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Quiz Inter1 C1

The document contains an accounting quiz with 3 problems. Problem 1 asks for the total current liabilities on December 31, 2019, which are calculated as $2,500,000. Problem 2 asks for the working capital, which is calculated as $26,500. Problem 3 asks for the total current assets, which are calculated as $7,740,000.

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98 views3 pages

Quiz Inter1 C1

The document contains an accounting quiz with 3 problems. Problem 1 asks for the total current liabilities on December 31, 2019, which are calculated as $2,500,000. Problem 2 asks for the working capital, which is calculated as $26,500. Problem 3 asks for the total current assets, which are calculated as $7,740,000.

Uploaded by

Vanessa vnss
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Intermediate Accounting 1 - C1

Quiz 4
Date : 13 April 2023

Problem 1

Clarence Company provided the following information on December 31, 2019:

● Accounts payable amounted to $500,000 and accrued expenses totaled $300,000 on


December 31, 2019.

● On December 15, 2019, the entity declared a cash dividend of $7 per share on 100,000
outstanding shares, payable on January 15, 2020.

● On July 1, 2019, the entity issued $5,000,000, notes payable bearing interest of 8% payable
annually every June 30.

● The pretax financial income was $8,500,000 and taxable income was $6,000,000. The
difference is due to $1,000,000 permanent difference and $1,500,000 of taxable temporary
difference to reverse in 2020.

● The income tax rate is 30%. The entity made estimated income tax payment during th year
of $1,000,000.

Required:
What amount should be reported as total current liabilities on December 31, 2019?
Solution:
Accounts Payable 500,000
Accrued expenses 300,000
Dividends payable 700,000
Accrued interest (5,000,000 x 8% x 6/12) 200,000
Income tax payable (6,000,000 x 30%-1,000,000) 800,000
2,500,000

Problem 2

The following information pertains to Alexis Company on December 31 of the previous year:

Property, plant and equipment $ 35,000


Accounts receivable 20,000
Prepaid insurance 2,500
Short-terrm note payable 3,000
Cash 5,000
Bonds payable 40,000
Total assets 101,500
Land 20,000
Accounts payable 8,000
Allowance for doubtful accounts 1,000
Merchandise inventory 13,000
Available for sale securities 7,000
Wages payable 2,000
Total liabilities 56,000
Premium on bonds payable 3,000
Required:
What is the working capital?

Solution:
Accounts receivable 20,000
Prepaid insurance 2,500
Cash 5,000
Allowance for doubltful accounts (1,000)
Merchandise inventory 13,000
39,500

Short-terrm note payable 3,000


Accounts payable 8,000
Wages payable 2,000
13,000
26,500
Problem 3

Ethan Company reported the following current assets at year-end:

Cash $ 3,200,000
Accounts receivable 3,000,000
Inventory 2,800,000
Prepaid insurance 200,000
Total current assets $ 9,200,000

The accounts receivable consisted of the following:

Customers' account $ 1,420,000


Employees' account - short term 240,000
Advances to subsidiary 260,000
Allowance for uncollectible accounts (120,000)
Subscription receivable-not collectible currently 1,200,000
$ 3,000,000

Required:
What total amount should be reported as current assets at year-end?
Solution:
Cash 3,200,000
Accounts Receivable 1,420,000
Allowance (120,000)
Employees' account 240,000
Inventory 2,800,000
Prepaid insurance 200,000
7,740,000

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