1. The following information was made available from the income statement and balance sheet of Lauren Company.Item 12/31/10 12/31/09Accounts Receivable $53400 58600Accounts Payable 35600 32700Merchandise Inventory 85000 79000Sales (2010) 243000Interest Revenue (2010) 5600Dividend Revenue (2010) 1200Tax Expense (2010) 12300Salaries Expense (2010) 28000COGS (2010) 65000Interest Expense (2010) 3600Operating Expenses 28500Complete the cash flow from operating activities section for Lauren Company using the direct method for the year ended December 31 2010.2. Given the following balance sheet complete a horizontal analysis. Compute the percentage to the nearest tenth of a percent.Jill s BikesComparative Balance SheetFor Years Ended December 31 2011 and 2010(in thousands) 2011 2010 Difference PercentageAssetsCurrent AssetsCash and Equivalents $72 $94Accounts Receivable net 122 104Inventory 288 232Total Current Assets 482 430Property Plant and Equipment 638 358Total Assets $1120 $788LiabilitiesCurrent LiabilitiesAccounts Payable $242 $148Accrued Liabilities 48 66Total Current Liabilities 290 214Long-Term Liabilities 346 208Total Liabilities 636 422Stockholders EquityCommon Stock 70 60Retained Earnings 414 306Total Stockholders Equity 484 366Total Liabilities and Stockholders Equity $1120 $788Part B: Answer each of the following questions. Each answer is worth 4 points.1. Record the following transactions using the accounting equation.Example:Assets = Liabilities + EquityXXXX(cash) XXXX(accounts payable)A. Amanda invests $17000 cash into her merchandising business.B. She buys $6500 of office equipment and $3000 of office supplies with cash from Office Depot.C. Additional purchases were supplies for $35000 on account from various suppliers.2. Journalize the following transactions and omit the explanations.A. ABC Corporation purchased $15000 of office furniture by putting $7000 down in cash and the rest on account onApril 8.B. The corporation paid $60000 for a two-year lease on April 19.C. The corporation had sales of $45000 of which $35000 were on account on April 20.D. The corporation borrowed $25000 by signing a note payable on April 22.E. The corporation paid $1250 on one of its accounts payable on April 26.3. Prepare a trial balance from the following information for Learn a New Language Inc. for December 31 2012.Accounts payable $5012Common stock $9692Cash $3928Notes payable $1439Wages expense $777Marketing expense $493Equipment $8345Accounts receivable $1142Inventory $8074Sales $66164. Compute the missing information from this post-closing trial balance.Cash $34689Accounts Receivable 9467Prepaid Rent 5000Prepaid Insurance (A)Supplies 944Accounts Payable $5389Wages Payable (B)Common Stock 37049Retained Earnings 8234 ______ _______Total $52356 $523565. Journalize the following transactions using the perpetual inventory method.Aug. 6 Purchased $830 of inventory on account from Johnston with terms of 2/10 n/30.Aug. 8 Purchased $2611 of inventory for cash from Pillner Company.Aug.15 Paid for August 6 purchase from Johnston.Aug. 17 Purchased $1743 of merchandise on account from Luis Company with Terms of 3/15 n/45.6. Given the following information prepare a balance sheet for Isaiah s Tool Shed for the year ending December 31 2012.Cash $65750 Retained Earnings $179319Common Stock $35000 Equipment $27500Accounts Receivable $11478 Accounts Payable $29450Land $30000 Inventory $78311Prepaid Supplies $7357 Income Taxes Payable $4209Office Computers $11345 Other PPE $31446Accum. Depr. (all) $23459 Prepaid Insurance $82507. Rick Company s beginning inventory and purchases during the fiscal year ended December 31 2012 were as follows:(Note: The company uses a perpetual system of inventory.) Units Unit Price Total CostJanuary 1 Beginning inventory 18 $24 $432March 12 Sold 13April 11 Purchase 45 $29 $1305June 20 Sold 33Aug 16 Purchase 35 $27 $945Sept 11 Sold 29Total Cost of InventoryEnding inventory is 23 units. $2682What is the cost of goods sold for Rick Company for 2012 using LIFO?8. Assume that in Year 1 the ending merchandise inventory is overstated by $30000. If this is the only error in Years 1 and 2 fill in the items below indicating which items will be understated overstated or correctly stated for Years 1 and 2.Item Year 1 Year 2Ending inventory ___________ _____________Beginning inventory ___________ _____________Cost of goods sold ___________ _____________9. Below is a list of treatments of accounting topics. Place GAAP on the line if the treatment is GAAP-based and place IFRS on the line if the treatment is IFRS-based.A. Interest and dividend income are reported in the investing section of the cash flow statement.__________B. Interest expense is reported in the financing section of the cash flow statement. ___________C. The use of LIFO is prohibited. ___________10. Record the necessary journal entries from the following bank reconciliation information for July 31 2011:Bank Balance July 31 2011 $36739Checkbook Balance July 31 2011 36444Bank collection of note receivable 1200 + 165 interestBank service charge 35Deposits in transit 2400Outstanding checks 1245NSF check from customer 330Correction of book error (check #456 written for $160 recorded at $610) gas expense11. Journalize the following transactions for Tammy Company:Sept. 1 Sold $3500 of merchandise to Jim on accountOct. 1 Exchanged Jim s account receivable for a fourmonth 8% note for $3500Dec. 31 Recorded accrued interest on Jim s noteFeb. 1 Jim paid off his note with interest (round to nearest dollar)12. A truck was purchased on January 2 at a cost of $60000. It s expected to be used for five years and to have a residual value of $5000 after 120000 miles of service. The truck was driven for 23000 miles the first year and 25000 miles the second year. Calculate the depreciation expense to the nearest dollar for the first and second years.Method Year 1 Year 2Straight-line ________ ________Double-declining-balance ________ ________Units-of-production ________ ________13. Prepare the general journal entries for the following transactions:Jan. 2 2011 Purchased land with a building on it for $750000. The land is worth $300000. Paid $150000 cash down and signed a mortgage payable for the balance.Dec. 31 2011 Depreciation is computed using the straight-line method. The estimated salvage value of the building is $75000 and has an estimated life of 20 years.July 1 2012 The building and land are sold for $825000 cash.14. Journalize the following treasury stock transactions:June 3 Reacquired 350 shares of $12 par common stock at $10 per share.June 7 Sold 180 shares of treasury stock for $16 per share.June 8 Sold 150 shares of treasury stock for $9 per share.15. Lowry Landscapes had net income of $50000 for 2010.Land was sold for $40000 of which $3000 was a gain.The beginning cash balance was $53000 and the ending cash balance was $151000. Depreciation expenses were$11000. Prepare a statement of cash flows for the year ended December 31 2010 for Lowry Landscapes using theindirect method.
