Utah Corp.
Use the following selected data and additional information from the records of Utah
Corp. to answer the questions that follow.
Additional information:
(1)Equipment with a cost of $15,000 and a book value of $3,000 was sold for $5,000
during 2016.
(2)Common stock was issued to retire bonds payable during 2016.
(3)The only items affecting retained earnings in 2016 were net income and dividends
declared and paid.
Review the data for Utah Corp.
REQUIRED:
(A)Prepare the investing activities section of a statement of cash flows for 2016 for
Utah Corp.
(B)Prepare the financing activities section of a statement of cash flows for 2016 for
Utah Corp.
For each of the following, calculate the cost of inventory reported on the balance sheet.
(a)The total merchandise inventory counted at the end of the year was $63,000.
Purchases for
$6,000 are in transit under FOB shipping point terms.
(b)The total merchandise inventory counted at the end of the year was $75,000.
Purchases for $5,000 are in transit under FOB destination terms.
Which of the following statements regarding the inclusion of liabilities on the statement
of cash flows is true?
a.Long-term liabilities generally affect the investing activities section.
b.A decrease in a current liability from the beginning to the end of the year is
accompanied by an inflow of cash.
c.All current liabilities affect the operating activities section.
d.A decrease in a current liability from the beginning to the end of the year is
accompanied by a decrease of cash.
Which of the following is an example of a contingent liability?
a.A corporate long-term employment contract with the chief executive officer.
b.A lawsuit pending against a restaurant chain for improper preparation of food.
c.A liability for notes payable with interest included in the face amount.
d.The liability for future warranty repairs on computers sold during the current period.
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
Sold equipment no longer used in the business
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
The portion of a long-term liability that will be paid within one year of the balance
sheet date.
Latahmer Corporation is reconciling its May bank account. For each item listed, state
how it would be handled on the bank reconciliation.
a.Addition to bank balance
b.Subtraction from bank balance
c.Addition to book balance
d.Subtraction from book balance
e.Would not appear on the May reconciliation
Customer’s check which was deposited on May 31 is not listed on the bank statement
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 percentage of earnings paid out as dividends.
For each ratio listed, select whether an increase or decrease in the ratio is generally
considered to be better.
a.increase
b.decrease
Current ratio
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 the data for Mellon Corporation.
If Mellon estimates its bad debts at 2% of net credit sales, what amount will be reported
as bad debt expense for 2015?
a. $25,800
b. $27,000
c. $28,800
d. $30,000
A contra-asset account used to reduce accounts receivable to its net realizable value is
known as a(n)
____________________.
On January 1, 2015, Davin Avenue Associates, Inc. purchased a copier for $6,000 cash
and decided to depreciate it over 5 years. What amounts associated with the copier will
appear on Davin’s financial statements for the year ending December 31, 2015?
If a company overstates its ending inventory balance for 2015 by $10,000, and
overstates its ending inventory balance for 2014 by $5,000 what are the effects on its
net income for 2015 and 2014?
If a company understates its ending inventory balance for 2015 by $15,500, what are
the effects on its net income for 2015 and 2014?
