accounting samples

QUESTIONS:

Question 1

On December 31st, Pyramid company had the following preferred and common stock:

PYRAMID COMPANY	COMMON SHARES	PREFERRED SHARES
Authorized	625.000	125.000
Issued and Outstanding	100.000	50.000
Dividend per share per year	Not fixed	$4, cumulative (Convertible 1 preferred to 5 common shares)

Net Income of the year accounts for $3.906.000

1. Calculate Basic Earnings per Share (EPS)

2. Calculate Diluted Earnings per Share (DEPS)

Question 2

AXY company´s 2021 Statement of Cash Flows is as follows:

	Cash flows from OPERATING ACTIVITIES
	Net income										48.571
	Add:
	Depreciation expense										11.656
	Decrease in inventory										971
	Increase in accounts payable									1.944
	Subtotal											14.571
	Less:
	Increase in accounts receivable									1.943
	Decrease in accrued expenses payable								2.914
	Gain on sales of marketable securities								3.885
	Subtotal											8.742
	Net cash provided by operating activities								54.400
	Cash flows from INVESTING ACTIVITIES
	Proceeds from sales of marketable securities								850
	Cash paid to acquire plant assets (see more explanation below **)						-536	**
	Net cash provided by investing activities								314
	Cash flows from FINANCING ACTIVITIES
	Dividends paid										-2.500
	Payments to retire bonds payable									-2.679
	Net cash used for financing activities								-5.179
	NET INCREASE IN CASH									49.535
	Cash and equivalents January 1, 2021								72.800
	Cash and equivalents December 31, 2021								122.335

1. What was the company´s free cash flow in 2021?

2. What were the major sources of cash from financing activities during 2021? Did the net effect of financing activities result in an increase or a decrease in cash during the year?

3. What happened to the total amount of cash and cash equivalents during the year? Assuming 2021 was a typical year, is the firm in a position to continue its dividend payments in the future? Explain

It increases by 49.535

4. Look at the reconciliation of net income to net cash provided by operating and financing activities, and explain the following:

a. Net loss (gain) from the sale of marketable securities

b. Increase in accounts receivable

Question 3

Among the transactions of SUNNI Inc, were the following:

3.1 Purchase of goods

3.2 Paid the principal amount of a loan to Santander Bank

3.3. Paid interest charges relating to the previous note payable to EBN Bank

Question 4

NBC adjusts its accounts at the end of the month. On November 30, adjusting entries are prepared:

a. Depreciation expense for November

b. Salaries that need to be paid and that have been accrued since the last payday in the previous month

Indicate the effect of each of these adjusting entries on the major elements of the company´s income statement and balance sheet, assets, liabilities and owner´s equity. Organize your answer in tabular form, using the column headings and the effect. The answer for adjusting entry a is provided as an example.

Adjusting entry	Revenue	Expenses	Net Income	Asset´s	Liabilities	Owner´s equity
a
b
c
d
e
f