Income statements for Maltese Corp. for the past two years are as follows:
(amounts in thousands of dollars)
REQUIRED:
1)Prepare common-size comparative income statements for the two years for Maltese
Corp.
2) What observations can you make about the common-size statements? List at least
four observations.
3)Prepare comparative income statements for Maltese Corp., including columns for the
dollars and for the percentage increase or decrease in each item on the statement.
4)Assume that you are interested in identifying reasons for the changes in selling and
administrative expenses and income tax expense. Explain where you would look to find
additional information about the change.
Match each of the following terms related to interest and time value of money
calculations to their appropriate definition.
a.Time value of money
b.Simple interest
c.Compound interest
d.Future value of a single amount
e.Present value of a single amount
f.Annuity
g.Future value of an annuity
h.Present value of an annuity
The amount that will be accumulated in the future when a series of payments is invested
and accrues interest until the future time.
Interest expense is computed annually when a bond is issued for other than its face
value. For a bond issued at a premium, how will this component change as the bond
approaches maturity?
a.Decrease
b.Increase
c.Remain constant
d.Not enough information given to decide.
Select the term from the list below that matches each of the following six descriptions.
a.Interest
b.Maturity value
c.Principal
d.Payee
e.Discounting
f.Term
g.Recourse
h.Implicit
i.Maker
The most common type of receivables is accounts receivable.
a.True
b.False
Winslet Corp. prepares monthly bank reconciliations of its checking account balance.
The bank statement for May, 2014, indicated the following:
An analysis of canceled checks and deposits and the records of Winslet Corp. revealed
the following items:
The correct amount of check #4456 is $760. It was recorded as a cash disbursement of
$670 by mistake. The check was issued to pay for merchandise purchases. The check
appeared on the bank statement correctly.
A)Prepare a bank reconciliation schedule at May 31, 2014 in proper form.
B)Explain how checking accounts, bank statements, and bank reconciliations are used
by Winslet to control its cash.
If Paulson Transport continues to use the ship in its eleventh year, what is the correct
accounting procedure?
a.Take the asset off the books and record a gain on the disposal
b.Continue to depreciate it
c.The company may not use it any longer
d.No longer depreciate it but leave it on the records at its book value at the end of its
useful life
Norys Corp. received an 8-month, 9% note for $100,000 from its agent on October 1,
2014. The note is due on May 30, 2015. If Norys’ accounting period ends on December
31, 2014, how much interest revenue should Norys recognize during 2014 and 2015?
All transactions refer to external events.
a.True
b.False
Marsh Corporation borrowed $90,000 by issuing a 12%, six-month note payable, all
due at the maturity date. After one month, the company’s total liability for this loan
amounts to:
a. $90,450
b. $90,000
c. $90,900
d. $91,800
From the following list, select the proper section from the statement of cash flows in
which it would be classified.
a.Operating Activities
b.Investing Activities
c.Financing Activities
Received cash from the sale of a building
Select the account that would be increased to show each of the following costs.
a.Land
b.Land Improvements
c.Buildings
d.Machinery and Equipment
e.An Expense Account
The annual painting costs of an office building.
The term “chronological order” is best associated with:
a.a journal.
b.a trial balance.
c.credit entries.
d.capital stock.
Match each of the following terms pertaining to liabilities to their definitions.
a.Current liability
b.Accounts payable
c.Notes payable
d.Discount on notes payable
e.Current maturities of long-term liabilities
f.Accrued liabilities
g.Contingent liability
h.Estimated liability
Amounts owed for the purchase of inventory, goods, or services acquired in the normal
course of business.
Pilot Company reported the following information for 2015 and 2016.
How much cash was paid for insurance during 2016?
a. $13,300
b. $14,200
c. $15,100
d. $15,700
The following data is available for one of the products sold by Learning Tree, Inc.,
which uses the perpetual
inventory system:
Refer to the data for Learning Tree, Inc.
If the LIFO method is used, what is the amount assigned to the ending inventory on
May 30?
If a company overstates its ending inventory for the current year, what are the effects on
cost of goods sold and net income for the current year?
PatentCopyright
GoodwillRevenue expenditure
Natural resourcesResearch and development costs TrademarkCapital expenditure
_______________________________is (are) the expenditure(s) incurred in the
discovery of new knowledge and the translation of research into a design or plan for a
new product.
Grenada Corporation
Use the note on Disclosure of Leases for the Grenada Corporation to answer the
questions that follow.
The Corporation leases office, warehouse and showroom space, retail stores and office
equipment under operating leases, which expire no later than 2029. The Corporation
normalizes fixed escalations in rental expense under its operating leases. Minimum
annual rentals under non-cancelable operating leases, excluding operating cost
escalations and contingent rental amounts based upon retail sales, are payable as
follows:
Rent expense was $12,551,000; $8,911,000; and $5,768,000 for the years ended March
31, 2014, 2013,and 2012 respectively. Review the information for Grenada
Corporation.
Review the information for Grenada Corporation.
REQUIRED:
The note disclosure mentions contingent rent payments. What do you think this means
with regard to Grenada Corporation?
_____________________depreciation is the GAAP depreciation method used most
frequently.