Question 1
"Intermediate corporation asked for your assistance with their earnings per share calculation for the year ended 12/31/2012. They provide you with the following information. they had 500,000 shares of stock outstanding on 1/1/2012. the average market value of each share is $25 for 2012. Their net income for 2012 was $1,200,000 and their tax rate is 40%. On April 1 they issued 75,000 shares. On June 1 they acquired 37,500 shares from the open market to use as treasury stock. Intermediate has 2000 stock options outstanding for the entire year. each option can be exchanged for one share of common stock at an exercise price of $20. In addition, Intermediate has outstanding for the entire year, a bond which was issued at par with face value of $2,000,000 and a 5% interest rate. Each $1000 bond is convertible into 20 shares of Intermediate common stock. Intermediate also has 40,000 shares of %6 convertible, cumulative preferred stock ($100 par value) which was outstanding for the full year. Each preferred share can be converted into 3 shares of common stock, No preferred dividends have been declared for the current year or the preceding 2 years. Provide basic and diluted earnings per share calculation. "
Question 2
1. paula smith accepted a six month 9%, $10,000 note receivable from a customer on june 1. Smith has an arrangement with the Regency Bank to discount selected customer notes at 12%. If the note were discounted on July 1 under the terms of agreement with Regency Bank, which one of the following journal entries would Smith record? a. DR Cash 10,000 CR notes receivable 10,000 b. DR cash 9,928 CR notes payable-Regency Bank 9.928 c. DR cash 9,928 DR interest Expense 72 CR notes receivable 10,000 d. DR cash 9,928 DR interest Expense 72 CR notes payable- Regency Bank 10,000 2. cook Industries purchased a machine on jan 2, Year 5, for $100,000. It paid $20,000 down and financed the balance over 5 years at Fidelity Bank, Terms of the loan were 10% interest payable on December 31 each year with a required $16,000 principal payment. Year 8 proved to be a difficult one and on December 1, Cook negotiated a debt restructuring with Fidelity Bank. The settlement calls for a cash payment of accrued interest plus $4,000 on December 1 and the transfer of 400 acres of land held by Cook that cost $15,000. The land has a current market value of $22,000. Which one of the following entries would be made to record the settlement on Cook?s books? a. DR note payable-Fidelity bank 32,000 CR cash 4000 CR land 15,000 CR extraordinary gain on debt restr. 13,000 b. DR note payable- Fidelity Bank 32,000 DR interest payable 2,933 CR cash 6,933 CR land 22,000 CR extraordinary gain on debt restr. 6,000 c. DR note payable ? Fidelity Bank 323,000 DR interest payable 2,933 CR cash 4,000 CR land 22,000 CR extraordinary gain on debt restr 8,933 d. DR note payable ? Fidelity Bank 26,000 CR cash 4,000 CR land 22,000 3. Analysts must be aware that with the use of absorption costing, as inventory absorbs more fixed costs, reported income tends to: a. become highly volitale b. decrease c. increase d. remain the same ------------------------------------------------------------------- TABLE 5-3 AMANDA COMPANY had the following inventory transactions in August. Purchases sales balance Aug.1 Balance 200 @ $3.20 Aug. 2 150 @ $5.50 Aug. 4 550 @ $3.10 Aug. 5 400 @ $5.50 Aug. 7 300 @ $3.30 Aug. 8 250 @ $5.50 Aug. 12 100 @ $6.00 Aug. 13 450 @ $3.40 Aug. 20 300 @ $6.00 Aug. 21 125 @ $3.50 Aug. 29 100 @ $6.00 1. Refer to table 5-3 If Amanda uses a periodic inventory system, the LIFO basis ending inventory is: a. $1,027.50 b. $1,040.00 c. $1,072.50 d. $1,117.50 2. Refer to Table 5-3. If Amanda uses a perpetual inventory system, the LIFO basis ending inventory is: a. $1,027.50 b. $1,040.00 c. $1,067.50 d. $1,117.50 3. Refer to Table 4-3. If Amanda uses a perpetual inventory system, the FIFO basis ending inventory is: e. $1,027.50 f. $1,040.00 g. $1,117.50 h. $1,137.50 4. The ABC Company reported merchandise inventory at LIFO of $450,000 on the year-end financial statements. The company also reported a LIFO Reserve of $45,000. An estimate of the inventory balance if the inventory had been reported using the FIFO assumption is: a. $360,000 b. $405,000 c. $455,000 d. $495,000 5. The Sea King Corporation reported a LIFO Reserve of $50,000 at the end of the year. The beginning of the year LIFO Reseerve was $40,000. The cost of goods sold was $395,000 under LIFO. The cost of goods sold under FIFO should be: a. $375,000 b. $385,000 c. $445,000 d. $485,000 6. As a firm liquidates old LIFO layers of inventory, the lower costs of the LIFO layers are matched against current sales dollars resulting in a profit margin that is: a. always the same as under FIFO b. deflated c. inflated d. lower than normal 7. WAM, Inc. uses the lower of cost or market mehod to determine inventory value. The following information relates to Product W at the end of the year: cost $26; replacement cost $20; selling price $30; cost of completion $2; and normal profit $7. Based upon this information, the lower of cost or market for Product W is: a. $20 b. $21 c. $23 d. $26 TABLE 5-4 Dollar Balue LIFO inventory Data: Year Year End Price Price Index 1 $200,000 100 2 $250,000 105 3 $296,000 108 4 $286,000 110 8. Refer to Table 5-4. The inventory under dollar value LIFO at the end of Year 3 is __________ and at the end of Year $ is _________. a. $274,075; $238,096 b. $276,800; $240,000 c. $278,856; $263,657 d. $300,000; $286,000 9. Clermont Company started construction of a new office building on january 1,2000, and moved into the finished building on July 1, 2002. Of the building?s $2,500,000 was incurred by 12/31/2000 in even increments throughout the year. Clermont?s weighted average borrowing rate was 12% throughout 2000, and the actual amount of interest incurred by Clermont during 2000 was $135,000. what amount should Clermont report as capitalized interest at 12/31/2000? a. $120,000 b. $135,000 c. $150,000 d. $240,000 10. The ABC Company purchased an oil well lease for $8,000,000 at the beginning of Year 7. During year 7, it drilled 10 oil wells at a cost of $9,000,000 each. Three of the wells were economically feasible wells and the remaining wells were dry holes. If ABC Company uses the full-cost approach to determine the asset cost, the capitalized cost is: a. $8,000,000 b. $27,000,000 c. $68,600,000 d. $98,000,000 11. The ABC Company purchased an oil well lease for $8,000,000 at the beginning of Year 7. During year 7, it drilled 10 oil wells at a cost of $9,000,000 each. Three of the wells were economically feasible wells and the remaining wells were dry holes. If ABC Company uses the successful-efforts approach to determine the asset cost, the capitalized cost is: a. $9,000,000 b. $27,000,000 c. $35,000,000 d. $98,000,000
Question 3
3~33;(Objectives 3-1, 3-9) The following is an auditor?s report prepared in accordance with Enternational Standards on Auditing (ISAS) issued by the International Auditing and Assurance Standards Board (IAASB): INDEPENDENT AUD|TOR?S REPORT To the Shareholders of Les Meridian, Inc. We have audited the accompanying financial statements of Les Meridian, Inc., which comprise the balance sheet as of December 31, 2009, and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes, Management? Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation gf these financial statements in accordancewith International Financial Reporting Standards, This responsibility includes: designing, implementing and maintainin internal control relevant to the preparation and fair presentation of financial stateinem th t are free from material misstatement, whether due to fraud Or error; selecting and applying appropriate accounting policies; and making accounting estimates thi; are reasonable in the circumstances. Auditor?s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on auditing.. . Those Standards require that we comply with ethical requirements and plan and perform the audit to optain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performi ng procedures to obtain audit evidence about the amounts and disclosures in the financial t s atements. The procedures selected depend on the auditor?s judgment, including the assessment of the risks of material misstate- ment of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity?s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity?s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate o provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair position of Les Meridian, Inc. as of December 31, 2009 and of its financial performance and cash flows for the year then ended in accordance with international financial reporting standards. a)For each of t unqualified report prepared in Request accordance with generally accepted auditing standards in the United States, describe whether key elements of each of those seven parts are present in the audit report based on International Standards on Auditing for Les Meridian?s financial statements. b)Describe elements in the audit report based on International Standards on Auditing that are more extensive than an audit re b ` ` port based on U.S. auditing standards.he seven distinct parts of the standard
Question 4
Problem II ? 25 Points Part A ? 15 Points Vance Company reported net incomes for a three-year period as follows: 2011, $191,000; 2012, $199,000; 2013, $180,000. In reviewing the accounts in 2014 after the books for the prior year have been closed, you find that the following errors have been made in summarizing activities: 2011 2012 2013 Overstatement of ending inventory $42,000 $51,000 $29,000 Understatement of accrued advertising expense 6,600 12,000 7,200 Instructions (a) Fill out the worksheet below to determine corrected net incomes for 2011, 2012, and 2013. Be sure to use ( ) to indicate subtraction or decreasing amounts. Items 2011 2012 2013 Net income (unadjusted) $191,000 $199,000 $180,000 Overstatement of ending inventory?2011 Overstatement of ending inventory?2012 Overstatement of ending inventory?2013 Understatement of accrued advertising expense?2011 Understatement of accrued advertising expense?2012 Understatement of accrued advertising expense?2013 ______ Net income (corrected) $ $ $ (b) Give the entry to bring the books of the company up to date in 2014, assuming that the books have been closed for 2013. Part B ? 10 Points Show how the following independent errors will affect the net income on the Income Statement and the Balance Sheet using the symbol + (plus) for overstated, - (minus) for understated, and 0 (zero) for no effect. 2012 2013 Income Balance Income Balance Statement Sheet Statement Sheet EXAMPLE: Recorded 2012 rent expense in 2013. + + - 0 1. Ending Inventory in 2012 overstated. 2013 ending inventory is correct. 2. Failed to accrue 2012 interest revenue until 2013. 3. A capital expenditure for factory equipment (useful life 5 years) was erroneously charged to maintenance expense in 2012. Not corrected. 4. Failed to count office supplies on hand at 12/31/12. Cash expenditures have been charged to Supplies Expense during the year 2012. Supplies were used in 2013.1 5. Failed to accrue 2012 wages. Recorded and paid in 2013. 1This is an example of initially recording supplies as an expense rather than an asset, which is permissible. The Company then neglected to make the adjusting journal entry (deferral) at the end of 2012. Problem III ? 30 Points Part A ? 20 Points The net changes (not balances) in the selected balance sheet accounts of Keating Corporation for the year 2013 are shown below. Account Debit Credit Short-term investments $121,000 Accounts receivable 83,200 Allowance for doubtful accounts 13,300 Inventory 74,200 Prepaid expenses 22,800 Investment in subsidiary (equity method) 25,000 Plant and equipment 210,000 Accumulated depreciation 130,000 Accounts payable 80,700 Accrued liabilities 21,500 Deferred tax liability 15,500 8% serial bonds, long-term 70,000 Common stock, $10 par 90,000 Additional paid-in capital 150,000 Retained earnings?Appropriation for bonded indebtedness 60,000 Retained earnings?Unappropriated 38,000 An analysis of the Retained Earnings?Unappropriated account follows: Retained earnings unappropriated, December 31, 2012 $1,300,000 Add: Net income 327,000 Transfer from appropriation for bonded indebtedness 60,000 Total $1,687,000 Deduct: Cash dividends $185,000 Stock dividend 240,000 425,000 Retained earnings unappropriated, December 31, 2013 $1,262,000 1. On January 2, 2013 short-term investments (classified as available-for-sale) costing $121,000 were sold for $145,000. 2. The company paid a cash dividend on February 1, 2013. 3. Accounts receivable of $16,200 and $19,400 were considered uncollectible and written off in 2013 and 2012, respectively. 4. Major repairs of $33,000 to the equipment were correctly debited to the Accumulated Depreciation account during the year. No assets were retired during 2013. (HINT: This also impacts investing activities.) 5. The wholly owned subsidiary reported a net loss for the year of $20,000. The loss was recorded by the parent. 6. At January 1, 2013, the cash balance was $166,000. Instructions Prepare a statement of cash flows (indirect method) for the year ended December 31, 2013. Keating Corporation has no securities which are classified as cash equivalents. Keating Corporation Statement of Cash Flows For the Year Ended December 31, 2013 Increase (Decrease) in Cash Cash flows from operating activities Net income $327,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation Expense $ ________ Net cash provided (used) by operating activities $ Cash flows from investing activities _________ Net cash provided (used) by investing activities $ Cash flows from financing activities _________ Net cash provided (used) by financing activities $ Net increase in cash $ Cash, January 1, 2013 166,000 Cash, December 31, 2013 $ Part B ? 10 Points Hartman, Inc. has prepared the following comparative balance sheets for 2012 and 2013: 2013 2012 Cash $ 287,000 $ 153,000 Accounts receivable 149,000 117,000 Inventory 150,000 180,000 Prepaid expenses 18,000 27,000 Plant assets 1,280,000 1,050,000 Accumulated depreciation (450,000) (375,000) Patent 153,000 174,000 $1,587,000 $1,326,000 Accounts payable $ 153,000 $ 168,000 Accrued liabilities 60,000 42,000 Mortgage payable ? 450,000 Preferred stock 525,000 ? Additional paid-in capital?preferred 120,000 ? Common stock 600,000 600,000 Retained earnings 129,000 66,000 $1,587,000 $1,326,000 1. The Accumulated Depreciation account has been credited only for the depreciation expense for the period. 2. The Retained Earnings account has been charged for dividends of $158,000 and credited for the net income for the year. The income statement for 2013 is as follows: Sales $1,980,000 Cost of sales 1,089,000 Gross profit 891,000 Operating expenses 670,000 Net income $ 221,000 Instructions From the information above, prepare a schedule of cash provided (used) by operating activities using the direct method on the next page. You do not have to reconcile to the indirect method. ? Hartman, Inc. Schedule of Cash Provided by Operating Activities ? Direct Method For Year Ended December 31, 2013 Increase (Decrease) in Cash Cash flows from operating activities Cash received from customers (1) $ Cash paid to suppliers (2) Operating expenses paid (3) Net cash provided by operating activities $ SHOW NUMERIC COMPUTATIONS HERE FOR (1), (2), and (3) above: (1) (2) (3) Problem IV ? 15 Points An article in Dun's Review made the following comment: "Every other year, say, companies should print the notes in big type and the base figures in smaller ones." Instructions Answer the following two questions. You do not need to write more than a paragraph or at most two for each question ? be concise. (a) Are notes considered as part of the financial statements and what basic purpose do they serve? (b) What are the general types of notes to the financial statements?
Question 5
1. (TCO 1) Analytical skills: (Points : 3) help you work with end users, as well as other analysts and programmers. help you understand the potential and the limitations of information technology. help you manage projects, resources, risk, and change. enable you to understand the organization and its functions, to identify opportunities and problems, and to analyze and solve problems. promote an understanding of the different types of information systems. 2. (TCO 1) The process of developing and maintaining an information system best describes: (Points : 3) joint application design. prototyping. information systems analysis and design. information technology infrastructure development. systems implementation. 3. (TCO 3) A manner that represents how an object acts and reacts best describes: (Points : 5) event. property. attribute. state. behavior. 4. (TCO 3) Which of the following is not an approach to systems development? (Points : 5) Prototyping. Agile Methodologies. Joint application design. Re-engineering analysis. Rapid application development. 5. (TCO 2) Arguably, the most instrumental person to the successful completion of any project is the: (Points : 5) project manager. chief information officer. department manager. staff consultant. end user. 6. (TCO 2) An individual with a diverse set of skills--management, leadership, technical, conflict management, and customer relationship--who is responsible for initiating, planning, executing, and closing down a project best defines: (Points : 5) chief information officer. consultant. project scheduler. project manager. end user. 7. (TCO 2) Tangible benefits would include: (Points : 5) improved organizational planning. ability to investigate more alternatives. improved asset control. lower transaction costs. first to market. 8. (TCO 3) The analysis of documents can help you identify: (Points : 5) problems with existing systems. special information processing circumstances that occur irregularly and may not be identified by any other requirements determination technique. the reason why current systems are designed the way they are. the organizational direction that can influence information system requirements. all of the above. 9. (TCO 3) The purpose of requirements structuring is to: (Points : 5) enable the analysts to gather information on what the system should do from as many sources as possible. enable the analysts to develop a baseline project plan quickly. enable the large amount of information gathered during requirements determination to be organized. enable the analysts to develop a new system rapidly. enable the analysts to identify several feasible alternatives. 10. (TCO 3) Which of the following is an advantage of closed-ended questions? (Points : 5) Interviews based on closed-ended questions do not necessarily require a large time commitment, so more topics can be covered. Closed-ended questions enable the analysts to explore information that does not quite fit defined answers. The analyst can obtain previously unknown information. Closed-ended questions often put the interviewee at ease. The interviewee has a sense of involvement and control in the interview. 11. (TCOs 4, 5) The process of converting complex data structures into simple, stable data structures is referred to as: (Points : 2) normalization. simplification. structuring. process modeling. relational conversion. 12. (TCOs 4, 5) A named two-dimensional table of data is a(n): (Points : 2) network tree structure relation tuple object THE REST ARE IN ATTACHMENT
