Reference no: EM132475021

Accounting Assignment -

PART 1: MULTIPLE CHOICE

Q1) When a business provides services for cash, which elements of the accounting equation are affected?

A) Revenue and Expense

B) Cash and Revenue

C) Cash and Expense

D) Cash and Dividends

Q2) Which of the following financial statements provides information about a company as of a specific point in time?

A) Income statement

B) Balance sheet

C) Statement of cash flows

D) Statement of changes in stockholders' equity

Q3) Expenses are reported on which of the following financial statement(s)?

A) Income statement

B) Balance sheet

C) Statement of changes in stockholders' equity

D) Income statement and statement of changes in stockholders' equity

Q4) Dividends paid by a company are reported on which of the following financial statement(s)?

A) Income statement

B) Statement of changes in stockholders' equity

C) Statement of cash flows

D) Statement of changes in stockholders' equity and statement of cash flows

Q5) Liabilities are reported on which of the following financial statement(s)?

A) Income statement

B) Balance sheet

C) Statement of cash flows

D) Statement of changes in stockholders' equity

Q6) Which resource providers lend financial resources to a business with the expectation of repayment with interest?

A) Consumers

B) Creditors

C) Investors

D) Owners

Q7) Recognizing an expense may be accompanied by which of the following?

A) An increase in liabilities

B) A decrease in liabilities

C) A decrease in revenue

D) An increase in assets

Q8) Which type of accounting information is intended to satisfy the needs of external users of accounting information?

A) Cost accounting

B) Managerial accounting

C) Tax accounting

D) Financial accounting

Q9) Which of the following statements is true regarding accrual accounting?

A) Revenue is recorded only when cash is collected.

B) Expenses are recorded when they are incurred.

C) Revenue is recorded in the period when it is earned.

D) Revenue is recorded in the period when it is earned and expenses are recorded when they are incurred.

Q10) Financial accounting standards are known collectively as GAAP. What does that acronym stand for?

A) Generally Accepted Accounting Principles

B) Generally Applied Accounting Procedures

C) Governmentally Approved Accounting Practices

D) Generally Authorized Auditing Principles

Q11) Which of the following events would not require a year-end adjusting entry?

A) Purchasing supplies for cash during the year.

B) Paying for one year's rent during the year.

C) Providing services on account during the year.

D) Each of these events would require a year-end adjusting entry.

Q12) Which of the following are "matched" under the matching concept?

A) Expenses and revenues

B) Expenses and liabilities

C) Assets and equity

D) Assets and liabilities

Q13) Which of the following is an example of revenue?

A) Cash received as a result of a bank loan

B) Cash received from investors from the sale of common stock

C) Cash received from customers at the time services were provided

D) Cash received from the sale of land for its original selling price

Q14) Which of the following correctly states the proper order of the steps in the accounting cycle?

A) Record transactions, adjust accounts, close temporary accounts, prepare statements.

B) Adjust accounts, record transactions, close temporary accounts, prepare statements.

C) Record transactions, adjust accounts, prepare statements, close temporary accounts.

D) Adjust accounts, prepare statements, record transactions, close temporary accounts.

Q15) Which of the following accounts normally has a debit balance?

A) Prepaid Insurance

B) Unearned Service Revenue

C) Accounts Payable

D) Common Stock

Q16) What is the term used to describe the left side of a T-account?

A) Equity Side

B) Debit Side

C) Credit Side

D) Claims Side

Q17) What is the term that is used to describe the difference between the total debit and credit amounts in a T-account?

A) Net Income

B) Trial Balance

C) Equality

D) Account Balance

Q18) Li Company paid cash to purchase land. What happened as a result of this business event?

A) Total assets decreased.

B) Total assets were unaffected.

C) Total equity decreased.

D) Both assets and total equity decreased.

Q19) Which of the following statements about the entry to record depreciation is true?

A) The entry involves a credit to a liability.

B) The entry involves a credit to Depreciation Expense.

C) The entry involves a credit to the asset being depreciated.

D) The entry involves a credit to a contra-asset account.

Q20) Which of the following types of accounts is closed at the end of an accounting cycle?

A) Dividends

B) Common stock

C) Assets

D) Liabilities

PART II: PROBLEM-SOLVING

PROBLEM 1 - Short Comprehensive Problem

Clown Around, Inc., provides party entertainment for children of all ages. The company's trial balance dated February 1, 2011, is shown (attached).

Clown Around engaged in the following transactions in February:

Feb. 2 Paid $750 in partial settlement of the outstanding account payable reported in the trial balance dated February 1.

Feb. 6 Collected $900 in full settlement of the outstanding accounts receivable reported in the trial balance dated February 1.

Feb. 18 Billed Sunflower Child Care $175 for clown services. The entire amount is due March 15.

Feb. 26 Billed and collected $480 for performing at several birthday parties.

Feb. 28 Paid clown salaries of $260 for work done in February.

Feb. 28 Recorded and paid $40 for travel expenses incurred in February.

Feb. 28 Declared and paid a $100 dividend to Ralph Jaschob, the company's only shareholder.

Instructions -

a. Analyze the effects that each of these transactions will have on the company's financial statements for the month of February.

b. Using the account titles provided in the trial balance, create a T account for each account and post the beginning balances and effect of each transaction to the appropriate T accounts (use the T account format as illustrated in Chapter 3 and discussed in class). If the appropriate account is not available on the trial balance provided, create a new account.

c. Prepare the new trial balance dated February 28, 2011. Prepare the income statement for the month of February and balance sheet dated February 28, 2011.

PROBLEM 2: Preparing adjusting entries and adjusted trial balance

Watson Technical Institute (WTI), a school owned by Tom Watson, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2011, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a) through h) that require adjusting entries on December 31, 2011, follow.

Additional Information Items

a) An analysis of WTI's insurance policies shows that $3,000 of coverage has expired.

b) An inventory count shows that teaching supplies costing $2,600 are available at year- end 2011.

c) Annual depreciation on the equipment is $12,000.

d) Annual depreciation on the professional library is $6,000.

e) On November 1, WTI agreed to do a special six-month course (starting immediately) for a client. The contract calls for a monthly fee of $2,200, and the client paid the first five months' fees in advance. When the cash was received, the Unearned Training Fees account was credited. The fee for the sixth month will be recorded when it is collected in 2012.

f) On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $3,000 tuition per month payable at the end of the class. The class started on October 15, but no payment has yet been received. (WTI's accruals are applied to the nearest half-month; for example, October recognizes one-half month accrual.)

g) WTI's two employees are paid weekly. As of the end of the year, two days' salaries have accrued at the rate of $100 per day for each employee.

h) The balance in the Prepaid Rent account represents rent for December.

Required -

1. Prepare T-accounts with balances from the unadjusted trial balance.

2. Assume that adjusting entries are made only at year-end. Post the necessary adjustments directly to the T-accounts. In this case, no need for the adjusting journal entries.

3. Update balances in the T-accounts for the adjusting entries and prepare an adjusted trial balance.

Problem 3 - Statement of cash flows (indirect method)

Kazaam Company, a merchandiser, recently completed its calendar-year 2011 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company's balance sheets and income statement follow.

Additional Information on Year 2011 Transactions

1. The loss on the cash sale of equipment was $5,125.

2. Sold equipment costing $46,875, with accumulated depreciation of $28,125, for $13,625 cash.

3. Purchased equipment costing $96,375 by paying $25,000 cash and signing a long-term note payable for the balance.

4. Borrowed $3,750 cash by signing a short-term note payable.

5. Paid $31,375 cash to reduce the long-term notes payable.

6. Issued 2,500 shares of common stock for $18 cash per share.

7. Declared and paid cash dividends of $62,125.

Required: Prepare a complete statement of cash flows using the indirect method as discussed in class. Disclose any noncash investing and financing activities in a note.

CHOOSE ONLY ONE PROBLEM TO SOLVE BETWEEN PROBLEMS 4, 5 AND 6. YOU WILL ONLY HAVE TO SOLVE ONE PROBLEM OF YOUR CHOICE.

ACCOUNTING FOR MERCHANDISE INVENTORY

Problem 4: Periodic inventory systems

Tres Chic uses a periodic inventory system. The beginning inventory of a particular product, and the purchases during the current year, were as follows (attached).

At December 31, the ending inventory of this product consisted of 850 units.

Determine the cost of the year-end inventory and the cost of goods sold for this product under each of the following methods of inventory valuation.

Problem 5: Perpetual inventory systems

Arrow, Inc. uses a perpetual inventory system. On January 22, 2015, the company had 200 units of a particular product on hand, with a total cost of $2,400. The per-unit costs were:

Date	Purchase Quantity	Unit Cost	Total Cost
Ending inventory, 2014	50	$9	$450
Jan. 10 purchase	150	$13	1,950
Total on hand	200		$2,400

On January 24, 2015, Arrow sold 65 units of this product.

Using the three flow assumptions listed below, compute (1) the cost of goods sold, and (2) the cost of the inventory of this product on hand after this sale. Show your computations as per below format.

Problem 6: ACCOUNTING FOR PROPERTY, PLANT AND EQUIPMENT

Various depreciation methods-first year

On March 24, 2015 Tastee Ice Cream Co. purchased equipment costing $140,000, with an estimated life of 5 years and an estimated salvage value of $20,000.

Compute the depreciation expense Tastee would recognize on this equipment in 2015, assuming:

(a) Straight-line depreciation using the half-year convention.

(b) 200% declining balance with fractional periods rounded to the nearest full month.

(c) 150%-declining-balance, using the half-year convention.

Note - All required information and details are in attached file.

Attachment:- Accounting Assignment File.rar