Economics for Accounting and Finance - ECON3007
19. On June 30, 2006, the condensed balance sheet for the partnership of Eddy, Fox, and Grimm, together...
Items 1 and 2 are based on the following:
On June 30, 2006, the condensed balance sheet for the partnership of Eddy, Fox, and Grimm, together with their respective profit and loss sharing percentages were as follows:
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Assets, net of liabilities | $320,000 |
Eddy, capital (50%) | $160,000 |
Fox, capital (30%) | 96,000 |
Grimm, capital (20%) | 64,000 |
$320,000 |
Eddy decided to retire from the partnership and by mutual agreement is to be paid $180,000 out of partnership funds for his interest. Total goodwill implicit in the agreement is to be recorded. After Eddy’s retirement, what are the capital balances of the other partners?
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Fox | Grimm | |
a. | $ 84,000 | $56,000 |
b. | $102,000 | $68,000 |
c. | $108,000 | $72,000 |
d. | $120,000 | $80,000 |
Assume instead that Eddy remains in the partnership and that Hamm is admitted as a new partner with a 25% interest in the capital of the new partnership for a cash payment of $140,000. Total goodwill implicit in the transaction is to be recorded. Immediately after admission of Hamm, Eddy’s capital account balance should be
- $280,000
- $210,000
- $160,000
- $140,000
20. How do you change the status of a project to done in QuickBooks Online Accountant? Select the projec
How do you change the status of a project to done in QuickBooks Online Accountant?
- Select the project, select Done in the status drop-down
- Select the project, select the edit pencil and select Done
- Select the project, select the edit project link in Actions and edit the task status to select Done
- Select the project and select the remove task button, select amend status and select Done
21. Rahim of Bombay consigned to Raju of Madras goods to be sold at invoice price which represents 125%.
Rahim of Bombay consigned to Raju of Madras goods to be sold at invoice price which represents 125% of cost. Raju is entitled to a commission of 10% on sales at invoice price and 25% of any excess realised over invoice price. The expenses on freight and insurance incurred by Rahim were ~ 10,000. The account sales received by Rahim shows that Raju effected sales aggregating to ~ 1,00,000 in respect of 75% of the consignment. His selling expenses to be reimbursed were ~ 8,000, 10% of the consignment goods of the value of ~ 12,500 were destroyed by fire at the Madras godown and the insurance company paid ~ 12,000 net of salvage. Raju remitted the balance in favour of Rahim. Prepare the Consignment Account and the account of Raju in the books of Rahim along with necessary working.
22. The following trial balance of Mint Corp. at December 31, 2006, has been adjusted except for income...
Items 1 through 3 are based on the following:
The following trial balance of Mint Corp. at December 31, 2006, has been adjusted except for income tax expense.
Dr. | Cr. | |||
Cash | $ | 600,000 | ||
Accounts receivable, net | 3,500,000 | |||
Cost in excess of billings on long-term contracts | 1,600,000 | |||
Billings in excess of costs on long-term contracts | $ | 700,000 | ||
Prepaid taxes | 450,000 | |||
Property, plant, and equipment, net | 1,480,000 | |||
Note payable—noncurrent | 1,620,000 | |||
Common stock | 750,000 | |||
Additional paid-in capital | 2,000,000 | |||
Retained earnings—unappropriated | 900,000 | |||
Retained earnings—restricted for note payable | 160,000 | |||
Earnings from long-term contracts | 6,680,000 | |||
Costs and expenses | 5,180,000 | |||
$ | 12,810,000 | $ | 12,810,000 | |
Other financial data for the year ended December 31, 2006, are
- Mint uses the percentage-of-completion method to account for long-term construction contracts for financial statement and income tax purposes. All receivables on these contracts are considered to be collectible within twelve months.
- During 2006, estimated tax payments of $450,000 were charged to prepaid taxes. Mint has not recorded income tax expense. There were no temporary or permanent differences, and Mint’s tax rate is 30%.
In Mint’s December 31, 2006 balance sheet, what amount should be reported as
Total retained earnings?
- $1,950,000
- $2,110,000
- $2,400,000
- $2,560,000
Total noncurrent liabilities?
- $1,620,000
- $1,780,000
- $2,320,000
- $2,480,000
Total current assets?
- $5,000,000
- $5,450,000
- $5,700,000
- $6,150,000
23. 21.Which of the following statements is correct regarding a partner's debit capital balances? a.
21.Which of the following statements is correct regarding a partner's debit capital balances?
a. | The partner should make contributions to reduce the debit balance to whatever extent possible. |
b. | If contributions are not possible, the other partners with credit capital balances will be allocated a portion of the debit balance based on their proportionate profit-and-loss-sharing percentages. |
c. | Partners who absorb another's debit capital balance have a legal claim against the deficient partner. |
d. | All of these statements are correct. |
22.The doctrine of marshaling of assets
a. | is applicable only if the partnership is insolvent. |
b. | allows partners to first contribute personal assets to unsatisfied partnership creditors. |
c. | is applicable if either the partnership is insolvent or individual partners are insolvent. |
d. | provides that when the Uniform Partnership Act is adopted, amounts owed to personal creditors and to the partnership for debit capital balances are shared proportionately from the personal assets of the partners. |
23.If a partnership has only non-cash assets, all liabilities have been properly disbursed, and no additional liquidation expenses are expected, the maximum potential loss to the partnership in the liquidation process is:
a. | the fair market value of the non-cash assets |
b. | the book value of the non-cash assets |
c. | the estimated proceeds from the sale of the assets less the book value of the non-cash assets |
d. | none of the above |
24.Allen, Branden & Caylin are in the process of liquidating their partnership. They have the following capital balances and profit and loss percentages:
Capital Balance | Profit/Loss % | ||
Allen | 5,000 | debit | 20% |
Branden | 18,000 | credit | 50% |
Caylin | 6,000 | credit | 30% |
The partnership balance sheet shows cash of $5,000, non-cash assets of $14,000, and no liabilities. Assuming no liquidation expenses, what safe payment could be made?
a. | $5,000 split between Branden & Caylin by a ratio of 5/8 and 3/8, respectively. |
b. | $5,000 to Branden only |
c. | $1,000 to Allen, $2,500 to Branden, and $1,500 to Caylin |
d. | $18,000 to Branden only |
25.A partner's maximum loss absorbable is calculated by
a. | dividing the partner's capital balance by his or her profit-and-loss-sharing percentage. |
b. | multiplying the partner's capital balance by his or her profit-and-loss-sharing percentage. |
c. | multiplying distributable assets by the partner's profit-sharing percentage. |
d. | dividing the partner's capital balance by his or her percentage interest in capital. |
26.Under the doctrine of marshaling of assets, unsatisfied partnership creditors
a. | must first proceed against the partner with the largest capital balance. |
b. | may attach to the assets of an individual partner before individual creditors have been satisfied. |
c. | may proceed against any personally solvent partner. |
d. | may proceed against any personally solvent partner but only to the extent of their capital balance in the partnership. |
27.Partner T is personally insolvent, owing $400,000. Personal assets will only bring $150,000 when liquidated. At the same time, T has a credit capital balance in the partnership of $85,000. The capital amounts of the other partners total a (credit) balance of $200,000. Under the doctrine of marshaling of assets, the personal creditors of T can collect up to ____.
a. | $150,000 |
b. | $235,000 |
c. | $400,000 |
d. | $435,000 |
28.Partners Thomas, Adams and Jones have capital balances of $24,000, $45,000, and $90,000 respectively. They split profits in the ratio of 3:3:4, respectively. Under a predistribution plan, one of the partners will get the following total amount in liquidation before any other partners get anything:
a. | $22,500 |
b. | $30,000 |
c. | $40,000 |
d. | $75,000 |
Scenario 14-2
Assume that a partnership had assets with a book value of $240,000 and a market value of $195,000, outside liabilities of $70,000, loans payable to partner Able of $20,000, and capital balances for partners Able, Baker, and Chapman of $70,000, $30,000, and $50,000.
29.Refer to Scenario 14-2. How much would Able receive upon liquidation of the partnership assuming profits and losses are allocated equally?
a. | $70,000 |
b. | $90,000 |
c. | $75,000 |
d. | $55,000 |
30.Refer to Scenario 14-2. How would the first $100,000 of available assets be distributed assuming profits and losses are allocated equally?
a. | $70,000 to outside liabilities, $20,000 to Able, and the balance equally among the partners |
b. | $70,000 to outside liabilities and $30,000 to Able |
c. | $70,000 to outside liabilities, $25,000 to Able, and $5,000 to Chapman |
d. | $40,000 to Able, $20,000 to Chapman, and the balance equally among the partners |
31.Refer to Scenario 14-2. If all outside creditors and loans to partners had been paid, how would the balance of the assets be distributed assuming that Chapman had already received assets with a value of $30,000 assuming profits and losses are allocated equally?
a. | Each of the partners would receive $25,000. |
b. | Each of the partners would receive $40,000. |
c. | Able: $70,000, Baker: $30,000, Chapman: $20,000 |
d. | Able: $55,000, Baker: $15,000, Chapman: $5,000 |
32.Partners Able, Baker, and Chapman have the following personal assets, personal liabilities, and partnership capital balances:
Able | Baker | Chapman | |
Personal assets | $30,000 | $ 80,000 | $60,000 |
Personal liabilities | 25,000 | 50,000 | 72,000 |
Capital balances | 50,000 | (32,000) | 70,000 |
Assume profits and losses are allocated equally.
After applying the doctrine of marshaling of assets, the capital balances for Able, Baker, and Chapman, respectively, would be
a. | $50,000, $(2,000), and $58,000. |
b. | $48,000, 0, and $58,000. |
c. | $49,000, 0, and $57,000. |
d. | $34,000, 0, and $54,000. |
33.Partners Dalton, Edwards, and Finley have capital balances of $40,000, 90,000 and $30,000, respectively, immediately prior to liquidation. Total remaining assets have a book value of $160,000, the liabilities having been paid. Among these remaining assets is a machine with a fair value of $35,000. The partners split profits and losses equally. Edwards covets the machine and is willing to accept it for $35,000 in lieu of cash. The other partners have no designs on specific assets, only cash in liquidation. How much cash, in addition to the machine, would be first distributed to Edwards, before any of the other partners received anything?
a. | $15,000 |
b. | $50,000 |
c. | $166,667 |
d. | $300,000 |
14-1
24. Mcdale Inc. produces and sells two products. Data concerning those products for the most recent...
Mcdale Inc. produces and sells two products. Data concerning those products for the most recent month appear below:
Product I49V | Product Z50U | |
Sales | $15,000 | $14,000 |
Variable expenses | $3,300 | $2,790 |
The fixed expenses of the entire company were $18,460. The break-even point for the entire company is closest to:
A) $23,367
B) $10,540
C) $24,550
D) $18,460
25. Last year, Jarod left a job that pays $80,000 to run his own bike-repair shop. JarodA????1s shop cha
Last year, Jarod left a job that pays $80,000 to run his own bike-repair shop. JarodA????1s shop charges $65 for a repair, and last year the shop performed 5,000 repairs. JarodA????1s production costs for the year included rent, wages, and equipment. Jarod spent $60,000 on rent and $100,000 on wages for his employees. Jarod keeps whatever profit the shop earns, but does not pay himself an official wage. Jarod borrowed $30,000 for the shopA????1s equipment at an annual interest rate of 4 percent.
Please solve for Jarod's accounting profit
Please solve for Jarod's economic profit
26. Morganton Company makes one product and it provided the following information to help prepare the...
Morganton Company makes one product and it provided the following information to help prepare the master budget for its first four months of operations:
a. | The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 8,600, 17,000, 19,000, and 20,000 units, respectively. All sales are on credit. |
b. | Thirty percent of credit sales are collected in the month of the sale and 70% in the following month. |
c. | The ending finished goods inventory equals 25% of the following month’s unit sales. |
d. | The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.40 per pound. |
e. | Thirty five percent of raw materials purchases are paid for in the month of purchase and 65% in the following month. |
f. | The direct labor wage rate is $14 per hour. Each unit of finished goods requires two direct labor-hours. |
g. | The variable selling and administrative expense per unit sold is $1.80. The fixed selling and administrative expense per month is $67,000. |
What are the budgeted sales for July? |
What are the expected cash collections for July? |
What is the accounts receivable balance at the end of July? |
According to the production budget, how many units should be produced in July? |
If 96,250 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be purchased in July?
What is the estimated cost of raw materials purchases for July? If the cost of raw material purchases in June is $136,560, what are the estimated cash disbursements for raw materials purchases in July? |
27. The following accounts appeared in recent financial statements of Delta Air Lines : Accounts...
The following accounts appeared in recent financial statements of Delta Air Lines:
Accounts Payable Flight Equipment Advanced Payments for Equipment Frequent Flyer (Obligations) Air Traffic Liability Fuel Inventory
Aircraft Fuel (Expense) Landing Fees (Expense) Aircraft Maintenance (Expense) Parts and Supplies Inventories
Aircraft Rent (Expense) Passenger Commissions (Expense)
Cargo Revenue Passenger Revenue
Cash Prepaid Expenses
Contract Carrier Arrangements (Expense) Taxes Payable
Identify each account as either a balance sheet account or an income statement account. For each balance sheet account, identify it as an asset, a liability, or stockholders’ equity. For each income statement account, identify it as a revenue or an expense.
28. The following comparative information is available for Prasad Company for 2012.
The following comparative information is available for Prasad Company for 2012.
LIFO | FIFO | |
Sales revenue | $86,000 | $86,000 |
Cost of goods sold | 38,000 | 29,000 |
Operating expenses | ||
(including depreciation) | 27,000 | 27,000 |
Depreciation | 10,000 | 10,000 |
Cash paid for inventory purchases | 32,000 | 32,000 |
Instructions
(a) Determine net income under each approach. Assume a 30% tax rate.
(b) Determine net cash provided by operating activities under each approach. Assume that all sales were on a cash basis and that income taxes and operating expenses, other than depreciation, were on a cash basis.
(c) Calculate the quality of earnings ratio under each approach and explain your findings.
29 Lindsay Company reported the following results from sales of 5,000 units of product A for the mon...
Lindsay Company reported the following results from sales of 5,000 units of product A for the month of June:
Sales | $200,000 |
Variable Costs | (120,000) |
Fixed Costs | (70,000) |
Operating Income | $10,000 |
Assume that Lindsay increases the selling price of product A by 10% on July 1. How many units of product A would have to be sold in July to generate an operating income of $40,000?
Question 5 options:
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30. Do you think transaction processing systems differ significantly between service and...
Do you think transaction processing systems differ significantly between service and manufacturing industries? Are they equally important to both sectors?
31. Cost accounting is a system of foresight and not a post mortem examination,it turns losses into...
Cost accounting is a system of foresight and not a post mortem examination,it turns losses into profits ,speeds up activities and eliminates waste ,discuss
32. What is the BEP (in units)?
A company budgets for a production of 1,50,000 units. The Variable Cost per unit is Rs. 15 and Fixed Cost is Rs. 3,00,000. The company fixes its Selling Price to fetch a profit of 25% on cost.
- What is the BEP (in units)?
- What is the P/V Ratio?