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During the fiscal year ended June 30, 20X9, the city of Moorhead constructed a new
courthouse which was budgeted to cost $5,000,000. Moorhead used a capital projects
fund to account for the construction activities. In July of 20X8, a bid was accepted from
Diamond Construction to build the courthouse for $4,800,000. On June 15, 20X9,
Diamond completed construction and submitted a bill to the city for $4,900,000. The
city accepted the bill and paid Diamond the entire amount owed, except for a 10
percentage retainage. On the statement of revenues, expenditures, and changes in fund
balance prepared for the capital projects fund for the year ended June 30, 20X9,
expenditures should be reported at
A. $4,900,000.
B. $4,800,000.
C. $4,410,000.
D. $4,320,000.
In a private, not-for-profit hospital, which fund would record cash and investments
which have been restricted by the governing board for acquisitions of equipment and
construction of a new hospital addition?
A. The plant replacement and expansion fund.
B. The specific purpose fund.
C. The endowment fund.
D. The general fund.
The following transactions were among those reported by Cliff County's water and
sewer enterprise fund for 20X4:
Proceeds from sale of revenue bonds $5,000,000
Cash received from customer households 3,000,000
Capital contributed by subdividers 1,000,000
In the water and sewer enterprise fund's statement of cash flows for the year ended
December 31, 20X4, what amount should be reported as cash flows from capital and
related financing activities?
A. $9,000,000
B. $6,000,000
C. $8,000,000
D. $5,000,000
On January 2, 20X8, Johnson Company acquired a 100% interest in the capital stock of
Perth Company for $3,100,000. Any excess cost over book value is attributable to a
patent with a 10-year remaining life. At the date of acquisition, Perth's balance sheet
contained the following information:
Perth's income statement for 20X8 is as follows:
The balance sheet of Perth at December 31, 20X8, is as follows:
Perth declared and paid a dividend of 20,000 FCU on October 1, 20X8. Spot rates at
various dates for 20X8 follow:
Assume Perth's revenues, purchases, operating expenses, depreciation expense, and
income taxes were incurred evenly throughout 20X8.
Refer to the above information. Assuming the U.S. dollar is the functional currency,
what is Johnson's remeasurement gain (loss) for 20X8? (Assume the ending inventory
was acquired on December 31, 20X8.)
A. $31,000 gain
B. $36,500 loss
C. $22,000 gain
D. $32,000 gain
On December 31, 20X8, Mercury Corporation acquired 100 percent ownership of
Saturn Corporation. On that date, Saturn reported assets and liabilities with book values
of $300,000 and $100,000, respectively, common stock outstanding of $50,000, and
retained earnings of $150,000. The book values and fair values of Saturn's assets and
liabilities were identical except for land which had increased in value by $10,000 and
inventories which had decreased by $5,000.
Based on the preceding information, what amount of goodwill will be reported if the
acquisition price was $240,000?
A. $0
B. $40,000
C. $15,000
D. $35,000
On January 1, 20X9 Athlon Company acquired 30 percent of the common stock of
Opteron Corporation, at underlying book value. For the same year, Opteron reported net
income of $55,000, which includes an extraordinary gain of 40,000. It did not pay any
dividends during the year. By what amount would Athlon's investment in Opteron
Corporation increase for the year, if Athlon used the equity method?
A. $0
B. $16,500
C. $4,500
D. $12,000
Miguel Corporation and Forest Company merged as of January 1, 20X3. Miguel paid
finder’s fees of $36,000 and legal fees of $8,000. Miguel also paid audit fees related to
the stock issuance of $12,000, stock registration fees of $7,000, and stock listing
application fees of $3,000.
Based on the preceding information, under the acquisition method
A. $22,000 of stock issue costs are treated as a reduction in the issue price.
B. $22,000 of stock issue costs are expensed.
C. $66,000 of stock issue costs are classified as goodwill.
D. $66,000 of stock issue costs are expensed.
Which of the following transactions of a private voluntary health and welfare
organization would increase temporarily restricted net assets in the statement of
activities for the current year?
I. Received a contribution of $20,000 from a donor in the current year who stipulated
that the money not be spent until the following year.
II. Spent $25,000 for fund raising during the current year from a donation from the
previous year.
A. I only
B. Both I and II
C. II only
D. Neither I nor II
Parent Corporation purchased land from S1 Corporation for $220,000 on December 26,
20X8. This purchase followed a series of transactions between P-controlled
subsidiaries. On February 15, 20X8, S3 Corporation purchased the land from a
nonaffiliate for $160,000. It sold the land to S2 Company for $145,000 on October 19,
20X8, and S2 sold the land to S1 for $197,000 on November 27, 20X8. Parent has
control of the following companies:
Parent reported income from its separate operations of $200,000 for 20X8.
Based on the preceding information, what should be the amount of income assigned to
the controlling shareholders in the consolidated income statement for 20X8?
A. $369,400
B. $405,000
C. $465,000
D. $60,000
On January 1, 20X8, Chariot Company acquired 100 percent of Stryder Company for
$220,000 cash. The trial balances for the two companies on December 31, 20X8,
included the following amounts:
On the acquisition date, Stryder reported net assets with a book value of $170,000. A
total of $10,000 of the acquisition price is applied to goodwill, which was not impaired
in 20X8. Stryder's depreciable assets had an estimated economic life of 10 years on the
date of combination. The difference between fair value and book value of tangible
assets is related entirely to buildings and equipment. Chariot used the equity method in
accounting for its investment in Stryder. Analysis of receivables and payables revealed
that Stryder owed Chariot $10,000 on December 31, 20X8.
Based on the information provided, what amount of retained earnings will be reported
in the consolidated financial statements for the year?
A. $331,000
B. $110,000
C. $441,000
D. $456,000
Granite Company issued $200,000 of 10 percent first mortgage bonds on January 1,
20X4, at 105. The bonds mature in 10 years and pay interest semiannually on January 1
and July 1. Mortar Corporation purchased $140,000 of Granite's bonds from the
original purchaser on January 1, 20X8, for $122,000. Mortar owns 75 percent of
Granite's voting common stock. Granite’s partial bond amortization schedule is as
follows:
Based on the information given above, what amount of interest income will be eliminated
in the preparation of the 20X9 consolidated financial statements?
A. $16,420
B. $11,494
C. $16,103
D. $11,291
Culver owns 80 percent of the common stock of Fowler Company. Culver also
purchases some of Fowler's bonds directly from Fowler and holds the bonds as a
long-term investment. How is the acquisition of the bonds treated for consolidated
reporting purposes?
A. As a retirement of bonds.
B. As an increase in the Bonds Payable account on Fowler's books.
C. Everything related to the intercompany bonds is eliminated in the consolidation
worksheet, and nothing related to the bonds appears in the consolidated financial
statements.
D. As an increase in noncurrent assets.
Which of the following observations concerning encumbrances is NOT true?
A. Their purpose is to ensure that the expenditures within a period do not exceed the
budgeted appropriations.
B. They provide a control system and safeguard for governmental unit administrators.
C. They are a unique element of governmental accounting.
D. They are recognized only at the time disbursements are made.
The general fund of Gillette levied property taxes of $400,000 on November 1, 20X8.
However, the property taxes are not collectible until May and August of 20X9. Assume
Gillette reports on the calendar year. On Gillette's general fund balance sheet at
December 31, 20X8, the property taxes levied on November 1 should:
A. be reported as an asset and as a decrease in unassigned fund balance.
B. be reported as an asset and as an increase in unassigned fund balance.
C. be reported as an asset and as a reservation of fund balance.
D. be reported as an asset and as a deferred revenue.
Zeta Corporation and its subsidiary reported consolidated net income of $320,000 for
the year ended December 31, 20X8. Zeta owns 80 percent of the common shares of its
subsidiary, acquired at book value. Noncontrolling interest was assigned income of
$30,000 in the consolidated income statement for 20X8. What is the amount of separate
operating income reported by Zeta for the year?
A. $170,000
B. $150,000
C. $120,000
D. $200,000
How would a company report a change in an accounting principle made on the last day
of the third quarter?
A. Retrospective application to all pre-change interim periods reported.
B. No change is required.
C. Apply to current and prospective interim periods only.
D. Apply to prospective interim periods only.
Wright Company recently petitioned for bankruptcy and is now in the process of
preparing a statement of affairs. The carrying values and estimated fair values of the
assets of Wright Company are as follows:
Carrying Value Fair Value
Cash $10,000 $10,000
Accounts Receivable 60,000 20,000
Inventory 70,000 40,000
Land 90,000 75,000
Building (net) 200,000 150,000
Equipment (net) 80,000 25,000
Total $510,000 $320,000
Debts of Wright are as follows:
Accounts Payable $40,000
Wages Payable (all have priority) 6,000
Taxes Payable 12,000
Notes Payable (secured by receivables and inventory) 90,000
Interest on Notes Payable 5,000
Bonds Payable (secured by land and buildings) 200,000
Interest on Bonds Payable 8,000
Total $361,000
Based on the preceding information, what is the estimated dividend percentage?
A. 45 percent
B. 55 percent
C. 61 percent
D. 69 percent
Cinema Company acquired 70 percent of Movie Corporation's shares on December 31,
20X5, at underlying book value of $98,000. At that date, the fair value of the
noncontrolling interest was equal to 30 percent of the book value of Movie Corporation.
Movie's balance sheet on January 1, 20X8, contained the following balances:
On January 1, 20X8, Movie acquired 5,000 of its own $2 par value common shares
from Nonaffiliated Corporation for $6 per share.
Based on the preceding information, what will be the journal entry to be recorded on
Cinema Company's books to recognize the change in the book value of the shares it
holds?
A. Option A
B. Option B
C. Option C
D. Option D
What is the correct sequence in the expenditure process in governmental accounting?
A. Appropriation, Encumbrance, Expenditure, and Disbursement.
B. Encumbrance, Expenditure, Disbursement, and Appropriation.
C. Expenditure, Encumbrance, Disbursement, and Appropriation.
D. Appropriation, Expenditure, Encumbrance, and Disbursement.
On January 2, 20X8, Johnson Company acquired a 100% interest in the capital stock of
Perth Company for $3,100,000. Any excess cost over book value is attributable to a
patent with a 10-year remaining life. At the date of acquisition, Perth's balance sheet
contained the following information:
Perth's income statement for 20X8 is as follows:
The balance sheet of Perth at December 31, 20X8, is as follows:
Perth declared and paid a dividend of 20,000 FCU on October 1, 20X8. Spot rates at
various dates for 20X8 follow:
Assume Perth's revenues, purchases, operating expenses, depreciation expense, and
income taxes were incurred evenly throughout 20X8.
Refer to the above information. Assuming the U.S. dollar is the functional currency,
what is Perth's net income for 20X8 in U.S. dollars (include the remeasurement gain or
loss in Perth's net income)?
A. $238,000
B. $228,000
C. $219,500
D. $202,000
Neptune Corporation owns 70 percent of Pluto Company’s stock. On July 1, 20X4,
Neptune sold a piece of equipment to Pluto for $56,350. Neptune had purchased this
equipment on January 1, 20X1, for $63,000. The equipment’s original 15-year
estimated total economic life remains unchanged. Both companies use straight-line
depreciation. The equipment’s residual value is considered negligible.
Based on the information provided, in the preparation of the 20X5 consolidated income
statement, depreciation expense will be
A. debited for $350 in the consolidation entries.
B. credited for $350 in the consolidation entries.
C. debited for $700 in the consolidation entries.
D. credited for $700 in the consolidation entries.
On January 1, 20X9, A Company acquired 85 percent of B Company's voting common
stock for $425,000. At that date, the fair value of the noncontrolling interest of B
Company was $75,000. Immediately after A Company acquired its ownership, B
Company acquired 75 percent of C Company's stock for $150,000. The fair value of the
noncontrolling interest of C Company was $50,000 at that date. At January 1, 20X9, the
stockholders' equity sections of the balance sheets of the companies were as follows:
During 20X9, A Company reported operating income of $175,000 and paid dividends
of $50,000. B Company reported operating income of $125,000 and paid dividends of
$40,000. C Company reported net income of $100,000 and paid dividends of $25,000.
Based on the information provided, what amount of income will be assigned to the
noncontrolling interest in the consolidated income statement for 20X9?
A. $55,000
B. $25,000
C. $30,000
D. $43,750
Which of the following statements best describes limited partnerships?
A. In an LLP, there must be at least one general partner that is personally liable for the
obligations of the partnership and has management responsibilities.
B. There are no general or limited partners in a LP; each partner has the rights and
duties of a general partner, but limited legal liability.
C. The identifier LP or LLP need not be included in the name or identification of a
limited partnership.
D. If the presumption of control by the general partner can be overcome, the partner
would account for its investment using the equity method of accounting.
On December 1, 20X8, Winston Corporation acquired 100 shares of Linked
Corporation at a cost of $40 per share. Winston classifies them as available-for-sale
securities. On this same date, it decides to hedge against a possible decline in the value
of the securities by purchasing, at a cost of $250, an at-the-money put option to sell the
100 shares at $40 per share. The option expires on February 20, 20X9. Selected
information concerning the fair values of the investment and the options follow:
Assume that Winston exercises the put option and sells Linked shares on February 20,
20X9.
Based on the preceding information, what is the market price of Linked Corporation stock
on December 31, 20X8?
A. $40
B. $37
C. $36
D. $38
All of the following are elements of the statement of financial condition for state and
local governments with the exception of:
A. Assets and Liabilities
B. Deferred inflow and outflow of resources
C. Net position
D. Inflow and outflow of resources
Granite Company issued $200,000 of 10 percent first mortgage bonds on January 1,
20X4, at 105. The bonds mature in 10 years and pay interest semiannually on January 1
and July 1. Mortar Corporation purchased $140,000 of Granite's bonds from the
original purchaser on December 31, 20X8, for $125,000. Mortar owns 75 percent of
Granite's voting common stock. Granite’s partial bond amortization schedule is as
follows:
Based on the information given above, what amount of premium on bonds payable will be
eliminated in the preparation of the December 31, 20X9 consolidated financial statements?
A. $5,097
B. $3,568
C. $5,614
D. $3,930
Granite Company issued $200,000 of 10 percent first mortgage bonds on January 1,
20X4, at 105. The bonds mature in 10 years and pay interest semiannually on January 1
and July 1. Mortar Corporation purchased $140,000 of Granite's bonds from the
original purchaser on December 31, 20X8, for $125,000. Mortar owns 75 percent of
Granite's voting common stock. Granite’s partial bond amortization schedule is as
follows:
Based on the information given above, what amount of premium on bonds payable will be
eliminated in the preparation of the December 31, 20X8 consolidated financial statements?
A. $4,276
B. $6,108
C. $6,581
D. $4,607
Tinitoys, Inc., a domestic company, purchased inventory from a Brazilian company for
500,000 Brazilian reals (Br. reals) on May 1, 20X2. Payment is due on June 30, 20X2.
On May 1, 20X2, Tinitoys also entered into a 60-day forward contract to purchase
500,000 Brazilian reals. The forward contract is not designated as a hedge. Tinitoys’
fiscal year ends on May 31. The direct exchange rates were as follows:
Spot Rate Forward Rate
May 1, 20X2 $0.523 $0.525 (60 days)
May 31, 20X2 $0.516 $0.52 (30 days)
June 30, 20X2 $0.508
Based on the preceding information, the entries on June 30, 20X2, include a
A. debit to Dollars Payable to Exchange Broker, $262,500.
B. credit to Cash, $254,000.
C. credit to Premium on Forward Contract, $6,000.
D. credit to Foreign Currency Receivable from Exchange Broker, $262,500.
Winner Corporation acquired 80 percent of the common shares and 70 percent of the
preferred shares of First Corporation at underlying book value on January 1, 20X9. At
that date, the fair value of the noncontrolling interest in First's common stock was equal
to 20 percent of the book value of its common stock. First's balance sheet at the time of
acquisition contained the following balances:
The preferred shares are cumulative and have a 10 percent annual dividend rate and are
four years in arrears on January 1, 20X9. All of the $5 par value preferred shares are
callable at $6 per share. During 20X9, First reported net income of $100,000 and paid
no dividends.
Based on the preceding information, the amount assigned to noncontrolling
stockholders' share of preferred stock interest in the preparation of a consolidated
balance sheet on January 1, 20X9, is:
A. $40,000
B. $42,000
C. $36,000
D. $48,000
Consolidated net income may include the parent's separate operating income plus the
parent's share of the subsidiary's reported net income:
A. plus the unrealized profit on upstream intercompany sales of inventory made during
the current year.
B. plus the profit realized this year from upstream intercompany sales of inventory
made last year.
C. plus unrealized profit on downstream intercompany sales of inventory made during
the current year.
D. minus the parent's share of profit realized this year from upstream intercompany
sales of inventory made last year.
A statutory consolidation is a type of business combination in which:
A. one of the combining companies survives and the other loses its separate identity.
B. one company acquires the voting shares of the other company and the two
companies continue to operate as separate legal entities.
C. two publicly traded companies agree to share a board of directors.
D. each of the combining companies is dissolved and the net assets of both companies
are transferred to a newly created corporation.
Paccu Corporation acquired 100 percent of Sallee Company’s common stock on
January 1, 20X7. Balance sheet data for the two companies immediately following the
acquisition follow:
Paccu Sallee
Cash $50,000 $30,000
Accounts Receivable 60,000 35,000
Inventory 130,000 45,000
Land 75,000 60,000
Buildings and Equipment 310,000 170,000
Less: Accumulated Depreciation (130,000) (30,000)
Investment in Sallee Company Stock 250,000
Total Assets $745,000 $310,000
Accounts Payable $40,000 $35,000
Taxes Payable 30,000 12,000
Bonds Payable 250,000 50,000
Common Stock 75,000 75,000
Retained Earnings 350,000 138,000
Total Liabilities and Stockholders’ Equity $745,000 $310,000
At the date of the business combination, the book values of Sallee’s assets and liabilities
approximated fair value except for inventory, which had a fair value of $55,000, and
land, which had a fair value of $65,000. The fair value of land for Paccu Corporation
was estimated at $90,000 immediately prior to the acquisition.
Based on the preceding information, what is the differential associated with the
acquisition?
A. $15,000
B. $20,000
C. $22,000
D. $37,000
On January 1, 20X8, Chariot Company acquired 100 percent of Stryder Company for
$220,000 cash. The trial balances for the two companies on December 31, 20X8,
included the following amounts:
On the acquisition date, Stryder reported net assets with a book value of $170,000. A
total of $10,000 of the acquisition price is applied to goodwill, which was not impaired
in 20X8. Stryder's depreciable assets had an estimated economic life of 10 years on the
date of combination. The difference between fair value and book value of tangible
assets is related entirely to buildings and equipment. Chariot used the equity method in
accounting for its investment in Stryder. Analysis of receivables and payables revealed
that Stryder owed Chariot $10,000 on December 31, 20X8.
Based on the information provided, the differential associated with this acquisition is:
A. $36,000.
B. $40,000.
C. $10,000.
D. $50,000.
Pone Company purchased 100 percent of Sone Inc. on January 1, 20X9 for $625,000.
Sone reported earnings of $76,000 and declared dividends of $8,000 during 20X9.
Based on the preceding information and assuming Pone uses the equity method to
account for its investment in Sone, what is the balance in Pone’s Investment in Sone
account on December 31, 20X9, prior to consolidation?
A. $617,000
B. $625,000
C. $633,000
D. $693,000
Peter Architectural Services owns 100 percent of Smith Manufacturing. During the
course of 20X8 Peter provides $100,000 of architectural services associated with
Smith's new manufacturing facility, which will open January 4, 20X9, and has a 5 year
useful life. Explain the impact providing this service has on Peter Architectural
Services' 20X8 and 20X9 consolidated financial statements.
Rivendell Corporation and Foster Company merged as of January 1, 20X9. To effect the
merger, Rivendell paid finder's fees of $40,000, legal fees of $13,000, audit fees related
to the stock issuance of $10,000, stock registration fees of $5,000, and stock listing
application fees of $4,000.
Based on the preceding information, under the acquisition method:
A. $72,000 of stock issue costs are treated as goodwill.
B. B. $19,000 of stock issue costs are treated as a reduction in the issue price.
C. C. $19,000 of stock issue costs are expensed.
D. D. $72,000 of stock issue costs are expensed.
The government-wide financial statements prepared for a municipality should include
assets acquired by the following funds:
The following condensed balance sheet is presented for the partnership of H, I, and J
who share profits and losses in the ration of 4:3:3, respectively:
Cash $50,000
Other Assets 300,000
Total $350,000
Liabilities $80,000
H, Capital 150,000
I, Capital 70,000
J, Capital 50,000
Total $350,000
The partners agree to liquidate the partnership after selling the other assets.
Refer to the above information. If the other assets are sold for $140,000 and all partners
are personally insolvent, how much should I receive upon liquidation?
A. $0
B. $2,000
C. $6,600
D. $22,000
A stock dividend of 2,000 shares on its $5 par value common stock
The current market price per share of Agro stock on January 1, 20X9, is $15.
Required:
Give the investment elimination entry required to prepare a consolidated balance sheet
at the close of business on January 1, 20X9, for each of the alternative transactions
under consideration by Agro Corporation.
On January 2, 20X2, Kentucky Company acquired 70% of Bluegrass Corporation’s
common stock for $420,000 cash. At the acquisition date, the book values and fair
values of Bluegrass’ assets and liabilities were equal, and the fair value of the
noncontrolling interest was equal to 30% of the total book value of Bluegrass. The
stockholders’ equity accounts of the two companies at the acquisition date are as
follows:
Kentucky Bluegrass
Common Stock ($10 par value) $600,000 $350,000
Additional Paid-In Capital 450,000 50,000
Retained Earnings 250,000 200,000
Total Stockholders’ Equity $1,300,000 $600,000
Noncontrolling interest was assigned income of $15,000 in Kentucky’s consolidated
income statement for 20X2.
Based on the preceding information, what will be the amount of net income reported by
Bluegrass Corporation in 20X2?
A. $45,000
B. $50,000
C. $75,000
D. $105,000
Paco Company acquired 100 percent of the stock of Garland Corp. on December 31,
20X8. The stockholder's equity section of Garland's balance sheet at that date is as
follows:
Paco financed the acquisition by using $880,000 cash and giving a note payable for
$400,000. Book value approximated fair value for all of Garland's assets and liabilities
except for buildings which had a fair value $60,000 more than its book value and a
remaining useful life of 10 years. Any remaining differential was related to goodwill. Paco
has an account payable to Garland in the amount of $30,000.
Required:
1) Present all consolidating entries needed to prepare a consolidated balance sheet
immediately following the acquisition.
2) What additional consolidating entry must be prepared at December 31, 20X9?
The CFO of a “Not-for-Profit” hospital is making a presentation at your college. The
presentation is for Business and Health-Science majors. During the presentation the
CFO mentions assets being reported “above the line.” On the way out your roommate a
health-science major asks, you an accounting major, to explain what the CFO was
referring to. What do you respond?
Private Not-For-Profit (NFP) Entities.
Select from this list of terms to answer the following questions.
Indicate your choice by entering the letter corresponding to the correct term. A term
may be used more than once or not at all.
”Reported as an expenditure of the fund using plant and equipment” describes which
term listed above?
The following condensed balance sheet is presented for the partnership of Dunn, Lott,
and Tyler who share profits and losses in the ratio of 7:2:1, respectively.
Cash $30,000
Other assets 150,000
$180,000
Liabilities $60,000
Dunn, Capital 50,000
Lott, Capital 40,000
Tyler, Capital 30,000
$180,000
The partners agreed that the partnership would be liquidated after selling the other
assets. All partners are personally insolvent. What would each of the partners receive if
the other assets are sold for $70,000?
Dunn Lott Tyler
A. $6,000 $24,000 $22,000
B. $0 $21,000 $19,000
C. $50,000 $40,000 $30,000
D. $0 $20,000 $20,000
During the fiscal year ended June 30, 20X9, an enterprise fund of St. Cloud acquired
computer equipment costing $110,000 on account and issued $400,000 of long-term
bonds. Revenues of the enterprise fund will be used to repay bond interest and
principal. What effect did these transactions have on St. Cloud's enterprise fund assets
and long-term debt?
Eagle Company recently petitioned for bankruptcy and is now in the process of
preparing a statement of affairs. The following information has been assembled for this
statement:
What amount will be paid to the fully secured creditors and the creditors with priority?
Boycott Company holds 75 percent ownership of Fred Corporation. The consolidated
balance sheets as of December 31, 20X8, and December 31, 20X9, are as follows:
The 20X9 consolidated income statement contained the following amounts:
Boycott acquired its investment in Fred on January 1, 20X6, for $120,000. At that date,
the fair value of the noncontrolling interest was $40,000, and Fred reported net assets of
$130,000. A total of $20,000 of the differential was assigned to goodwill. The
remainder of the differential was assigned to equipment with a remaining life of 10
years from the date of combination.
Boycott sold $100,000 of bonds on December 31, 20X9, to assist in generating
additional funds. Fred reported net income of $20,000 for 20X9 and paid dividends of
$10,000. Boycott reported 20X9 equity-method net income of $75,000 paid dividends
of $20,000 for the year.
Required:
1) Prepare a worksheet to develop a consolidated statement of cash flows for 20X9
using the indirect method of computing cash flows from operations.
2) Prepare a consolidated statement of cash flows for 20X9.
Siera, Lani, and Cecilia are partners in an equipment leasing business that has not been
able to generate the type of revenue expected by the partners. They share profits and
losses in a ratio of 5:3:2, respectively. They have decided to liquidate the business and
have sold all the assets except for one piece of heavy machinery. All the partners are
personally insolvent. The machinery has a book value of $120,000, and the partners
have capital balances as follows:
Siera, Capita $40,000
Lani, Capital $20,000
Cecilia, Capital $30,000
Each of the following is an independent case.
Refer to the information given above. What amount of cash will each partner receive as
a liquidating distribution if the machinery is sold for $51,000?
Siera Lani Cecilia
A. $5,000 $0 $16,000
B. $5,000 $700 $16,000
C. $5,500 $0 $16,200
D. $5,500 $700 $16,200
