Accounting 303

2013 Words9 Pages
1 Accounting 303 Name _______________________ Exam 2, Chapters 4 and 5 Spring 2011 Section _______ Row _______ I. Multiple Choice Questions. (2 points each, 28 points in total) Read each question carefully and indicate your answer by circling the letter preceding the one best answer. 1. Changes in accounting estimates are reported a. currently and prospectively. b. retroactively and currently. c. retroactively, currently, and prospectively. d. by restating prior years. 2. Pablo purchased a lathe on January 1, 2009, at a cost of $45,000. At the time of purchase, the lathe was expected to have a five-year economic life and a residual value of $3,000. Pablo uses straight-line depreciation. At the beginning of 2011, Pablo estimated the…show more content…
On May 1, Foxtrot Co. agreed to sell the assets of its Footwear Division to Albanese Inc. for $80 million. The sale was completed on December 31, 2011. The following additional facts pertain to the transaction: The Footwear Division qualifies as a component of the entity according to GAAP regarding discontinued operations. The book value of Footwear's assets totaled $48 million on the date of the sale. Footwear's operating income was a pre-tax loss of $10 million in 2011. Foxtrot's income tax rate is 40%. 3. In the 2011 income statement for Foxtrot Co., it would report income from discontinued operations of: a. $9.2 million. b. $13.2 million. c. $22 million. d. $26 million. 2 4. Suppose that the Footwear Division's assets had not been sold by December 31, 2011, but were considered held for sale. Assume that the fair value of these assets at December 31 was $40 million. In the 2011 income statement for Foxtrot Co., it would report a loss from discontinued operations of: a. $3 million loss b. $10 million loss c. $10.8 million loss d. $18 million loss 5. Intraperiod income tax presentation is primarily a matter of: a. Valuation. b. Going concern. c.…show more content…
(15 points) On July 1, 2010, Tourville Construction Co. began construction on a new city hall building for the City of Calais and used the percentage of completion accounting method. The contract price was $19,000,000. The following costs and estimates are provided. 2010 2011 2012 Contract Costs Incurred to Date $ 3,000,000 $ 12,000,000 $ 21,000,000 Estimated Costs to Complete 12,000,000 8,000,000 - Billings to Calais 3,000,000 11,000,000 5,000,000 Cash Collections 1,750,000 12,100,000 4,800,000 a. What is the amount of revenue recognized in 2010? __________ b. What is the amount of revenue recognized in 2011? __________ c. What is the amount of gross profit recognized in 2011? __________ d. What is the amount of gross profit recognized in 2012? __________ e. As a result of this project, what is reported on the December 31, 2010, balance sheet? 9 6. (10 points) Assume Z-Mart appropriately uses the installment sales method of accounting for its installment sales. During 2011, Z-Mart made installments sales of $300,000 and received payments of $135,000 on those sales. Z-Mart's gross profit on sales is 30%. Required: Prepare the necessary journal entries for 2011. 10 Solutions Multiple Choice Question Number Answer 1 a 2 c 3 b 4 c 5 d 6 c 7 a

More about Accounting 303

Open Document