15. Moorman Corporation reports the following information:
Correction of understatement of depreciation expense
in prior years, net of tax $ 645,000
Dividends declared 480,000
Net income 1,500,000
Retained earnings, 1/1/12, as reported 3,000,000
Moorman should report retained earnings, 12/31/12, as adjusted at
16. Leonard Corporation reports the following information:
Correction of overstatement of depreciation expense
in prior years, net of tax $ 215,000
Dividends declared 160,000
Net income 500,000
Retained earnings, 1/1/12, as reported 2,000,000
Leonard should report retained earnings, 1/1/12, as adjusted at
17. In 2012, Linz Corporation reported an extraordinary loss of $1,000,000, net of tax. It declared and paid preferred stock dividends of $100,000 and common stock dividends of $300,000. During 2012, Linz had a weighted average of 400,000 common shares outstanding. Compute the effect of the extraordinary loss, net of tax, on earnings per share.
18. Benedict Corporation reports the following information:
Net income $750,000
Dividends on common stock 210,000
Dividends on preferred stock 90,000
Weighted average common shares outstanding 100,000
Benedict should report earnings per share of
19. The following information was extracted from the accounts of Essex Corporation at December 31, 2012:
Total reported income since incorporation $3,400,000
Total cash dividends paid (1,600,000)
Unrealized holding loss (240,000)
Total stock dividends distributed (400,000)
Prior period adjustment, recorded January 1, 2012 150,000
What should be the balance of retained earnings at December 31, 2012?
20. Madsen Company reported the following information for 2012:
Sales revenue $1,530,000
Cost of goods sold 1,050,000
Operating expenses 165,000
Unrealized holding gain on available-for-sale securities 120,000
Cash dividends received on the securities 6,000
For 2012, Madsen would report other comprehensive income of
21. Keisler Corporation reports:
Cash provided by operating activities $240,000
Cash used by investing activities 110,000
Cash provided by financing activities 140,000
Beginning cash balance 70,000
What is Keisler's ending cash balance?
22. During 2012 the DLD Company had a net income of $55,000. In addition, selected accounts showed the following changes:
Accounts Receivable $3,000 increase
Accounts Payable 1,000 increase
Building 4,000 decrease
Depreciation Expense 1,500 increase
Bonds Payable 8,000 increase
What was the amount of cash provided by operating activities?
23. Harding Corporation reports the following information:
Net income $450,000
Depreciation expense 140,000
Increase in accounts receivable 60,000
Harding should report cash provided by operating activities of
24. Presented below are data for Caracas Corp.
Assets, January 1 $4,560 ?
Liabilities, January 1 ? $2,736
Stockholders' Equity, Jan. 1 ? 2,750
Dividends 570 646
Common Stock 608 650
Stockholders' Equity, Dec. 31 ? 2,166
Net Income 684 ?
Net income for 2014 is
a. $584 income.
b. $584 loss.
c. $62 loss.
d. $62 income.
25. Presented below are data for Bandkok Corp.
Assets, January 1 $5,400 $6,480
Liabilities, January 1 3,240 ?
Stockholders' Equity, Jan. 1 ? ?
Dividends 1,080 810
Common Stock 972 864
Stockholders' Equity, Dec. 31 ? ?
Net Income 1,280 864
Stockholders' Equity at January 1, 2013 is
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At December 31, 2010, Dwight Corporation reported current assets of $390,000 and current liabilities of $200,000. The following items may have been recorded incorrectly. Dwight uses the periodic method.
Compute the current ratio based on Dwight's balance sheet. (Round answer to 2 decimal places, e.g. 5.10.)
Recompute the current ratio after corrections are made. (Round answer to 2 decimal places, e.g. 5.10.)
By what amount will income (before taxes) be adjusted up or down as a result of the corrections?
The following independent situations relate to inventory accounting.
Answer each of the questions below about inventories.
Kim Co. purchased goods with a list price of $175,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable. How much should Kim Co. record as the cost of these goods?
Keillor Company's inventory of $1,100,000 at December 31, 2010, was based on a physical count of goods priced at cost and before any year-end adjustments relating to the following items.
What amount should Keillor report as inventory on its balance sheet?
Zimmerman Corp. had 1,500 units of part M.O. on hand May 1, 2010, costing $21 each. Purchases of part M.O. during May were as follows.
A physical count on May 31, 2010, shows 2,000 units of part M.O. on hand. Using the FIFO method, what is the cost of part M.O. inventory at May 31, 2010? Using the LIFO method, what is the inventory cost? Using the average cost method, what is the inventory cost?
FIFO inventory cost
LIFO inventory cost
Ashbrook Company adopted the dollar-value LIFO method on January 1, 2010 (using internal price indexes and multiple pools). The following data are available for inventory pool A for the 2 years following adoption of LIFO.
At Base-Year Cost
At Current-Year Cost
Computing an internal price index and using the dollar-value LIFO method, at what amount should the inventory be reported at December 31, 2011?
Price index (12/31/10)
Price index (12/31/11)
Dollar-value LIFO inventory (12/31/10)
Dollar-value LIFO inventory (12/31/11)
Donovan Inc., a retail store chain, had the following information in its general ledger for the year 2010.
Merchandise purchased for resale
Interest on notes payable to vendors
Cash discounts on purchases
What is Donovan's inventoriable cost for 2010?
Dover Company began operations in 2010 and determined its ending inventory at cost and at lower of cost or market at December 31, 2010, and December 31, 2011. This information is presented below.
Prepare the journal entries required at December 31, 2010, and December 31, 2011, assuming that the inventory is recorded at market, and a perpetual inventory system (direct method) is used.
SalesAllowance to reduce inventory to marketCost of goods soldInventoryRecovery of loss due to market decline of inventoryLoss due to market decline of inventoryCash
Recovery of loss due to market decline of inventoryCashInventoryCost of goods soldLoss due to market decline of inventoryAllowance to reduce inventory to marketSales
InventoryCashCost of goods soldLoss due to market decline of inventoryRecovery of loss due to market decline of inventoryAllowance to reduce inventory to marketSales
InventoryCashSalesCost of goods soldAllowance to reduce inventory to marketRecovery of loss due to market decline of inventoryLoss due to market decline of inventory
Prepare journal entries required at December 31, 2010, and December 31, 2011, assuming that the inventory is recorded at cost and an allowance account is adjusted at each year-end under a perpetual system.
Loss due to market decline of inventoryCashCost of goods soldInventoryAllowance to reduce inventory to marketRecovery of loss due to market decline of inventorySales
Allowance to reduce inventory to marketLoss due to market decline of inventoryCost of goods soldInventoryRecovery of loss due to market decline of inventorySalesCash
CashLoss due to market decline of inventorySalesAllowance to reduce inventory to marketRecovery of loss due to market decline of inventoryInventoryCost of goods sold
CashRecovery of loss due to market decline of inventoryCost of goods soldInventoryLoss due to market decline of inventoryAllowance to reduce inventory to marketSales
Which of the two methods above provides the higher net income in each year?
Inventory recorded at marketInventory recorded at costBoth have the same effect
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