ACCT 3021 : Comprehensive Exam For Ch. 15-17

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azuremammoth471

15 Mar 2019

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*part of this topic is dealt with in an appendix to the chapter. Test bank for intermediate accounting, fourteenth edition issued and outstanding 600,000 shares) The stockholders" equity section of carey co. "s balance sheet at december 31, 2012, was as follows: Assume net income of ,000 during the first quarter: on june 30, 2013 the firm sold 10,000 of the reacquired shares for per share. Bell company has stock outstanding as follows: common, par value per share, 140,000 shares; preferred, 5%; par value per share, 8,000 shares. The preferred is cumulative and participating up to an additional 4% of par; two years are in arrears (not including the current year); and the total amount of cash dividends declared for both classes of stock is ,000. Prepare the entry for the dividend declaration, separating the dividend into the common and preferred portions. Problem d-iii stock dividends and stock splits.

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Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, 2016. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31:

Record these transactions on page 10:

2016
Jan.	18	Purchased 9,000 shares of Malmo Inc. as an available-for-sale investment at $40 per share, including the brokerage commission.
July	22	A cash dividend of $3.00 per share was received on the Malmo stock.
Oct.	5	Sold 500 shares of Malmo Inc. stock at $58.00 per share, less a brokerage commission of $100.
Dec.	18	Received a regular cash dividend of $3.00 per share on Malmo Inc. stock.
	31	Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $36.00 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment.

Record these transactions on page 11:

2017
Jan.	25	Purchased an influential interest in Helsi Co. for $800,000 by purchasing 75,000 shares directly from the estate of the founder of Helsi. There are 250,000 shares of Helsi Co. stock outstanding.
July	16	Received a cash dividend of $3.00 per share on Malmo Inc. stock.
Dec.	16	Received a cash dividend of $3.00 per share plus an extra dividend of $0.20 per share on Malmo Inc. stock.
	31	Received $38,000 of cash dividends on Helsi Co. stock. Helsi Co. reported net income of $170,000 in 2017. Glacier Products Inc. uses the equity method of accounting for its investment in Helsi Co.
	31	Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $44 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the increase in fair value from $36 to $44 per share.

	Required:
A.	Journalize the entries to record the preceding transactions. Be sure to enter the year as part of the date for the first entry on each page. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries.
B.	Prepare the investment-related asset and stockholdersâ equity balance sheet presentation for Glacier Products Inc. on December 31, 2017, assuming the Retained Earnings balance on December 31, 2017, is $700,000. Refer to the Chart of Accounts and Amount Descriptions provided for the exact wording of the answer choices for text entries. âLessâ or âPlusâ will automatically appear if it is required. For those boxes in which you must enter subtractive or negative numbers use a minus sign.

CHART OF ACCOUNTS

Glacier Products Inc.

General Ledger

	ASSETS
110	Cash
111	Petty Cash
120	Accounts Receivable
121	Allowance for Doubtful Accounts
131	Notes Receivable
132	Interest Receivable
141	Merchandise Inventory
145	Office Supplies
146	Store Supplies
151	Prepaid Insurance
161	Investments-Malmo Inc.
163	Investment in Helsi Co. Stock
165	Valuation Allowance for Trading Investments
166	Valuation Allowance for Available-for-Sale Investments
181	Land
191	Store Equipment
192	Accumulated Depreciation-Store Equipment
193	Office Equipment
194	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
221	Notes Payable
231	Interest Payable
241	Salaries Payable
251	Sales Tax Payable

	EQUITY
311	Common Stock
312	Paid-In Capital in Excess of Par-Common Stock
321	Preferred Stock
322	Paid-In Capital in Excess of Par-Preferred Stock
331	Treasury Stock
332	Paid-In Capital from Sale of Treasury Stock
340	Retained Earnings
350	Unrealized Gain (Loss) on Available-for-Sale Investments
351	Cash Dividends
352	Stock Dividends
390	Income Summary

	REVENUE
410	Sales
611	Interest Revenue
612	Dividend Revenue
621	Income of Helsi Co.
631	Gain on Sale of Investments
641	Unrealized Gain on Trading Investments

	EXPENSES
511	Cost of Merchandise Sold
512	Bad Debt Expense
515	Credit Card Expense
516	Cash Short and Over
520	Salaries Expense
531	Advertising Expense
532	Delivery Expense
533	Repairs Expense
534	Selling Expenses
535	Rent Expense
536	Insurance Expense
537	Office Supplies Expense
538	Store Supplies Expense
561	Depreciation Expense-Store Equipment
562	Depreciation Expense-Office Equipment
590	Miscellaneous Expense
710	Interest Expense
721	Loss of Helsi Co.
731	Loss on Sale of Investments
741	Unrealized Loss on Trading Investments

Amount Descriptions
Available-for-sale investments (at cost)
Available-for-sale investments (at fair value)
Net income
Net loss
Other comprehensive income (loss)
Other income (loss)
Trading investments (at cost)
Trading investments (at fair value)

Journalize the entries to record these transactions. Be sure to enter the year as part of the date for the first entry on each page. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries.

PAGE 10PAGE 11

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9
10
11

Prepare the investment-related asset and stockholdersâ equity balance sheet presentation for Glacier Products Inc. on December 31, 2017, assuming the Retained Earnings balance on December 31, 2017, is $700,000. Refer to the Chart of Accounts and Amount Descriptions provided for the exact wording of the answer choices for text entries. âLessâ or âPlusâ will automatically appear if it is required. For those boxes in which you must enter subtractive or negative numbers use a minus sign.

GLACIER PRODUCTS, INC.

Balance Sheet (selected items)

December 31, 2017

1	Current assets:
2
3
4
5
6	Investments:
7
8
9	Stockholdersâ equity:
10
11

greenseal56

Consolidated Balance sheets - Thomason Inc
Consolidated Balance sheets - Thomason Inc
	31-Dec
	1997	%	1996	%
Assets
Cash	$50,000	6.13%	$46,000	5.93%
Accounts receivable	$94,000	11.52%	$86,000	11.08%
Inventories	$128,000	15.69%	$120,000	15.46%
Prepaid expenes & other rec	$14,000	1.72%	$12,000	1.55%
Total Current Assets	$286,000	35.05%	$264,000	34.02%

Property Plant & Equip	$504,000	61.76%	$482,000	62.11%
intangible	$26,000	3.19%	$30,000	3.87%
Land	$0	0.00%	$0	0.00%
Total assets	$816,000		$776,000
Liabilities & Shareholder Equity
Current liabilities	$144,000	17.65%	$140,000	18.04%
Long term liabilities	$180,000	22.06%	$180,000	23.20%
Total liabilities	$324,000	39.71%	$320,000	41.24%
Shareholder's investment
preferred stock	$100,000	12.25%	$100,000	12.89%
Class B nonvoting Pref stock
Common Stock	$180,000	22.06%	$180,000	23.20%
Additional paid in capital	$34,000	4.17%	$34,000	4.38%
Retained earnings	$178,000	21.81%	$142,000	18.30%
Total Shareholder's equity	$492,000	60.29%	$456,000	58.76%
Total Liab and S/holder's equity	$816,000	100%	$776,000	100%

18,000 common shares outstanding

Consolidated Income Statements - Thomason

30-Jun

1997

Net sales

$800,000

100%

Cost of goods sold

$485,000

60.63%

Marketing, research, administrative &oth

0.00%

$315,000

39.38%

Op exp

$244,000

30.50%

EBIT

$71,000

8.88%

Int exp

$11,000

Income before taxes

$60,000

7.50%

Tax

$20,000

2.50%

Net Income

$40,000

5.00%

The AIR turnover ratio for 1997 is:

A. 8.5

B 8.9

C 9.3

D 4.4

The number of days sales in AIR for 1997 to nearest whole day:

A 43

B 41

C 18

III

The inventory turnover ratio for 1997

A 3.91

B 4.04

C 3.68

D 0.79

The current ratio for 1997 is

A .83:1

B .85:1

C 1.13:1

D 1.99:1

Total Assets turnover ratio for 1997

A 1.04

B 0.07

C 1.01

D 0.05

VI.

The percentage of net income to net sales for 1997

A 100.00%

B 7.50%

C 2.50%

D 5.00%

VII.

The rate of return on assets for 1997

A 8.90%

B 1.63%

C 16.80%

D 5.21%

VIII.

Debt to Equity Ratio: Leverage

A 36.59%

B 65.80%

C 12.50%

D 39.71%

The earnings per share of common stock for 1997 (assumes no preferred dividends paid)

A $2.22

B $0.35

C $1.94

D $0.40

The times interest earned ratio for 1997

A 6.45

B 9

C 7.81

D 5.42

Ratios for 1997

Name of ratio

Numerator

Denominator

Ratio/$

Accounts Receivable turnover

Number of days sales in A/R for 1997

Inventory turnover ratio

Current ratio

Total Asset turnover

Percentage of net inc to net sales

Return on assets

Debt to Equity

EPS (basic)

Times interest earned ratio

violetpig5

Read the 2015 annual report of Air France â KLM and answer the 20 questions asked regarding the accounting issues. Link is provided below:

http://www.airfranceklm.com/sites/default/files/publications/afkl_registration_doc_2015.pdf

1. Air France-KLM reports âConsolidated statement of recognized income and expensesâ for the year ended December 31, 2015. If this statement was a U.S. GAAP statement, what would be the title of this statement?

a. Consolidated statement of total net income

b. Consolidated statement of other comprehensive income

c. Consolidated statement of comprehensive income

d. Consolidated statement of recognized net income

2. What method does Air France-KLM use for the Statement of Cash Flows?

a. Indirect method

b. Direct method

c. Gross method

d. Net method

3. The basic and diluted earnings per share for the year ended December 31, 2015, indicates that Air France-KLM has:

a. no convertible debts.

b. some dilutive securities.

c. no preferred stocks.

d. some treasury stocks.

4. What method is used to account for investments in companies over which Air France-KLM can âexercise significant influence on financial and operating policy decisions?â

a. Cost method

b. Liability method

c. Equity method

d. Fair value method

5. Sale of passenger tickets is accounted for at the time of ticket sale as:

a. Sales revenue

b. Deferred revenue

c. Contingent asset

d. No recognition

6. How does Air France account for business combination costs other than those related to the issuance of debt or equity securities?

a. Expensed as incurred

b. Capitalized as incurred

c. Included in goodwill

d. Used to offset fair value of the acquisition

7. Which of the following is not an âaccumulated other comprehensive incomeâ item among those reported in the âreserves and retained earningsâ in the 2015 consolidated balance sheet of Air France-KLM?

a. Available for sale securities reserves.

b. Derivatives reserves.

c. Legal reserves.

d. Pension defined benefits reserves.

8. What is the carrying amount of investments in debt and equity securities that are classified as available-for-sale?

a. Fair value Cost

b. Amortized cost

c. Lower of cost or market

9. Inventories are carried at:

a. The lower of the first-in-first-out cost or net realizable value.

b. The first-in-first-out cost.

c. The lower of the weighted-average cost or net realizable value.

d. The weighted-average cost.

10. Air France-KLM classifies its frequent flyer programs as:

a. Noncurrent liability

b. Current liability

c. Current asset

d. Other debt

11. The followings are included in Air France-KLMâs intangible assets, except for:

a. Trademarks

b. Leased aircraft

c. Customer relationships

d. Slots for takeoff and landing

12. Air France-KLM reports bank overdrafts as:

a. A contra account to cash and cash equivalents.

b. A current liability.

c. An expense.

d. A bank deposits in transit.

13. Which method does Air France-KLM use to record depreciation expense for its flight equipment?

a. The activity-based method.

b. The sum-of-yearsâ-digit method.

c. The straight-line method.

d. The group method.

14. Which accounting standards does Air France-KLM use?

a. U.S. GAAP

b. French GAAP

c. Netherlands GAAP

d. International Financial Reporting Standards

15. As of December 31, 2015, what assets are held for sale?

a. Land

b. Aircraft

c. Equipment

d. Buildings

16. Which of the following is included in âincome from operating activitiesâ but not in âincome from current operations?

a. Sale of aircraft equipment

b. Research and development costs

c. Bad debt expense

d. Interest revenue

17. Which of the following is not true about accounting treatment for the overhaul cost of major airframe and engine?

a. The cost is treated as separate asset component.

b. The cost is capitalized.

c. The cost is depreciated over the remaining useful life.

d. The cost is expensed as incurred.

18. How are financial assets accounted for if the Air France-KLM intends to sell them in the near future to realize capital gains?

a. At fair value with fair value changes recognized in the current period profit and loss

b. At fair value with fair value changes recognized as other comprehensive income

c. At cost with no recognition of fair value changes

d. At amortized cost with no recognition of fair value changes

19. Which of the following is not true about impairment test?

a. Tangible fixed assets, intangible assets, goodwill, and other assets with indefinite useful life are subject to an impairment test.

b. The impairment test is done at least once a year.

c. Recoverable value is the lower of the net realizable value and value in use.

d. The value in use is determined according to the discounted future cash flow method.

20. Which of the following is not an âother non-current income and expensesâ item?

a. Restructuring costs

b. Gains and losses on disposal of shares available for sale

c. Gains and losses on disposal of subsidiaries and affiliates

d. Gains and losses on sale of trading securities

ACCT 3021 : Comprehensive Exam For Ch. 15-17

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