In a single-step income statement, all data are classified under two categories: (1)
Revenues, or (2) Expenses. If the income statement is recast in a multiple-step format,
what additional information or intermediate components of income would be
presented?
Answer:
The income statement for Pepe Serna Company for the year ended December 31, 2015
is as follows:
Prepare the entries to close the revenue and expense accounts at December 31, 2015.
You may omit explanations for the transactions.
Answer:
A journal is also known as a book of original entry.
Answer:
The following information is available for Young Corporation:
Instructions
Compute Young Corporation’s free cash flow.
Answer:
Match the items below by entering the appropriate code letter in the space provided.
1> A written promise to pay a specified amount on demand or at a definite time.
2> Sales that involve the customer, the retailer, and the credit card issuer.
3> Emphasizes the matching of costs and revenues in the same period.
4> Amounts owed by customers from the sale of goods and services.
5> A note which is not paid in full at maturity.
6> Analysis of customer account balances by length of time they have been unpaid.
7> Emphasizes expected cash realizable value of accounts receivable.
8> Generally not acceptable for financial reporting purposes.
9> The amount of time that a receivable is outstanding.
10> Sale of accounts receivable to a factor.
Answer:
Other receivables include nontrade receivables such as loans to company officers.
Answer:
A debenture bond is an unsecured bond which is issued against the general credit of the
borrower.
Answer:
Cash dividends are not a liability of the corporation until they are declared by the board
of directors.
Answer:
The residual claim on total assets of a business is known as ________________ and is
equal to total assets minus total liabilities.
Answer:
Information pertaining to long-term stock investments in 2014 by Bell Corporation
follows:
Acquired 18% of the 250,000 shares of common stock of Kansas Company at a total
cost of $8 per share on January 1, 2014. On July 1, Kansas Company declared and paid
a cash dividend of $2 per share. On December 31, Kansas’s reported net income was
$654,000 for the year.
Obtained significant influence over Toto Company by buying 30% of Toto’s 100,000
outstanding shares of common stock at a total cost of $22 per share on January 1, 2014.
On June 15, Toto Company declared and paid a cash dividend of $1.50 per share. On
December 31, Toto’s reported net income was $280,000.
Instructions
Prepare all necessary journal entries for 2014 for Bell Corporation.
Answer: