Q1.Company ABC purchased a piece of depreciable asset on 1/1/2017 for $10,000. T

Question

Q1.Company ABC purchased a piece of depreciable asset on 1/1/2017 for $10,000. The asset has an estimated residual value of $2,000 and useful life of 5 years. Calculate the first-year depreciation expense using the


(1) straight-line method
(2) Double-declining balance method and
(3) Sum-of-years’-digits’ method.

Q2.Dollar Bookstore has the following information about its inventory of intermediate accounting textbook:

Beginning inventory of 2018: 1 book @$60

The following transactions took place in year 2018:

Jan. 2018: purchase 2 books at $55 each

Mar. 2018: Purchase 2 books at $50 each

June. 2018: Sold 3 books at $80 each

Sep. 2018: Purchase 1 book at $65.

Q3.Assuming that Dollar Bookstore uses a periodic system. What are the COGS and ending inventory recorded on 12/31/2018 if the LIFO inventory flow assumption is used?

$240 and $165

$170 and $165

$165 and $240

$165 and $170

Q4.Napier Co. provided the following information on selected transactions during 2018:

Proceeds from issuing bonds                                                          3,000,000
Purchases of treasury stock                                                               600,000
Dividends paid to preferred stockholders                                          400,000
Proceeds from issuing preferred stock                                           1,600,000

The net cash provided by financing activities during 2018 is

$3,200,000.

$3,600,000.

$4,200,000.

$4,600,000.

Q.5. The following information on selected cash transactions for 2018 has been provided by            Mancuso Company:

Proceeds from sale of land                                                        $315,000
Purchases of plant assets                                                             216,000
Proceeds from sale of Mancuso common stock                          360,000

Q.6.What is the cash provided (used) by investing activities for the year ended December 31, 2018, as a result of the above information?

$99,000

$384,000.

$315,000.

$1,275,000.

Q7.A company purchases equipment for $30,000 on July 1, 2017. It estimates that the equipment will have a salvage value of $2,500 and its useful life will be 10 years. Assuming that the company's accounting year ends on December 31 of each year, what will be the Depreciation Expense for the years 2017 and 2018 assuming double-declining-balance method?

$5,455 and $4,909

$6,000 and $4,800

$6,000 and $4,500

$5,000 and $4,500

Q8.Which of the following is a cash inflow?

Acquiring treasury stock

Exchange of securities for land

Selling equipment at book value

Purchasing supplies.

Q9.One thousand shares of common stocks with par value equal to $1 per share and original issue price of $5 per share was repurchased at $10 per share. Under of the cost method, “treasury stock” account will change by what amount?

$1,000

$4,000

$5,000

$10,000

Q10.Dollar Bookstore has the following information about its inventory of intermediate accounting textbook:

Beginning inventory of 2018: 1 book @$60

The following transactions took place in year 2018:

Jan. 2018: purchase 2 books at $55 each

Mar. 2018: Purchase 2 books at $50 each

June. 2018: Sold 3 books at $80 each

Sep. 2018: Purchase 1 book at $65.

Q11.Assuming that Penny Bookstore uses a periodic system. What are the COGS and ending inventory recorded on 12/31/2018 if the average-cost inventory flow assumption is used?

$162 and $167

$167.5 and $167.5

$162 and $173

$55.83 and $279.2

Q12.Where will be “loss from flood” recorded on the income statement?

Discontinued operation

Extraordinary items

Operating expense

Other expenses and losses

Q13.Which of the following should be subtracted from net income when calculating cash flow from operating activities?

depreciation expense

increase in accounts payable

Loss from selling equipment

increase in inventory

Q.14.Which of the following accounts does not affect the statement of shareholders’ equity

Treasury stock

Dividends

Accumulated other comprehensive income

All of the above affect the statement of shareholders’ equity.

Q15.Which of the following line item is placed between “Operating income” and “income from continuing operations”?

Discontinued operating

Noncontrolling interest

Income before income tax

Gross profit

Q16.Hager Company sold some of its plant assets during 2018. The original cost of the plant assets was $900,000 and the accumulated depreciation at date of sale was $840,000. The proceeds from the sale of the plant assets were $90,000. The information concerning the sale of the plant assets should be shown on Hager's statement of cash flows (indirect method) for the year ended December 31, 2018, as a(n)

subtraction from net income of $30,000 and a $60,000 increase in cash flows from financing activities.

addition to net income of $30,000 and a $90,000 increase in cash flows from investing activities.

subtraction from net income of $30,000 and a $90,000 increase in cash flows from investing activities.

addition of $90,000 to net income.

Q17.The land is not subject to depreciation.

True

False

Q18.Paying for interest expense should be classified as cash flow from financing activities.

True

False

Q19.Current assets, from the most liquid to the least liquid, are: cash, inventory, accounts receivable, prepaid expenses.

True

False

Q20.In an inflationary economy, everything else the same, a company that uses the FIFO inventory flow assumption will record higher ending inventory than another company that uses the LIFO inventory flow assumption.

True

False

Q21.Sale of equity securities of other entities” is classified as a financing activity in the cash flow statement.

True

False

Q22.Number of shares authorized” is used to calculate the balance of “common stock” on the balance sheet.

True

False

Accumulated other comprehensive income is part of shareholders’ equity.

True

False

Q23.The multi-step format of the income statement uses only one subtraction to arrive at net income.

True

False

Q24.The sum-of-years’-digits depreciation method results in higher depreciation expenses recorded in the earlier years and lower depreciation expenses recorded in later years.

True

False

Q25.Treasury stock reduces stockholder’s equity.

True

False

$240 and $165

$170 and $165

$165 and $240

$165 and $170

Q4.Napier Co. provided the following information on selected transactions during 2018:

Proceeds from issuing bonds                                                          3,000,000
Purchases of treasury stock                                                               600,000
Dividends paid to preferred stockholders                                          400,000
Proceeds from issuing preferred stock                                           1,600,000

The net cash provided by financing activities during 2018 is

$3,200,000.

$3,600,000.

$4,200,000.

$4,600,000.

Q.5. The following information on selected cash transactions for 2018 has been provided by            Mancuso Company:

Proceeds from sale of land                                                        $315,000
Purchases of plant assets                                                             216,000
Proceeds from sale of Mancuso common stock                          360,000

Q.6.What is the cash provided (used) by investing activities for the year ended December 31, 2018, as a result of the above information?

$99,000

$384,000.

$315,000.

$1,275,000.

Q7.A company purchases equipment for $30,000 on July 1, 2017. It estimates that the equipment will have a salvage value of $2,500 and its useful life will be 10 years. Assuming that the company's accounting year ends on December 31 of each year, what will be the Depreciation Expense for the years 2017 and 2018 assuming double-declining-balance method?

$5,455 and $4,909

$6,000 and $4,800

$6,000 and $4,500

$5,000 and $4,500

Q8.Which of the following is a cash inflow?

Acquiring treasury stock

Exchange of securities for land

Selling equipment at book value

Purchasing supplies.

Q9.One thousand shares of common stocks with par value equal to $1 per share and original issue price of $5 per share was repurchased at $10 per share. Under of the cost method, “treasury stock” account will change by what amount?

$1,000

$4,000

$5,000

$10,000

Q10.Dollar Bookstore has the following information about its inventory of intermediate accounting textbook:

Beginning inventory of 2018: 1 book @$60

The following transactions took place in year 2018:

Jan. 2018: purchase 2 books at $55 each

Mar. 2018: Purchase 2 books at $50 each

June. 2018: Sold 3 books at $80 each

Sep. 2018: Purchase 1 book at $65.

Q11.Assuming that Penny Bookstore uses a periodic system. What are the COGS and ending inventory recorded on 12/31/2018 if the average-cost inventory flow assumption is used?

$162 and $167

$167.5 and $167.5

$162 and $173

$55.83 and $279.2

Q12.Where will be “loss from flood” recorded on the income statement?

Discontinued operation

Extraordinary items

Operating expense

Other expenses and losses

Q13.Which of the following should be subtracted from net income when calculating cash flow from operating activities?

depreciation expense

increase in accounts payable

Loss from selling equipment

increase in inventory

Q.14.Which of the following accounts does not affect the statement of shareholders’ equity

Treasury stock

Dividends

Accumulated other comprehensive income

All of the above affect the statement of shareholders’ equity.

Q15.Which of the following line item is placed between “Operating income” and “income from continuing operations”?

Discontinued operating

Noncontrolling interest

Income before income tax

Gross profit

Q16.Hager Company sold some of its plant assets during 2018. The original cost of the plant assets was $900,000 and the accumulated depreciation at date of sale was $840,000. The proceeds from the sale of the plant assets were $90,000. The information concerning the sale of the plant assets should be shown on Hager's statement of cash flows (indirect method) for the year ended December 31, 2018, as a(n)

subtraction from net income of $30,000 and a $60,000 increase in cash flows from financing activities.

addition to net income of $30,000 and a $90,000 increase in cash flows from investing activities.

subtraction from net income of $30,000 and a $90,000 increase in cash flows from investing activities.

addition of $90,000 to net income.

Q17.The land is not subject to depreciation.

True

False

Q18.Paying for interest expense should be classified as cash flow from financing activities.

True

False

Q19.Current assets, from the most liquid to the least liquid, are: cash, inventory, accounts receivable, prepaid expenses.

True

False

Q20.In an inflationary economy, everything else the same, a company that uses the FIFO inventory flow assumption will record higher ending inventory than another company that uses the LIFO inventory flow assumption.

True

False

Q21.Sale of equity securities of other entities” is classified as a financing activity in the cash flow statement.

True

False

Q22.Number of shares authorized” is used to calculate the balance of “common stock” on the balance sheet.

True

False

Accumulated other comprehensive income is part of shareholders’ equity.

True

False

Q23.The multi-step format of the income statement uses only one subtraction to arrive at net income.

True

False

Q24.The sum-of-years’-digits depreciation method results in higher depreciation expenses recorded in the earlier years and lower depreciation expenses recorded in later years.

True

False

Q25.Treasury stock reduces stockholder’s equity.

True

False

Explanation / Answer

Solution 1:

Depreciable cost of asset = Cost - Residual value = $10,000 - $2,000 = $8,000

Useful life = 5

First year depreciation expense using staright line method = Depreciable cost / useful life = $8,000 / 5 = $1,600

Depreciation rate SLM = $1,600 / $8,000 = 20%

Depreciation rate - DDB = 20%*2 = 40%

Depreciation - DDB = $10,000 * 40% = $4,000Depreciation expense for first year using sum of digit = Depreciable cost * remaining useful /Sum of digit of life

= $8,000 * 5/15 = $2,666.66

Solution 2 & 3:

COGS = $165

Ending inventory = $170

Hence last option is correct.

Solution 4:

Net cash provided by financing activities = Proceed from issue of bond + Proceed from issuing preferred stock- purchase of treasury stock - Dividend paid to preferred shareholders

= $3,000,000 + $1,600,000 - $600,000 - $400,000 = $3,600,000

Hence 2nd option is correct.

Solution 5&6:

Cash provided (used) by investing activities = Proceed from sale of land - Purchase of plant assets = $315,000 - $216,000 = $99,000

Hence first option is correct.

Note: As multiple questions are posted, i have answered more than required question as per chegg policy, kindly post separate question for answer of remaining questions.

Computation of COGS and ending inventory - Periodic LIFO Particulars Cost of goods available for sale Cost of goods sold Ending Inventory Nos of units Unit Cost Cost of goods available for sale Nos of units sold Unit Cost Cost of goods sold Nos of units in ending inventory Unit Cost Ending inventory Beginning inventory 1 $60.00 $60 1 $60.00 $60.00 Purchases: Jan-18 2 $55.00 $110 2 $55.00 $110.00 Mar-18 2 $50.00 $100 2 $50.00 $100 Sep-18 1 $65.00 $65 1 $65.00 $65 Total 6 $335 3 $165.00 3 $170.00

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