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Paper Topic:

MCQ Accounting

Question 36 The following are the typical classifications used in a balance sheet

a

Current assets

f

Current liabilities

b

Investments and funds

g

Long-term liabilities

c

Property , plant , and equipment

h

Paid-in-capital

d

Intangible assets

i

Retained earnings

e

Other assets Required

For each of the following 2006 balance sheet items , use the letters above to indicate the appropriate classification category

If the item is a contra account , place a minus sign before the chosen letter

p 1

f

Accrued interest payable

10

a

Supplies

2

d

Franchise

11

c

Machinery

3

-c

Accumulated depreciation

12

c

Land , in use

4

a

Prepaid insurance , for 2008

13

a

Unearned revenue

5

g

Bonds payable , due in 10 years

14

d

Copyrights

6

f

Current maturities of long-term debt

15

h

stock

7

f

Note payable , due in three months

16

a

Land , held for speculation

8

b

Long-term receivables

17

b

Cash equivalents

9

b

Bond sinking fund , will be used to

retire bonds in 10 years

18

f

Wages payable Question 37 E 4-4 Multiple-step statement of income and comprehensive income

The trial balance for Lindor Corporation , a manufacturing company , for the year ended December 31 , 2006 , included the following comprehensive income accounts

Account Title

Debits

Credits

Sales revenue 2 ,300 ,000

Gain on early debt extinguishment (unusual and infrequent 400 ,000

Cost of goods sold

1 ,400 ,000 Selling and administrative expenses

420 ,000 Interest expense

40 ,000 Unrealized holding gains on investment securities 80 ,000

The trial balance does not include the accrual for income taxes Lindor 's income tax rate is 30 . One million shares of common stock were outstanding throughout 2006

Required

Prepare a combined multiple-step statement of income and comprehensive income for 2006 , including appropriate EPS disclosures

Round EPS calculations to 2 decimal places . Amounts in parentheses do not require a minus sign

LINDOR CORPORATION

Statement of Income and Comprehensive Income

For the Year Ended December 31 , 2006 Sales revenue Cost of goods sold

1 ,400 ,000 Gross Profit Operating expenses Selling Administrative Expenses Operating income

480 ,000

Other income (expense Interest expense Income before income taxes and extraordinary item Taxes 30 Income before extraordinary item

Extraordinary item Gain on early debt extinguishment Net income Other comprehensive income Unrealized holding gains on investment securities , net of tax

56 ,000 Earnings per share Income before extraordinary item

Question 1

The principal benefit of separately reporting discontinued operations and extraordinary items is to enhance :Intraperiod continuity Comprehensive reporting Consistency in reporting Predictive ability .Question 2

A voluntary change in accounting principle is accounted for by :A separate line component of income A cumulative effect on income in the year of the change A retrospective reporting of all comparative financial statements shown A prior period adjustment .Question 3

In its Dec . 31 , 2006 financial statements , E-Z Prices estimated that losses on its current receivables would be 10 .2 million . During 2007 E-Z Prices determined that the losses on the Dec . 31 , 2006 , receivables were actually 12...

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