accounting questions
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the accounting cycle or one year, whichever is shorter. the operating cycle or one year, whichever is longer. the accounting cycle or one year, whichever is longer. the operating cycle or one year, whichever is shorter. |
Question 2.
2. (TCO A) Why are some of the major differences between iGAAP and U.S. GAAP? Explain in detail.
(Points : 25)
The significance difference between I GAAP and U.S GAAP is on the valuation of assets, inventories and many other areas. For example i GAAP list the long term assets first but the US GAAP list the current asset first and long term assets later one. The balance sheet format is also difference as per the U.S GAAP it list the current assets first whereas the I GAAP list the long term asset first. The other significance difference is US GAAP is rule based and I GAAP is most broadly based on the principle. Moreover IASB is focus on providing the information for management performance which is referred to stewardship
Question 3.
3. (TCO C) Perry Corp. reports operating expenses in two categories: (1) selling and (2) general and administrative. The adjusted trial balance at December 31, 2010, included the following expense accounts.
Accounting and legal fees | $140,000 |
Advertising | $120,000 |
Freight-out | $75,000 |
Interest | $60,000 |
Loss on sale of long-term investments | $30,000 |
Officers' salaries | $180,000 |
Rent for office space | $180,000 |
Sales salaries and commissions | $110,000 |
One half of the rented premises are occupied by the sales department.
How much of the expenses listed above should be included in Perry's selling expenses for 2010? (Points : 15)
Perry's selling expenses
Advertising expenses= $120,000
Sale department expen 90,000
Sales salaries comission 110,000
Total selling cost $320,000
Question 4.
4. (TCO C) For the year ended December 31, 2010, Transformers Inc. reported the following.
Net income $60,000
Preferred dividends declared $10,000
Common dividend declared $2,000
Unrealized holding loss, net of tax $1,000
Retained earnings, beginning balance $80,000
Common stock sold during the year Retained earnings, beginning balance $80,000
Common stock $40,000
Accumulated Other Comprehensive Income, Beginning Balance $5,000
What would Transformers report as the ending balance of retained earnings? (Points : 20)
Retained earning begining balance=$80,000
Add Net income = 60,000
Deduct Preferred dividends = 10,000
Deduct common deividend =2,000
Retained earning ending balance= $128,000
5. (TCO C) For the year ended December 31, 2010, Transformers Inc. reported the following.
Net income | $60,000 |
Preferred dividends declared,
| $10,000 |
Common dividend declared,
| $2,000 |
Unrealized holding loss, net of tax; – Available-For-Sale-Securities
| $1,000 |
Retained earnings
| $80,000 |
Common stock,
| $40,000 |
Accumulated Other Comprehensive Income, Beginning Balance
| 5,000 |
What would Transformers report as its ending balance of accumulated other comprehensive income? (Points : 20)
Question 6.
6. (TCO B) Prepaid rent at 1/1/10 was $30,000. During 2010, rent payments of $120,000 were made and charged to "rent expense." The 2010 income statement shows as a general expense the item "rent expense" in the amount of $125,000. You are to prepare the missing adjusting entry that must have been made, assuming reversing entries are not made. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment (Points : 10)
Rent expenses= $125,000
Less cash paid = 120,000
Decrease in payment=5,000
Rent expenses Dr. $5,000
Cash Cr. $5,000
Question 7.
7. (TCO B) Retained earnings at 1/1/10 was $170,000 and at 12/31/10 it was $200,000. During 2010, cash dividends of $50,000 were paid and a stock dividend of $40,000 was issued. Both dividends were properly charged to retained earnings. You are to provide the missing closing entry. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment. (Points : 10)
Income Summary Dr. $120,000
Retained earning Cr. $120,000
Retained earning ending balance =$200,000
Retained earning beginining balance=170,00
Difference =30,000
Cash dividend =50,000
Stock dividend =40,000
Total adjustment = 120,000
Question 8.
8. (TCO B) Retained earnings at 1/1/10 was $150,000 and at 12/31/10 it was $200,000. During 2010, cash dividends of $50,000 were paid and a stock dividend of $40,000 was issued. Both dividends were properly charged to retained earnings. You are to provide the missing closing entry. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment. (Points : 10)
Income Summary Dr. $140,000
Retained earning Cr. $140,000
Retained earning ending balance $200,000
Retained earning beginining balance 150,000
Differences =50,000
Cash dividends =50,000
Stock dividends =40,ooo
Adjustment 140,000
Question 9.
9. (TCO B) Allowance for doubtful accounts on 1/1/10 was $60,000. The balance in the allowance account on 12/31/10 after making the annual adjusting entry was $55,000, and during 2010, bad debts written off amounted to $40,000. You are to provide the missing adjusting entry. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment. (Points : 10)
Bad debt expenses Dr. $35,000
Allowance for doubtful account Cr. $35,000
Ending balanc of allowace for doutful account =$55,000
Begining balance of allowance for doubtful account =$60,000
Difference =(5,000)
Written off =40,000
Adjustment=35,000
12 years ago
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