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A company had 100,000 shares outstanding on 1/1. 10,000 new shares were issued on 4/1, and...

A company had 100,000 shares outstanding on 1/1. 10,000 new shares were issued on 4/1, and 5,000 shares of treasury stock were purchased by the company from the stockholders on 7/1. What is the weighted average number of shares to be used for the year-end earnings per share calculation?

a. 110,000

b. 102,500

c. 107,500

d. 105,000

A truck was purchased for $25,000. It had a five-year life and a $4,000 residual value. Under the double-declining-balance method, what is depreciation expense in year two?

a. $6,000

b. $5,040

c. $8,000

d. $8,400

   The following Income Statement and account balance changes apply to this question:

Income Statement for the year:

Sales                                   $1,400,000

Cost of Goods Sold                 810,000

Gross Profit                            $590,000

Operating Expenses               360,000

Net Income before Taxes $230,000

Taxes                                             34,000

Net Income                              $196,000

Account Balance Changes during the year:

Accounts Payable increase                                  $6,000

Prepaid expenses decrease                                          $4,500

Taxes Payable increase                                                  $8,200

Accounts Receivable decrease                                    $24,000

Additions to Accumulated Depreciation                     $76,000

Inventory increase                                               $12,000

Accrued liabilities (e.g., Wages Payable) decrease        $5,000

What was the amount of cash payments made during the year for inventory purchases, using the direct method?

a. $822,000.

b. $804,000

c. $828,000.

d. $816,000.

Which of the following is not correct according to the accounting rules for when to record revenues and expenses?

a. Recording revenue upon performance of a service that the customer paid for in advance

b. Recording revenue upon receipt of payment for services performed in a prior accounting period

c. Adjusting prepaid expenses at the end of the month for the portion that has expired during the month

d. Recording Interest Expense at the end of the month for the month's accrued interest on corporate debt
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Homework Answers

Answer #1

1) Weighted average share outstanding

Share outstanding
1/1 100000*3/12 25000
4/1 110000*3/12 27500
7/1 105000*6/12 52500
Total 105000

So answer is d) $105000

2) Double decline Dep expense = 25000*60%*40% = 6000

So answer is a) $6000

3) Cash payment for inventory purchase = 810000+12000-6000 = 816000

So answer is d) $816000

4) Which of the following is not correct according to the accounting rules for when to record revenues and expenses?

So answer is b) Recording revenue upon receipt of payment for services performed in a prior accounting period

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