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127.For income reporting purposes, items can appear in any of the following components of the income statement, the statement of retained earnings, and related schedules and footnotes: a. income from continuing operations or supporting schedules b. results from discontinued operations c. statement of comprehensive income d. statement of retained earnings e. disclosure Several items of accounting information are listed below: ? ____ 1. Selling expenses ? ? ? ____ 2. Loss.
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120.Below is a list of financial statement components with a corresponding letter code. a. Sales revenue (net) b. Cost of goods sold c. Selling expenses d. General and administrative expenses e. Other revenue and expenses f. Results from discontinued operations g. Prior period adjustments h. Additions to retained earnings (other than h) i. Deductions from retained earnings (other than h) j. Disclosures k. Ending balance sheet ? ____ 1. Merchandise inventory (beginning) ? ? ? ____ 2. Cash dividends declared on common.
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109.Taylor Corporation sold Division M (a business component). It was determined that the pretax loss from the operations of Division M during the year totaled $50,000 and that a pretax gain of $125,000 was realized on the sale of the division. The tax rate is 35%. ? Required: ? In good form, prepare the.
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41.Which is not a key element of internal control over cash receipts? a.daily recording of all cash receipts in the accounting records b.daily entry in a voucher register c.immediate counting by the person opening the mail or using the cash register d.daily bank deposits 42.Some companies use automated payment processing technology in which paper checks.
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140.The accounting profession has developed three alternatives for matching expenses: association of cause and effect, systematic and rational allocation, and immediate recognition. Discuss the conceptual merits of each alternative and give two examples for each expense matching alternative. 141.Describe the major differences that still exist between the income statement information presentation.
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120. The following data were taken from the Oxon Hill, Inc. balance sheet: Accounts payable $ 1,150 Inventory 1,250 Retained earnings 40 Accumulated depreciation 300 Cash 15,500 Serial bonds payable ($1,200 matures each year) 10,800 Prepaid insurance 1,200 Allowance for doubtful accounts 720 Capital stock 440 Property, plant, and equipment 1,000 Accounts receivable (gross) 3,110 Accrued salaries 1,310   Required:Compute working capital. 121. The following information has been provided for Zero One Corp.: Prepaid insurance $ 1,200 Accrued salaries 2,170 Petty cash 675 Investment in trading.
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Exhibit 5-1The following condensed income statement of Ranger Corporation is presented for the two years ended December 31, 2016 and 2015: ? 2016 2015 Net sales $10,000,000 $9,000,000 Cost of sales 6,000,000 6,000,000 Gross profit $ 4,000,000 $3,000,000 Operating expense 2,500,000 2,000,000 Operating income $ 1,500,000 $1,000,000 Gain on sale of a component    900,000 -- ? $ 2,400,000 $1,000,000 Income tax expense    720,000   300,000 Net income $ 1,680,000 $  700,000 ? On January 1, 2016,.
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11.The net price method of recording sales and receivables generally requires less record keeping and is more cost effective a.True b.False 12.The gross price method highlights sales discounts taken and the net price method highlights sales discounts NOT taken. a.True b.False 13.The estimated value of sales returns should reduce gross sales in the period items are.
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1.Together with the cash flow statement, the income statement enables the investors to determine the rate of return the company is generating relative to the amount of capital invested. a.True b.False 2.The information reported in the income statement can be used to predict a company’s future income and cash flows. a.True b.False 3.The amount of money.
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Exhibit 6-1 O’Martin& Lowry, Inc. accepted a $150,000, 8%, 90-day note receivable for services rendered to a client. Thirty days later, O’Martin& Lowry discounted the note at a bank at 10%. Assume interest has not been recognized for the first month. ? 100.Refer to Exhibit 6-1. The entry to record the proceeds from.
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135. A client of your accounting firm is impressed with the precision and detail in the financial statements that you have just prepared for his company. However, he wants to know if there are any limitations to the information contained in them. ? Required: ? Briefly describe four limitations of the balance sheet. 136. A friend of the.
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62.Which of the following methods is not an appropriate method for estimating bad debt expense for companies whose uncollectible accounts are material? a. percentage of net credit sales b. percentage of outstanding accounts receivable c. aging of accounts receivable d. direct write-off method 63.An advantage of basing bad debt expense on the historical relationship between bad debts and net.
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1.A compensating balance used to secure a short term loan should be recorded against its short term borrowing in current assets separate from cash. a.True b.False 2.A sinking fund established for the purpose of paying off long term bonds would be recorded on the balance sheet as a cash equivalent. a.True b.False 3.Cash equivalents include coin.
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116.Information from the accounts of Gause Company is shown below: Sales $9,000,000 Purchases 5,000,000 Operating expenses 1,100,000 Gain on sale of equipment 100,000 Gain on sale of component 1,000,000 Operating loss from disposed component 200,000 Merchandise inventory, 12/31/16 1,900,000 The merchandise inventory on January 1, 2016, was $3,200,000. There were 250,000 shares of common stock outstanding during the entire year. Required: Assuming a 30% income tax rate,.
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31.Given the following information: Petty cash fund $ 175 Postage stamps 58 Cash on hand 4,265 Traveler's checks 550 Checking balance, First National Bank 30,425 Checking balance, Third National Bank (825) ) The total amount of cash that should appear on the balance sheet is a.$34,648 b.$34,590 c.$34,040 d.$35,415 32.Compensating balance agreements are held against short-term borrowings should a.only be described in the footnotes to the financial statements. b.be separately reported.
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118.Below arethe Consolidated Statements of Earnings (in part) for Starlights, Inc. ? 2017 2016 2015 Net earnings attributable to Starlights $ 875 $ 725 $ 650 Earnings per share-basic (a) $ 1.09 (e) Earnings per share-diluted $ 1.25 (c) $ 1.04 Weighted average shares outstanding: Basic 678 (d) 654 Diluted (b) 693 (f) Cash dividends declared per share $ 0.25 $ - $ -   Required:Compute the amounts for letters a through f. .
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92.What journalentry format is appropriate if sales returns and allowances occur on factored accounts? a. Sales Returns and Allowances   XX Receivable from Factor             XX b. Receivable from Factor        XX Factoring Expense                 XX c. Sales Returns and Allowances  XX Factoring Expense                 XX d. ?Factoring Expense           XX Sales Returns and Allowances       XX ? 93.The Trey Co. sells $75,000 of accounts receivable to a factor and receives.
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21.For a non-interest-bearing note, the maturity value of the note includes both principal and interest. a.True b.False 22.In a well-controlled petty cash fund,the amount of cash minus the amount ofexpenditure vouchers should be equal to the original amount in the petty cash fund. a.True b.False 23.A bank reconciliation is an analysis of the difference between the.
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125. List the financial statements that report changes in the financial position of a company during a period. 126. What three characteristics must an economic resource have in order be considered an asset? 127. What is FASB’s definition of fair value? 128. ?List the three primary elements recognized on the balance sheet and provide the primary classifications.
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118. On January 1, 2015, Marlow Corporation had the following shareholders' equity account balances: Accumulated other comprehensive income $ 130,000 Additional paid-in capital on common stock 280,000 Common stock, $5 par (30,000 shares authorized) 150,000 Retained earnings 340,000 ? ? During 2015, the following events occurred in the order listed and were properly recorded: ? The company issued 3,000 shares of common stock at.
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129.Below are the income statement and balance sheet for Lily Company: ? Income Statement ? Sales (net) $1,275,000 Cost of Goods Sold (767,500) Gross Profit $  507,500 Operating expenses (265,000) Operating Income $  242,500 Interest revenue 5,600 Interest expense   (14,700) Income before taxes $  233,400 Income tax expense   (70,020) Net Income $  163,380 Number of shares of common stock 150,000 ? Balance Sheet ? Cash $ 123,500 Receivables (net) 96,000 Inventory 113,460 Property, plant, and equipment (net) 255,000 Total Assets $ 587,960 ? ? Accounts Payable $.
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11.A company does not have to disclose information about the sale of a discontinued component in the notes to its financial statements until the actual sale has occurred. a.True b.False 12.Any disposal of a large number of long-lived assets can appropriately be reported in the income statement as results from discontinued operations. a.True b.False 13.There is.
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82.Which of the following events would be classified as an operating activity in a statement of cash flows? a. receipt of a cash dividend from an equity investment b. sale of a long-term investment c. issuing notes payable d. payment of cash dividends 83.Which of the following events would be classified as an investing activity on a statement of.
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52.Intraperiod tax allocation a. is used to allocate a company's total income tax expense to the components of net income and comprehensive income. b. involves temporary (timing) differences between financial and taxable incomes. c. requires allocation of deferred taxes across accounting periods. d. results from differences between tax regulations and the principles followed to determine financial income. 53.Intraperiod tax.
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110. Hardy’s bookkeeper provided  the following balance sheet. ? ? HARDY COMPANYBalance Report for the year ended December 31, 2016 Current Assets: ? Current Liabilities: ? ? Cash $ 58,000 ? Accounts payable $ 25,000 ? ? Accounts receivable ? 123,500 ? Accumulated depreciation: buildings ? 20,000 ? ? Inventory, at higher of cost or market (cost $29,850) ? 35,800 ? Wages payable ?   22,200 ? ? Sinking fund for bond retirement ? ? 115,000 ? Additional paid-in capital on common stock ? ? 100,000 Long-Term Investments: ? Long-Term Liabilities: ? ? Treasury stock (at cost) 55,500 ? Bonds payable 100,000 ? ? Investments in bonds ? 100,000 ? Preferred stock, $50 par ? 150,000 ? ? Marketable.
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72.Comprehensive income includes the following changes in equity in a company during a period except a. transactions with nonowners. b. events relating to nonowner sources. c. circumstances relating to nonowner sources. d. distributions to owners. 73.Comprehensive income consists of a. operating income + other income and losses. b. net income + other adjustments to retained earnings. c. net income + other comprehensive income. d. other comprehensive income.
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112.After completing the bank reconciliation, whichof the following reconciling items would require an adjusting journal entry on the company's books? a. outstanding checks b. service charges c. deposits in transit d. cash on hand 113.Brad’s Market's accountant is preparing its May bank reconciliation and has collected the following data: Per Books Per Bank May 1 balance $11,600 $10,000 May deposits 24,600 21,200 May checks 27,800 29,000 Note collected (includes 10% interest) -- 4,400 May.
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92.Refer to Exhibit 5-2. Compute earnings-based interest coverage for Peace, Love, and Joy Company. a. 5.72 times b. 16.88 times c. 6.72 times d. 6.08 times 93.Which is the most commonly computed coverage ratio? a. debt ratio b. interest coverage ratio c. return on common equity d. net profit margin 94.An operating segment is a component of a company a. that engages in business activities to earn revenues and incur.
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122.On December 31, 2016, Melissa Company's adjusted trial balance contained the following account balances: Sales (net) $175,000 Operating expenses 18,000 Unrealized decrease in value of available-for-sale securities 10,000 Cost of goods sold 100,000 The income tax rate is 30%, and the company had 2,000 shares of common stock outstanding during the year.Required: a. Prepare the income statement for the year 2016.
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82.Which method for estimating uncollectible accounts receivable is considered to be income-statement oriented? a. aging of accounts receivable method b. percentage of net sales method c. Direct write-off method d. percentage of outstanding accounts receivablemethod 83.?Which method for estimating uncollectible accounts receivable is considered to be balance-sheet oriented? a. ?Aging of accounts receivable method b. ?Percentage of net sales method c. ?Direct write-off method d. ?Gross receivables.
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107.The income statement information for 2014 and 2015 of Kloe Company is as follows: 2014 2015 Beginning inventory $ 50,000 (d) _______ Sales 400,000 (e) _______ Purchases 300,000 $490,000 Purchases returns and allowances 5,000 20,000 Ending inventory 70,000 50,000 Sales returns and allowances 10,000 20,000 Gross profit (a) _______ 100,000 Cost of goods sold (b) _______ 500,000 Selling expenses 40,000 60,000 Transportation-in 8,000 10,000 General and administrative expenses 50,000 (f) _______ Net income (c) _______ 20,000   Required:Fill in the blanks for the missing data. All the necessary information is listed. .
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131.The SEC reported that overstating revenue and recognizing revenue too soon was the culprit in more than half of the financial reporting frauds in the United States. As such Staff Accounting Bulletin No. 104 provided additional guidance on revenue recognition. It emphasized four criteria for revenue recognition. What are these.
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128.Lockern Co. records estimated future sales returns and allowances. Total sales amount to $1,550,000, and, in the past, sales returns and allowances have been 2 1/2% of sales. Required:Prepare journal entries to: a. Record the estimated sales returns and allowances. b. Record the return of $1,000 of defective furniture. 129.Movie Set Up Company’s trial balance before.
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32.On December 31, 2015, the net assets of Martinez Manufacturing amounted to $40,000. Net income calculated by using the financial capital maintenance concept amounted to $12,000. During the year, additional common stock was issued for $8,000, and $5,000 of dividends was paid. The net assets at January 1, 2015, amounted.
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124.The following are accounting items taken from the records of Sterling Company for 2016: Payment of dividends $24,000 Decrease in accounts payable $19,000 Decrease in accounts receivable $21,000 Increase in inventories $ 6,000 Increase in salaries payable $18,000 Net income $42,000 Payment for purchase of land and buildings $60,000 Issuance of ten-year bonds payable at par $20,000 Depreciation expense $10,000 Proceeds from sale of patent rights $27,000   Required:Prepare the statement of.
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116. The following information has been provided by Meyers Company as of December 31, 20XX: Unearned rent $ 4,500 Retained earnings (unrestricted) 141,000 Common stock, $5 par 150,000 Premium on bonds payable 1,800 Bonds payable 28,000 Additional paid-in capital on common stock 55,000 Treasury stock, at cost 29,000 Retained earnings restricted for plant expansion 17,000 Sinking fund for bond retirement 31,250 ? Required:Prepare the shareholders' equity section of the balance sheet for.
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103.The following information relates to Peter Company (in thousands): Additional investment by Mr. Peter $ 15 Sales revenue 150 Net assets, beginning of year 1,100 Distribution to Mr. Peter 110 Cost of goods sold 125 Net assets, end of year 1,180   Required: Compute net income, using the capital maintenance approach. 104.Listed below are the three expense recognition principles followed by a series of expense items. a. association.
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51.Which of the following is an advantage of using the net price method for recording cash discounts on credit sales? a.It eases communication with customers about their balances. b.It conservativelyreflects current period sales revenue. c.It simplifies recording of sales returns and allowances. d.It requires less record keeping than the gross method. 52.When the net price.
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130. What is FASB’s Statement of Financial Accounting Concepts No. 6 definition of investments by owners and distributions to owners? 131. ABC Company entered into some relatively large transactions with family members of the chairman of the board of directors. List four types of disclosures required by GAAP about related party transactions. 132. List four.
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42.Which of the following are components of the income statement? a. revenues b. results from discontinued operations c. income from continuing operations d. all of these 43.Which of the following would appear after the heading of operating income? a. cost of goods sold b. other operating income items (gains or losses) c. operating expenses d. unusual and nonrecurring gains or losses 44.Which of the following is not a.
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72.Under the allowance method of recording bad debts, which of the following entries, if any, would be made to write off actual uncollectible accounts of $5,500? a. Allowance for Doubtful Accounts  5,500 Accounts Receivable                5,500 b. Bad Debt Expense             5,500 Allowance for Doubtful Accounts       5,500 c. Bad Debt Expense             5,500 Accounts Receivable                5,500 d. No entry is needed. 73.Based on the following.
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123. The following is from the financial reports of Sledge Company: Credit Sales $ 1,250,000 Average Accounts Receivable 250,000 Inventory Purchases 450,000 Costs of Goods Sold 550,000 Change in Inventory (145,000) Average Accounts Payable 123,500 Total Revenues 1,500,000 Average Net Fixed Assets 275,000 Average Total Assets 385,000   Required:Calculate the following to three decimal places: a.) Fixed Asset Turnover b.) Total Asset Turnover c.) Accounts Payable Turnover d.) Accounts Payable Turnover in Days e.) Accounts Receivable Turnover f.) Accounts Receivable Turnover in Days .
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125.The Boise Tractor Company hired a new auditor DeBruins& Co. Upon review of their accounting records DeBruins made some suggestions regarding the information classified in the single account titled Accounts Receivable. The auditors found the following: ? Accounts Receivable (trade) $ 78,875 Advances to Employees 2,475 Deposit to guarantee performance 19,000 Utility Deposit 750 Notes Receivable (trade) due in 2.
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