Questions and Answers of Financial Accounting 11th

The ledger of P. Oodle, Veterinary Surgeon, contains the accounts and account balances shown below on 30 June 2019.The following account titles are included in the chart of accounts.• Interest
The adjusted trial balance of Brompton Bowling Alley at 30 June 2020, the end of the entity’s accounting year, follows.Additional data taken into account in the preparation of the above adjusted
There is a travel agency operating in a suburban shopping centre in Broome called Top End Tours. Two trial balances prepared at different stages of the accounting cycle are presented below (account
The trial balance shown below summarises the year’s activities for Nova Caine’s dental surgery.The following additional information should be considered.1. Inventory of dental supplies on hand at
Andy Harris owns Piano Tuning Service. The post‐closing trial balance at 30 June 2019 is shown below. Ignore GST.Transactions completed during the year ended 30 June 2020 are summarised below.1.
The post‐closing trial balance at 30 June 2019 of Payneham Professional Services is shown below.Transactions completed during the year ended 30 June 2020 are summarised below.1. Collections on
Browne Cleaning and Gardening Services commenced on 1 June 2020 when Lorne Browne contributed $120 000 into a business bank account. The following transactions occurred in the month of June. Ignore
Lara Knoffs, a qualified commercial artist, had worked as an employee of a large advertising agency for a number of years. She decided to resign her position and set up her own business which would
Chloe’s Clothing Importers sells clothing with credit terms of 3/15, n/30. A trade discount of 30% is given to purchases made by wholesalers. On 6 September 2019, Kingsbury Wholesalers purchased
The Confiture Factory in central Adelaide buys sculptures, flatware and jewellery from a number of private artists around the country. The Confiture Factory always purchases the products from the
Use the following information from the records of Preston Partners to prepare an income statement under the periodic inventory system for the year ended 30 June 2020. Purchases Inventory, 1 July 2019
The account balances below are taken from the records of Gilberton Retail. Prepare an income statement under the perpetual inventory system for the year ended 30 June 2019. Cost of sales Inventory,
The following information is taken from the trial balance of Petra’s Pedicure Parlour.RequiredGiven that the cost of the inventory on 30 June 2020 is $25 300, prepare the closing entries on 30 June
On 28 February 2019, Darwin‐based entity, Phonee Partners, had inventory of 480 phones at a total cost of $153 600. The business maintains a perpetual inventory system. The following transactions
Dundas Desks buys desks for $80 each and sells them for $140 each. On 1 August 2019, 86 desks were in inventory. Dundas Desks completed the transactions below during August.A physical inventory count
Vaucluse Ltd sells handheld video consoles for $120 each. It buys the consoles for $90 each. On 1 June 2020, 60 consoles are in inventory. Vaucluse Ltd completed the following transactions during
Cliff Clarendon opened a wine store on 1 June 2019. The business trades under the name of Wine to Dine and uses a perpetual inventory system to account for its inventory. All credit sales are made on
A trial balance for Flemington Fashions Pty Ltd is shown below.Required(a) Prepare a worksheet for Flemington Fashions Pty Ltd. Use the following information to make adjusting entries.i. Supplies on
The following selected information is available for Middleton Wholesalers for September 2019.Required(a) Prepare the detailed income statement for Middleton Wholesalers for the month ended 30
Pete’s Computer Shop is a sole trader run by Pete Narellan. The unadjusted trial balance of Pete’s Computer Shop is shown below.Required (a) Prepare a worksheet for Pete’s Computer Shop. Use
The following data have been extracted from the income statement of Llandilo Furniture Store.Required(a) Calculate the gross profit ratio, profit margin, and expenses to sales ratio for the years
The income statement below for Guildford Granaries was prepared by the accountant from the accounting records at 30 June 2020. This statement showed a significant improvement over the preceding year
Ben’s Patisserie had the following balances in its ledger at 30 June 2019.Ben’s Patisserie’s financial year ends on 30 June. During the year the accountant prepared monthly statements using
Read the following article and answer the questions that follow.Required(a) How would inventory shrinkage be accounted for?(b) Which inventory system would be most useful in determining inventory
Chisenhall Company purchased land and a building on January 1, 2019. Management’s best estimate of the value of the land was $100,000 and of the building $200,000.However, management told the
Depreciation information for Corales Company is given in BE9-4. Assuming the declining-balance depreciation rate is double the straight-line rate, compute annual depreciation for the first and second
Information related to plant assets, natural resources, and intangibles at the end of 2019 for Dent Company is as follows: buildings $1,100,000, accumulated depreciation—buildings $600,000,
For 2019, Sale Company reported beginning total assets of $300,000 and ending total assets of $340,000. Its net income for this period was $50,000, and its net sales were $400,000. Compute the
During 2019, Paola Corporation reported net sales of $3,500,000 and net income of$1,500,000. Its balance sheet reported average total assets of $1,400,000.Instructions Calculate the asset turnover.
Rizzo’s Delivery Company and Overland’s Express Delivery exchanged delivery trucks on January 1, 2019. Rizzo’s truck cost $22,000. It has accumulated depreciation of$15,000 and a fair value of
Turner Container Company is suffering declining sales of its principal product, nonbiodegradeable plastic cartons. The president, Robert Griffin, instructs his controller, Alexis Landrum, to lengthen
Explain how to account for current liabilities.
Describe the major characteristics of bonds.
Explain how to account for bond transactions.
Explain how to account for long-term notes pay able.
Apply the straight-line method of amortizing bond discount and bond premium.
Apply the effective-interest method of amortizing bond discount and bond premium.
The time period for classifying a liability as current is one year or the operating cycle, whichever is:(a) longer. (c) probable.(b) shorter. (d) possible.
To be classified as a current liability, a debt must be expected to be paid within:(a) one year.(b) the operating cycle.(c) 2 years.(d) (a) or (b), whichever is longer.
Maggie Sharrer Company borrows $88,500 on September 1, 2019, from Sandwich State Bank by signing an $88,500, 12%, one-year note. What is the accrued interest at December 31, 2019?(a) $2,655. (b)
JD Company borrowed $70,000 on December 1 on a 6-month, 12% note. At December 31:(a) neither the note payable nor the interest payable is a current liability.(b) the note payable is a current
Becky Sherrick Company has total proceeds from sales of $4,515. If the proceeds include sales taxes of 5%, the amount to be credited to Sales Revenue is:(a) $4,000.(b) $4,300.(c) $4,289.25.(d) No
Sensible Insurance Company collected a premium of$18,000 for a 1-year insurance policy on April 1. What amount should Sensible report as a current liability for Unearned Service Revenue at December
Employer payroll taxes do not include:(a) federal unemployment taxes.(b) state unemployment taxes.(c) federal income taxes.(d) FICA taxes.
When recording payroll:(a) gross earnings are recorded as salaries and wages payable.(b) net pay is recorded as salaries and wages expense.(c) payroll deductions are recorded as liabilities.(d) More
The term used for bonds that are unsecured is:(a) callable bonds.(b) U.S. Treasury bonds.(c) debenture bonds.(d) convertible bonds.
Karson Inc. issues 10-year bonds with a maturity value of $200,000. If the bonds are issued at a premium, this indicates that:(a) the contractual interest rate exceeds the market interest rate.(b)
On January 1, 2019, Kelly Corp. issues $200,000, 5-year, 7% bonds at face value. The entry to record the issuance of the bonds would include a:(a) debit to Cash for $14,000.(b) debit to Bonds Payable
Prescher Corporation issued bonds that pay interest every July 1 and January 1. The entry to accrue bond interest at December 31 includes a:(a) debit to Interest Payable.(b) credit to Cash.(c) credit
Gester Corporation redeems its $100,000 face value bonds at 105 on January 1, following the payment of annual interest. The carrying value of the bonds at the redemption date is $103,745. The entry
Andrews Inc. issues a $497,000, 10% 3-year mortgage note on January 1. The note will be paid in three annual installments of $200,000, each payable at the end of the year. What is the amount of
Howard Corporation issued a 20-year mortgage note payable on January 1, 2019. At December 31, 2019, the unpaid principal balance will be reported as:(a) a current liability.(b) a long-term
For 2019, Corn Flake Corporation reported net income of $300,000. Interest expense was $40,000 and income taxes were $100,000. The times interest earned was:(a) 3 times. (b) 4.4 times.(c) 7.5
On December 31, Hurley Corporation issues $500,000, 5-year, 12% bonds at 96 with interest payable on December 31, 2019. The entry on December 31, 2020, to record payment of bond interest and the
For the bonds issued in Question 17, what is the carrying value of the bonds at the end of the third interest period?(a) $492,000. (b) $488,000.(c) $486,000.(d) $464,000.
On January 1, Besalius Inc. issued $1,000,000, 9%bonds for $938,554. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Besalius uses the
Dias Corporation issued $1,000,000, 14%, 5-year bonds with interest payable annually on December 31.The bonds sold for $1,072,096. The market rate of interest for these bonds was 12%. On the first
Data for Beth Corbin are presented in BE10-5. Prepare the journal entries to record (a) Beth’s pay for the period and (b) the payment of Beth’s wages. Use January 15 for the end of the pay period
Data for Beth Corbin are presented in BE10-5. Prepare the employer’s journal entry to record payroll taxes for the period. Ignore unemployment taxes.BE10-5Beth Corbin’s regular hourly wage rate
Which of the following is false ?(a) Under IFRS, current liabilities must always be presented before noncurrent liabilities.(b) Under IFRS, an item is a current liability if it will be paid within
Which of the following is true regarding accounting for amortization of bond discount and premium?(a) Both IFRS and GAAP must use the effective-interest method.(b) GAAP must use the
Discuss the major characteristics of a corporation.
Explain how to account for the issuance of common, preferred, and treasury stock.
Explain how to account for cash dividends, stock dividends, and stock splits.
Discuss how stockholders’ equity is reported and analyzed.
Describe the use and content of the stockholders’ equity statement.
Compute book value per share.
Which of the following is not a major advantage of acorporate form of organization?(a) Separate legal existence.(b) Continuous life.(c) Government regulations.(d) Transferable ownership rights.
A major disadvantage of a corporation is:(a) limited liability of stockholders.(b) additional taxes.(c) transferable ownership rights.(d) separate legal existence.
Preferred stock may have priority over common stockexcept in:(a) dividends.(b) assets in the event of liquidation.(c) cumulative dividend features.(d) voting.
In the stockholders’ equity section, the cost of treasurystock is deducted from:(a) total paid-in capital and retained earnings.(b) retained earnings.(c) total stockholders’ equity.(d) common
Entries for cash dividends are required on the:(a) declaration date and the payment date.(b) record date and the payment date.(c) declaration date, record date, and payment date.(d) declaration date
Which of the following statements about small stockdiv i dends is true ?(a) A debit to Retained Earnings for the par value ofthe shares issued should be made.(b) A small stock dividend decreases
In the stockholders’ equity section of the balancesheet, common stock:(a) is listed before preferred stock.(b) is added to total capital stock.(c) is part of paid-in capital.(d) is part of
Which of the following is not reported under additionalpaid-in capital?(a) Paid-in capital in excess of par.(b) Common stock.(c) Paid-in capital in excess of stated value.(d) Paid-in capital from
When a stockholders’ equity statement is presented, it is not necessary to prepare a (an):(a) retained earnings statement.(b) balance sheet.(c) income statement.(d) None of the above.
Which of the following is true ?(a) In the United States, the primary corporate stockholders are financial institutions.(b) Share capital means total assets under IFRS.(c) The IASB and FASB are
Under IFRS, the amount of capital received in excess of par value would be credited to:(a) Retained Earnings. (b) Contributed Capital.(c) Share Premium.(d) Par value is not used under IFRS.
Which of the following is false ?(a) Under GAAP, companies cannot record gains on transactions involving their own shares.(b) Under IFRS, companies cannot record gains on transactions involving their
Which of the following does not represent a pair of GAAP/IFRS-comparable terms?(a) Additional paid-in capital/Share premium. (b) Treasury stock/Repurchase reserve.(c) Common stock/Share capital.(d)
Which item is not considered part of reserves?(a) Unrealized loss on available-for-sale investments. (b) Revaluation surplus.(c) Retained earnings.(d) Issued shares.
Under IFRS, a statement of comprehensive income must include:(a) accounts payable. (c) income tax expense.(b) retained earnings. (d) preference stock.
Which set of terms can be used to describe total stockholders’ equity under IFRS?(a) Shareholders’ equity, capital and reserves, other comprehensive income.(b) Capital and reserves,
Discuss the usefulness and format of the statement of cash flows.
Prepare a statement of cash flows using the indirect method.
Analyze the statement of cash flows.
Prepare a statement of cash flows using the direct method.
Use a worksheet to prepare the statement of cash flows using the indirect method.
Which of the following is incorrect about the statement of cash flows?(a) It is a fourth basic financial statement.(b) It provides information about cash receipts and cash payments of an entity
Which of the following is not reported in the statement of cash flows?(a) The net change in stockholders’ equity during the year.(b) Cash payments for plant assets during the year.(c) Cash receipts
The statement of cash flows classifies cash receipts and cash payments by these activities:(a) operating and nonoperating.(b) investing, financing, and operating.(c) financing, operating, and
Which is an example of a cash flow from an operating activity?(a) Payment of cash to lenders for interest.(b) Receipt of cash from the sale of common stock.(c) Payment of cash dividends to the
Which is an example of a cash flow from an investing activity?(a) Receipt of cash from the issuance of bonds payable.(b) Payment of cash to repurchase outstanding common stock.(c) Receipt of cash
Cash dividends paid to stockholders are classified on the statement of cash flows as:(a) an operating activity.(b) an investing activity.(c) a combination of (a) and (b). (d) a financing
Which is an example of a cash flow from a financingactivity?(a) Receipt of cash from sale of land.(b) Issuance of debt for cash.(c) Purchase of equipment for cash.(d) None of the above.
Which of the following is incorrect about the statement of cash flows?(a) The direct method may be used to report net cash provided by operating activities.(b) The statement shows the net cash
Net income is $132,000, accounts payable increased $10,000 during the year, inventory decreased $6,000 during the year, and accounts receivable increased $12,000 during the year. Under the indirect
The following data are available for Allen ClappCorporation.Net cash provided by operating activities is:(a) $160,000.(b) $220,000.(c) $240,000.(d) $280,000. Net income Depreciation expense Dividends
The following data are available for Orange PeelsCorporation.Net cash provided by investing activities is:(a) $120,000.(b) $130,000.(c) $150,000.(d) $190,000. Proceeds from sale of land Proceeds from
The following data are available for Something Strange!Net cash provided by financing activities is:(a) $90,000.(b) $130,000.(c) $160,000.(d) $170,000. Increase in accounts payable Increase in bonds

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