1. Depreciation on hirepurchased asset is claimed by
(a) Hire vendor
(b) Hire purchaser
(c) Either the hire vendor or thehire purchaser as per the agreement between them
(d) No depreciation is claimed tillthe last instalment is paid/ received
2. Under instalment payment system,ownership of goods
(a) is transferred at the time ofpayment of last instalment
(b) is not transferred
(c) is transferred at the time ofsigning the contract
(d) None of theabove
1. Depreciation on hirepurchased asset is claimed by
(a) Hire vendor
(b) Hire purchaser
(c) Either the hire vendor or thehire purchaser as per the agreement between them
(d) No depreciation is claimed tillthe last instalment is paid/ received
2. Under instalment payment system,ownership of goods
(a) is transferred at the time ofpayment of last instalment
(b) is not transferred
(c) is transferred at the time ofsigning the contract
(d) None of theabove
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Can someone please help me with the following questions so I candouble check my work? No explanation needed just the answer isfine.
8. U.S. GAAP and IFRS require firms to account for minority,active investments, generally those where the investor owns between_____ using the equity method. Under the equity method, theinvestor recognizes as revenue (expense) each period its share ofthe net income (loss) of the investee. The investor recognizesdividends received from the investee as a return (reduction) ofinvestment, not as income.
a. | 10% and 50% |
b. | 20% and 50% |
c. | 30% and 50% |
d. | 40% and 60% |
e. | 50% and 60% |
25. Purchaser Corporation acquires 30%of the outstanding voting common shares of the Investee Corporationfor $600,000. Purchaser Corporation acquires the investment inInvestee Corporation by buying previously issued shares of InvesteeCorporation from other investors. When Purchaser Corporationacquired 30% of Investee Corporationâs common shares for $600,000,Investee Corporationâs total shareholdersâ equity was $1.5 million.Purchaser Corporationâs cost exceeds the carrying value of the netassets acquired by $150,000 [ $600,000 - (0.30 x$1,500,000)].
Purchaser Corporation attributes the $150,000 excess purchaseprice as follows: $100,000 to remeasure buildings and equipment tofair value and $50,000 to goodwill. Which of the following is/aretrue?
a. | Purchaser Corporation does not reclassify this excess out of itsInvestment in Stock of Investee Corporation account to Buildingsand Equipment and to Goodwill. |
b. | Purchaser Corporation must amortize (or depreciate) any amountattributed to assets with limited lives. |
c. | Purchaser Corporation must depreciate the $100,000 attributed tobuildings and equipment over their remaining useful lives. |
d. | U.S. GAAP and IFRS do not permit the investor to amortize theexcess purchase price attributed to goodwill and other assets withindefinite lives. Instead, the investor must test the investmentaccount annually for possible impairment. |
e. | all of the above |
32. Pareto Corporation owns 40% ofSpring Corporation. During Year 3, Spring has net income of$60,000. What entry should Pareto record related to its investmentin Spring during Year 3?
a. | Investment in SpringCorp. 24,000 Equity in Earnings ofAffiliate 24,000 |
b. | DividendReceivable 24,000 DividendIncome 24,000 |
c. | InvestmentReceivable 24,000 InvestmentIncome 24,000 |
d. | Investment in SpringCorp. 24,000 InvestmentIncome 24,000 |
e. | Investment in SpringCorp. 24,000 Cash 24,000 |
35. Pense Co. purchased 40% of thestock of Stretch Co. in Year 1 for $100,000. Stretch had net incomein Year 1 of $50,000 and net income in Year 2 of $30,000. Stretchalso paid total dividends of $20,000 in Year 2. On January 1, Year3, Pense Co. sold its investment in Stretch Co. to GE CapitalCorporation (GE) for $130,000. What entry would Pense Co. make torecord the sale of Stretch Co.?
a. | Cash 130,000 Gain onSale 6,000 Investment inStretch 124,000 |
b. | Cash 130,000 Loss onSale 2,000 Investment inStretch 132,000 |
c. | Cash 130,000 Loss onSale 10,000 Investment inStretch 140,000 |
d. | Cash 130,000 Loss onSale 30,000 Investment inStretch 160,000 |
e. | Cash 130,000 Loss onSale 20,000 Investment inStretch 150,000 |
55. Intercompany sales
a. | do not need to be eliminated as long as the sales have beencompleted to an outside party. |
b. | must be eliminated from both the sales and cost of goods soldaccounts. |
c. | do not need to be eliminated if made at arm's length values. |
d. | must be eliminated only if not in the ordinary course of tradeor business. |
e. | do not need to be eliminated. |
54. To avoid double counting P'sinvestment in S, P must eliminate
a. | the investment in S and S's separate company shareholders'equity. |
b. | all debt on S's separate company financial statements. |
c. | any dividends paid against the cash account. |
d. | all intercompany transactions. |
e. | all of the above. |
58. U.S. GAAP view investments of over50 percent of the voting stock of another company (for the purposeof controlling the other company at the broad policy-making leveland at the day-to-day operational level) as
a. | minority, passive investments. |
b. | minority, active investments. |
c. | majority, passive investments. |
d. | majority, active investments. |
e. | marketable securities. |
33. If Wabasso Company pays $55,000 individends to its corporate investor Lament Corporation (Lament owns35% of The Wabasso Company), what entry should Lament Corporationrecord when it receives the dividends?
a. | Cash 55,000 DividendIncome 55,000 |
b. | Cash 55,000 InvestmentIncome 55,000 |
c. | Cash 55,000 Investment in WabassoCompany 55,000 |
d. | Cash 55,000 Additional Paid-inCapital 55,000 |
e. | Cash 55,000 Common Stock- WabassoCompany 55,000 |
25. Purchaser Corporation acquires 30%of the outstanding voting common shares of the Investee Corporationfor $600,000. Purchaser Corporation acquires the investment inInvestee Corporation by buying previously issued shares of InvesteeCorporation from other investors. When Purchaser Corporationacquired 30% of Investee Corporationâs common shares for $600,000,Investee Corporationâs total shareholdersâ equity was $1.5 million.Purchaser Corporationâs cost exceeds the carrying value of the netassets acquired by $150,000 [ $600,000 - (0.30 x$1,500,000)].
Purchaser Corporation attributes the $150,000 excess purchaseprice as follows: $100,000 to remeasure buildings and equipment tofair value and $50,000 to goodwill. Which of the following is/aretrue?
a. | Purchaser Corporation does not reclassify this excess out of itsInvestment in Stock of Investee Corporation account to Buildingsand Equipment and to Goodwill. |
b. | Purchaser Corporation must amortize (or depreciate) any amountattributed to assets with limited lives. |
c. | Purchaser Corporation must depreciate the $100,000 attributed tobuildings and equipment over their remaining useful lives. |
d. | U.S. GAAP and IFRS do not permit the investor to amortize theexcess purchase price attributed to goodwill and other assets withindefinite lives. Instead, the investor must test the investmentaccount annually for possible impairment. |
e. | all of the above |
20. Pagoli Corporation acquires 30% ofthe outstanding voting common shares of the Inform Corporation for$600,000. Pagoli Corporation acquires the investment in InformCorporation by buying previously issued shares of InformCorporation from other investors.
Between the time of the acquisition and the end of PagoliCorporationâs next accounting period, Inform Corporation reportsearnings of $80,000; and pays a dividend of $30,000 to holders ofits common stock.
Inform Corporation reports earnings of $100,000 and paysdividends of $40,000 during the subsequent accounting period.
Pagoli Corporationâs Investment in Stock of Inform Corporationaccount now has a balance of:
a. | $609,000 |
b. | $621,000 |
c. | $633,000 |
d. | $642,000 |
e. | $657,000 |
Need help with 8-11
Create financial statements by properly employing prescribedmethods in accordance with generally accepted accountingprinciples: A. Step Eight: Prepare the financial statements. Notethat you must use your adjusted trial balance to prepare the incomestatement, statement of ownerâs equity, and balance sheet. You mustcomplete these statements in this order, as there areinterdependencies among them. B. Step Nine: Complete the âClosingEntriesâ tab in your workbook by closing all temporary incomestatement amounts to create closing entries. C. Step Ten: Preparethe âPost Closing Trial Balanceâ tab for the next accountingperiod. [ACC-201-03] D. Step Eleven: Prepare the reversing entriesin the âReversing Entriesâ tab of your workbook.
Here is all of the info to go along with it:
July 1: You take $10,000 from your personal savings account andbuy common stock in Peyton Approved. July 1: Purchase $6,500 inbaking supplies from vendor, on account. July 3: Your parents lendthe company $10,000 cash in exchange for a two-year, 6% notepayable. Interest and the principal are repayable at maturity. July7: Enter into a lease agreement for bakery space. The agreement isfor 1 year. The rent is $1,500 per month, and the last monthâs rentpayment of $1,500 is required at time of lease agreement. Thepayment was made in cash. Lease period is effective July 1, 2018,through June 30, 2019. July 10: Pay $375 to the county for abusiness license. July 11: Purchase a cash register for $250(deemed to be not material enough to qualify as depreciableequipmentâuse misc. exp.). July 13: You have baking equipment,including an oven and mixer, which you have been using for yourhome-based business and will now start using in the bakery. Youestimate that the equipment is currently worth $6,000, and youtransfer the equipment into the business in exchange for additionalcommon stock. The equipment has a 5-year useful life. July 13: Pay$200 for business cards/flyers/posters/ads to use for advertising.July 14: Pay $300 for office supplies. July 15: Hire part-timehelper to be paid $12 per hour. Pay periods are the 1st through the15th and 16th through the end of the month, with paydays being the20th for the first pay period and the 5th of the following monthfor the second pay period. (No entry is required on this date; itis here for informational purposes only.) July 30: Receivedtelephone bill for July in amount of $75. Payment is due on August10. 6 July 31: Pay $2,400 for a 12-month insurance policy. Policyeffective dates are August 1, 2018, through July 31, 2019. July 31:Accrue wages earned for employee for period of 16th through 31st ofJuly (Wage calculations table provided below). July 31: Total Julybakery sales were $15,000. $5,000 of these sales are on accountsreceivable. Step Two Data (Click on the link to return to theprompt.) The following events occur in August, 2018: August 5: Paidemployee for period ending 7/31. August 8: Receive payments fromcustomers towards accounts receivable in amount of $3,800. August10: Paid July telephone bill. August 15: Purchase additional bakingsupplies in amount of $5,000 from vendor, on account. August 15:Accrue wages earned for employee from period of 1st through 15th ofAugust (Wage calculations table provided below). August 15: Payrent on bakery space. August 18: Receive payments from customerstowards accounts receivable in amount of $3,000. August 20: Paid$8,500 toward baking supplies vendor payable. August 20: Payemployee for period ending 8/15. August 22: $300 in office suppliespurchased. August 31: Received telephone bill for August in amountof $75. Payment is due on September 10. 7 August 31: Accrue wagesearned for employee for period of August 16th through August 31st(Wage calculations table provided below). August 31: August bakerysales total $20,000. $7,500 of this total is on accountsreceivable. Step Three (Click on the link to return to the prompt.)Updated Scenario: Many customers have been asking for morehypoallergenic products, so in September you start carrying a lineof hypoallergenic shampoos on a trial basis. The followinginformation relates to the purchase and sales of the shampoo: ï· Youuse the perpetual inventory method. Although you could use thefollowing valuation methodsâFIFO, LIFO, or weighted average, youchoose to use the FIFO method. Data: The following events occur inSeptember, 2018: September 1: Paid dividends to self in amount of$10,000. September 5: Pay employee for period ending 8/31.September 7: Purchase merchandise for resale. See âInventoryValuationâ tab for details. September 8: Receive payments fromcustomers toward accounts receivable in amount of $4,000. September10: Pay August telephone bill. September 11: Purchase bakingsupplies in amount of $7,000 from vendor on account. September 13:Paid on supplies vendor account in amount of $5,000. September 15:Accrue employee wages for period of September 1 through September15. September 15: Pay rent on bakery space: $1,500. 8 September 15:Record merchandise sales transaction. See âInventory Valuationâ tabfor details. September 15: Record impact of sales transaction onCOGS and the inventory asset. See âInventory Valuationâ tab fordetails. September 20: Pay employee for period ending 9/15.September 20: Purchase merchandise inventory for resale tocustomers. See âInventory Valuationâ tab for details. September 24:Record sales of merchandise to customers. See âInventory Valuationâtab for details. September 24: Record impact of sales transactionon COGS and the inventory asset. See âInventory Valuationâ tab fordetails. September 30: Purchase merchandise inventory for resale tocustomers. See âInventory Valuationâ tab for details. September 30:Accrue employee wages for period of September 16th throughSeptember 30th September 30: Total September bakery sales are$20,000. $6,000 of these sales are on accounts receivable. Step SixData (Click on the link to return to the prompt.) On September 30,the following adjustments must be made: ï· [Note: This is a sample.]Depreciation of baking equipment transferred to company on 7/13.Assume a half month of depreciation in July using the straight-linemethod. ï· Accrue interest for note payable. Assume a full month ofinterest for July. (6% annual interest on $10,000 loan fromparents.) ï· Record insurance used for the year. ï· Actual bakingsupplies on-hand as of September 30 are $1,100. ï· Office supplieson-hand as of September 30 are $50. Wage calculation data: 9 MonthHours Rate Pay 31 Jul. 10 12 120 15 Aug. 40 12 480 31 Aug. 35 12420 15 Sep. 38 12 456 30 Sep. 40 12 480
PEYTON APPROVED | |||
General Journal for the period from July, 1 to September, 30 | |||
Date | Account Title | Debit | Credit |
July, 1 | Cash | $10,000 | |
Common Stock | $10,000 | ||
July, 1 | Baking Supplies | $6,500 | |
Accounts Payable | $6,500 | ||
July, 3 | Cash | $10,000 | |
6% Note Payable | $10,000 | ||
July, 7 | Prepaid Rent | $1,500 | |
Cash | $1,500 | ||
July, 10 | Licensing fee | $375 | |
Cash | $375 | ||
July, 11 | Miscellaneous Expense | $250 | |
Cash | $250 | ||
July, 13 | Baking Equipment | $6,000 | |
Common Stock | $6,000 | ||
July, 13 | Advertising expense | $200 | |
Cash | $200 | ||
July, 14 | Office Supplies | $300 | |
Cash | $300 | ||
July, 30 | Telephone expense | $75 | |
Accounts Payable | $75 | ||
July, 31 | Prepaid Insurance | $2,400 | |
Cash | $2,400 | ||
July, 31 | Salaries expense | $120 | |
Salaries payable | $120 | ||
July, 31 | Cash | $10,000 | |
Accounts Receivable | $5,000 | ||
Sales | $15,000 | ||
Aug, 5 | Salaries payable | $120 | |
Cash | $120 | ||
Aug, 8 | Cash | $3,800 | |
Accounts Receivable | $3,800 | ||
Aug,10 | Accounts Payable | $75 | |
Cash | $75 | ||
Aug,15 | Baking Supplies | $5,000 | |
Accounts Payable | $5,000 | ||
Aug,15 | Salaries expense | $480 | |
Salaries payable | $480 | ||
Aug,15 | Rent Expense | $1,500 | |
Cash | $1,500 | ||
Aug,18 | Cash | $3,000 | |
Accounts Receivable | $3,000 | ||
Aug,20 | Accounts Payable | $8,500 | |
Cash | $8,500 | ||
Aug,20 | Salaries payable | $480 | |
Cash | $480 | ||
Aug,22 | Office Supplies | $300 | |
Cash | $300 | ||
Aug,31 | Telephone expense | $75 | |
Accounts Payable | $75 | ||
Aug,31 | Salaries expense | $420 | |
Salaries payable | $420 | ||
Aug,31 | Cash | $12,500 | |
Accounts Receivable | $7,500 | ||
Sales | $20,000 | ||
Sept, 1 | Dividend | $10,000 | |
Cash | $10,000 | ||
Sept, 5 | Salaries payable | $420 | |
Cash | $420 | ||
Sept, 8 | Cash | $4,000 | |
Accounts Receivable | $4,000 | ||
Sept,10 | Accounts Payable | $75 | |
Cash | $75 | ||
Sept,11 | Baking Supplies | $7,000 | |
Accounts Payable | $7,000 | ||
Sept,13 | Accounts Payable | $5,000 | |
Cash | $5,000 | ||
Sept,15 | Salaries expense | $456 | |
Salaries payable | $456 | ||
Sept,15 | Rent Expense | $1,500 | |
Cash | $1,500 | ||
Sept,20 | Salaries payable | $456 | |
Cash | $456 | ||
Sept,30 | Salaries expense | $480 | |
Salaries payable | $480 | ||
Sept,30 | Cash | $14,000 | |
Accounts Receivable | $6,000 | ||
Sales | $20,000 |
Unadjusted Trial Balance | Adjusting Entries | Adjusted Trial Balance | ||||
Account | Debit | Credit | Debit | Credit | Debit | Credit |
Cash | 25,356.75 | 25,356.75 | ||||
Baking Supplies | 18,500.00 | 17,400.00 | 1,100.00 | |||
Merchandise Inventory | 175.45 | 175.45 | ||||
Prepaid Rent | 1,500.00 | 1,500.00 | ||||
Prepaid Insurance | 2,400.00 | 400.00 | 2,000.00 | |||
Baking Equipment | 6,000.00 | 6,000.00 | ||||
Misc. Supplies | 600.00 | 550.00 | 50.00 | |||
Accounts Receivable | 7,700.00 | 7,700.00 | ||||
Notes Payable | 10,000.00 | 10,000.00 | ||||
Accounts Payable | 2,000.00 | 2,000.00 | ||||
Wages Payable | 480.00 | 480.00 | ||||
Common Stock | 16,000.00 | 16,000.00 | ||||
Dividends | 10,000.00 | 10,000.00 | ||||
Bakery Sales | 55,000.00 | 55,000.00 | ||||
Merchandise sales | 221.00 | 221.00 | ||||
Baking Supplies Expense | 17,400.00 | 17,400.00 | ||||
Rent Expense | 4,500.00 | 4,500.00 | ||||
Insurance Expense | 400.00 | 400.00 | ||||
Misc. Expense | 250.00 | 250.00 | ||||
Business License Expense | 375.00 | 375.00 | ||||
Advertising Expense | 200.00 | 200.00 | ||||
Wages Expense | 1,836.00 | 1,836.00 | ||||
Telephone Expense | 150.00 | 150.00 | ||||
COGS | 157.80 | 157.80 | ||||
Depreciation Expense | 250.00 | 250.00 | ||||
Accumulated Depreciation | 250.00 | 250.00 | ||||
Interest Expense | 150.00 | 150.00 | ||||
Interest Payable | 150.00 | 150.00 | ||||
Misc. Supplies Expense | 550.00 | 550.00 | ||||
Total | 81,701.00 | 81,701.00 | 18,750.00 | 18,750.00 | 82,101.00 | 82,101.00 |