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Financial Accounting 11th Edition Robert Libby, Patricia Libby, Frank Hodge
Financial Accounting 11th Edition Robert Libby, Patricia Libby, Frank Hodge
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TEST BANK FORFinancial Accounting 11th Edition Robert Libby, Patricia Libby, Frank Hodge
Answers are at the end of each Chapter
Chapter 1
Student name:__________
1) Determine the missing amounts for each independent case below. Assume the amounts
shown are at the end of the company's first year of operation.
Company Total Total Total Total Net Income Stockholders
Name Revenue Assets Expenses Liabilitie (Loss) ' Equity
s
Randolph $ $ $ $
600,00 450,00 350,00 130,000
0 0 0
Newman $ $ $ $ 75,000
105,00 80,000 10,000
0
Wiseman $ $ $(30,000 $ 100,000
190,00 70,000 )
0
Martin $ $ $ $
180,00 215,00 115,00 75,000
0 0 0
VanTasse $ $ $ $ 79,000
l 55,000 75,000 19,000
,Question Details
AACSB : Knowledge Application
AICPA : BB Critical Thinking
AICPA : FN Measurement
Bloom's : Apply
Difficulty : 2 Medium
Learning Objective : 01-01 Recognize the information conveyed in each of the four basic financial sta
Topic : Distinguish different financial statements
Type : Static
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Gradable : manual
2) Frank’s Flower Company, a small retail store that sells flowers, started business on
January 1, 2022. At the end of January 2022, the following information was available:
Sales of flowers for cash $ 150,000
Sales of flowers for credit (not yet collected) 30,000
Cost of flowers which were sold and paid for during January 90,000
Expenses during January incurred, and paid for, during January unless otherwise noted:
Salaries $ 10,000
Telephone 500
Office supplies (all used) 300
Electricity 600
Rent on the store for January, 2022 (will not be paid until 2,000
February, 2022)
Required:A.Using the above information, prepare the income statement for Frank’s Flower
Company for the month ended January 31, 2022.
B.What is the amount of cash flows provided by operating activities to be presented on the
statement of cash flows?
,Question Details
AACSB : Knowledge Application
AICPA : BB Critical Thinking
AICPA : FN Measurement
Bloom's : Apply
Learning Objective : 01-01 Recognize the information conveyed in each of the four basic financial sta
Topic : Distinguish different financial statements
Type : Static
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 3 Hard
Gradable : manual
3) Indicate on which financial statement you would expect to find each of the following. If
an item can be found on more than one statement, list each statement.
Example: Cash Balance Sheet and Statement of Cash Flows
Notes payable ___________blank
Salaries expense ___________blank
Cost of goods sold ___________blank
Sales revenue ___________blank
Inventory ___________blank
Income tax expense ___________blank
Dividends declared ___________blank
Retained earnings ___________blank
Accounts payable ___________blank
Equipment ___________blank
,Question Details
AICPA : BB Critical Thinking
AICPA : FN Measurement
Learning Objective : 01-01 Recognize the information conveyed in each of the four basic financial sta
Topic : Distinguish different financial statements
Type : Static
AACSB : Reflective Thinking
Difficulty : 1 Easy
Bloom's : Remember
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Gradable : manual
4) For each of the following items that appear on the balance sheet, identify each as an asset
(A), liability (L), or element of stockholders' equity (SE). For any item that would not appear on
the balance sheet, write the letter, N.
Retained earnings ___________blank
Accounts payable ___________blank
Selling expense ___________blank
Common stock ___________blank
Accounts receivable ___________blank
Income tax expense ___________blank
Dividends ___________blank
Property and equipment ___________blank
,Question Details
AICPA : BB Critical Thinking
AICPA : FN Measurement
Learning Objective : 01-01 Recognize the information conveyed in each of the four basic financial sta
Type : Static
AACSB : Reflective Thinking
Difficulty : 1 Easy
Bloom's : Remember
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Topic : Financial statements-Balance sheet
Gradable : manual
5) Rose Corporation began operations on January 2, 2022. During 2022, Rose made cash
and credit sales totaling $500,000 and collected $420,000 in cash from its customers. Rose
purchased inventory costing $250,000, paid $15,000 for dividends and the cost of goods sold
was $210,000. Also, the corporation incurred the following expenses during 2022:
Salary expense $ 80,000
Interest expense 5,000
Insurance expense 4,000
Supplies expense 6,000
Income tax expense 34,000
Required:1.Prepare an income statement showing revenues, expenses, income before income
taxes, income tax expense, and net income for the year ended December 31, 2022.
2.Based on the above information, what is the amount of accounts receivable on the balance
sheet prepared as of December 31, 2022?
3.Based on the above information, what is the amount of retained earnings on the balance sheet
prepared as of December 31, 2022?
,Question Details
AACSB : Knowledge Application
AICPA : BB Critical Thinking
AICPA : FN Measurement
Bloom's : Apply
Learning Objective : 01-01 Recognize the information conveyed in each of the four basic financial sta
Topic : Distinguish different financial statements
Type : Static
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 3 Hard
Gradable : manual
6) Cosmos Corporation was established on December 31, 2021, by a group of investors who
invested a total of $1,000,000 for shares of the new corporation's common stock. During the
month of January 2022, Cosmos provided services to customers for which the total revenue was
$100,000. Of this amount, $10,000 had not been collected by the end of January. Cosmos
recorded salary expense of $20,000, of which 90% had been paid by the end of the month; rent
expense of $5,000, which had been paid on January 1; and other expenses of $12,000, which had
been paid by check. On January 31, 2022, Cosmos purchased a van by paying cash of $30,000.
There were no other transactions that affected cash.
Required:1.In which section of the statement of cash flows would the amount of cash paid for
rent be reported?
2.In which section of the statement of cash flows would the amount of cash paid for the van
purchase be reported?
3.By how much did Cosmos's cash increase or decrease during January 2022?
4.What was Cosmos's net income or net loss (after income tax expense) for the month of January
2022? The income tax expense was $18,900.
5.Explain why the net increase or decrease in cash for a business generally will be different than
the net income, or net loss, for the same period.
,Question Details
AACSB : Knowledge Application
AICPA : BB Critical Thinking
AICPA : FN Measurement
Bloom's : Apply
Learning Objective : 01-01 Recognize the information conveyed in each of the four basic financial sta
Topic : Distinguish different financial statements
Type : Static
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 3 Hard
AACSB : Communication
Gradable : manual
7) Parker Pool Supply, Incorporated reported the following items for the year ended
December 31, 2022:
Salaries and salary expense $ 685,100
Cost of goods sold 1,461,200
Rent expense 513,500
Sales revenue 3,333,200
Interest expense 39,000
Income tax expense 157,300
Accounts receivable 35,100
Required: Prepare an income statement for the year ended December 31, 2022.
,Question Details
AACSB : Knowledge Application
AICPA : BB Critical Thinking
AICPA : FN Measurement
Difficulty : 2 Medium
Learning Objective : 01-01 Recognize the information conveyed in each of the four basic financial sta
Type : Static
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Bloom's : Understand
Topic : Financial statements-Income statement
Gradable : manual
8) National Shops, Incorporated reported the following amounts on its balance sheet as of
December 31, 2022:
Inventory $ 325,000
Notes payable 100,000
Cash 150,000
Common stock 750,000
Net property, plant and equipment 600,000
Accounts receivable 30,000
Accounts payable 45,000
Retained earnings ?
Required:1.What is the amount of National's total assets as of December 31, 2022?
2.Identify the items listed above that are liabilities.
3.What is the amount of National's retained earnings as of December 31, 2022?
4.Prepare a balance sheet for National at December 31, 2022.
5.National wishes to purchase merchandise from your company on account. The amount of the
purchases would probably be about $10,000 per month, and the terms would require National to
make payment in full within 30 days. Would you recommend that your company grant credit to
National under these terms? Explain the reasoning for your response.
,Question Details
AACSB : Knowledge Application
AICPA : BB Critical Thinking
AICPA : FN Measurement
Bloom's : Apply
Learning Objective : 01-01 Recognize the information conveyed in each of the four basic financial sta
Type : Static
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Topic : Financial statements-Balance sheet
Difficulty : 3 Hard
AACSB : Communication
AACSB : Analytical thinking
AICPA : FN Decision Making
Bloom's : Analyze
Gradable : manual
9) During 2022, Winterset Company performed services for which customers paid or
promised to pay a total of $587,000. Of this amount, $552,000 had been collected by year-end.
Winterset paid $340,000 in cash for employee salaries and owed the employees $15,000 at the
end of the year for work that had been done but had not paid for. Winterset paid interest expense
of $3,000 and $195,000 for other service expenses. The income tax rate was 35%, and income
taxes had not yet been paid at the end of the year. Winterset declared and paid dividends of
$20,000. There were no other transactions that affected cash.
Required:1.What was the amount of the increase or decrease in cash during the year?
2.Prepare an income statement for Winterset for the year 2022.
3.At the beginning of 2022, Winterset's retained earnings were $90,000. Prepare a statement of
stockholders' equity with only a column for retained earnings.
, Question Details
AACSB : Knowledge Application
AICPA : BB Critical Thinking
AICPA : FN Measurement
Bloom's : Apply
Learning Objective : 01-01 Recognize the information conveyed in each of the four basic financial sta
Topic : Distinguish different financial statements
Type : Static
Accessibility : Keyboard Navigation
Accessibility : Screen Reader Compatible
Difficulty : 3 Hard
Gradable : manual
10) Alfred Company manufactures men's clothing. During the current year, the company
reported the following items that affected cash. Indicate whether each of these items is a cash
flow from operating activities (O), investing activities (I), or financing activities (F).
Purchased equipment by paying cash: ___blank
Collected cash on account from customers: ___blank
Paid dividends to stockholders: ___blank
Paid cash for supplies: ___blank
Paid suppliers for fabric: ___blank
Borrowed money from bank on a note payable: ___blank
Paid interest to bank on the note payable: ___blank
Paid salaries to employees: ___blank
Sold shares of common stock to new stockholders: ___blank
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