(

) 567
_

A.
1. T

2. F

3. F

4. T

5. F

6. T

7. F

8. T

9. F

10. T

B.
1. B

2. A

3. C

4. C

5. B

6. D

7. D

8. C

9. A

10. B

C.
1.
(1) $300,000 10% = $30,000#
(2) (2) + $5,000 $5,000 = 10
(2) = $45,000#
(3) $45,000 - $30,000 = $15,000#
(4) $75,000 - $45,000 = $30,000#
(5) $30,000 - $12,000 - $8,000 - $5,000 = $5,000#
(6) $300,000 [($40,000+(6)) 2] = 6
$300,000 = $120,000 + 3(6)
(6) = $180,000 3 = $60,000#
(7) ($30,000 + $10,000 + $60,000) ((7) + $30,000) = 2
2(7) + $60,000 = $100,000
(7) = $40,000 2 = $20,000#
(8) ~ (11)
$30,000 +$10,000 + $60,000 + (11) + $200,000 = $20,000 + $30,000 + (8)
+ $220,000 + $60,000
$300,000 + (11) = $330,000 + (8)
(11) - (8) = $30,000 ..........................................................................
($20,000 + $30,000 + (8)) ($300,000 + (11)) = 0.2
$50,000 + (8) = $60,000 + 0.2(11)
-0.2(11) + (8) = $10,000 ...................................................................
+
0.8(11) = $40,000
(11) = $50,000#
(9) = (10) = $30,000 + $10,000 + $60,000 + $50,000 + $200,000 =
$350,000#
(8) = $350,000 - $20,000 - $30,000 -$220,000 - $60,000 = $20,000#
1

2.
a.
b.
c.

$30,000 [($220,000 + $60,000 + $200,000 + $35,000) 2 ] = 0.12#

$225,000 [($50,000 + $50,000) 2] = 4.5#
$300,000 [($350,000 + $320,000) 2] = 0.90#

d.

($30,000 + $10,000 + $60,000 + $50,000) ($20,000 + $30,000)

= $150,000 $50,000 = 3#

D.
Melton Company
Statement of Cash Flows
For the Year Ended December 31, 2009
Cash flows from operating activities
Cash receipts from customers
Cash payments:

$408,000a
$295,000b
37,000c

To suppliers
For operating expenses
For income taxes
For interest
Net cash provided by operating activities
Cash flows from investing activities
Sale of plant assets
Net cash provided by investing activities
Cash flows from financing activities
Retirement of bonds
Payment of cash dividends
Net cash used by financing activities
Net increase in cash
Cash at beginning of period
Cash at end of period

23,000d
4,000

359,000
49,000

15,000
15,000
(9,000)
(34,000)
(43,000)
21,000
23,000
$ 44,000

Noncash investing and financing activities

Conversion of bonds payable into common stock
a.
b.

$34,000 + $400,000 $26,000 = $408,000

Cost of goods sold
Add: Increase in inventory

$280,000
10,000

Purchases
Add: Decrease in accounts payable
Cash payments to suppliers

290,000
5,000
$295,000

17,000

c.

Depreciation expense
$24,000 + X ($28,000 - $15,000) = $20,000
X = $9,000
Cash flow for operating expenses = $46,000 - $9,000 = $37,000

d.

$8,000 + $28,000 Y = $13,000

Y = $23,000

E.
LARUSSA CORPORATION
Income Statement
For the Year Ended December 31, 2007
Net sales
Cost of goods sold
Gross profit

$1,700,000
1,100,000
600,000

Selling and administrative expenses

Income from operations

270,000
330,000

Other revenues and gains

Other expenses and losses
Income before income taxes
Income tax expense

20,000
28,000

Income from continuing operations

Discontinued operations
Income from operations of discontinued
division, net of $6,000 income taxes
Loss on sale of discontinued division,
net of $27,000 income tax saving
Income before extraordinary item
Extraordinary item
Gain from expropriation, net of $36,000
income taxes
Net income
a.

8,000
322,000
96,600a
225,400

14,000
63,000

49,000
176,400

84,000
$

$322,000 30% = $96,600

260,400