FIN 468 The accountant for Darden

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The accountant for Darden Corp. was preparing a bank reconciliation as of April 30,

2014. The following items were identified:

In addition, Darden made an error in recording a customer’s check; the amount was

recorded in cash receipts as

$150; the bank recorded the amount correctly as $510. What amount will Darden report

as its adjusted cash balance at April 30, 2014?

a. $44,650

b. $45,890

c. $46,110

d. $46,250

Calzone, Inc. signs a 9% 4-month $50,000 loan with Reliable Bank on October 1, 2015.

Determine the effects on the accounting equation for the following items:

A.The signing of the loan on October 1, 2015 by Calzone, Inc.

B.The recording of the interest on December 31, 2015 by Calzone, Inc.

Identify the classifications of the following accounts as either current or long-term

liabilities for the December 31, 2014 balance sheet.

a.Current liability

b.Long-term liability

An amount of money owed in 2015 to a creditor as an annual installment payment on a

ten-year note, due June 30, 2020.

Use the following codes to indicate how the cash flow effect, if any, of each transaction

or event would be reported on a statement of cash flows if the operating activities

section is prepared using the indirect method.

a.Operating activity-add to net income

b.Operating activity-deduct from net income

c.Inflow from investing activity

d.Outflow from investing activity

e.Inflow from financing activity

f.Outflow from financing activity

g.Noncash investing and financing activity

h.Not reported on statement of cash flows

Increased the accounts receivable balance.

Identify the classifications of the following accounts as either current or long-term

liabilities for the December 31, 2014 balance sheet.

a.Current liability

b.Long-term liability

Estimated warranty payable by June 30, 2015.

Match the following choices to the listed situation.

a.a deferred expense

b.a deferred revenue

c.an accrued liability

d.an accrued asset

Income taxes are owed to the federal government at year end

Use the following codes to indicate how the cash flow effect, if any, of each transaction

or event would be reported on a statement of cash flows if the operating activities

section is prepared using the indirect method.

a.Operating activity-add to net income

b.Operating activity-deduct from net income

c.Inflow from investing activity

d.Outflow from investing activity

e.Inflow from financing activity

f.Outflow from financing activity

g.Noncash investing and financing activity

h.Not reported on statement of cash flows

Reissued treasury stock.

Identify where each of the following accounts would be reported on CocaCola’s

financial statements

a.Balance Sheet – Property, Plant, and Equipment

b.Balance Sheet – Intangible Assets

c.Balance Sheet – Current Assets

d.Balance Sheet – Other Assets

e.Income Statement – Operating Section

f.Income Statement – Other Revenue and Expense Section

g.Statement of Cash Flows

Amortization expense

For each of the following sentences, select the phrase or group of words that best

completes the statement.

a.Earnings per share

b.Dividend yield ratio

c.Dividend payout ratio

d.Leverage

e.Return on assets ratio

f.Return on common stockholders’ equity ratio

g.Debt-to-equity ratio

h.Price/earnings ratio

The measure of a company’s success in earning a return for the common stockholders.

Grant Company had the following data available for 2015 (before making any

adjustments):

1>Based on this information identify the effects of the transaction on the accounting

equation to recognize bad debts under the following assumptions:

(a)Bad debts expense is expected to be 3% of net credit sales for the year and

(b)Grant 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 of $3,800 is added to the

accounts receivable balance to arrive at net accounts receivable for 12/31/15, before

adjustment. How will this affect your answers to (1)?

Dayton Ridge Co. purchased new trucks at the beginning of 2015 for $600,000. The

trucks had an estimated life of 4 years and an estimated residual value of $50,000.

Dayton Ridge uses straight-line depreciation. At the beginning of 2016, Dayton Ridge

sold the trucks for $480,000 and purchased new trucks for $700,000. Determine the

following amounts:

A.Book value of the trucks at the end of 2015.

B.Gain (loss) on the sale of the trucks at the beginning of 2016 (Indicate the amount

and whether a gain or loss).

Connor Martin Corporation’s balance sheet showed the following amounts: Current

Liabilities, $10,000¾ Bonds Payable, $3,000¾ Lease Obligations, $4,000¾ and Notes

Payable, $600. Total stockholders’ equity was $12,000. The debt-to-equity ratio is:

a. 0.83.

b. 1.47.

c. 1.42.

d. 0.63.

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

A contra-liability account that represents interest deducted from a loan or note in

advance.

The data presented below is for Mellon Corporation for the year ended December 31,

2015:

Allowance for Doubtful Accounts [Credit Balance]

(Before adjustment at December 31, 2015) 3,000

Estimated amount of uncollectible accounts based on an aging analysis 31,000

Refer to information for Mellon Corporation.

If Mellon uses 2% of net credit sales to estimate its bad debts, what will be the balance

in the Allowance for Doubtful Accounts account after the adjustment for bad debts?

a. $33,000

b. $31,800

c. $27,000

d. $25,800

Exeter Corporation purchased a piece of equipment with a price of $80,000 on March 1,

2015. The amounts below are related to the equipment purchase. Match the items below

and explain why each revenue expenditure is not capitalized.

a.This item should be included as part of the cost of the equipment.

b.This item should be considered a revenue expenditure.

The company purchased a three-year liability insurance policy to cover possible

damage caused by the new equipment at a cost of $6,000.

For each of the following accounts, indicate whether it is a balance sheet account or an

income statement account.

a.Balance sheet account

b.Income statement account

Interest Revenue

Select the ratio that each statement below most properly satisfies.

a.Dividend yield ratio

b.Cash flow from operations to capital expenditures ratio

c.Debt service coverage ratio

d.Return on common stockholders’ equity ratio

e.Times interest earned ratio

f.Asset turnover ratio

g.Debt-to-equity ratio

h.Dividend payout ratio

i.Price/earnings ratio

A measure of a company’s success in earning a return for the common stockholders

An amount of money owed to a supplier based on the terms 2/20, n/40, for which no

note was executed.

A current ratio ofor better is usually considered a comfortable margin.

The totaling of each side of a T account is known as.

The following account balances are taken from the records of the Odessa Industries:

Odessa extends credit terms requiring full payment in 45 days, with no discount for

early payment. REQUIRED:

1) Compute Odessa’s accounts receivable turnover ratio for 2016 and 2015.

2)Compute the number of days’ sales in receivables for 2016 and 2015. Assume 360

days in a year.

3)Comment on the efficiency of Odessa’s collection efforts over the twoyear period.

Estimated Uncollectible Accounts

Refer to the data for Slammer Sports.

If the aging approach is used to estimate bad debts, how much is the net realizable value

of the accounts receivable at December 31, 2014?

Theprinciple attempts to associate with the revenue of the period, all costs necessary to

generate that revenue.

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.

Explain why the amounts are different for LIFO under periodic and perpetual inventory

systems.

Padagonian Company

Use the deferred tax account that appears in the financial statements of Padagonian

Company to answer the related questions.

Review the information for Padagonian Company.

REQUIRED:

(1) In your opinion, are deferred income taxes an appreciable portion of both long-term

liabilities and total liabilities? Why?

(2) What difference between accounting income and taxable income produces the

Deferred Income Taxes account?

(3) Will Padagonian eventually pay the deferred tax liability? When?

Sliders Company sells its merchandise only on credit. The following data is available at

December 31, 2014:

Refer to data for Sliders Company.

Determine the balance of Accounts Receivable at December 31, 2014.