income statement compared to the multiple-step statement?
7. What type of revenue is reported in the Other income section of the multiple-step income statement?
8. Name at least three accounts that would normally appear in the chart of accounts
of a merchandising business but would not appear in the chart of accounts of a service business.
9. How are sales to customers using MasterCard and VISA recorded?
10. The credit period during which the buyer of merchandise is allowed to pay usually begins with what date?
11. What is the meaning of (a) 1/15, n/60; (b) n/30; (c) n/eom?
12. What is the nature of (a) a credit memo issued by the seller of merchandise, (b) a debit memo issued by the buyer of merchandise?
13. Who bears the freight when the terms of sale are (a) FOB shipping point, (b) FOB destination?
14. Business Outfitters Inc., which uses a perpetual inventory system, experienced a normal inventory shrinkage of $9,175. What accounts would be debited and credited to record the adjustment for the inventory shrinkage at the end of the accounting period?
15. Assume that Business Outfitters Inc. in Eye Opener 14 experienced an abnormal inventory shrinkage of $80,750. Business Outfitters Inc. has decided to record the abnormal inventory shrinkage so that it would be separately disclosed on the…

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Accounting questions

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1.
(TCO 7) Elliot’s Escargots sells commercial and home snail extraction tools and serving pieces. Currently, the snail extraction line of products takes up approximately 50 percent of the company’s retail floor space. The CEO of Elliot’s wants to decide if the company should continue offering snail extraction tools or focus only on serving pieces. If the snail extraction tools are dropped, salaries and other direct fixed costs can be avoided and serving piece sales would increase by 13 percent. Allocated fixed costs are assigned based on relative sales.

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1.
(TCO 7) Elliot’s Escargots sells commercial and home snail extraction tools and serving pieces. Currently, the snail extraction line of products takes up approximately 50 percent of the company’s retail floor space. The CEO of Elliot’s wants to decide if the company should continue offering snail extraction tools or focus only on serving pieces. If the snail extraction tools are dropped, salaries and other direct fixed costs can be avoided and serving piece sales would increase by 13 percent. Allocated fixed costs are assigned based on relative sales.
 
Snail Extraction
Serving
 
 
Tools
Pieces
Total
Sales
$1,200,000
$800,000
$2,000,000
Less cost of goods sold
700,000
500,000
1,200,000
Contribution margin
500,000
300,000
800,000
Less direct fixed costs:
 
 Salaries
175,000
175,000
350,000
 Other
60,000
60,000
120,000
Less allocated fixed costs:
 
 Rent
14,118
9,882
24,000
 Insurance
3,529
2,471
6,000
 Cleaning
4,117
2,883
7,000
 Executive salary
76,470
53,530
130,000
 Other
7,058
4,942
12,000
Total costs
340,292
308,708
649,000
Net income
$159,708
 ($ 8,708)
 $151,000
Prepare an incremental analysis in good form to determine the incremental effect on profit of discontinuing the snail extraction tool line.
Paschal’s Parasailing Enterprises has estimated that fixed costs per month are $115,600 and variable cost per dollar of sales is $0.35 (6 points).   What is the break-even point per month in sales? What level of sales is needed for a monthly profit of $70,000? For the month of August, Paschal’s anticipates sales of $600,000. What is the expected level of profit?
3. (TCO 6) Princess Cruise Lines has the following service departments; concierge, valet, and maintenance.  Expense for these departments are allocated to Mediterranean and Trans Atlantic cruises.  Expenses for the departments are totaled (both variable and components are combined) and as follows:  …

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Accounting questions

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A company purchased a machine for $75,000 that was expected to last 6 years and to have a salvage value of $6,000. At the beginning of the machine’s fourth year the company decided that the machine’s estimated useful life should be revised to a total of 10 years instead of 6 years. Also, the salvage value was re-estimated to be $5,500. Straight-line depreciation was used throughout the machine’s life. Calculate the depreciation expense for the fourth year of the machine’s useful life.

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ACCT 203 –Financial & Managerial Accounting
Problem #1 – 15 points (Chapter 8)
The following information is available to reconcile Litner Co.’s book balance of cash with its bank statement cash balance as of April 30. The April 30 cash balance according to the accounting records is $78,356, and the bank statement cash balance for that date is $83,525. a. The bank erroneously cleared a $480 check against the account in April that was not issued by Litner. The check documentation included with the bank statement indicates the check was actually issued by Lightning Co. b. On April 30, the bank issued a credit memorandum for $53 interest earned on Litner’s account. c. When the April checks are compared with entries in the accounting records, it is found that Check No. 1828 had been correctly drawn for $1,530 to pay for advertising but was erroneously entered in the accounting records as $1,350 d. A credit memorandum indicates that the bank collected $10,000 cash on a note receivable for Litner, deducted a $30 collection fee, and credited the balance to the company’s Cash account. Litner did not record this transaction before receiving the statement. e. A debit memorandum of $895 is enclosed with the bank statement for an NSF check for $870 received from a customer. The bank assessed a $25 fee for processing it. f. Litner’s April 30 daily cash receipts of $5,102 were placed in the bank’s night depository on that date, but do not appear on the April 30 bank statement. g. Litner’s April 30 cash disbursements journal indicates that Check No. 1837 for $584 and Check No. 1840 for $1,219 were both written and entered in the accounting records, but are not among the canceled checks. 1. Prepare the bank reconciliation for this company as of April 30.
2. Prepare the journal entries necessary to bring the company’s book balance of cash into conformity with the reconciled cash balance as of April 30.
ACCT 203 – Financial & Managerial Accounting
Problem #2 – 15…

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accounting questions

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What types of regulations requiring periodic reporting, both monetary and statistical, come along with the payroll function, and what are the reports required?

Is the payroll function best performed within a company, or is outsourcing a better approach to payroll processing?

What are the positives and negatives of both?

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Accounting Questions

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On December, 31, 2010, Ogden Motors, Inc. is involved in a lawsuit. It is possible that the jury will find in favor of the plaitiff and Ogden Motors will owe ten million dollars. Even though the lawsuit is not yet settled, how should Ogden Motors handle the lawsuit in its financial statements? Be…

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Accounting Questions

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A. Posting
B. Mixed Accounts
C. Liabilities
D. Trial Balance
E. General ledger account
F. Debit
G. Asset
H. Revenues
I. Temporary Equity Accounts
J. Worksheet
K. Expenses

1. Cost that relate to the earning of revenue
2. Something a company owns of value
3. Listing of the ending balances of all ledger accounts th…

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Accounting Questions

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80

80

300

390

286

34

225

12

21

50

260

63

121

50

60

300

110

45

25

576

100

120

1655
1653

Dr
Cr
£’000
Sales
Purchases
Building
Acc Depreciation of Building
Carriage inwards
Discounts received
Discounts allowed
Drawings
Wages
Insurance
Heat and Light
Receivables
Payables
Cash at bank
Bank Loan
Capital
Adjustments
Acc. Depreciation of Equipment
Equipment
Returns outwards
Returns inwards
General expenses
8.

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80

80

300

390

286

34

225

12

21

50

260

63

121

50

60

300

110

45

25

576

100

120

1655
1653

Dr
Cr
£’000
Sales
Purchases
Building
Acc Depreciation of Building
Carriage inwards
Discounts received
Discounts allowed
Drawings
Wages
Insurance
Heat and Light
Receivables
Payables
Cash at bank
Bank Loan
Capital
Adjustments
Acc. Depreciation of Equipment
Equipment
Returns outwards
Returns inwards
General expenses
8. A bad debt of £5000 is to be written off and a provision set up for 2% of the remaining receivables
You are required to :
(a) Set up a suspense account and explain its uses
(c) Prepare an income statement and a balance sheet
Question 1
Question 2
for the year.
10. An invoice for a customer for £10,000 as been correctly recorded in sales but credited to payables.
4. Insurance includes £8000 for the year to 31 March 2012
nothing else. The equipment originally cost £50,000 4 years ago.
(b) Record journal entries for all of the above adjustments and show that the suspense account is cleared
2. Depreciation is to be provided at 25% reducing balance on equipment and 2% straight line on buildings
EC3076 Assignment 1 2013
Brown’s Grocery Store
Trial Balance as at 30 September 2012
Inventory at 1 October 2011
7. Inventory at 30 September 2012 is valued at cost at £120,000
1. The building cost includes land valued at £150,000
6. Bank loan interest at 4% is to be provided for
5. An accrual for heat and light for September 2012 is needed
Please submit a hard copy of your answers to reception before 12pm (noon) on Thursday 28th February
(f) In the last question how would the destroyed stock be accounted for? Give answers for with and without insurance.
3. The owner took goods, for his own use, from inventory that cost £15000 – no adjustment has been made
9. The owner sold some equipment at the end of the year for £22,000 he has recorded the cash received but
(a) On 1 January 2012 trade receivables were £15070 and on 31 December…

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Accounting questions

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1. Which of the following statements characterizes an operating lease?
A. The lessee records depreciation and interest.
B. The lessee records the lease obligation related to the leased asset.
C. The lessor transfers the title of the leased property to the lessee for the duration of the lease term.
D. The lessor records depreciation and lease revenue.

2. Which type of contract is unique in that it protects the owner against unfavorable movements in the prices or rates while allowing the owner to benefit from favorable movements?
A. Interest rate swap
B. Forward contract
C. Futures contract
D. Option

3. Cowboy Corporation reported depreciation of $450,000 on its 2002 tax return. However, in its 2002 income statement, Cowboy reported depreciation of $300,000, as well as $30,000 interest revenue on tax-free bonds. The difference in depreciation is only a temporary difference, and it will reverse equally over the next three years. Cowboy’s enacted income tax rates are as follows:
2002 35%
2003 30%
2004 25%
2005 20%
What amount should be included in the deferred income tax liability in Cowboy’s December 31, 2002, balance sheet?
A. $30,000
B. $37,500
C. $45,000
D. $52,500

4. Stockton, Inc. leased machinery with a fair value of $250,000 from Layton Machine Co. on December 31, 2001. The contract is a six-year noncancellable lease with an implicit interest rate of 10 percent. The lease requires annual payments of $50,000 beginning December 31, 2001. Stockton appropriately accounted for the lease as a capital lease. Stockton’s incremental borrowing rate is 12 percent. Assuming the present value of
an annuity due of 1 for 6 years at 10 percent is 4.7908 and the present value of an annuity due of 1 for 6 years at 12 percent is 4.6048, what is the lease liability that Stockton should report on the balance sheet at December 31, 2001?
A. $189,540
B. $200,000
C. $230,240
D. $239,540

5. The books of the Tracker Company for the year ended December 31, 2002, showed pretax income of $360,000. In computing the taxable income for federal income tax purposes, the following timing differences were taken into account:

Depreciation deducted for tax purposes in excess of depreciation recorded on the books, $16,000

Income from installment sale reportable for tax purposes in excess of income recognized on the books, $12,000

What should Tracker record as its current federal income tax liability at December 31, 2002, assuming a corporate income tax rate of 30 percent?

A. $99,600
B. $103,200
C. $106,800
D. $108,000

6. The president of Technorthern signed a contract for a large purchase of a particular software program. She then heard rumors that the next generation of that software will be available much sooner than expected. The uncertain future market value of that inventory is a(n)
A. price risk
B. credit risk
C. interest rate risk
D. exchange rate risk

7. Baxter Company leased equipment to Fritz Inc. on January 1, 2002. The lease is for an eight-year period expiring December 31, 2009. The first of eight equal annual payments of $900,000 was made on January 1, 2002. Baxter had purchased the equipment on December 29, 2001 for $4,800,000. The lease is appropriately accounted for as a sales-type lease by Baxter. Assume that the present value at January 1, 2002, of all rent payments over the lease term discounted at a 10 percent interest rate was $5,280,000. What amount of interest revenue should Baxter record in 2003 (the second year of the lease period) as a result of the lease?
A. $490,000
B. $480,000
C. $438,000
D. $391,800

8. Wright, Inc. has an incentive compensation plan under which the sales manager receives a bonus equal to 10 percent of the company’s income after deductions for bonus and income taxes. Income before bonus and income taxes is $400,000. The effective income tax rate is 30 percent. How much is the bonus (rounded to the nearest dollar)?
A. $80,000
B. $30,108
C. $28,000
D. $26,168

9. Slice Company manufactures equipment that they sell or lease. On December 31, 2002, Slice leased equipment to Hook Company for a five-year period after which the ownership of the leased asset will be transferred to Hook. The lease calls for equal annual payments of $50,000, due on December 31 of each year. The first payment was made on December 31, 2001. The normal sales price of the equipment is $220,000, and cost is $176,000. For the year ended December 31, 2002, what amount of income should Slice report from the lease transaction?
A. $10,000
B. $30,000
C. $44,000
D. $74,000

10. Frey Corporation’s income statement for the year ended December 31, 2002, shows pretax income of $1,000,000. The following items are treated differently on the tax return and in the accounting records:
Tax Return Accounting Records
Rent Income $70,000 $120,000
Depreciation expense 280,000 220,000
Premiums on officer’s life insurance – 90,000

Assume that Frey’s tax rate for 2002 is 30 percent. What is the amount of income tax payable for 2001?
A. $360,000
B. $320,000
C. $294,000
D. $267,000

11. Blaine Inc. shows the following data relating to its pension plan for 2002:

Amortization of unrecognized net loss $16,000
Amortization of unrecognized prior service cost 28,000
Expected return on plan assets 32,000
Actual return on plan assets 36,000
Interest on projected benefit obligation 70,000
Service cost 160,000

What amount should Blaine report for pension cost in 2002?

A. $206,000
B. $238,000
C. $242,000
D. $270,000

12. On December 1, 2002, Blake Inc. signed an operating lease for a warehouse for 10 years at $24,000 per year. Upon execution of the lease, Blake paid $48,000 covering rent for the first two years. How much should be shown in Blake’s income statement for the year ended December 31, 2002, as rent expense?
A. $0
B. $2,000
C. $24,000
D. $48,000

13. Which of the following payroll taxes aren’t paid by the employer?
A. FICA taxes
B. Federal unemployment taxes
C. State unemployment taxes
D. State income taxes

14. The following information relates to the defined benefit pension plan of the McDonald Company for the year ended December 31, 2002:

Projected benefit obligation, January 1 $4,600,000
Projected benefit obligation, December 31 4,729,000
Fair value of plan assets, January 1 5,035,000
Fair value of plan assets, December 31 5,565,000
Expected return on plan assets 450,000
Amortization of deferred gain 32,500
Employer contributions 425,000
Benefits paid to retirees 390,000
Settlement rate 10%

The actual return on plan assets for the year is
A. $105,000
B. $495,000
C. $503,500
D. $530,000

15. Which of the following statements characterizes lessor accounting for residual values?
A. Guaranteed residual values are included in the gross investment amount, but unguaranteed residual values are excluded from the gross investment.
B. Unguaranteed residual values are included in the gross investment amount, but guaranteed residual values are excluded from the gross investment.
C. Guaranteed residual values and unguaranteed residual values are excluded from the gross investment.
D. Guaranteed residual values and unguaranteed residual values are included in the gross investment.

16. For three consecutive years, 1999-2001, Twin Corporation has reported income before taxes of $100,000 for both financial reporting purposes and tax reporting purposes. During this time, Twin’s income tax rates were as follows:
1999 20%
2000 25%
2001 30%
In 2002, Twin’s tax rate changed to 35 percent. Also in 2002, the company reported a loss for both financial reporting and tax reporting purposes of $100,000. Assuming the company uses the carryback provisions, the amount Twin’s should report as an income tax refund receivable in 2002 is:

A. $20,000
B. $25,000
C. $30,000
D. $35,000

17. Northwest Company determined that it has an obligation relating to employees’ rights to receive compensation for future absences attributable to employees’ services already rendered. The obligation relates to rights that vest, and payment of the compensation is probable. The amounts of Northwest’s obligations as of December 31 are reasonably estimated as follows:
Vacation pay $110,000
Sick pay 80,000
In its December 31 balance sheet, what amount should Northwest report as its liability of compensated absences?
A. $0
B. $80,000
C. $110,000
D. $190,000

18. During the first week of January, Sam Jones earned $200. Assume that FICA taxes are 7.65 percent of wages up to $50,000, state unemployment tax is 5.0 percent of wages up to $13,000, and federal unemployment tax is 0.8 percent of wages up to $13,000. Assume that Sam has voluntary withholdings of $10 (in addition to taxes) and that federal and state income tax withholdings are $18 and $6, respectively. What is the employer’s payroll tax expense for the week, assuming that Sam Jones is the only employee?
A. $6.32
B. $10.00
C. $19.05
D. $26.90

19. The following information is taken from Blackhawk Corporation’s 2002 financial records:
Pretax accounting income $1,500,000
Excess tax depreciation (45,000)
Taxable income $1,455,000
Assume the taxable temporary difference was created entirely in 2002 and will reverse in equal net taxable amounts in each of the next three years. If tax rates are 40 percent in 2002, 35 percent in 2003, 35 percent in 2004, and 30 percent in 2005, then the total deferred tax liability Blackhawk should report on its December 31, 2002 balance sheet is:
A. $13,500
B. $15,000
C. $15,750
D. $18,000

20. If the actual return on pension fund assets exceeds the expected return for the period, then difference is
A. a deferred loss
B. a deferred gain
C. recognized as a loss in the current period
D. recognized as a gain in the current period

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