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Review Problems Answers

This document contains 4 practice problems related to financial accounting. Problem 1 provides sales, inventory, and expense data for a partnership and asks to calculate purchases and net income for 2003-2005. Problem 2 gives account balance changes and additional information for a company and asks to calculate net income for 2004. Problem 3 gives partial balance sheet data for 2005 and 2004 and asks to prepare the operating activities section of the statement of cash flows for 2005 using the indirect method. Problem 4 provides a trial balance, transactions, and additional information and asks to prepare comprehensive income, financial position, and cash flow statements for a company for January 2018.

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Franchette Yvonne Julian
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1K views4 pages

Review Problems Answers

This document contains 4 practice problems related to financial accounting. Problem 1 provides sales, inventory, and expense data for a partnership and asks to calculate purchases and net income for 2003-2005. Problem 2 gives account balance changes and additional information for a company and asks to calculate net income for 2004. Problem 3 gives partial balance sheet data for 2005 and 2004 and asks to prepare the operating activities section of the statement of cash flows for 2005 using the indirect method. Problem 4 provides a trial balance, transactions, and additional information and asks to prepare comprehensive income, financial position, and cash flow statements for a company for January 2018.

Uploaded by

Franchette Yvonne Julian
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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AEC 12 – PROBLEM SOLVING PRACTICE SET

1. The following data are available for Cut Throat Products, a partnership:

Beginning Ending Operating


Year Sales Inventory Inventory Expenses
2003 $ 93,600 $16,000 $24,000 $ 8,000
2004 124,800 24,000 34,000 18,000
2005 156,000 34,000 26,000 12,000
Compute the purchases and the net income for the partnership for 2003, 2004, and 2005, assuming that the firm sells its
merchandise at 25 percent above cost.

2. The changes in the account balances and the following additional information are taken from the accounts of the Rainbow Co.
Increase
(Decrease)
Cash ................................................. $142,500
Accounts Receivable .................................. (30,000)
Inventory ............................................ 202,500
Buildings and Equipment (net) ........................ 630,000
Accounts Payable ..................................... (172,500)
Bonds Payable ........................................ 375,000
Capital Stock ........................................ 300,000
Additional Paid-In Capital ........................... 45,000

Dividends for 2004 were $82,500. There were no transactions in 2004 affecting retained earnings other than the dividends
and net income. Calculate the 2004 net income.

3. Partial balance sheet data and additional information for Anderson Industries are given below:

Anderson Industries
Partial Balance Sheet
December 31, 2005 and 2004

Assets

2005 2004

Cash ........................................ $70,000 $10,000


Accounts receivable ......................... 80,000 92,000
Inventory ................................... 65,000 43,000
Liabilities
Accounts payable ............................ $95,000 $75,000

Additional Information:
(a) Net income for 2005 was $50,000.
(b) Depreciation expense for 2005 was $25,000.

Prepare the operating activities section of the statement of cash flows, using the indirect method, for the year ending
December 31, 2005

4. GUANZON MERCHANDISING showed its post-closing trial balance for the year ended December 31, 2017:

Cash on hand ₱ 18,000


Accounts receivable 130,000
Allowance for bad debts ₱ 1,300
Inventories 96,000
Store equipment 300,000
Accumulated depreciation 30,000
Accounts payable 65,700
Guanzon, Capital 447,000
544,000 544,000
During the month of January 2018, the following transactions happen:
(a) All the accounts receivables were collected with 3% cash discount
(b) Sold merchandise on account ₱240,000 with credit terms 3/10, n/30
(c) Paid all the accounts payable with 3% cash discount
(d) Purchased merchandise on account, ₱110,000 plus freight in of ₱500
(e) Collected accounts receivable of ₱120,000 with cash discount
(f) Incurred and paid the following items:
Salaries ₱ 30,000
Utilities 10,000
Freight out 10,000
Rent 5,000
Equity investment through FVOCI 95,000

In preparation for the month end reports, the following are additional information:
(a) The company records using the periodic accounting method. Unsold merchandise is ₱51,820;
(b) Estimated uncollectible accounts is 1% of accounts receivable and depreciation is ₱30,000 per year; and
(c) The equity investment through FVOCI now values 100,500

Required:
Prepare a Statement of Comprehensive Income
Statement of Financial Position in account form for the month ended January 31, 2018.
Prepare a Cash Flow Statement (Direct and Indirect)

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