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TCO A) Assets include _____.

 

prepaid insurance and prepaid rent
 

dividends paid to shareholders

 

 

loans obtained by the company
 

stockholders’ investment in the business    

 

(TCO A) Which of the following accounts is recorded as part of stockholders’ equity on the balance sheet?

 

Long-term debt
 

Retained earnings

 

 

Revenue
 

Expenses

 

 

(TCO A) Which of the following is not a current liability?

 

Unearned revenue
 

Accounts payable

 

 

Accrued liabilities
 

Prepaid expenses

 

 

TCO B) For 2014, EAB Corporation reported net income of $78,750; net sales of $1,378,125; and weighted average shares outstanding of 10,500. There were no preferred dividends. What was the 2014 earnings per share?

 

$17.50
 

$7.50

 

 

$75.00
 

$131.25

 

 

 

 

 

 

 

 

 

 

TCO B) For 2014, EAB Corporation reported net income of $78,750; net sales of $1,378,125; and weighted average shares outstanding of 10,500. There were no preferred dividends. What was the 2014 earnings per share?

 

$17.50
 

$7.50

 

 

$75.00
 

$131.25

 

 

TCO B) In periods of rising prices, which of the following inventory methods results in the lowest income taxes?

 

Average cost method
 

FIFO

 

 

LIFO
 

Cannot be determined based on the information given

 

 

(TCO C) Selling a long-term asset is an example of a(n) _____.

 

operating activity
 

investing activity

 

 

financing activity
 

noncash investing and financing activity

 

 

(TCO D) Dividends declared are reported on which of the following statements?

 

Income statement
 

Statement of retained earnings

 

 

Balance sheet
 

Statement of financial position

 

 

 

 

 

(TCO D) What is the correct order to create the financial statements?

 

Balance sheet, income statement, statement of retained earnings, and statement of cash flows
 

Statement of cash flows, balance sheet, statement of retained earnings, and income statement

 

 

Income statement, statement of retained earnings, balance sheet, and statement of cash flows
 

Income statement, balance sheet, statement of retained earnings, and statement of cash flows

 

 

 

(TCO E) Which of the following is an objective of internal control?

 

Risk assessment
 

Information technology

 

 

Adequate records
 

Comply with legal requirements

 

 

(TCO E) Which of the following is an objective of internal control?

 

Risk assessment
 

Information technology

 

 

Adequate records
 

Comply with legal requirements

 

 

(TCO F) The accounting term used to indicate recording an expense before paying cash for the item is _____.

 

deferral
 

accrual

 

 

depreciation
 

prepayment

 

 

 

 

 

 

1.(TCOs A and E) Your friend, Lisa, has hired you to evaluate the following internal control procedures.

Explain to your friend whether each of the numbered items below is an internal control strength or weakness. You must also state which internal control procedure relates to each of the internal controls.

For the weaknesses, you also need to state a recommendation for improvement.

(1) Paychecks are left on the desk for pick-up. (2) Supervisors count cash receipts daily. (3) Invoices are pre-numbered. (4) Bonding of the cashiers is required. (5) The accountant purchases and pays for supplies.

 

 

 

2.(TCOs B and D) Please prepare the following journal entries. Indicate which account should be debited and which account should be credited, along with the dollar amount of the debit and credit.   (1) Investors invest $300,000 in exchange for 30,000 shares of common stock.

(2) Company made payment on account for $500.

(3) Employees work Monday through Friday and are paid on Friday. Salary expense is $20,000 per day, and December 31 falls on a Tuesday.

(4) Company purchased Supplies for $2,000.

(5) The company needs to record Supplies used for $500.

 

 

 

 

 

 

 

3.(TCOs B and D) The following items are taken from the financial statements of Lacey Company for 2017.

Note some information may not be relevant for the required calculations below. 

Advertising Expense

$14,000

Accounts Receivable

12,000

Cost of Goods Sold

65,000

Accumulated Depreciation—Equipment

20,000

Accounts Payable

21,000

Cash

44,000

Depreciation Expense

17,000

Common Stock

100,000

Dividends

25,000

Insurance Expense

5,000

Note Payable (due 2020)

70,000

Rent Expense

4,000

Prepaid Insurance

17,000

Retained Earnings (beginning)

22,000

Salaries Expense

50,000

Salaries Payable

3,500

Net sales

175,000

Supplies

4,000

Supplies Expense

3,000

Equipment

210,000

Instructions (Must show your work for each part to receive partial credit):

(a) Calculate the net income. (18 points)

(b) Calculate the ending balance of Retained Earnings that would appear on a balance sheet at December 31, 2017. (7 points)

(c) Calculate the gross profit percentage. (5 points)

 

 

4.(TCO D) The following items are taken from the general ledger of SRW Company at the end of December 2017.

Note some information may not apply to the financial statement.  

Cash

$375,000

Accounts Receivable

125,000

Prepaid Insurance

100,000

Accounts Payable

88,000

Unearned Service Revenue

15,000

Equipment, net of accumulated depreciation

177,000

Common Stock

125,000

Retained Earnings (beginning)

106,000

Long-term debt

336,500

Service revenue

225,000

Cost of Goods Sold

62,500

Rent expense

30,000

Supplies expense

8,000

Insurance expense

18,000

Instructions:   (a) Please create a classified Balance Sheet in good form for the year ended 2017. (25 points)

(b) Please calculate the current ratio.  (5 points)

 

 

TCO A) Assets include _____.

 

 

prepaid insurance and prepaid rent

 

 

dividends paid to shareholders

 

 

loans obtained by the company

 

 

stockholders’ investment in the business

 

 

 

 

 

(TCO A) Which of the following accounts is recorded as part of stockholders’ equity on

the balance sheet?

 

 

Long

–

term debt

 

 

Retained earnings

 

 

Revenue

 

 

Expenses

 

 

(TCO A) Which of the following is not a current liability?

 

 

Unearned revenue

 

 

Accounts payable

 

 

Accrued liabilities

 

 

Prepaid expenses

 

 

TCO B) For 2014, EAB Corporation reported net income of $78,750; net sales of

$1,37

8,125; and weighted average shares outstanding of 10,500. There were no

preferred dividends. What was the 2014 earnings per share?

 

 

$17.50

 

 

$7.50

 

 

$75.00

 

 

$131.25

 

 

 

 

 

 

 

TCO A) Assets include _____.

 

prepaid insurance and prepaid rent

 

dividends paid to shareholders

 

loans obtained by the company

 

stockholders’ investment in the business

 

 

(TCO A) Which of the following accounts is recorded as part of stockholders’ equity on

the balance sheet?

 

Long-term debt

 

Retained earnings

 

Revenue

 

Expenses

 

(TCO A) Which of the following is not a current liability?

 

Unearned revenue

 

Accounts payable

 

Accrued liabilities

 

Prepaid expenses

 

TCO B) For 2014, EAB Corporation reported net income of $78,750; net sales of

$1,378,125; and weighted average shares outstanding of 10,500. There were no

preferred dividends. What was the 2014 earnings per share?

 

$17.50

 

$7.50

 

$75.00

 

$131.25