1. Which one of the following items is NOT included in the computation of comprehensive income (ignoring tax effects)?
d. unrealized gains or losses on securities
2. james inc. discovered that equipment purchased 3 years ago for $600,000 will not last as long as originally estimated. the firm was depreciating the equipment at the rate of $80,000 per year with an estimated salvage value of $40,000. new estimates indicate that the equipment will last a total of 5 years with no salvage value. how much should james inc. record as depreciation in year 4?
b. $120,000
3. refer the following data for andrews construction company. the company is building a large complex at a price of $10,000,000. this 3 rear project is estimated to cost a total of $8,000,000. actual yearly data are as follows.
Year 1 Year2 Year3
costs incurred $2,000,000 $3,000,000 $2,500,000
estimated completion costs $6,000,000 $3,000,000 $0
billings $1,500,000 $3,500,000 $5,000,000
cash collected $1,000,000 $3,000,000 $6,000,000
Which one of the following entries would be made in year1 to record the income recognized using the percentage-of-completion method of revenue recognition?
a. debit inventory: construction in progress 500,000 Credit income on long term construction contract 500,000
4. refer to the following data for joes application center. the business records revenue using the installment sales method.
year 1 year2
sales $200,000 $250,000
cost of goods sold 140,000 162,500
cash collection from
year 1 sales: 100,000 80,000
year 2 sales: 130,000
how much realized gross profit on installment sales will the business record in year2?
b. $45,500
5. leaders who rely on collateral as the security for a loan tend to focus their attention on the borrowers:
c. statement cash flows
To answer questions 6-8 refer to the following information for motor sales corporation
Moor sales recorded sales of $540,000 for the current year. It was determined that in the past approximately 2% of sales prove to be uncollectible. Having made the proper adjusting entry recognizing bad dpt expenses, the year-end balances are:
Accounts receivable $74,000
Allowance for doubtful accounts $8,000
6. What is the net amount of Accounts receivable that will appear in Moors balance sheet at year end? b. $66,000
7. What is the amount of bad debt expenses that appears on the moor income statement?
b. $8,000
8. What type of accounts is allowance for doubtful accounts?
c. Current asset
9. financing activities on the statement of cash flows result from the cash effects of:
a. paying amounts owed to suppliers b. payment of dividends c. purchasing & disposing of debt securities d. receipt of dividends from equity investments
questions 10 and 11 are based on the following info:
TABLE 3-1 merritt sales company annual report information
year 5 year 4 year 3
sales $356,800 $325,000 $301,000
cost of goods sold 240,000 215,000 200,000
operating expenses 90,000 90,000 80,000
net income 26,800 20,000 21,000
10. refer table 3-1. In a common size income statement for year 3, the cost of goods sold is expressed as:
b. 66.4%
11. Refer table 3-1. In a trend income statement for year 5, where year 3 is the base year, sales for year 5 are expressed as:
c. 118.5%