Intermediate Accounting_Quiz 5th Sept

l.

Intermediate Accounting I

Quiz L, Part2

This part of the exam is not timed. You must submit your answers in your Leo assignment folder by

Sunday, September 7 (midnight). Question #3 asks you to prepare an Income Statement. This must be in

good form, so you may want to create it in Excel and attach it as a PDF file. (You can submit all of your

answers as one uploaded document.) AN ATTACHMENT MUST FIRST BE SAVED AS A PDF OR I WILL NOT

OPEN IT AND YOU WILL NOT GET CREDIT FOR IT.

You may use your textbook to answer the questions. You may not use any other

written material. You may not discuss the questions or your answers with your

classmates or any other person,

Note: Part 1 of the exam is in WileyPlus. (Part 1 is a timed exam.)

Identify the basic assumption or broad accounting principle that was violated

in each of the following situations. Evplail y our ansu)cr.

1. Don Sherwood, a shareholder of the Brady Construction Corporation, has

not received a financial statement from the company for over two years.

2. The Diatonics Corporation reported equipment on its balance sheet at fair

market value.

3. Holyoke Corporation paid $20,000 for a three-year insurance policy and

recorded the entire expenditure as insurance expense.

4. The Acme Appliance Company is involved in a major lawsuit. The company

is being sued for $10 million dollars for alleged patent infringement. The

company believes the suit is without merit and has not disclosed its existence

in its financial statements.

5. The Ravel Company's balance sheet includes assets owned by the company

as well as assets of its principal shareholder, Jim Thomas.

6. The Marine Chemical Company recorded revenue for a $50,000 advance

payment received from a customer. The customer's order will be shipped

next month.

prepare the necessary adjusting entries at December 3 l, lnB , 

for the Jasper

Company for each of the following situations. Assume that no financial

statements were prepared during the year and no adjusting entries were

recorded.

1. A two-year fire insurance policy was purchased on August l, Jatl, for

$12,000. The cornpany debited prepaid insurance for the entire amount.

2. Depreciation on equipment totaled $20,000 for the year.

3. Employee salaries- oi $27,000 for the month of December will be paid in

early January, &ot{ .

4. On Octobei 1, nora, the company lent $50,000 to a customer. The

customer signed a note that requires principal and interest al 8oh to be paid

on September 30, aot,l.

5. In July, the company purchased supplies for $4,500. The entry was recorded

as a debit to supplies expense. Supplies on hand at the end of the year

totaled $2,200. No supplies had been previously purchased.

J,3 . Presented below is information rtffiffif to Ur 6ttav y Co ryo ratto n 

"

Retained earnings, December 31 , Jott.

Sales

Selling and administrative expenses

Hurricane loss (pre-tax) on plant (extraordinary item)

Cash dividends declared on common stock

Cost of goods sold

Gain resulting from

Other revenue

Other expenses

Instructlons

computation error on depreciation charge ln ton (pre-tax)

$ 650,000

1,400,000

240,000

250,000

33,600

820,000

520,000

60,000

50,000

prepare in good form a multiple-step income statement for the yrer,|arr, hrne a30oh tax rate

and that ooloog shares of common stock were outstanding durirq thi ynr.