Accounting Review.docx
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Accounting Review.docx
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AccountingReview
ThisdocumentisbasedonACCREVIonMcGraw-HillConnect.
SolutionstothisdocumentwererecordedbyDr.Raganandareavailableas
“Lecture0:
AccountingReview”oniTunesU.
1.
Followingisacompletelistofaccounts(inalphabeticalorder)takenfromABCCorp.fortheyearof20X1.Usethisinformationtoanswerquestions(a)through(h)below.(Hint:
PrepareaClassifiedBalanceSheetasof12/31/X1.)
AccountsPayable$18,200
AccountsReceivable$20,800
AccumulatedDepreciation$35,200
AdditionalPaid-in-Capital$16,600
BondsPayable,duein30years$41,400
Building$289,500
Cash$13,600
CommonStock$89,400
CostofGoodsSold$52,400
DepreciationExpense$44,200
DividendsPaid$6,800
InsuranceExpense$2,600
Land$71,300
MarketableSecurities$6,000
NotesPayable,duein3months$26,000
RetainedEarnings,beginningofyear$150,400
SalariesExpense$26,600
SalesRevenue$185,000
TaxExpense$28,400
a.WhatisthetotalamountofCurrentAssetstobereportedonABCCorp.'s12/31/X1ClassifiedBalanceSheet?
☐$34,400
☐$366,000
☐$40,400
☐$13,600
b.WhatisthetotalamountofNon-Current(Long-Term)AssetstobereportedonABCCorp's12/31/X1ClassifiedBalanceSheet?
☐$71,300
☐$254,300
☐$325,600
☐$360,800
c.WhatisthetotalamountofCurrentLiabilitiestobereportedonABCCorp.'s12/31/X1ClassifiedBalanceSheet?
☐$67,400
☐$44,200
☐$18,200
☐$59,600
d.WhatisthetotalamountofNon-Current(Long-Term)LiabilitiestobereportedonABCCorp.'s12/31/X1ClassifiedBalanceSheet?
☐$26,000
☐$6,800
☐$18,200
☐$41,400
e.WhatisABCCorp.'sNetIncomefortheyearended12/31/X1?
☐Noneofthese.
☐$75,000
☐$30,800
☐$143,600
☐$24,000
f.WhatisABCCorp.'sAdditiontoRetainedEarningsfortheyear20X1?
☐$24,000
☐$6,800
☐$150,400
☐$30,800
g.WhatistheEndingBalanceinRetainedEarningstobereportedonABCCorp.'s12/31/X1ClassifiedBalanceSheet?
☐$188,000
☐Noneofthese.
☐$174,400
☐$181,200
☐$150,400
h.WhatisthetotalamountofShareholders'EquitytobereportedonABCCorp.'s12/31/X1ClassifiedBalanceSheet?
☐$89,400
☐Noneofthese.
☐$256,400
☐$280,400
☐$299,400
2.
UsethefollowinginformationtoprepareaStatementofCashFlows(ingoodaccountingform)forABCCompany.Usetheindirectmethod.
ABCCompany
ComparativeBalanceSheets
December31,
20X420X3Change
ASSETS
Cash51,4004,80046,600
AccountsReceivable44,60032,60012,000
Inventory113,400126,600-13,200
CurrentAssets209,400164,00045,400
Land129,000147,600-18,600
Building211,000211,0000
Equipment193,800153,60040,200
AccumulatedDepreciation-125,200-88,600-36,600
NetFixedAssets408,600423,600-15,000
TotalAssets618,000587,60030,400
LIABILITIES
AccountsPayable41,40032,8008,600
BondsPayable,duein30years171,000212,000-41,000
SHAREHOLDERS'EQUITY
CommonStock177,000147,00030,000
AdditionalPaid-in-Capital28,40020,2008,200
RetainedEarnings200,200175,60024,600
TotalLiabilities&Shareholders'Equity618,000587,60030,400
AdditionalInformation:
1.NetIncomefor20X4was$80,800.
2.Dividendswerepaidduringtheyear.Lookattheretainedearningsaccounttocomputetheamountofdividendspaid.
3.Theonlypostingtoaccumulateddepreciationisfordepreciationexpense(i.e.,noequipmentwassold).
4.Landwassoldforcashequaltocost.
a.WhatwastheamountofdividendspaidbyABCCorp.?
☐8,400
☐Noneofthese.
☐-24,600
☐56,200
b.WhatwastheamountofdepreciationexpenserecordedbyABCCorp.?
☐80,800
☐-88,600
☐Noneofthese.
☐-125,200
☐36,600
c.WhatwasABCCorp.'sCashInflow(Outflow)from(for)OperatingActivities?
☐-41,000
☐-21,600
☐135,600
☐90,600
☐127,200
d.WhatwasABCCorp.'sCashInflow(Outflow)from(for)InvestingActivities?
☐-21,600
☐-41,000
☐-40,200
☐127,200
☐18,600
e.WhatwasABCCorp.'sCashInflow(Outflow)from(for)FinancingActivities?
☐-41,000
☐-21,600
☐-97,200
☐-59,000
☐127,200
Sixtransactiontypesandtheireffectoncash
1.Increaseanassetotherthancash
Examples:
Purchasefixedassetsorincreaseaccountsreceivable
Casheffect:
Useofcash(cashdecreases)
2.Decreaseanassetotherthancash
Examples:
Selloffplantandequipmentorinventory,ordecreaseA/R
Casheffect:
Sourceofcash(cashincreases)
3.Increasealiability
Examples:
Increaseaccountspayable,notespayable,oraccruedexpenses
Casheffect:
Sourceofcash(cashincreases)
4.Decreasealiability
Examples:
DecreaseA/P,reducenote/bondprincipal
Casheffect:
Useofcash(cashdecreases)
5.Increaseanequityaccount
Example:
Issuestock
Casheffect:
Sourceofcash(cashincreases)
6.Decreaseanequityaccount
Example:
Repurchasestockorpayadividend(reduceretainedearnings)
Casheffect:
Useofcash(cashdecreases)
3.
Usingthefinancialinformationbelow,dothefollowing:
a.Prepareallnecessaryadjustingandclosingentries.
b.PrepareaStatementofRetainedEarnings(ingoodaccountingform)fortheyear.
ABCCorp.
FinancialInformation
FortheyearendedDecember31,20X5
Cash20,600
AccountsReceivable8,100
Inventory25,300
Equipment99,500
AccumulatedDepreciation9,700
AccountsPayable9,100
CommonStock56,900
DividendsDeclared(Payable)5,300
DepreciationExpense3,400
RetainedEarnings16,300
FeeRevenue114,500
SalariesExpense22,500
LegalExpense6,200
RentExpense15,600
AdditionalInformation:
1.ThedividendsweredeclaredonNovember15,20X5andpaidonDecember31,20X5.
2.ThebalanceintheAccumulatedDepreciationaccountasof12/31/X4was$6,300.
GeneralJournal
a1.Recordthedeclarationofdividends.
DateAccountTitleDebitCredit
11/15/X5AccountsPayable$5,300
RetainedEarnings
CashDividendsDeclared(Payable)
AccountsPayable
DividendsDeclared(Payable)$5,300
AccountsPayable
AccountsPayable
RetainedEarnings
Cash
a2.Providetheadjustingjournalentryfordepreciationexpense.
DateAccountTitleDebitCredit
12/31/X5RetainedEarnings6,300
AccumulatedDepreciation3,400
DepreciationExpense20,600
EquipmentNoneofthese.
Cash9,700
AccumulatedDepreciation9,700
DepreciationExpense20,600
RetainedEarningsNoneofthese.
Cash3,400
AccountsPayable6,300
a3.Closeoutallrevenues.
DateAccountTitleDebitCredit
12/31/X5RetainedEarnings$114,500
Cash
Revenue
DividendsDeclared
AccountsPayable
DividendsDeclared(Payable)$114,500
RetainedEarnings
Cash
Revenue
AccountsPayable
a4.Closeoutallexpenses.
DateAccountTitleDebitCredit
12/31/X5Expenses$47,700
Revenue
RetainedEarnings
Cash
Revenue$47,700
Expenses
Cash
RetainedEarnings
a5.Recordthepaymentofdividends.
DateAccountTitleDebitCredit
12/31/X5AccountsPayable$5,300
Cash
InterestPayable
DividendsDeclared(Payable)
DividendsDeclared(Payable)$5,300
InterestPayable
AccountsPayable
Cash
b.CompletetheStatementofRetainedEarningsprovidedbelow.
ABCCorp.
StatementofRetainedEarnings
FortheyearendedDecember31,20X5
BeginningRetainedEarnings$66,800
$16,300
$20,600
$77,800
$5,300
[add]NetIncome$61,500
$53,900
$81,200
$90,800
$66,800
[deduct]Dividends$5,300
EndingRetainedEarnings$77,800
FreeCashFlow
EndingCash
AdjustedNetIncome
BeginningRetainedEarnings
4.
Followingisapartiallistofaccounts(inalphabeticalorder)takenfromABCCorp.fortheyearof20X2.PrepareanIncomeStatementfortheyearended12/31/X2.
AccountsPayable56,400
Cash169,600
CostofGoodsSold379,200
DividendsPaid13,000
InterestExpense40,600
InterestPayable65,600
SalesRevenue969,400
SellingExpense68,400
TaxExpense104,800
WhatisABCCorp.'sGrossProfitfortheyearended12/31/X2?
☐549,600
☐590,200
☐Noneofthese.
☐481,200
☐376,400
WhatisABCCorp.'sNetIncomefortheyearended12/31/X2?
☐549,600
☐481,200
☐590,200
☐376,400
☐Noneofthese.
WhatisABCCorp.'sAdditiontoRetainedEarningsfortheyearended12/31/X2?
☐Noneofthese.
☐13,000
☐363,400
☐376,400
☐389,400
5.
On1/1/X1,XYZCorp.,astart-upcompany,issues1,250,000sharesofits$20parvaluecommonstockfor$31pershare.Providethejournalentryforthestockissuance.
DateAccountTitleDebitCredit
1/1/X1CommonStock25,000,000
RetainedEarnings38,750,000
AccountsReceivable1,250,000
CashNoneofthese.
13,750,000
CommonStockNoneofthese.
13,750,000
25,000,000
38,750,000
1,250,000
AdditionalPaid-in-Capital38,750,000
25,000,000
1,250,000
Noneofthese.
13,750,000
On11/1/X4,XYZCorp.,repurchases120,000sharesofitsoutstandingcommonstockfor$20pershare(par).Providethejournalentry.
DateAccountTitleDebitCredit
11/1/X4RetainedEarnings1,320,000
Cash120,000
TreasuryStockNoneofthese.
CommonStock3,720,000
AdditionalPaid-in-Capital2,400,000
AdditionalPaid-in-CapitalNoneofthese.
CommonStock2,400,000
RetainedEarnings120,000
Cash3,720,000
TreasuryStock1,320,000
6.
On1/1/X1,XYZCorp.purchasesanewbuildingfor$822,000.Thebuildingwillbedepreciatedonastraight-linebasistoasalvagevalueof$82,200overitsdepreciablelifeof30years.Providethejour
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