SOLUTION: help with this homework - Accounting

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Question 1.1. (TCO A) Assets include (Points : 3) prepaid insurance and prepaid rent. dividends paid to shareholders. loans obtained by the company. stockholders’ investment in the business. Question 2.2. (TCO B) For 2014, CAP Corporation reported net income of $96,000; net sales $1,440,000; and weighted average shares outstanding of 9,600. There were no preferred dividends. What was the 2014 earnings per share? (Points : 3) $100.00 $150.00 $10.00 $15.00 Question 3.3. (TCO C) Purchasing inventory is an example of a(n) (Points : 3) operating activity. investing activity. financing activity. noncash investing and financing activity. Question 4.4. (TCO D) Dividends declared are reported on which of the following statements? (Points : 3) Income Statement Statement of Retained Earnings Balance Sheet Statement of Financial Position Question 5.5. (TCO E) Which of the following describes the normal balance and classification of the Unearned Revenue account? (Points : 3) Credit, liability Debit, liability Debit, stockholders’ equity Credit, stockholders’ equity Question 6.6. (TCO F) The accrual accounting term used to indicate recording an expense before paying cash for the item is (Points : 3) deferral. accrual. depreciation. prepayment. Question 7.7. (TCO A) LBJ Company recorded the following events involving a recent purchase of merchandise. - Received goods for $95,000, terms 2/10, n/30. Returned $4,500 of the shipment for credit due to damaged goods. Paid $1,000 for freight in. Paid the invoice within the discount period. As a result of these events, the company's merchandise inventory (Points : 3) increased by 89,580. increased by $89,690. increased by $89,600. increased by $91,500. Question 8.8. (TCO B) In a period of declining prices, which of the following inventory methods generally results in the highest gross profit figure? (Points : 3) Average cost method LIFO FIFO Cannot be determined based on the information given Question 9.9. (TCO A) On a classified balance sheet, which is the least liquid asset listed below? (Points : 3) Inventories Cash and cash equivalents Accounts receivable, net Short-term investments Question 10.10. (TCO E) Which of the following is a component of internal control? (Points : 3) Safeguard assets Limited access Risk assessment Encourage employees to follow company policies. Question 11.11. (TCOs A and E) Your friend, James, has hired you to evaluate the following internal control procedures. Explain to your friend whether each of the numbered items below is an internal control strength or weakness. You must also state which internal control procedure relates to each of the internal controls. For the weaknesses, you also need to state a recommendation for improvement. (1) (2) (3) (4) (5) Background checks are required. Paychecks are stored in an unlocked safe. The Treasurer signs all checks. The accountant counts the cash and makes the bank deposit. The company utilizes internal and external auditors. (Points : 30) Question 12.12. (TCOs E and F) Please prepare the following journal entries. Indicate which account should be debited and which account should be credited, along with the dollar amount of the debit and credit. (1) (2) (3) (4) (5) Investors invest $500,000 in exchange for 50,000 shares of common stock. Company purchased equipment for $25,000 on account. Company paid Rent for $4,000. Company received $15,000 for services not yet performed. Employees work Monday through Friday and are paid on Friday. Salary expense is $10,000 per day and this year, December 31 falls on a Wednesday. (Points : 30) Question 13.13. (TCOs B and D) The following items are taken from the financial statements of Butler Company for 2012: Accounts Receivable Cost of Goods Sold Utilities Expense Accounts Payable Common Stock Rent Expense Advertising Expense Dividends Insurance Expense Note Payable (due 2014) Depreciation Expense Prepaid Insurance Accumulated Depreciation Retained Earnings (beginning) Salaries Expense Salaries Payable Net sales Supplies Supplies Expense $20,000 95,000 3,500 7,000 100,000 5,500 9,000 10,000 2,000 50,000 10,000 18,000 30,000 33,000 40,000 4,500 170,000 3,000 2,500 Instructions (a) Calculate the net income. (18 points) (b) Calculate the balance of Retained Earnings that would appear on a Balance Sheet at December 31, 2012. (7 points) (c) Calculate the gross profit percentage. (5 points) (Points : 30) Question 14.14. (TCO D) The following items are taken from the financial statements of SRW Company for 2012: Cash Accounts Receivable Prepaid Insurance Accounts Payable Unearned Service Revenue Equipment, net of accumulated depreciation Common Stock Retained Earnings 12/31/2011 Long-term debt Service revenue Cost of Goods Sold Rent expense Supplies expense Insurance expense $375,000 125,000 100,000 88,000 15,000 177,000 125,000 106,000 336,500 225,000 62,500 30,000 8,000 18,000 Instructions (a) Please create a classified Balance Sheet in good form for the year ended 2012. (25 points) (b) Please calculate the current ratio. (5 points) (Points : 30)