Accouting entry and Multiple Choices RUSH IN A HOUR
doreens
Accouting.docx
1.Which of the following is not a key component of the conceptual framework of accounting?
Select one:
a. internal users
b. the objective of financial reporting
c. cost constraint on useful financial reporting
d. elements of the financial statements
2.The balance sheet and income statement for Joe's Fish Hut are presented below:
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Joe's Fish Hut Balance Sheet As at December 31 |
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2016 |
2015 |
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ASSETS |
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Current Assets |
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Cash |
$180,623 |
$60,300 |
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Accounts receivable |
$18,900 |
$14,200 |
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Inventory |
$23,600 |
$25,300 |
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Total Current Assets |
$223,123 |
$99,800 |
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Property, plant & equipment |
$129,000 |
$184,000 |
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Less: Accumulated depreciation |
$-26,900 |
$-21,600 |
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TOTAL ASSETS |
$325,223 |
$262,200 |
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LIABILITIES AND EQUITY |
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Liabilities |
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Current Liabilities |
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Accounts payable |
$28,000 |
$41,800 |
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Current portion of bank loan |
$9,500 |
$9,500 |
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Total Current Liabilities |
$37,500 |
$51,300 |
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Non-current portion of bank loan |
$71,000 |
$42,000 |
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TOTAL LIABILITIES |
$108,500 |
$93,300 |
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Shareholders' Equity |
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Common shares |
$80,000 |
$54,400 |
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Retained earnings |
$136,723 |
$114,500 |
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TOTAL SHAREHOLDERS' EQUITY |
$216,723 |
$168,900 |
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TOTAL LIABILITIES AND EQUITY |
$325,223 |
$262,200 |
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Joe's Fish Hut Income Statement For the Year Ended December 31, 2016 |
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Sales |
$137,000 |
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COGS |
$83,200 |
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Gross Profit |
$53,800 |
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Operating Expenses |
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Insurance Expense |
$1,600 |
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Rent Expense |
$5,380 |
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Salaries Expense |
$5,150 |
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Telephone Expense |
$840 |
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Interest Expense |
$1,340 |
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Depreciation Expense |
$5,300 |
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Total Operating Expenses |
$19,610 |
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Operating Profit Before Tax |
$34,190 |
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Income Tax Expense |
$11,967 |
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Net Profit (Loss) |
$22,223 |
Complete the following ratio analysis.
Do not enter dollar signs or commas in the input boxes. Round all answers to 2 decimal places. a) Calculate the return on equity for 2016. Return on Equity: Answer % b) Calculate the return on assets for 2016. Return on Assets: Answer % c) Calculate the asset turnover ratio for 2016. Asset turnover: Answer times d) Calculate the current ratio for 2016. Current Ratio: Answer e) Calculate the quick ratio for 2016. Quick Ratio: Answer f) Calculate the debt to equity ratio for 2016. Debt to Equity Ratio: Answer g) Calculate the days sales outstanding ratio for 2016. Assume all sales are credit sales. Days sales outstanding: Answer days h) Calculate the accounts receivable turnover for 2016. Assume all sales are credit sales Accounts Receivable turnover: Answer times
3. When investing, what is a debt instrument?
Select one:
a. lending cash to someone in order to receive interest income
b. buying shares of another organization
c. a strategic investment
d. an investment that is intended to be held for longer than one year
4. The date on which the directors announce a future dividend payment to shareholders is called the:
Select one:
a. date of record
b. dividend date
c. date of declaration
d. payment date
5. On February 1, 2016, Success Company accepted a six-month note receivable as an extention of time for a balance of $15,000 owing from Climbing Company. The note has an annual interest rate of 4%. Success Company has a June 30 year end.
Required a) Prepare the appropriate journal entry for Success Company when the note is signed.
Do not enter dollar signs or commas in the input boxes.
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Date |
Account Title and Explanation |
Debit |
Credit |
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Feb 1 |
AnswerAccounts PayableAccounts ReceivableAccumulated DepreciationAdvertising ExpenseAllowance for Doubtful AccountsBad Debt ExpenseCashInsurance ExpenseInterest ExpenseInterest PayableInterest ReceivableInterest RevenueNotes PayableNotes ReceivablePrepaid InsurancePrepaid RentPrepaid Services |
Answer |
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AnswerAccounts PayableAccounts ReceivableAccumulated DepreciationAdvertising ExpenseAllowance for Doubtful AccountsBad Debt ExpenseCashInsurance ExpenseInterest ExpenseInterest PayableInterest ReceivableInterest RevenueNotes PayableNotes ReceivablePrepaid InsurancePrepaid RentPrepaid Services |
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Answer |
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To convert accounts receivable to a note |
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b) Prepare the appropriate journal entry for the year-end adjustment.
Round your answers to 2 decimal places.
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Date |
Account Title and Explanation |
Debit |
Credit |
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Jun 30 |
AnswerAccounts PayableAccounts ReceivableAccumulated DepreciationAdvertising ExpenseAllowance for Doubtful AccountsBad Debt ExpenseCashInsurance ExpenseInterest ExpenseInterest PayableInterest ReceivableInterest RevenueNotes PayableNotes ReceivablePrepaid InsurancePrepaid RentPrepaid Services |
Answer |
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AnswerAccounts PayableAccounts ReceivableAccumulated DepreciationAdvertising ExpenseAllowance for Doubtful AccountsBad Debt ExpenseCashInsurance ExpenseInterest ExpenseInterest PayableInterest ReceivableInterest RevenueNotes PayableNotes ReceivablePrepaid InsurancePrepaid RentPrepaid Services |
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Answer |
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To accrue interest at year end |
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c) Climbing Company honoured the note. Prepare the appropriate journal entry upon payment.
Round your answers to 2 decimal places. Enter credit entries in alphabetical order.
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Date |
Account Title and Explanation |
Debit |
Credit |
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Aug 1 |
AnswerAccounts PayableAccounts ReceivableAccumulated DepreciationAdvertising ExpenseAllowance for Doubtful AccountsBad Debt ExpenseCashInsurance ExpenseInterest ExpenseInterest PayableInterest ReceivableInterest RevenueNotes PayableNotes ReceivablePrepaid InsurancePrepaid RentPrepaid Services |
Answer |
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AnswerAccounts PayableAccounts ReceivableAccumulated DepreciationAdvertising ExpenseAllowance for Doubtful AccountsBad Debt ExpenseCashInsurance ExpenseInterest ExpenseInterest PayableInterest ReceivableInterest RevenueNotes PayableNotes ReceivablePrepaid InsurancePrepaid RentPrepaid Services |
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Answer |
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AnswerAccounts PayableAccounts ReceivableAccumulated DepreciationAdvertising ExpenseAllowance for Doubtful AccountsBad Debt ExpenseCashInsurance ExpenseInterest ExpenseInterest PayableInterest ReceivableInterest RevenueNotes PayableNotes ReceivablePrepaid InsurancePrepaid RentPrepaid Services |
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Answer |
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AnswerAccounts PayableAccounts ReceivableAccumulated DepreciationAdvertising ExpenseAllowance for Doubtful AccountsBad Debt ExpenseCashInsurance ExpenseInterest ExpenseInterest PayableInterest ReceivableInterest RevenueNotes PayableNotes ReceivablePrepaid InsurancePrepaid RentPrepaid Services |
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Answer |
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To receive note at maturity |
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6. On April 30, 2016, a company issued $630,000 worth of 7% bonds at par. The term of the bonds is 8 years, with interest payable semi-annually on October 31 and April 30. The year-end of the company is November 30. Record the journal entries related to interest for 2016 and 2017. Note that interest must be accrued at the end of each year.
Do not enter dollar signs or commas in the input boxes. Round your answers to the nearest whole dollar. For transactions with more than one debit, enter the debit accounts in alphabetical order.
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Date |
Account Title and Explanation |
Debit |
Credit |
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Oct 31, 2016 |
AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseBonds PayableCashCommon SharesCost of Goods SoldDiscount on BondsInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryPremium on BondsPrepaid RentRent ExpenseSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities Expense |
Answer |
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AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseBonds PayableCashCommon SharesCost of Goods SoldDiscount on BondsInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryPremium on BondsPrepaid RentRent ExpenseSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities Expense |
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Answer |
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Payment of bond interest |
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Nov 30, 2016 |
AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseBonds PayableCashCommon SharesCost of Goods SoldDiscount on BondsInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryPremium on BondsPrepaid RentRent ExpenseSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities Expense |
Answer |
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AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseBonds PayableCashCommon SharesCost of Goods SoldDiscount on BondsInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryPremium on BondsPrepaid RentRent ExpenseSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities Expense |
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Answer |
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Accrued interest on bonds at year-end |
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Apr 30, 2017 |
AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseBonds PayableCashCommon SharesCost of Goods SoldDiscount on BondsInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryPremium on BondsPrepaid RentRent ExpenseSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities Expense |
Answer |
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AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseBonds PayableCashCommon SharesCost of Goods SoldDiscount on BondsInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryPremium on BondsPrepaid RentRent ExpenseSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities Expense |
Answer |
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AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseBonds PayableCashCommon SharesCost of Goods SoldDiscount on BondsInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryPremium on BondsPrepaid RentRent ExpenseSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities Expense |
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Answer |
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Payment of bond interest |
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Oct 31, 2017 |
AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseBonds PayableCashCommon SharesCost of Goods SoldDiscount on BondsInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryPremium on BondsPrepaid RentRent ExpenseSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities Expense |
Answer |
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AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseBonds PayableCashCommon SharesCost of Goods SoldDiscount on BondsInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryPremium on BondsPrepaid RentRent ExpenseSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities Expense |
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Answer |
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Payment of bond interest |
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Nov 30, 2017 |
AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseBonds PayableCashCommon SharesCost of Goods SoldDiscount on BondsInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryPremium on BondsPrepaid RentRent ExpenseSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities Expense |
Answer |
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AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseBonds PayableCashCommon SharesCost of Goods SoldDiscount on BondsInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryPremium on BondsPrepaid RentRent ExpenseSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities Expense |
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Answer |
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Accrued interest on bonds at year-end |
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7. A $100,000 bond bears an interest rate of 6%. The bond was issued at a price of $95,000. The actual amount of interest that the bondholder would receive each year is:
Select one:
a. $5,700
b. $6,000
c. $100,000
d. $7,000
8. Liabilities are listed in order of:
Select one:
a. descending dollar balance
b. liquidity
c. due date
d. ascending dollar balance
9. What is the balance sheet called under IFRS guidelines?
Select one:
a. Statement of Account Balances
b. Statement of Cash Flows
c. Statement of Balance
d. Statement of Financial Position
10. Mirabella Manufacturing spent several years developing a process for producing widgets. Its lawyer suggested patenting the process. Accordingly, the company proceeded to obtain the patent on January 1, 2016. The company paid $250,000 to the lawyer plus $25,000 to the government for the patent. In addition, other fees were incurred relating to the patent worth $5,000.
Required
a) Prepare the journal entry to record the full cost of the patent.
Do not enter dollar signs or commas in the input boxes.
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Date |
Account Title and Explanation |
Debit |
Credit |
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Jan 1 |
AnswerAccounts PayableAccounts ReceivableAccumulated AmortizationAllowance for Doubtful AccountsAmortization ExpenseBad Debt ExpenseBuildingCashEquipmentGain on Disposal of AssetInventoryLandLoss on Disposal of AssetMachine (New)Machine (Old)Notes PayableNotes ReceivablePatentsTruck |
Answer |
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AnswerAccounts PayableAccounts ReceivableAccumulated AmortizationAllowance for Doubtful AccountsAmortization ExpenseBad Debt ExpenseBuildingCashEquipmentGain on Disposal of AssetInventoryLandLoss on Disposal of AssetMachine (New)Machine (Old)Notes PayableNotes ReceivablePatentsTruck |
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Answer |
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Record the total relevant patent fees |
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b) The patent has an estimated life of 20 years. Prepare the journal entry to record amortization for one year on December 31, 2016. Assume the straight-line method of depreciation is used.
Round your answers to the nearest whole number.
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Date |
Account Title and Explanation |
Debit |
Credit |
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Dec 31 |
AnswerAccounts PayableAccounts ReceivableAccumulated AmortizationAllowance for Doubtful AccountsAmortization ExpenseBad Debt ExpenseBuildingCashEquipmentGain on Disposal of AssetInventoryLandLoss on Disposal of AssetMachine (New)Machine (Old)Notes PayableNotes ReceivablePatentsTruck |
Answer |
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AnswerAccounts PayableAccounts ReceivableAccumulated AmortizationAllowance for Doubtful AccountsAmortization ExpenseBad Debt ExpenseBuildingCashEquipmentGain on Disposal of AssetInventoryLandLoss on Disposal of AssetMachine (New)Machine (Old)Notes PayableNotes ReceivablePatentsTruck |
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Answer |
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Record amortization for the year |
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11. Perform a horizontal analysis for Groff Inc. Use 2013 as the base year.
Do not enter dollar signs or commas in the input boxes. Round your answers to 2 decimal places.
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Groff Inc. In Millions of Dollars |
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2016 |
2015 |
2014 |
2013 |
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Revenue |
$500 |
$326 |
$287 |
$197 |
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Revenue Ratio |
Answer% |
Answer% |
Answer% |
Answer% |
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Net Income |
$231 |
$223 |
$178 |
$99 |
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Net Income Ratio |
Answer% |
Answer% |
Answer% |
Answer% |
12. Bard Enterprises offered a customer a note for extended payment on November 1, 2016. The $8,000 note was for 6 months at 5%. Bard Enterprises has a December 31 year end and must accrue interest on that date. How much interest has accrued on the note receivable on December 31, 2016?
Select one:
a. $200
b. $100
c. $67
d. $400
13. Under IFRS, which statement reconciles the opening balance of various equity accounts with the closing balance of these accounts?
Select one:
a. Statement of Changes in Equity
b. Cash Flow Statement
c. Statement of Owner's Equity
d. Balance Sheet
14. A customer that owes your company $6,000 for goods purchased has gone bankrupt. What journal entry should your company make to write-off this receivable?
Select one:
a. Debit Allowance for Doubtful Accounts $6,000, credit Accounts Receivable $6,000
b. Debit Accounts Receivable $6,000, credit Allowance for Doubtful Accounts $6,000
c. Debit Allowance for Doubtful Accounts $6,000, credit Cash $6,000
d. Debit Cash $6,000, credit Accounts Receivable $6,000
15. A natural resource has a total cost of $1,200,000 and a residual value of $200,000. It is expected to produce 5,000,000 units. The depletion per unit is:
Select one:
a. 24 cents per unit
b. $2 per unit
c. 4 cents per unit
d. 20 cents per unit
16. Last year, accounts payable was $49,000. This year accounts payable is $9,000. Which of the following statements about the statement of cash flow is correct?
Select one:
a. Cash has increased by $9,000 from financing activities
b. Cash has decreased by $40,000 from operating activities
c. Cash has decreased by $40,000 from financing activities
d. Cash has increased by $40,000 from operating activities
17. A natural resource has a total cost of $1,000,000 and a residual value of $200,000. It is expected to produce 5,000,000 units. The depletion per unit is:
Select one:
a. 4 cents per unit
b. 20 cents per unit
c. 24 cents per unit
d. 16 cents per unit
18 . Chan-Nee Enterprises sells heavy-duty lawnmower equipment. On May 16, 2017, they sold a lawnmower (on account) for $41,000 which included a 4-year unlimited warranty. The corporation's accountant estimates that $3,700 will be paid out in warranty obligations. The cost of goods sold is $20,090. Assume Chan-Nee uses a perpetual inventory system. Prepare the journal entries relating to these transactions in the following order: the sales transaction, the cost of goods sold transaction, and then the warranty transaction.
Do not enter dollar signs or commas in the input boxes.
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Date |
Account Title and Explanation |
Debit |
Credit |
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May 16 |
Accounts PayableAccounts ReceivableAdvertising ExpenseCashCommon SharesCost of Goods SoldEstimated Warranty LiabilityInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryLoan PayableNotes PayablePrepaid RentRent ExpenseSalaries ExpenseSales RevenueShareholders' LoanSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities ExpenseWarranty Expense |
Answer |
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AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseCashCommon SharesCost of Goods SoldEstimated Warranty LiabilityInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryLoan PayableNotes PayablePrepaid RentRent ExpenseSalaries ExpenseSales RevenueShareholders' LoanSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities ExpenseWarranty Expense |
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Answer |
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To record the sale of the lawnmower |
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May 16 |
AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseCashCommon SharesCost of Goods SoldEstimated Warranty LiabilityInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryLoan PayableNotes PayablePrepaid RentRent ExpenseSalaries ExpenseSales RevenueShareholders' LoanSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities ExpenseWarranty Expense |
Answer |
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AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseCashCommon SharesCost of Goods SoldEstimated Warranty LiabilityInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryLoan PayableNotes PayablePrepaid RentRent ExpenseSalaries ExpenseSales RevenueShareholders' LoanSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities ExpenseWarranty Expense |
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Answer |
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To record the sale of inventory |
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May 16 |
AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseCashCommon SharesCost of Goods SoldEstimated Warranty LiabilityInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryLoan PayableNotes PayablePrepaid RentRent ExpenseSalaries ExpenseSales RevenueShareholders' LoanSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities ExpenseWarranty Expense |
Answer |
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AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseCashCommon SharesCost of Goods SoldEstimated Warranty LiabilityInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryLoan PayableNotes PayablePrepaid RentRent ExpenseSalaries ExpenseSales RevenueShareholders' LoanSupplies ExpenseTelephone ExpenseTravel ExpenseUnearned RevenueUtilities ExpenseWarranty Expense |
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Answer |
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To accrue for estimated warranty costs |
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19. Sugar Company purchased 25% of Benjamin Company’s 400,000 common shares outstanding, on March 1, 2016. Sugar Company paid $6.00 per share. Sugar Company is considered to have significant influence over Benjamin Company and applies the cost method for recording this investment. Sugar Company’s year-end is on December 31. The company follows ASPE.
a) Prepare journal entry for the acquisition of Benjamin Company’s common shares by Sugar Company. b) Prepare journal entry for the $23,000 dividends received from Benjamin Company on December 31, 2016. c) On January 1, 2017, Sugar Company sold 10% of Benjamin Company’s outstanding common shares for $7.00 per share. Prepare the journal entry for this transaction. Do not enter dollar signs or commas in the input boxes. For transactions with more than one debit or more than one credit, enter the accounts in alphabetical order. Round all answers to the nearest whole number.
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Date |
Account Title and Explanation |
Debit |
Credit |
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Mar 1 |
AnswerAccounts PayableAccounts ReceivableCashCost of Goods SoldDividend RevenueGain on Fair Value AdjustmentGain on Sale of InvestmentInterest ReceivableInterest RevenueInventoryInvestment in AssociateLong-Term InvestmentLoss on Fair Value AdjustmentLoss on Sale of InvestmentOCI - Gain on Fair Value AdjustmentOCI - Loss on Fair Value AdjustmentPrepaid RentRent ExpenseRevenue from Investments in AssociateSales RevenueShort-Term Investment |
Answer |
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AnswerAccounts PayableAccounts ReceivableCashCost of Goods SoldDividend RevenueGain on Fair Value AdjustmentGain on Sale of InvestmentInterest ReceivableInterest RevenueInventoryInvestment in AssociateLong-Term InvestmentLoss on Fair Value AdjustmentLoss on Sale of InvestmentOCI - Gain on Fair Value AdjustmentOCI - Loss on Fair Value AdjustmentPrepaid RentRent ExpenseRevenue from Investments in AssociateSales RevenueShort-Term Investment |
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Answer |
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To record acquisition of common shares |
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Dec 31 |
AnswerAccounts PayableAccounts ReceivableCashCost of Goods SoldDividend RevenueGain on Fair Value AdjustmentGain on Sale of InvestmentInterest ReceivableInterest RevenueInventoryInvestment in AssociateLong-Term InvestmentLoss on Fair Value AdjustmentLoss on Sale of InvestmentOCI - Gain on Fair Value AdjustmentOCI - Loss on Fair Value AdjustmentPrepaid RentRent ExpenseRevenue from Investments in AssociateSales RevenueShort-Term Investment |
Answer |
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AnswerAccounts PayableAccounts ReceivableCashCost of Goods SoldDividend RevenueGain on Fair Value AdjustmentGain on Sale of InvestmentInterest ReceivableInterest RevenueInventoryInvestment in AssociateLong-Term InvestmentLoss on Fair Value AdjustmentLoss on Sale of InvestmentOCI - Gain on Fair Value AdjustmentOCI - Loss on Fair Value AdjustmentPrepaid RentRent ExpenseRevenue from Investments in AssociateSales RevenueShort-Term Investment |
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Answer |
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To record dividends received |
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Jan 1 |
AnswerAccounts PayableAccounts ReceivableCashCost of Goods SoldDividend RevenueGain on Fair Value AdjustmentGain on Sale of InvestmentInterest ReceivableInterest RevenueInventoryInvestment in AssociateLong-Term InvestmentLoss on Fair Value AdjustmentLoss on Sale of InvestmentOCI - Gain on Fair Value AdjustmentOCI - Loss on Fair Value AdjustmentPrepaid RentRent ExpenseRevenue from Investments in AssociateSales RevenueShort-Term Investment |
Answer |
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AnswerAccounts PayableAccounts ReceivableCashCost of Goods SoldDividend RevenueGain on Fair Value AdjustmentGain on Sale of InvestmentInterest ReceivableInterest RevenueInventoryInvestment in AssociateLong-Term InvestmentLoss on Fair Value AdjustmentLoss on Sale of InvestmentOCI - Gain on Fair Value AdjustmentOCI - Loss on Fair Value AdjustmentPrepaid RentRent ExpenseRevenue from Investments in AssociateSales RevenueShort-Term Investment |
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Answer |
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AnswerAccounts PayableAccounts ReceivableCashCost of Goods SoldDividend RevenueGain on Fair Value AdjustmentGain on Sale of InvestmentInterest ReceivableInterest RevenueInventoryInvestment in AssociateLong-Term InvestmentLoss on Fair Value AdjustmentLoss on Sale of InvestmentOCI - Gain on Fair Value AdjustmentOCI - Loss on Fair Value AdjustmentPrepaid RentRent ExpenseRevenue from Investments in AssociateSales RevenueShort-Term Investment |
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Answer |
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To record sale of common shares |
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20. Determinable liabilities:
Select one:
a. are the first sign of trouble
b. are negotiable
c. are estimated
d. have a precise value
21 Which of the following is included in the equity section of a partnership?
Select one:
a. Share Capital
b. Partner Retained Earnings
c. Partner Capital Account
d. Owners' Equity
22. The balance sheet and income statement for Joe's Fish Hut are presented below:
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Joe's Fish Hut Balance Sheet As at October 31 |
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2016 |
2015 |
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ASSETS |
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Current Assets |
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|
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Cash |
$137,192 |
$66,600 |
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Accounts receivable |
$20,900 |
$13,900 |
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Inventory |
$22,000 |
$28,500 |
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Total Current Assets |
$180,092 |
$109,000 |
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Equipment(1) |
$150,000 |
$176,000 |
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Less: Accumulated depreciation |
$-25,100 |
$-22,900 |
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TOTAL ASSETS |
$304,992 |
$262,100 |
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LIABILITIES AND EQUITY |
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Liabilities |
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Current Liabilities |
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Accounts payable |
$28,200 |
$39,600 |
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Current portion of bank loan |
$9,500 |
$9,500 |
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Total Current Liabilities |
$37,700 |
$49,100 |
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Non-current portion of bank loan |
$76,000 |
$45,000 |
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TOTAL LIABILITIES |
$113,700 |
$94,100 |
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Shareholders' Equity |
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Common shares |
$70,000 |
$52,100 |
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Retained earnings(2) |
$121,292 |
$115,900 |
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TOTAL SHAREHOLDERS' EQUITY |
$191,292 |
$168,000 |
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TOTAL LIABILITIES AND EQUITY |
$304,992 |
$262,100 |
Additional Information: 1. Equipment During 2016, equipment was sold for a gain of $6,700. The cash proceeds from the sale totaled $32,700. 2. Retained Earnings Joe's Fish Hut declared and paid $10,000 in dividends in 2016.
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Joe's Fish Hut Income Statement For the Year Ended October 31, 2016 |
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Sales |
$137,000 |
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COGS |
$89,050 |
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Gross Profit |
$47,950 |
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Operating Expenses |
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Depreciation Expense |
$2,200 |
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Other operating expenses |
$28,770 |
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Total Operating Expenses |
$30,970 |
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Operating Income |
$16,980 |
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Other Income |
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Gain on Sale of Equipment |
$6,700 |
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Net Income Before Tax |
$23,680 |
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Income Tax |
$8,288 |
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Net Income |
$15,392 |
Create the cash flow statement using the indirect method.
Do not enter dollar signs or commas in the input boxes. Use the negative sign for a decrease in cash.
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Joe's Fish Hut Cash Flow Statement For the Year Ended October 31, 2016 |
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Cash Flow from Operations |
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Net Income |
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Add: Depreciation |
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Less: Gain on sale of equipment |
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Change in Current Assets and Current Liabilities |
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Change in Accounts Receivable |
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Change in inventory |
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Change in Accounts Payable |
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Change in Cash Due to Operations |
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Cash Flow from Investing |
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Sale of equipment |
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Change in Cash Due to Investing |
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Cash Flow from Financing |
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Sale of common shares |
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Receipt of bank loan |
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Payment of cash dividend |
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Change in Cash Due to Financing |
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Net increase (decrease) in cash |
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Cash at the beginning of the year |
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Cash at the end of the year |
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23 Cost of goods sold, office supplies expense and depreciation expense impact:
Select one:
a. profitability ratios
b. balance sheet ratios
c. debt-to-equity ratios
d. liquidity ratios
24 Controls related to non-current liabilities should ensure that:
Select one:
a. joint ventures, research and development partnerships and operating leases are kept off the books
b. pension fund assets and liabilities are reported in footnote form only
c. all future payments for interest and principal and made on time
d. off-balance sheet financing is not disclosed in the financial statements
25 Henge Inc. is planning to purchase $296,000 worth of 6-year bonds issued by William Company, a publically traded company in Ontario, on January 1, 2016 for $281,268. The interest rate of the bonds is 5% annually; payments are made semi-annually on June 30 and December 31 every year. The interest rate paid by similar bonds is at 6% per year in the market. Henge Inc. has a December 31 year-end.
Required Prepare journal entries for the bonds’ acquisition, the first and last interest payments and retirement of the bonds on January 1, 2022. Do not enter dollar signs or commas in the input boxes. For transactions that have 2 debits or 2 credits, enter the accounts in alphabetical order. Round all answers to the nearest whole number.
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Account Title and Explanation |
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Credit |
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Jan 1, 2016 |
AnswerAccounts PayableAccounts ReceivableCashCost of Goods SoldDividend RevenueGain on Fair Value AdjustmentGain on Sale of InvestmentInterest ReceivableInterest RevenueInventoryInvestment in AssociateLong-Term InvestmentLoss on Fair Value AdjustmentLoss on Sale of InvestmentOCI - Gain on Fair Value AdjustmentOCI - Loss on Fair Value AdjustmentPrepaid RentRent ExpenseRevenue from Investments in AssociateSales RevenueShort-Term Investment |
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AnswerAccounts PayableAccounts ReceivableCashCost of Goods SoldDividend RevenueGain on Fair Value AdjustmentGain on Sale of InvestmentInterest ReceivableInterest RevenueInventoryInvestment in AssociateLong-Term InvestmentLoss on Fair Value AdjustmentLoss on Sale of InvestmentOCI - Gain on Fair Value AdjustmentOCI - Loss on Fair Value AdjustmentPrepaid RentRent ExpenseRevenue from Investments in AssociateSales RevenueShort-Term Investment |
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To record purchase of bonds at discount |
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Jun 30, 2016 |
AnswerAccounts PayableAccounts ReceivableCashCost of Goods SoldDividend RevenueGain on Fair Value AdjustmentGain on Sale of InvestmentInterest ReceivableInterest RevenueInventoryInvestment in AssociateLong-Term InvestmentLoss on Fair Value AdjustmentLoss on Sale of InvestmentOCI - Gain on Fair Value AdjustmentOCI - Loss on Fair Value AdjustmentPrepaid RentRent ExpenseRevenue from Investments in AssociateSales RevenueShort-Term Investment |
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AnswerAccounts PayableAccounts ReceivableCashCost of Goods SoldDividend RevenueGain on Fair Value AdjustmentGain on Sale of InvestmentInterest ReceivableInterest RevenueInventoryInvestment in AssociateLong-Term InvestmentLoss on Fair Value AdjustmentLoss on Sale of InvestmentOCI - Gain on Fair Value AdjustmentOCI - Loss on Fair Value AdjustmentPrepaid RentRent ExpenseRevenue from Investments in AssociateSales RevenueShort-Term Investment |
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AnswerAccounts PayableAccounts ReceivableCashCost of Goods SoldDividend RevenueGain on Fair Value AdjustmentGain on Sale of InvestmentInterest ReceivableInterest RevenueInventoryInvestment in AssociateLong-Term InvestmentLoss on Fair Value AdjustmentLoss on Sale of InvestmentOCI - Gain on Fair Value AdjustmentOCI - Loss on Fair Value AdjustmentPrepaid RentRent ExpenseRevenue from Investments in AssociateSales RevenueShort-Term Investment |
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To record cash received and amortized discount |
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Dec 31, 2021 |
AnswerAccounts PayableAccounts ReceivableCashCost of Goods SoldDividend RevenueGain on Fair Value AdjustmentGain on Sale of InvestmentInterest ReceivableInterest RevenueInventoryInvestment in AssociateLong-Term InvestmentLoss on Fair Value AdjustmentLoss on Sale of InvestmentOCI - Gain on Fair Value AdjustmentOCI - Loss on Fair Value AdjustmentPrepaid RentRent ExpenseRevenue from Investments in AssociateSales RevenueShort-Term Investment |
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AnswerAccounts PayableAccounts ReceivableCashCost of Goods SoldDividend RevenueGain on Fair Value AdjustmentGain on Sale of InvestmentInterest ReceivableInterest RevenueInventoryInvestment in AssociateLong-Term InvestmentLoss on Fair Value AdjustmentLoss on Sale of InvestmentOCI - Gain on Fair Value AdjustmentOCI - Loss on Fair Value AdjustmentPrepaid RentRent ExpenseRevenue from Investments in AssociateSales RevenueShort-Term Investment |
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AnswerAccounts PayableAccounts ReceivableCashCost of Goods SoldDividend RevenueGain on Fair Value AdjustmentGain on Sale of InvestmentInterest ReceivableInterest RevenueInventoryInvestment in AssociateLong-Term InvestmentLoss on Fair Value AdjustmentLoss on Sale of InvestmentOCI - Gain on Fair Value AdjustmentOCI - Loss on Fair Value AdjustmentPrepaid RentRent ExpenseRevenue from Investments in AssociateSales RevenueShort-Term Investment |
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To record cash received and amortized discount |
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Jan 1, 2022 |
AnswerAccounts PayableAccounts ReceivableCashCost of Goods SoldDividend RevenueGain on Fair Value AdjustmentGain on Sale of InvestmentInterest ReceivableInterest RevenueInventoryInvestment in AssociateLong-Term InvestmentLoss on Fair Value AdjustmentLoss on Sale of InvestmentOCI - Gain on Fair Value AdjustmentOCI - Loss on Fair Value AdjustmentPrepaid RentRent ExpenseRevenue from Investments in AssociateSales RevenueShort-Term Investment |
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AnswerAccounts PayableAccounts ReceivableCashCost of Goods SoldDividend RevenueGain on Fair Value AdjustmentGain on Sale of InvestmentInterest ReceivableInterest RevenueInventoryInvestment in AssociateLong-Term InvestmentLoss on Fair Value AdjustmentLoss on Sale of InvestmentOCI - Gain on Fair Value AdjustmentOCI - Loss on Fair Value AdjustmentPrepaid RentRent ExpenseRevenue from Investments in AssociateSales RevenueShort-Term Investment |
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To record receipt of cash at maturity |
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26. Which of the following is an example of a typical method of dividing earnings in a partnership?
Select one:
a. According to the drawings made by each partner
b. According to the capital contribution of each partner
c. First come first serve
d. Randomly
27. The bookkeeper of ABC Gym receives advanced membership payments from customers and records it as revenue. Which of the following principles did the bookkeeper violate?
Select one:
a. The consistency principle
b. The measurement principle
c. The disclosure principle
d. The revenue recognition principle
28. On September 1, 2017, Krazy Kitty Inc. declared $195,000 of dividends payable to shareholders on October 3, 2017. There are 20,300 common shares worth $649,600 and 12,800, $0.50 cumulative preferred shares worth $665,600. No new shares were issued during the year and dividends were last declared in 2013. The company had retained earnings of $2,827,000 at the beginning of the accounting period and earned a net income of $795,000 during the year. Write the journal entry to record the declaration and subsequent payout of the dividends. The company uses the cash dividends method to record dividends.
Do not enter dollar signs or commas in the input boxes. For transactions that have 2 debits or credits, enter the accounts in alphabetical order.
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Account Title and Explanation |
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Credit |
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Sep 1 |
AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseBuildingCashCash Dividends - CommonCash Dividends - PreferredCommon Share Dividends DistributableCommon SharesCost of Goods SoldDividends PayableIncome SummaryInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryLandLegal ExpensePrepaid RentRent ExpenseRetained EarningsSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUtilities Expense |
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AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseBuildingCashCash Dividends - CommonCash Dividends - PreferredCommon Share Dividends DistributableCommon SharesCost of Goods SoldDividends PayableIncome SummaryInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryLandLegal ExpensePrepaid RentRent ExpenseRetained EarningsSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUtilities Expense |
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AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseBuildingCashCash Dividends - CommonCash Dividends - PreferredCommon Share Dividends DistributableCommon SharesCost of Goods SoldDividends PayableIncome SummaryInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryLandLegal ExpensePrepaid RentRent ExpenseRetained EarningsSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUtilities Expense |
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Record dividend payable |
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Oct 3 |
AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseBuildingCashCash Dividends - CommonCash Dividends - PreferredCommon Share Dividends DistributableCommon SharesCost of Goods SoldDividends PayableIncome SummaryInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryLandLegal ExpensePrepaid RentRent ExpenseRetained EarningsSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUtilities Expense |
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AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseBuildingCashCash Dividends - CommonCash Dividends - PreferredCommon Share Dividends DistributableCommon SharesCost of Goods SoldDividends PayableIncome SummaryInterest ExpenseInterest PayableInterest ReceivableInterest RevenueInventoryLandLegal ExpensePrepaid RentRent ExpenseRetained EarningsSalaries ExpenseSales RevenueSupplies ExpenseTelephone ExpenseTravel ExpenseUtilities Expense |
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Record payment of dividend declared on Sep 1 |
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