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ACCTG300 Study Guide - Midterm Guide: Retained Earnings, Accounts Payable, General Ledger

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fuchsiapug44
16 Sep 2016
School
University of Alberta
Department
Accounting
Course
ACCTG300
Professor
Trish Stringer

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Document Summary

Partnership: owned by 1+ but not incorporated. Corporation: separate legal entity with shareholder ownership. Financing: obtaining (and repaying) funds to finance the operations of the business, usually long term liability or shareholders"/owners" equity are related to financing. Investing: obtaining the resources or assets needed to operate the business for the long term, usually long-term assets (investments or property, plant and equipment) Operating: the main day-to-day activities of the business, usually current assets and current liabilities. Statement of retained earning: shows the changes interlined for earnings period, changes in each component of equity for a specific time period, cumulative profit (earnings) retained into a company, less dividends paid to shareholders. Statement of changes in equity: shows changes in each component of shareholders" equity for the period, share capita. May have common and preferred classes: retained earnings/deficit. Cumulative profit (earnings) retained in the company. Income statement: results of operations (expenses/revenue) for a specific period, revenues.

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Related Questions

A fire destroyed your firm’s ending balance sheet and income statement after the year-end
but before the financial statements are released. However, you have been successful in obtaining the
numbers for the beginning balance sheet and the statement of cash flows, which are provided to you and
your team members in Excel format. Fields representing the missing balance sheet and income statement
are End of year2 in the Excel sheet

CONSOLIDATED BALANCE SHEETS (USD $) End of year 2 End of year 1
In Thousands, unless otherwise specified
Current assets:
Cash and cash equivalents 　 598
Receivables, net 　 230
Inventories, net 　 2309
Other current assets 　 47
Total current assets 　 3184
Property and equipment, net of accumulated depreciation 　 1292
Assets held for sale 　 1
Goodwill 　 76
Intangible assets, net 　 29
Other assets, net 　 32
Assets, Total 　 4614
Current liabilities: 　 0
Current portion of long-term debt 　 0
Accounts payable 　 2030
Accrued expenses 　 380
Other current liabilities 　 150
Total current liabilities 　 2560
Long-term debt 　 604
Other long-term liabilities 　 239
Commitments and Contingencies 　 0
Stockholders Equity Attributable to Parent [Abstract] 　 0
Preferred stock, nonvoting, $00001 par value 　 0
Common stock, voting, $00001 par value 　 0
Additional paid-in capital 　 520
Treasury stock, at cost 　 -27
Accumulated other comprehensive income (loss) 　 3
Retained earnings 　 715
Total stockholders equity 　 1210
Liabilities and Stockholders Equity, Total 　 4613
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) 12 Months Ended
In Thousands, except Per Share data, unless otherwise specified Year 2
Net sales 　
Cost of sales, including purchasing and warehousing costs 　
Gross profit 　
Selling, general and administrative expenses 　
Operating income 　
Interest expense 　
Other income, net 　
Total other, net 　
Income before provision for income taxes 　
Provision for income taxes 　
Net income 　
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) 12 Months Ended
In Thousands, unless otherwise specified Year 2
Cash flows from operating activities:
Net income $392
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 208
Share-based compensation 13
Loss on property and equipment, net 1
Other 2
Provision for deferred income taxes -2
Excess tax benefit from share-based compensation -16
Increase Decrease in Operating Capital
Receivables, net -32
Inventories, net -204
Other assets 11
Accounts payable 113
Accrued expenses 63
Other liabilities -4
Net cash provided by operating activities 545
Cash flows from investing activities:
Purchases of property and equipment -196
Payments to Acquire Businesses, Gross -186
Sale of certain assets of acquired business 19
Proceeds from sales of property and equipment 1
Net cash used in investing activities -362
Cash flows from financing activities:
(Decrease) increase in bank overdrafts -3
Decrease in financed vendor accounts payable 0
Issuance of senior unsecured notes 449
Payment of debt related costs -9
Borrowings under credit facilities 0
Payments on credit facilities 0
Dividends paid -18
Proceeds from the issuance of common stock, primarily exercise of stock options 4
Tax withholdings related to the exercise of stock appreciation rights -22
Excess tax benefit from share-based compensation 16
Repurchase of common stock -81
Contingent payment accrued on acquisitions 5
Other -1
Net cash provided by (used in) financing activities 331
Net increase (decrease) in cash and cash equivalents 514
Cash and cash equivalents, beginning of period 598
Cash and cash equivalents, end of period 1,112
Supplemental cash flow information:
Interest paid 35
Income tax payments 219
Non-cash transactions:
Accrued purchases of property and equipment 21
Retirement of common stock 0
Contingent consideration accrued on acquisitions 0
Changes in other comprehensive income 1
Declared but unpaid cash dividends $4

Assignment Choice #1: Corporate Tax Returns

Because it is important for accountants to demonstrate the filing requirements for specialized tax returns, for this final project you will be completing a corporate tax return and then analyzing this experience. Key Component: Use the financial data from the following file to complete form 1120.

Complete the following template that has the respective tax forms and schedules required to complete the return. Complete all of the parts of your respective business tax return for which there is information.

Show your income tax calculations Prepare a write-up on:

The purpose of questions on Form 1120 Schedule K with the exception of line 1. (You may select a sub-grouping of these questions to complete your milestone.)

Some challenges (identify three to five), both anticipated and unexpected, when completing the corporate tax return.

Solutions you can provide to those challenges.

Requirements: Submit 1) your tax return template and

2) Income tax calculations, and

3) your write-up about the tax return questions to the drop box identified for that submission.

Entity Type: Corporation
Sub-Entity Type: None
Entity Name: BADEC
State of Formation Georgia
Entity Start Date 4/2/2013
Tax Year Start Date: 4/2/2013
Tax Year End Date: 12/31/2013
Book Maintained By: Andrew Anderson
Address: 10 Sysco Way Atlanta, GA 30039
Purpose of Entity Acquire, rehabilitate and resale residential real property.
Corporate Information
Dividends Received from investment in a domestic corporations with ownership = 70%
Estimated Tax Payments $6,000
First Name Last Name SSN Address City State Zip Shareholder Information
Andrew Anderson 756-12-1111 10 Sysco Way Atlanta GA 30039 Shareholder
Bill Bacon 756-12-2222 20 Sysco Way Atlanta GA 30039 Shareholder
Cathy Cox 756-12-3333 30 Sysco Way Atlanta GA 30039 Shareholder
Doris Day 756-12-4444 40 Sysco Way Atlanta GA 30039 Shareholder
Elroy Elders 756-12-5555 50 Sysco Way Atlanta GA 30039 Shareholder
Farah Fawcett 756-12-6666 60 Sysco Way Atlanta GA 30039 Shareholder
Gomez Gonzalez 756-12-7777 70 Sysco Way Atlanta GA 30039 Shareholder
Investor Contribution Date Contribution 1 Contribution 2 Contribution 3 Contribution 4 Net Contributions Sharholder Interest
First Name Last Name SSN Item Value Item Value Item Value Item Value
Andrew Anderson 756-12-1111 4/2/2013 Cash $50,000 $50,000 10%
Bill Bacon 756-12-2222 4/2/2013 Cash $150,000 $150,000 31%
Cathy Cox 756-12-3333 4/2/2013 Cash $100,000 $100,000 20%
Doris Day 756-12-4444 4/2/2013 Cash $50,000 $50,000 10%
Elroy Elders 756-12-5555 4/2/2013 Cash $40,000 $40,000 8%
Farah Fawcett 756-12-6666 4/2/2013 Cash $30,000 Land $50,000 $80,000 16%
Gomez Gonzalez 756-12-7777 4/2/2013 Cash $10,000 Computer $7,000 Furniture $3,000 $20,000 4%
100%
BADEC, Inc
4/2/2013
Assets
Cash $ 430,000
Computer $ 7,000
Furniture $ 3,000
Land $ 50,000
Total Assets $ 490,000
Liabilities
Equity
Capital-Anderson $ 50,000
Capital-Bacon $ 150,000
Capital-Cox $ 100,000
Capital-Day $ 50,000
Capital-Elders $ 40,000
Capital-Fawcett $ 80,000
Capital-Gonzalez $ 20,000
Total Liabilities plus Equity $ 490,000
BADEC, Inc.
04/02/2013 - 12/31/2013
Gross Income
Repair Revenue $100,000
Interest Income $600
Dividends (Qualified) $2,000
Net Short-term Capital Gain $5,000
Total Income from all sources $107,600
Expenses
Guaranteed payments $10,000
Renovation Expense $5,500
Rent $1,500
Depreciaton expense $2,066
Licenses $500
Travel Expenses $800
Supplies Expenses $700
Net Long-term Capital Loss $10,000
Charitable Contributions $5,000
Total Expenses $36,066
Net Income (before federal income taxes) $71,534
BADEC Partnership
12/31/2013
Assets
Cash $ 485,600
Computer $ 7,000
AccDep-Computer $ (1,745)
Furniture $ 3,000
AccDep-Furniture $ (321)
Land $ 50,000
Total Assets $ 543,534
Liabilities
Equity
Retained Earnings $ 53,534
Stock-Anderson $ 50,000
Stock-Bacon $ 150,000
Stock-Cox $ 100,000
Stock-Day $ 50,000
Stock-Elders $ 40,000
Stock-Fawcett $ 80,000
Stock-Gonzalez $ 20,000
Total Liabilities plus Equity $ 543,534

Investment and financing decisions, which may beshort-term or long-term decisions are best describedas:

financial decision making.

economic decision making.

accounting decision making.

Mutual funds, pension funds, investment dealers andinsurance companies are best described as examples of:

corporate finance.

market intermediaries.

financial intermediaries.

Farmers and Merchants Bank lends money to Ruth topurchase a car from Steven Toyota. Ruth is going to insure the carwith Allstate Insurance. Which party is best described as thecreditor?

Ruth

Steven Toyota

Allstate Insurance

Farmers and Merchants Bank

Which of the following would not be described as adebenture?

An unsecured loan

A loan secured by collateral

A loan secured by the “full faith and credit” of theissuer

Morgan Stanley was the investment banking firm that tookFacebook from being a closely held company to issuing stock to thepublic for the first time. Which of the following terms mostclosely describes this?

money market security.

issuing commercial paper.

initial public offering (IPO).

debt security backed by the general credit of theissuer.

Which of the following transactions does not take placein the primary market? An investor:

buying a newly issued municipal bond.

buying shares of an initial publicoffering.

selling one hundred shares of stock through a stockbroker.

buying a U.S. Treasury bill through the governmentauction.

The majority of home purchases in the U.S. are securedwith a mortgage. A mortgage is:

an unsecured loan.

an equity investment in the property.

a debt obligation secured by a specificproperty.

Which form of business would most likely describe thefollowing, a college student other students, a retired woman whobabysits children, a teenager who mows lawns, and a partyclown?

Partnership

Corporation

Sole proprietorship

Limited liability company

Flow-through taxation is a characteristic for all butthe following forms of business?

Partnership

Corporation

Sole proprietorship

Limited liability company

Your sister wants to start a tee shirt business on e-Baywith you to help pay for college tuition. All of the following areadvantages to partnerships that you should both consider, except____________?

Easy to form

Access to capital

Business income is taxed once, at the individualpartner’s level

Which of the following takes into account takes intoaccount the opportunity cost of funds?

Net profit

Economic profit

Accounting profit

When we talk about capital structure, this refersto:

the cash, inventory, and accountsreceivable.

mix of debt and equity to finance anenterprise.

the investment in plant, property andequipment.

The uncertainty associated with the use of debt tofinance a business enterprise is best described as:

financial risk.

business risk.

operating risk.

The mix of debt and equity that is used to finance abusiness enterprise is best described as theenterprise’s:

assets.

working capital.

capital structure.

capital expenditures

Generally accepted accounting principles (GAAP) are bestdescribed as a(n):

organization that establishes the accounting principlesfor U.S. financial reporting.

accounting standards promulgated by the InternationalAccounting Standards Board (IASB.)

set of basic principles and conventions that are appliedin the preparation of financial statements.

organization that establishes the accounting principlesfor business entities in the European EconomicCommunity.

Which reporting convention requires recording revenueand expenses when the transaction occurs, regardless of when cashchanges hands?

Cost basis

Cash basis

Accrual basis

The summary of the company’s performance over a periodof time, typically a fiscal quarter or fiscal year

Balance sheet

Statement of stockholder’s equity

Income statement

Statement of cash flows

_______ is the cash flow from the day-to-day operationsof the business; the result of subtracting the increase in newworking capital from traditional cash flow.

Cash flow from investing

Cash flow from financing

Simple cash flow

Cash flow from operations

The debt ratio is classified as which type ofratio?

Owner

Liquidity

Efficiency

Productivity

Financial Leverage

Inventory turnover, accountsreceivable turnover, fixed asset turnover, and total asset turnoverare all classified as which type of ratio?

Owner

Liquidity

Efficiency

Productivity

Financial Leverage

ABC Company attempts tomanage its earnings by extending the useful life of all of itsequipment. Which of the following will not be an outcome of thischoice by management?

Income will be higher than it would have been underprior accounting methods.

Equipment values will be higher than they would havebeen without the change.

Depreciation expense will be lower than it would havebeen under prior accounting methods.

Depreciation expense will be higher than it would havebeen under prior accounting methods.

It is important for a companyto know the level of sales at which it covers all its variable andfixed operating costs. This level of sales is best described asthe:

gross profit margin.

contribution margin.

operating break even.

operating profit margin.

The minimum return thatinvestors expect to earn on the investment in stock is bestdescribed as:

growth rate.

risk premium.

capital gains yield.

required rate of return

If a company returns more than the required rate ofreturn on a stock, what happens to the value of thatstock?

The stock price falls.

The stock price rises.

The stock price stays the same.

When market rates are greaterthan the dividend rate, preferred shares will tradeat:

par.

a discount.

a premium.