1) The balance in retained earnings on January 1, 2014, for Hotel Plaza Inc., was
$575,000. During the year, the corporation paid cash dividends of $70,000 and
distributed a stock dividend of $15,000. In addition, the company determined that it had
overstated its depreciation expense in prior years by $50,000. Net income for 2014 was
$120,000.
Instructions
Prepare the retained earnings statement for 2014 .
2) The two methods of accounting for uncollectible accounts are the ____________
method and the ______________ method.
3) The following transactions were made by Allen Company. Assume all investments
are short-term and are readily marketable.
June2Purchased 400 shares of Snoop Corporation common stock for $45 per share.
July1Purchased 200 Barr Corporation bonds for $228,000.
30Received a cash dividend of $1.50 per share from Snoop Corporation.
Sept.15Sold 120 shares of Snoop Corporation stock for $50 per share.
Dec.31Received semiannual interest check for $13,000 from Barr Corporation.
31Received a cash dividend of $2 per share from Snoop Corporation.
Instructions
Journalize the transactions.
4) Leaf Industries is preparing its master budget for 2013. Relevant data pertaining to
its sales budget are as follows:
Sales for the year are expected to total 8,000,000 units. Quarterly sales are 25%, 30%,
15%, and 30%, respectively. The sales price is expected to be $2.00 per unit for the first
quarter and then be increased to $2.20 per unit in the second quarter.
Instructions
Prepare a sales budget for 2013 for Leaf Industries.
SO: 3, Bloom: AP,
5) The correction of an error in previously issued financial statements is known as a
_________________.
6) The basic principles in the development of an accounting information system are
(1)________________, (2)________________, and (3)_______________.
7) The difference between the cash in bank balance shown on the company’s books and
the cash balance shown on the bank statement may be caused by ______________ and
by ______________ in recording transactions by either party.
8) Indicate whether each of the following would appear on the:
ACost of goods manufactured schedule
BIncome statement
CBalance sheet
Note: If it would appear in more than just one, indicate which ones.
______ 1> Cost of goods sold
______ 2> Finished goods inventory, 12/31
______ 3> Direct materials used
______ 4> Raw materials inventory, 1/1
______ 5> Insurance on factory equipment
______ 6> Work in process, 12/31
______ 7> Indirect labor
______ 8> Property taxes on office building
9) Wesley Company adds materials at the beginning of the process and conversion costs
are incurred uniformly throughout the process.
Instructions
Complete the following calculation of equivalent units for materials and conversion
costs.
Equivalent Units
Physical UnitsMaterialsConversion Costs
Completed and transferred out40,000
Ending work in process
Materials
Conversion costs, 80% complete10,000
Total units