1) Utah Corp.
Use the following selected data and additional information from the records of Utah
Corp. to answer the questions that follow.
Additional information:
Review the data for Utah Corp.
REQUIRED:
(A) What amount of cash was collected from customers during 2014?
(B) What is the amount paid for purchases of merchandise during 2014?
(C) What is the amount paid for operating expenses during 2014?
2) Realistic Sounds unadjusted bank balance amounted to $3,000. Outstanding checks
amounted to $500 and deposits in transit totaled $300. Based on this information alone,
Realistics adjusted cash balance is:
A.$3,200
B.$3,300
C.$2,800
D.$2,700
3) [APPENDIX] The attitude of the Financial Accounting Standards Board toward
deferred tax liabilities is that they are
A.an amount that results in a future obligation and meets the definition of a liability
B.a bookkeeping item that is used merely to maintain equality of the accounting
equation
C.not true liabilities because the balance increases every year
D.not payable in the immediate future so it not necessary to record them
4) Georgy Company had the following data available for 2014 (before making any
adjustments):
Accounts receivable, 12/31/14 $343,200 (Dr.)
Allowance for doubtful accounts 3,800 (Cr.)
Net credit sales, 2014 829,000 (Cr.)
REQUIRED:
1> Identify and analyze the adjustment needed to estimate bad debts under the
following assumptions:
(a) Bad Debts Expense is expected to be 3% of net credit sales for the year and
(b) Georgy expects it will not be able to collect 7% of the balance in accounts
receivable at year-end.
2> Assume instead that the balance in the allowance account is ($3,800) or $3,800 (Dr).
How will this affect your answers to (1)?
5) Based on its income for the month, Reel Company estimates that federal income
taxes for the month of May will be $11,000. What is the effect of the adjustment on the
financial statements?
A.Increase retained earnings
B.Increase income taxes expense
C.Increase net income
D.Decrease income taxes payable
6) The three forms of business entities are:
A.Government, cooperatives, and philanthropic organizations
B.Financing, investing, and operating
C.Sole proprietorships, partnerships, and corporations
D.Wholesaler, manufacturer, and retailer
7) Clarke Shop purchased supplies at a cost of $18,000 during 2014. At January 1,
2014, the beginning balance in the supplies account was $1,000. For 2014, supplies
expense was $16,000. How much “Supplies” are on hand as of December 31, 2014?
A.$ 1,000
B.$ 3,000
C.$16,000
D.$17,000
8) Which of the following items would be considered a cash equivalent if it was held at
the balance sheet date?
A.U.S. Treasury bill purchased when there were 90 days until maturity
B.Commercial paper with a 6-month maturity which was purchased at the issue date
C.The common stock of a company traded on the New York Stock Exchange which was
purchased 30 days before the balance sheet date
D.U.S. Treasury note which matures 2 years after it is issued and which was purchased
4 months before the balance sheet date
9) Agee Corp.
The data presented below for Agee Corp. is for the year ended December 31, 2014
See the data for Agee Corp.
If Agee Corp. estimates its bad debt to be 1% of net credit sales, what will be the
balance in the Allowance for Doubtful Accounts account after the adjustment for bad
debts?
A.$12,400
B.$13,700
C.$14,000
D.$15,000
10) An invoice received from a supplier for $8,000 on January 1 with terms 1/15, n/30
means that the company should pay
A.$7,920 before the end of January
B.either $7,920 before January 16 or $8,000 before the end of the month
C.$8,000 between January 2 and January 16
D.$6,800 before January 16
11) There are three elements to the accounting equation: assets, liabilities, and
stockholders equity. Below are five possible types of transactions. For each of these five
types, write descriptions of a example that would illustrate this type of transaction.
12) On January 1, 2014, Horton Solutions began business. The company offers scalable
cloud computing to small businesses for a monthly fee of $0.25 per gigabyte, $.05 per
hour for public IP addresses, and $.01 per hour for Internet services. During January,
150 companies signed up for the service, and each will have until the fifth of the
following month to pay the monthly fee. By the end of January, 120 companies had
paid the monthly fee for an average company usage of 100 gigabytes. In addition, IP
addresses were accessed for an average of 680 hours per company and Internet services
averaged 600 hours per company during January. Assume that Horton Solutions uses
the accrual basis of accounting.
REQUIRED
1> Prepare the Revenues section of Horton Solutions income statement for the month of
January.
2> Prepare the Cash Receipts section of Horton Solutions statement of cash flows for
the month of January.
3> In addition to the Cash account, what other account will appear on Horton Solutions
balance sheet at the end of January? What amount will be in this account?
13) If a 12% interest rate is compounded quarterly for 3 years, then there would be
__________________________ compounding periods.
14) What importance is placed on a company’s stock price in the ratio analysis of a
company? Explain.
15) ___________________________ include any amount that has been incurred due to
the passage of time, but not paid as of the balance sheet date.
16) The one asset account that never requires adjustment at the end of the period is
____________________.