I. Exercises
Be sure to show all your detailed calculations. This has the possibility of partial credit for the exercises.
Questions
1. Per the Roger CPA Exam Review, what does the financial reporting framework include?
2. Risks and Uncertaintiesrequires disclosure in financial statements of risks and uncertainties existing at the date of the financial statements. What are the four areas of disclosure described in the Roger CPA Exam Review?
3. What are the 4 steps of the accounting cycle?
4. Per the Roger CPA Exam Review, what are the types of accounting changes?
5. What are the three valuation techniques used when measuring financial assets and financial liabilities at fair value?
6. In the debt versus equity financing decision, what were the three advantages of Old World Corporation by selecting option 1 Issue 12% debt, due in three years?
II. Exercises
1. Standward Company's shareholders' equity section balance sheet at December 31, 2016 is shown below. Preferred shares Authorized-100 shares Issued and outstanding-55 shares $2,145. Common shares Authorized-900 shares Issued and outstanding-600 shares $1,010.Retained earnings $450. Total shareholders' equity $3,605.
Required:
1. What is the average price received for each issued preferred share? 2. What is the average price received for each issued common share?NOTE: For this part 2 onlyround your answer to the nearest 2 decimal places.
2. A company had the following bank reconciliation at June 30, 2016:
Balance per bank statement, 6/30/16 $151,125
Add deposit in transit 33,475
184,600
Less outstanding checks 40,950
Balance per books, 6/30/16 $143,650
Data per bank for the month of July2016 follow:
Deposits$189,800
Disbursements $161,525
All reconciling items at June 30, 2016, cleared the bank in July. Outstanding checks at July 31, 2016, totaled $22,750. There were no deposits in transit at July 31, 2016. What is the cash balance per books at July 31, 2016?
3. Expresso Company had the following information related to common and preferred shares during the year:
|
Common shares outstanding
|
1/1
|
568,750
|
|
Common shares repurchased
|
3/1
|
17,500
|
|
Conversion of preferred shares
|
7/1
|
32,500
|
|
Common shares repurchased
|
12/1
|
29,250
|
Expresso reported net income of $1,625,000 at December 31. What amount of shares should Expresso use as the denominator in the computation of basic earnings per share?
4. An extract from the trial balance of Armstrong Corp. at June 30, 2016 is reproduced below:
|
|
Account
|
Amount in
unadjusted
trial balance
|
Amount in
adjusted
trial balance
|
|
1
|
Prepaid insurance
|
$3,200
|
$2,600
|
|
2
|
Salaries payable
|
$1,500
|
$2,100
|
|
3
|
Interest payable
|
$ 0
|
$ 1,000
|
|
4
|
Unearned revenue
|
$5,000
|
$4,000
|
|
5
|
Accumulated depreciation
|
$2,200
|
$2,750
|
|
6
|
Unused office supplies
|
$ 450
|
$ 125
|
Required: Prepare in general journal format the entries that were posted, including a plausible description. General ledger account numbers are not necessary.