1) In relation to inventory, differentiate between flow of cost and physical flow of
goods.
2) Indicate how each event affects the elements of financial statements. Use the
following letters to record your answer in the box shown below each element. You do
not need to enter amounts.
At June 30, 2012, the bank reconciliation of Swale Company reveals deposits in transit
of $2,000.
3) The College of Business Administration needs to distribute $12,000 received from an
anonymous donor and earmarked for three business student organizations, Beta Alpha
Psi (BAP), Delta Sigma Pi (DSP), and Beta Gamma Sigma (BGS). Relevant
information is provided below:
Assume that each organization wishes to obtain the highest funding possible.
Required:
1) Which cost driver will each organization recommend be used to distribute the funds?
2) Which cost driver would you recommend and why?
4) Alpha Company is considering purchasing equipment that costs $200,000. The
equipment has an estimated useful life of 8 years and no salvage value. Alpha believes
that the annual cash inflows from using the equipment will be $40,000.
Required:
1) Calculate the net present value of the equipment assuming that Alpha’s cost of capital
is 12%. Is the equipment an acceptable investment?
2) Calculate the net present value of the equipment assuming that Alpha’s cost of capital
is 10%. At this required rate of return, is the equipment an acceptable investment?
3) What general conclusion can you reach from your results to parts 1) and 2)?
5) Use the following information to prepare an income statement for Burleson
Company for the year ended December 31, 2012 .
1> revenue from services, $28,000
2> paid $10,000 cash for land
3> paid operating expenses, $21,000
4> paid dividends to stockholders, $4,000
5> issued $6,000 of common stock for cash
6) What is the purpose of the closing process?
7) Which type of stock, common or preferred, must all corporations have?
8) Indicate how each event affects the elements of financial statements. Use the
following letters to record your answer in the box shown below each element. You do
not need to enter amounts.
On October 1, 2012, Falls Company loaned $10,000 to a customer for one year at 6%
interest. Show the effect of this transaction on Falls’ financial statements.
9) Which financial statement provides information about how a business obtained and
spent cash during an accounting period?