AC 477 | Course Paper

Unlock access to all the studying documents.

View Full Document

Moss Company Moss Company has provided the following information from its

accounting records for the current year:

Read the information for Moss Company. What are Moss’ current liabilities?

a. $ 50,000

b. $ 125,000

c. $ 200,000

d. $ 230,000

Tradewinds Corporation was organized on January 1, 2014, with the investment of

$500,000 in cash by its stockholders. Tradewinds signed a ten-year, $300,000

promissory note at a local bank during 2014 and received cash in the same amount. The

company immediately purchased an office building for $800,000, paying in cash.

During its first year, Tradewinds generated $35,000 in cash from operations and paid

$30,000 in cash dividends. A) In good form, prepare a statement of cash flows for the

year ended December 31, 2014. B) What does this statement tell you that an income

statement does not?

If a company has a number of day’s sales in inventory equal to 60, that means that it

takes about two months on average to sell its inventory.

a. True

b. False

Identify which inventory costing method (LIFO or FIFO) achieves the effect listed in

the following items:

a. LIFO

b. FIFO

Prices are rising; cost of goods sold is lower with this method.

Potential stockholders and lenders are interested in a company’s financial statements.

Several financial statement items appear below. Answer the questions that follow.

A) Which two items would stockholders be most interested in that can either be

computed from the above data or are included in the items listed above? Explain why

the two you selected are important to stockholders. B) In which one item would lenders

be most interested? Explain why this item is important.

Regarding the valuation of operating assets, IFRS allows companies to use fair value.

a. True

b. False

An accountant is uncertain about the best estimate of an amount for a business

transaction. If two amounts are about equally likely, the amount least likely to overstate

assets and income is selected. Which of the following qualities is characterized by this

action?

a. Comparability

b. Conservatism

c. Materiality

d. Neutrality

Use the following codes to indicate how the cash flow effect, if any, of each transaction

would be reported on a statement of cash flows if the operating activities section is

prepared using the direct method.

a. Inflow from operating activity

b. Outflow from operating activity

c. Inflow from investing activity

d. Outflow from investing activity

e. Inflow from financing activity

f. Outflow from financing activity

g. Noncash investing and financing activity

h. Not reported on statement of cash flows

Received payments from credit sales.

GAAP stands for Generally Accepted Auditing Procedures.

a. True

b. False

From the following list, identify each item as operating (O), investing (I), financing (F),

or not separately reported on the statement of cash flows (N).

a. Operating-O

b. Investing-I

c. Financing-F

d. Not separately reported-N

Payment of cash dividend on preferred stock

For each item listed, select the section of the balance sheet in which the item would be r

eported.

a. Current Assets

b. Property, Plant, and Equipment

c. Current Liabilities

d. Long-term Liabilities

e. Stockholders’ Equity

Bonds payable

Hawk Company purchased an asset on January 1, 2014, for $10,000. The asset was

expected to have a ten-year life and a $1,000 salvage value. The company uses the

straight-line method of depreciation. On January 1, 2016, the company made a major

repair to the asset of $5,000, extending its life. The asset is expected to last ten years

from January 1, 2016. Calculate the amount of depreciation for 2016.

What are the advantages of organizing a company as a corporation instead of a

partnership or sole proprietorship?

Refer to the data for Slammer Sports. If the aging approach is used to estimate bad

debts, how much is the net realizable value of the accounts receivable at December 31,

2014?

Claxton Corp. purchased equipment at a cost of $320,000 in January, 2010. As of

January 1, 2014, depreciation of $160,000 had been recorded on this asset. Depreciation

expense for 2014 is $40,000. After the adjustments are recorded and posted at

December 31, 2014, what are the balances for the Equipment and Accumulated

Depreciation?

How frequently should entries be posted from the journal to the ledger? How have

computers improved the posting process?

On March 31, 2015, Outdoor Closets, Inc. had common stock of $230,000, retained

earnings of $65,000, and additional paidÂin capital-common of $540,000. During the

fiscal year ended March 31, 2016, 500 shares of stock were sold for $60,000, of which

$40,000 represented additional paid-in capital. The company reported net income of

$140,000 and declared and paid dividends of $80,000. In good form, prepare the

financial statement that shows all of the changes in the stockholders’ equity accounts.

Use the selected information from the statement of cash flows for three actual

companies for the last three years to answer the questions that follow.

REQUIRED:

Ignoring the differences in magnitude, comment on the similarities and differences in

the cash flows of the three companies.

French Corp. began the year with $18,000 in cash and another $6,500 in cash

equivalents. During the year, operations generated $132,000 in cash. Net cash used in

investing activities during the year was $213,000, and the company raised a net amount

of $168,000 from financing activities.

REQUIRED: Determine the year-end balance in cash and cash equivalents.

The concept that assumes that an entity is not in the process of liquidation is.