Accounting quiz

Accounting quiz
Take-Home Quiz #2
Question #1 (2 points) For the following account activities, indicate the adjustment to be made, if any, to cash flows in the operating section of the cash flow statement. Assume that the statement is prepared on the indirect method:
(A) Increase net income (B) Decrease net income
(C) No adjustment (investing activity). (D) No adjustment (financing activity)
_____1. Accounts receivable decreased by $5,000 from last year to this year.
_____2. Depreciation was $30,000.
_____3. Prepaid Expenses decreased $10,000.
_____4. Accounts Payable increased $20,000.
_____5. Merchandise inventory decreased by $15,000.
_____6. Office furniture increased $8,000.
_____7. Sold a building at a gain of $5,000.
_____8. Issued a cash dividend.
_____9. Amortization of intangible assets was $10,000.
_____10. Purchased 100 shares of Google common stock for $15,000.
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Question #2 (3 points) The stockholders’ equity section of the XYZ Corporation’s balance sheet shows these balances in the capital stock accounts:
Preferred Stock 5% $100 par cumulative $100,000.
Common Stock $1 Par $ 1,000,000.
The board of directors made the following dividend declarations and payments:
2013 $ 0
2014 $120,000
2015 $200,000
Required: Prepare a schedule showing the distribution of the dividends between preferred and common stockholders for all three years. Also indicate the dividend per share as well.
Question #3 (5 points): The following information is available for the A Big Gazint Corporation:
A Big Gazint Corporation
Income Statement
For the Year Ended December 31, 2017
Service Revenue $ 900,000
Operating Expenses 700,000
Operating Income $ 200,000
Gain on Investment Sale 10,000
Net income Before Income Taxes $ 210,000
Loss on Sale of Investments 25,000
$ 185,000
Income Tax Expense 90,000
Net Income $ 95,000
The following partial balance sheet information is also available for 2015 and 2014:
2017 2016
Cash $ 655,000 $ 435,000
Accounts Receivable 120,000 100,000
Merchandise Inventory 40,000 50,000
Supplies 10,000 20,000
L.T. Investments 35,000 80,000
Accounts Payable 70,000 60,000
Income Taxes Payable 10,000 15,000
In addition, the following transactions took place during 2017:
1. Common stock was issued for $100,000 cash.
2. Long-term investments were sold for $55,000.
3. Cash dividends of $80,000 were paid.
4. The operating expenses included depreciation of $30,000.
Required: Prepare in good form, a cash flow statement for 2017 using the indirect method for A Big Gazint Corporation.

 

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