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The following information is from Mabel Co.’s year-end financial statements for the current and
previous years:
Current year
- Prepaid Expenses = $10,000
- Accounts Payable = 50,000
- Land = 250,000
Previous year
- Prepaid Expenses = $20,000
- Accounts Payable = 30,000
- Land = 600,000
Land was sold during the current fiscal year for cash resulting in a loss of $40,000. What is
Mabel’s net adjustment to net income to determine net cash from operating activities?
A. ($70,000)
B. $0
C. $30,000
D. $70,000
Alder Corp. had the following stockholders' equity balances at the beginning of the current
year:
Common stock 200,000 shares authorized, $1 par;
15,000 shares issued and outstanding $15,000
Additional paid-in capital 24,000
Retained earnings 11,000
During the current year, Alder issued 2,000 shares of common stock with a fair value of $35 per
share to Terry Brady on a subscription basis. Terry made a down payment of $3,500, but shortly
thereafter defaulted on the subscription. What would be the debit to additional paid-in capital
if Alder returned the $3,500 to Terry?
A. $73,500
B. $70,000
C. $68,000
D. $66,500
On January 1, Lyle Co. purchased a manufacturing facility. After remodeling was completed, the
facility was ready for use on March 1. On April 1, production began. Interest costs were
incurred as follows:
January 1 to March 1
- Building = $10,000
- Remodeling = 2000
March 1 to April 3
- Building = $5000
- Remodeling = 3000
What amount of interest should Lyle capitalize during the current year?
A. $10,000
B. $12,000
C. $15,000
D. $20,000
2. Love Doddle is a gifting enterprise of Ms. Dorati. The enterprise generates inflows by arranging gift hampers for the customer's loved ones. The inflows arises from the sale of gift hampers Rs 505000 and from bank interest, dividend receipt Rs4200. Ms. Dorati is confused on how to record these inflows. She would like to understand from you about the concepts Revenue from operation and other income, so that she can record the information so as to prepare the profit and loss statement of the enterprise. Define, share examples, and elaborate on your understanding towards the terms Revenue from Operation and Other Income
A company reports on the cash basis. During the company's first year of business, it had sales
on account of $1,000,000, inventory purchases on account of $400,000, and other expenses of
$200,000. At the end of the year, the company had accounts receivable, inventory, and
inventory related accounts payable of $100,000, $10,000, and $50,000, respectively. What is
the company's cash-basis income for its first year of operations?
A. $300,000
B. $350,000
C. $400,000
D. $450,000
Ifrs 3 is mandatory for all new acquisitions from march 2004. Entities have to cease the amortization of goodwill arising from the acquisitions . How is the balance of goodwill arising from those acquisitions treated
Q.3 Tullahoma Company purchased equipment for $27,500. It depreciated the equipment over a five-year life by the double-declining-balance method until the end of the second year, at which time the asset was sold for $8,500. Calculate the gain or loss on the sale at the end of the second year.
Q.4 Swanson & Hiller, Inc., purchased a new machine on September 1, 2008 at a cost of $108,000. The machine’s estimated useful life at the time of the purchase was five years, and its residual value was $8,000.
Instructions
a. Prepare a complete depreciation schedule, beginning with calendar year 2008, under each of
the methods listed below (assume that the half-year convention is used):
1. Straight-line.
2. 200 percent declining-balance.
3. 150 percent declining-balance, switching to straight-line when that maximizes the expense.
Suppose Saron has 7 Birr to be spent on two goods: banana and bread. The unit
price of banana is 1 Birr and the unit price of a loaf of bread is 4 Birr. The total utility she
obtains from consumption of each good is given below.
(ii) In terms of allocating fixed manufacturing overheads, what is the IFRS requirements in terms of budgeted, normal and actual quantities as a possible denominator? (1)
(iii) Explain why the choice of an appropriate denominator level is important. (3)
(iv) Give a short description of the three methods that are available to distinguish between variable and fixed costs. (6)
b) Mr. Eze has provided you the following information as at 30 June 2019.Stock 1 july 2018 ksh6000, purchases 54,000.
Eze’s mark-up is 50% on cost of goods sold. His average stock during the year was Sh12,000. Draw up a trading and profit and loss account for the year ended 30 June 2019.
i) Calculate the closing stock as at 30 June 2019.
ii) State the total amount of profit and loss expenditure Jones must not exceed if he is to maintain a net profit on sales of 10%.
