33:010:272 Study Guide - Final Guide: Double-Entry Bookkeeping System, Inventory Turnover, Deferral
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A fire destroyed your firmâs 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 | ã | 598 | |
Receivables, net | ã | 230 | |
Inventories, net | ã | 2309 | |
Other current assets | ã | 47 | |
Total current assets | ã | 3184 | |
Property and equipment, net of accumulated depreciation | ã | 1292 | |
Assets held for sale | ã | 1 | |
Goodwill | ã | 76 | |
Intangible assets, net | ã | 29 | |
Other assets, net | ã | 32 | |
Assets, Total | ã | 4614 | |
Current liabilities: | ã | 0 | |
Current portion of long-term debt | ã | 0 | |
Accounts payable | ã | 2030 | |
Accrued expenses | ã | 380 | |
Other current liabilities | ã | 150 | |
Total current liabilities | ã | 2560 | |
Long-term debt | ã | 604 | |
Other long-term liabilities | ã | 239 | |
Commitments and Contingencies | ã | 0 | |
Stockholders Equity Attributable to Parent [Abstract] | ã | 0 | |
Preferred stock, nonvoting, $00001 par value | ã | 0 | |
Common stock, voting, $00001 par value | ã | 0 | |
Additional paid-in capital | ã | 520 | |
Treasury stock, at cost | ã | -27 | |
Accumulated other comprehensive income (loss) | ã | 3 | |
Retained earnings | ã | 715 | |
Total stockholders equity | ã | 1210 | |
Liabilities and Stockholders Equity, Total | ã | 4613 | |
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Year 2 | ||
Net sales | ã | ||
Cost of sales, including purchasing and warehousing costs | ã | ||
Gross profit | ã | ||
Selling, general and administrative expenses | ã | ||
Operating income | ã | ||
Interest expense | ã | ||
Other income, net | ã | ||
Total other, net | ã | ||
Income before provision for income taxes | ã | ||
Provision for income taxes | ã | ||
Net income | ã | ||
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 |
1) Which of the following items would be reported net of taxesafter income from continuing operations?
Select one:
a. Gain or loss on the sale of property.
b. Loss due to a factory strike.
c. Interest expense.
d. Gain or loss on the sale of a major segment of theentity.
2)
Given the following list of accounts, calculate TotalAssets:
Accounts Receivable | $ 5,000 |
Capital Stock | 20,000 |
Cash | 14,300 |
Equipment | 15,400 |
Fees Earned | 44,400 |
Miscellaneous Expense | 18,200 |
Rent Expense | 4,150 |
Retained Earnings | 6,550 |
Wages Expense | 13,900 |
Select one:
a. $54,700
b. $26,550
c. $79,100
d. $34,700
3)
Which of the following is NOT associated with accrual basisaccounting?
Select one:
a. Income statement.
b. Matching principle.
c. Statement of cash flows.
d. Revenue recognition principle.
4)
Which of the following is an example of an intangible asset?
Select one:
a. Trademark
b. Timber
c. Equipment
d. Marketable securities
5)
Which of the following would be shown under the financingactivities section on the statement of cash flows?
Select one:
a. Cash received from customers.
b. The payment of cash to retire a long-term note.
c. Depreciation expense.
d. The proceeds from the sale of a building.
6)
A machine was purchased for $32,000 on April 1st. It has auseful life of 5 years and a residual value of $4,000. What is thedepreciation expense for the first fiscal year ending on December31st under the straight-line method?
Select one:
a. $1,400
b. $6,400
c. $4,200
d. $5,600
7)
The entry to record the signing of a contract to receiveinventory and make payment at a future date includes
Select one:
a. No debits or creditsâjust a memorandum.
b. A debit to cost of goods sold.
c. A credit to cash.
d. A debit to inventory.
8)
An inventory cost flow assumption is NOT needed for a productline
Select one:
a. If all of the inventory available for sale was purchased atthe same unit cost.
b. If all of the inventory looks the same.
c. If there is still some inventory on hand at the end of theyear.
d. If there is no beginning inventory carried over from theprevious accounting period.
9)
Fees received this period from customers for services to beperformed in the next accounting period, would be a(n)
Select one:
a. Expense disclosed on the statement of cash flows.
b. Revenue disclosed on the income statement.
c. Liability disclosed on the balance sheet.
d. Item not included on the financial statements until the nextaccounting period.
10)
Which of the following is TRUE of a corporation?
Select one:
a. They are incorporated with a national agency.
b. At least one owner has unlimited liability.
c. They are a separate taxable entity.
d. More than 70% of businesses are organized this way.
11)
The effects on the accounts of recording the cost of merchandisesold for cash using a perpetual inventory system include an
Select one:
a. Increase in Accounts Payable.
b. Increase in Merchandise Inventory.
c. Increase in Sales.
d. Increase in Cost of Goods Sold;
12)
Which of the following is NOT a limitation of externallyreported accounting information?
Select one:
a. The income statement contains atypical data due to the timingof the fiscal year end.
b. Accounting information relies on estimates.
c. Management has some discretion regarding the reportingclassification and choice of accounting measurement methods.
d. There is a hodge-podge of valuation techniques used on thefinancial statements.
13)
Given the following information regarding merchandise inventoryat the end of the fiscal year:
Ending inventory at cost $34,000
Ending inventory at market $33,400
Which of the following is correct?
Select one:
a. No journal entry should be made based upon the informationgiven.
b. Inventory should be reported on the balance sheet at$34,000.
c. Inventory should be reported on the balance sheet at$33,400.
d. A journal entry should be made to recognize a gain of$600.
14)
Which of the following describes the closing process when acompany has net earnings for the period?
Select one:
a. The Dividends account is debited for its balance.
b. The individual asset accounts are credited for theirbalances.
c. The individual expense accounts are debited for theirbalances.
d. The Income Summary account is debited for its balance.