1-When a company cannot justify applying the going concern assumption, different measurement attributes may be required. Identify the most likely measurement.
1. Plant and equipment would be valued at _______________________________________________
2. Bonds Payable would be valued at ________________________________________________.
3. Accounts receivable should be valued at ____________________________________________
4. Inventory should be valued at ____ market / cost _______________________ .A LIFO inventory in an inflationary economy forced sale may result in an increase in inventory values rather than a decrease. Yes / No
5. Accounts Payable would be valued at ________________.______________________________
.2. MARK WITH AN ( x ) THE ACTION YOU WOULD TAKE WHEN YOU ARE CLOSING THE BOOKS
Balance Balance Balance
Carried Closed by Closed by
Account Forward Debiting Crediting
This account This account
(a) Cash ___________________________________
(b) Sales ___________________________________
(c) Dividends ___________________________________
(d) Inventory ___________________________________
(e) Selling Expenses ___________________________________
(f) Capital Stock ___________________________________
(g) Wages Expense ___________________________________
(h) Dividends Payable ___________________________________
(i) Cost of Goods Sold ___________________________________
(j) Accounts Payable ___________________________________
(k) Accounts Receivable ___________________________________
(l) Prepaid Insurance ___________________________________
(m) Interest Receivable ___________________________________
(n) Sales Discounts ___________________________________
(o) Interest Revenue ___________________________________
(p) Supplies ___________________________________
(q) Retained Earnings ___________________________________
(r) Accumulated Depreciation ___________________________________
(s) Depreciation Expense ___________________________________
3. Closing Entries--- Close the following accounts using the Summary of Income and Expenses
Selling Expense 7,900
Wages Expense 14,400
Cost of Goods Sold 26,500
Sales Discounts 4,200
Interest Revenue 6,500
Depreciation Expense 1,800
4Prepare the post closing entries to correct the balances in Balance Sheet belowâ?
December 31, 2011
Current assets: Current liabilities:
Cash $ 8,500 Accounts payable $ 3,400
Investment securities 5,250 Current portion of bonds
Accounts receivable, net 21,350 payable 2,500
Inventory 31,000 Loan due on demand 7,000
Land held for resale 8,000 Dividends payable 15,000
Other current assets 10,200 Other 2,000
Total current assets $ 84,300 Total current liabilities $ 29,900
Noncurrent assets: Bonds payable $ 7,500
Investments $ 2,750 Other liabilities 15,750
Property, plant, and Total long-term
equipment, net 56,800 liabilities $ 23,250
Restricted cash: Total liabilities $ 53,150
For preferred stock 19,000 Ownersâ?? Equity
For equipment 4,000 Preferred stock $ 19,000
Advance to company Common stock 50,000
president 4,000 Retained earnings 66,800
Other noncurrent assets 13,600 Less treasury stock (4,500)
Total noncurrent Total ownersâ?? equity $ 131,300
assets $ 100,150 Total liabilities and ownersâ??
Total assets $ 184,450 equity $ 184,450
1. The advance to company president has been declared a bonus by the Board.
2. The Treasury Stock had been sold for $4,500 in cash and Retained Earnings had been credited.
3. One third of the bonds payable are due next year.
4. Land originally held for resale it is going to be used to build a cottage for Research and Development.
5. Dividends payable had been paid and the following entry had been originally made:
Restricted cash for Preferred Stock $15,000
4. In the case above, prepare the Owners Equity section after the sale of Treasury Stock. You noticed that the correct stock accounts are as follows
Common stock at par $10,000
Preferred stock at par $10,000
Paid in Capital, Common stock in excess of par $40,000
Paid in Capital, Preferred stock in excess of par $9,000
5-Prepare ADJUSTING ENTRIES as of 12/31/10
1 The Depreciation Expense for the year was $1, 500
2. An estimate of $400 of Accounts receivable are considered bad debts
3. A note you signed pays 6% interest and it is dated Oct. 1 with a face value of $2,000
4. The rent was prepaid as of August 1 for one year at a cost of $36,000.
5. Unearned Gym membership was recorded in November for $ 4,800 and in December for $3,600. All memberships are for one year.
The expert determines how we value PPE, bonds, AR, inventory and AP.