Wuestions for Accounting Queen only

Frack Department Store sells gift certificates, redeemable for store merchandise, that expire one year after their issuance. Frack has the following information pertaining to its gift certificates sales and redemptions:

Frack records the gift certificates as income when. Frack began business on 1/1/2014. Prepare any required general journal adjusting entries (without explanation) for the years ending 12/31/14 and 12/31/15. If no entry is required then identify this fact in the journal.

Question 2

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On January 1, 2014, Flop Co. purchased a patent for $714,000. The patent is being amortized over its remaining legal life of fifteen years expiring on December 31, 2028. During 2016, Flop determined that the economic benefits of the patent would not last longer than ten years from the date of acquisition. Prepare any required general journal adjusting entries (without explanation) for the Flop Co. for the 2016. If no entry is required then identify this fact in the journal.

Question 3 options:

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Floozy had the following selected account balances as of December 31, 2014.

The following information was received from Floozy's accountant. Adjusting entries have not yet been made.

a. It is estimated that $16,000 of accounts will not be collectible. A provision for uncollectible accounts has never been made by Floozy.

b. Supplies remaining at the end of the year were $27,000.

c. Equipment is depreciated over 20 years with a $60,000 salvage value.

d. Accrued salaries at 12/31/14 were $27,500.

e. The note receivable was signed by the customer on November 1, 2014. It is a 6-month note with an interest rate of 12%, with the principle and interest paid at maturity.

f. Rent was paid on August 1, 2014, for 24 months and recorded in a prepaid rent account.

g. Floozy does not elect to use the fair value option for any of its financial assets or liabilities. Determine the adjustments necessary for December 31, and indicate the adjusted balances of the selected accounts at December 31, 2014.

Calculate the values for the following items:

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In 2014, Frick Corp. sold a comic strip to Frack, Inc. and will receive royalties of 20% of future revenues associated with the comic strip. At December 31, 2015, Frack reported revenues of $375,000 from the comic strip. During 2016, Frick received royalty payments of $200,000. Frack reported revenues of $1,500,000 in 2016 from the comic strip. In its 2015 income statement, what amount should Frick report as royalty revenue?

Question 5 options:

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Frick Corp. maintains its accounting records on the cash basis but restates its financial statements to the accrual method of accounting. Frick had $60,000 in cash-basis pretax income for 2015. The following information pertains to Frick's operations for the years ended December 31, 2015 and 2014:

Under the accrual method, what amount of income before taxes should Frick report in its December 31, 2015 income statement?

Question 6 options:

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On February 1, 2014, Frick began a service proprietorship with an initial cash investment of $2,000. The proprietorship provided $5,000 of services in February. The proprietorship incurred expenses of $3,000 in February, which wre paid in April. During March, Frick drew $1,000 against the capital account. In the proprietorship's financial statements for the two months ended March 31, 2014 prepared under the accrual basis method of accounting, what amount should be reported as capital?

Question 7 options:

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Flam Co. reported a retained earnings balance of $400,000 at December 31, 2014. In August, 2015, Flam determined that insurance premiums of $60,000 for the three-year period beginning January 1, 2014, had been paid and fully expensed in 2014. Flam has a 25% income tax rate. What amount should Flam report as adjusted beginning retained earnings in its 2015 statement of retained earnings?

Question 8 options:

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Flam Co.'s beginning inventory at January 1, 2014, was understated by $26,000, and its ending inventory was understated by $52,000. As a result:

a) was cost of goods sold understated or overstated for 2014, and

b) by how much

Question 9 options:

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For year 1, Flop Co. estimated its two-year equipment warranty costs based on $100 per unit sold in year 1. Experience during year 2 indicated that the estimate should have been based on $110 per unit. The effect of this $10 difference from the estimate is reported

Question 10 options:

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Flop Co. incurred the following infrequent losses during 2014:

$175,000 from a major strike by employees.

$125,000 from an earthquake (unusual).

$150,000 from the abandonment of equipment used in the business.

In Flop's 2014 income statement, the total amount of infrequent losses not considered extraordinary should be

Question 11 options:

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Flop Co. had the following transactions during 2014:

a. $1,200,000 pretax loss on foreign currency exchange due to a major unexpected devaluation by the foreign government.

b. $500,000 pretax loss from discontinued operations of a division.

c. $800,000 pretax loss on equipment damaged by a hurricane. This was the first hurricane ever to strike in Flop's area. Flop also received $1,000,000 from its insurance company to replace a building, with a carrying value of $330,000, that had been destroyed by the hurricane.

What amount should Flop report in its 2014 income statement as extraordinary loss before income taxes?

Question 12 options:

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On November 1, 2015, management of Flop Corporation committed to a plan to dispose of Flip Company, a major subsidiary. The disposal meets the requirements for classification as discontinued operations. The carrying value of Flip Company was $8,000,000 and management estimated the fair value less costs to sell to be $6,500,000. For 2015, Flip Company had a loss of $200,000. How much should Flop Corporation present as loss from discontinued operations before the effect of taxes in its income statement for 2015?

Question 13 options:

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Accumulated other comprehensive income should be reported on the balance sheet as a component of

Question 14 options:

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A company buys ten shares of securities at $1,000 each on January 15, year 1. The securities are classified as available-for-sale. The fair value of the securities increases to $1,250 per share as of December 31, year 1. The company does not elect to use the fair value option for reporting available-for-sale securities. Assume no dividends are paid and that the company has a 30% tax rate. What is the amount of the holding gain arising during the period that is classified in other comprehensive income for the period ending December 31, year 1?

Question 15 options:

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The following trial balance of Flip Corp. at December 31, year 1, has been adjusted except for income tax expense.

Other financial data for the year ended December 31, year 1, are

Flip uses the percentage-of-completion method to account for long-term construction contracts for financial statement and income tax purposes. All receivables on these contracts are considered to be collectible within twelve months.

During year 1, estimated tax payments of $450,000 were charged to prepaid taxes. Flip has not recorded income tax expense. There were no temporary or permanent differences, and Flip's tax rate is 30%.

In Flip's December 31, year 1 balance sheet, what amount should be reported as total retained earnings?

Question 16 options:

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The following changes in Flip Corp.'s account balances occurred during 2014:

Except for a $13,000 dividend payment and the year's earnings, there were no other reductions in retained earnings for 2014. What was Flip's net income for 2014?

Question 17 options:

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During year 1, Flop Company engaged in the following transactions:                

Salary expense to key employees who are also principal owners                        $100,000

Sales to affiliated enterprises                                                                                  250,000

Which of the two transactions would be disclosed as related-party transactions in Flop's year 1 financial statements?

Question 18 options:

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Financial statements shall include disclosures of material transactions between related parties except

Question 19 options: