Expert Answers

Question 1

Brisky Corporation had net sales of $2,400,000 and interest revenue of $31,000 during 2014. Expenses for 2014 were cost of goods sold $1,450,000; administrative expenses $212,000; selling expenses $280,000; and interest expense $45,000. Brisky’s tax rate is 30%. The corporation had 100,000 shares of common stock authorized and 70,000 shares issued and outstanding during 2014. Prepare a single-step income statement for the year ended December 31, 2014. (Round earnings per share to 2 decimal places, e.g. 1.48.) 

Question 2

Accumulated Depreciation—Equipment
Administrative Expenses
Bad Debt Expense
Cost of Goods Sold
Delivery Expense
Depreciation Expense
Entertainment Expense
Equipment
Extraordinary Item—Casualty loss
Extraordinary Item—Gain on Sale of Plant
Extraordinary Item—Loss from Earthquake Damage
Income Tax Expense
Interest Expense
Interest Revenue
Maintenance and Repairs Expense
Miscellaneous Selling Expenses
Mortgage Payable
Net Sales
Office Expense
Other Administrative Expenses
Property Tax Expense
Rent Revenue
Salaries and Wages Expense
Salaries and Wages Payable
Sales Commission
Sales Discounts
Sales Returns and Allowances
Sales Revenue
Selling Expenses
Telephone and Internet Expense
Travel Expense

Question 3

Finley Corporation had income from continuing operations of $10,600,000 in 2014. During 2014, it disposed of its restaurant division at an after-tax loss of $189,000. Prior to disposal, the division operated at a loss of $315,000 (net of tax) in 2014. Finley had 10,000,000 shares of common stock outstanding during 2014. Prepare a partial income statement for Finley beginning with income from continuing operations. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Question 4

Portman Corporation has retained earnings of $675,000 at January 1, 2014. Net income during 2014 was $1,400,000, and cash dividends declared and paid during 2014 totaled $75,000. Prepare a retained earnings statement for the year ended December 31, 2014. (List items that increase retained earnings first.)

Question 5

Adani Inc. sells goods to Geo Company for $11,000 on January 2, 2014, with payment due in 12 months. The fair value of the goods at the date of sale is $10,000.

Prepare the journal entry to record this transaction on January 2, 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
How much total revenue should be recognized on this sale in 2014? 

Question 6

Accounts Receivable
Advertising Expense
Allowance for Sales Returns and Allowances
Billings on Construction in Process
Cash
Commission Expense
Construction in Process
Construction Expenses
Cost of Goods Sold
Cost of Installment Sales
Deferred Gross Profit
Delivery Expense
Discount on Notes Receivable
Freight-Out
Gain on Repossession
Income Summary
Installment Accounts Receivable
Installment Sales Revenue
Inventory
Inventory on Consignment
Loss from Long-Term Contracts
Loss on Repossession
Materials, Cash, Payables
Notes Receivable
Operating Expenses
Purchases
Realized Gross Profit
Repossessed Merchandise
Retained Earnings
Revenue from Consignment Sales
Revenue from Franchise Fees
Revenue from Long-Term Contracts
Sales Discounts
Sales Discounts Forfeited
Sales Returns and Allowances
Sales Revenue
Unearned Franchise Fees
Unearned Service Revenue 

Question 6

Jansen Corporation shipped $20,000 of merchandise on consignment to Gooch Company. Jansen paid freight costs of $2,000. Gooch Company paid $500 for local advertising, which is reimbursable from Jansen. By year-end, 60% of the merchandise had been sold for $21,500. Gooch notified Jansen, retained a 10% commission, and remitted the cash due to Jansen.

Prepare Jansen’s entry when the cash is received. (Round answers to 0 decimal places, e.g. 1,525. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Question 7

Accounts Receivable
Advertising Expense
Allowance for Sales Returns and Allowances
Billings on Construction in Process
Cash
Commission Expense
Construction in Process
Construction Expenses
Cost of Goods Sold
Cost of Installment Sales
Deferred Gross Profit
Delivery Expense
Discount on Notes Receivable
Freight-Out
Gain on Repossession
Income Summary
Installment Accounts Receivable
Installment Sales Revenue
Inventory
Inventory on Consignment
Loss from Long-Term Contracts
Loss on Repossession
Materials, Cash, Payables
Notes Receivable
Operating Expenses
Purchases
Realized Gross Profit
Repossessed Merchandise
Retained Earnings
Revenue from Consignment Sales
Revenue from Franchise Fees
Revenue from Long-Term Contracts
Sales Discounts
Sales Discounts Forfeited
Sales Returns and Allowances
Sales Revenue
Unearned Franchise Fees
Unearned Service Revenue 

Question 8

Telephone Sellers Inc. sells prepaid telephone cards to customers. Telephone Sellers then pays the telecommunications company, TeleExpress, for the actual use of its telephone lines. Assume that Telephone Sellers sells $4,000 of prepaid cards in January 2014. It then pays TeleExpress based on usage, which turns out to be 50% in February, 30% in March, and 20% in April. The total payment by Telephone Sellers for TeleExpress lines over the 3 months is $3,000.

Indicate how much income Telephone Sellers should recognize in January, February, March, and April.
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