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1, Which of the wollowing is not a liability?

A, An unused line of credit

B, Current portion of long-term debit

C, Sales tax collected from customers

D, Unearned revenue

2, On December 11, 2015, Jaron Co received magazine subscriptions for 2016 in cash for $200. Make the entry to record the recipt of this cash in 2015.

3, If you buy lunch for 16.35 that includes 9% sales tax, how much did the restaurent charge you for lunch and how much do they owe for sales taxes?

4, United Supply has a $25 million liability at December 31, 2015, of which $5 million is payable in each of the next five years. What portion of the $25 million is current and what is long term at 12/31/2015?

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Nelly Stracke
Nelly StrackeLv2
28 Sep 2019

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9. On December 11, 2015, Jaron Co received magazine subscriptions for 2016 in cash for $200. Make the entry to record the receipt of this cash in 2015.

10. If you buy lunch for $16.35 that includes 9% sales tax, how much did the restaurant charge you for lunch and how much do they owe for sales taxes?

11. United Supply has a $25 million liability at December 31, 2015, of which $5 million is payable in each of the next five years. What portion of the $25 million is current and what amount is long term at 12/31/15?
Current:_________________________ Long-term: ___________________________

12. For each of the following, determine the correct way to treat the situation: i.e. record in the books, disclosure required or no reporting needed and any amount that is to be reported or disclosed.
a. The likelihood of a payment occurring is probable, and the estimated amount is $1.3 million
b. The likelihood of a payment occurring is probable, and the amount is estimated to be in the range of $1.1 million to $1.6 million.
c. The likelihood of a payment occurring is reasonably possible, and the estimated amount is $1.3 million.
d. The likelihood of a payment occurring is remote, while the estimated potential amount is $1.3 million.

13. Axel Inc offers its employees free medical, dental and life insurance coverage. It also matches employee contributions to a voluntary retirement plan dollar for dollar. Assume that no employee's wages exceed the relevant wage bases. Payroll information for the payroll period ending January 15 are below. Make the appropriate journal entries in good form to record the payroll.

Wages and salaries $2,750,000.00
Employee contributions to voluntary retirement plan $130,000.00
Medical Insurance premiums paid by employer $50,000.00
Dental Insurance premiums paid by employer $17,500.00
Life Insurance premiuims paid by employer $8,750.00
Federal and state income tax withheld $540,000.00
FICA rate 7.65%
Federal and state unemployment tax rate 6.20%

At December 31, DePaul Corporation had a $22 million balance inits deferred tax asset account and a $90 million balance in itsdeferred tax liability account. The balances were due to thefollowing cumulative temporary differences:

1. Estimated warranty expense, $15 million: expense recorded inthe year of the sale; tax-deductible when paid (one-yearwarranty).

2. Depreciation expense, $200 million: straight-line in theincome statement; MACRS on the tax return.

3. Income from installment sales of properties, $25 million:income recorded in the year of the sale; taxable when receivedequally over the next five years.

4. Rent revenue collected in advance, $40 million; taxable inthe year collected; recorded as income when earned the followingyear.

Required: Determine the deferred tax amounts to be reported inthe December 31 balance sheet. The tax rate is 40%. (Enter youranswers in millions.)

Current-assets ... ($ in millions)

Long-term liabilities ... ($ in millions)

The comparative balance sheets for 2016 and 2015 and thestatement of income for 2016 are given below for NationalIntercable Company. Additional information from NIC’s accountingrecords is provided also.

NATIONAL INTERCABLE COMPANY
Comparative Balance Sheets
December 31, 2016 and 2015
($ in millions)
2016 2015
Assets
Cash $ 127 $ 80
Accounts receivable 237 230
Prepaid insurance 9 14
Inventory 218 210
Long-term investment 38 60
Land 200 200
Buildings and equipment 284 240
Less: Accumulateddepreciation (91) (70)
Trademark 38 40
$ 1,060 $ 1,004
Liabilities
Accounts payable $ 35 $ 48
Salaries payable 5 8
Deferred income tax liability 16 14
Lease liability 80 0
Bonds payable 130 270
Less: Discount on bonds (21) (24)
Shareholders' Equity
Common stock 280 240
Paid-in capital—excess of par 100 70
Preferred stock 60 0
Retained earnings 375 378
$ 1,060 $ 1,004

NATIONAL INTERCABLE COMPANY
Income Statement
For Year Ended December 31, 2016
($ in millions)
Revenues
Sales revenue $ 330
Investment revenue 13
Gain on sale of investments 4 $ 347
Expenses
Cost of goods sold 140
Salaries expense 56
Depreciation expense 30
Trademark amortization expense 2
Insurance expense 18
Bond interest expense 40
Loss on building fire 24 310
Income before tax 37
Income tax expense 24
Net income $ 13

Additional information from the accounting records:
a.

Investment revenue includes National Intercable Company's $6million share of the net income of Central Fiber OpticsCorporation, an equity method investee.
b.

A long-term investment in bonds, originally purchased for $28million, was sold for $32 million.
c.

Pretax accounting income exceeded taxable income causing thedeferred income tax liability to increase by $2 million.
d.

A building that originally cost $36 million, and which wasone-fourth depreciated, was destroyed by fire. Some undamaged partswere sold for $3 million.
e.

The right to use a building was acquired with a seven-year leaseagreement; present value of lease payments, $80 million.
f. $140 million ofbonds were retired at maturity.
g.

$40 million par value of common stock was sold for $70 million,and $60 million of preferred stock was sold at par.
h. Shareholderswere paid cash dividends of $16 million.

Required:
2.

Prepare the statement of cash flows. (Enter your answersin millions (i.e., 10,000,000 should be entered as 10.). Amounts tobe deducted should be indicated with a minus sign.)

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