Accounting lab questions

Multiple Choice (2 points each) | 1. During May 2020, a company spend $14,000 on ordinary maintenance of its delivery trucks. These maintenance costs should have been recorded as debits to 'Maintenance Expense' but the company mistakenly capitalized these costs instead. Which of the following is true? a. Total Assets are overstated as of May 31, 2020 and May 2020 Net Income is overstated. b. Total Assets are overstated as of May 31, 2020 and May 2020 Net Income is properly stated. c. Total Assets are understated as of May 31, 2020 and May 2020 Net Income is understated. d. Both Total Assets as of May 31, 2020 and May 2020 Net Income are properly stated. 2. On May 26, 2020, Robin Company sells a piece of its manufacturing equipment for $80,000 cash. Robin had initially purchased the equipment for $200,000 in a prior period. The company had recorded $140,000 in depreciation for this piece of equipment as of the date of sale. Robin Company will record a_ related to the sale. a. $80,000 gain b. $20,000 gain . $60,000 loss d. $120,000 loss Use the following information about Bueno Corporation to answer the next two questions. On April 3, 2020, Bueno Corporation purchases 400 shares of Costco Wholesale Corporation stock for $289 per share and classifies the investment as TRADING. On April 30, 2020, Costco stock is trading at $303 per share, and on May 31, 2020, Costco stock is trading at $302 per share 3. The Investment in Costco Wholesale will be shown on Bueno Corporation's April 30, 2020 Balance Sheets for: a. $115,600 b. $120,800 . $121,200 $128,800 4. The Unrealized Gain or Unrealized Loss on this trading investment will be shown on Bueno Corporation's April 2020 Income Statem a. $400 unrealized loss b. $5,200 unrealized loss c. $5,600 unrealized gain d. $13,200 unrealized gain5. Trading securities are valued on the balance sheet at: a. market value. b. lower of cost or market. c. cost. 1. cost, adjusted for the effects of interest. 6. BIG Corporation purchases new equipment for $2,800,000 on January 1, 2020. BIG estimates that the equipment has a $120,000 residual value and a useful life of 10 years. BIG uses the straight-line method to record depreciation. Assume that on January 1, 2022, after 2 years, BIG realizes that the equipment remaining useful life is 5 years and a al value is $160,000. A depreciation schedule would show a. $528,000 depreciation expense for 2022 b. $420,80 c. $300,571 d. e. $263,000Problem 1 (27 points) Pan Corporation is a company that manufactures and sells baking forms. On 1/1/20, the company purchases a piece of manufacturing equipment for $2,500,000 cash. The expected residual value is $260,000 and the useful life is 5 years. The company expects to produce 8,000,000 forms with the equipment - 2,500,000 forms in 2020; 2,000,000 forms in 2021; 1,500,000 forms in 2022; 800,000 forms in 2023, and 1,200,000 forms in 2024. Assume that Pan Corporation uses the Straight-Line method of depreciation. 2020 2021 2022 2023 2024 Depreciation Expense for the year Accumulated Depreciation at year-end PPE, Net on year-end Balance Sheet Assume that Pan Corporation uses the Units-of-Activity method of depreciation. 2020 2021 2022 2023 2024 Depreciation Expense for the year Accumulated Depreciation at year-end PPE, Net on year-end Balance SheetAssume that Pan Corporation uses the Double-Declining-Balance method of depreciation. 2020 2021 2022 2023 2024 Depreciation Expense for the year Accumulated Depreciation at year-end PPE, Net on year-end Balance SheetProblem 2 (11 points) Use PVH Corp.'s financial statements to answer to the following questions. 1. Provide the fiscal year 2019 adjusting journal entry (both accounts and amounts) that PVH made to record depreciation on its Property and Equipment. Assume that PVH makes one adjusting journal entry for depreciation expense at the end of each fiscal year as part of its adjusting entries. (3 points) 2. According to the footnotes, what is the TOTAL COST of the Property and Equipment that PVH owns as of February 2, 2020? (1 point) $ 3. According to the footnotes, what is the TOTAL COST of Land that PVH owns as of February 2, 2020? (1 point) 4. According to the footnotes, which of the following methods does PVH use to depreciate its Property and Equipment? (Circle one)_(1 point) Straight-Line Double-Declining- Balance Units-of-Activity 5. Provide the fiscal year 2019 adjusting journal entry (both accounts and amounts) that PVH made to record amortization on its finite-lived Intangible Assets. Assume that PVH makes one adjusting journal entry for amortization expense at the end of each fiscal year as part of its adjusting entries. (3 points) 6. Does PVH's Goodwill footnote suggest that the company acquired any other companies during fiscal 2019? (Circle one)_(1 point YES NO Does PVH's Goodwill footnote suggest that the company acquired any other companies during fiscal 2018? Circle one)_(1 point) YES NOPVH Corp. Financial Statements (partial) PVH Consolidated Balance Sheets In millions of dollars As of As of ASSETS Feb. 2, 2020 Feb. 3, 2019 Cash and cash equivalents $ 503 5 452 Accounts receivable, net of the allowance of $21 million as of 2/2/2020 and of $22 million as of 2/3/2019 741 778 Inventories 1,616 1,732 Prepaid expenses and other current assets 534 277 Total current assets $ 3,394 $ 3,239 Property, plant, and equipment, net 1,027 985 Goodwill 3,678 3,671 Tradenames 2,830 2,863 Other intangibles, net 650 705 Other long-term assets 2.052 401 Total assets $ 13,631 $ 11,864 LIABILITIES & EQUITY Account payable $ 883 $ 924 Accrued expenses 929 892 Unearned revenue 65 65 Short-term borrowings and other current liabilities 484 13 Total current liabilities 2,361 1.894 Long-term debt 2,694 2,819 Other long-term liabilities 2, 765 1,323 Total liabilities 7,820 6,036 Common stock 3,161 3,10 Retained earnings 2,650 2,725 Total shareholders' equity 5,811 5,828 Total liabilities and shareholders' equity $ 13,361 $ 11,864Notes to Consolidated Financial Statements (partial) 1.1. Description of Business PVH Corp. constitutes a global apparel company with a brand portfolio consisting of nationally and internationally recognized trademarks, including TOMMY HILFIGER, CALVIN KLEIN, Van Heusen, IZOD, ARROW, Warner's, Olga, True&Co and Geoffrey Beene, which are owned, as well as various other owned, licensed and, to a lesser extent, private label brands. The Company designs and markets branded dress shirts, neckwear, sportswear (casual apparel), jeanswear, performance apparel, intimate apparel, underwear, swimwear, swim products, handbags, accessories, footwear and other related products and licenses its owned brands globally over a broad array of product categories and for use in numerous discrete jurisdictions 1.4. Fiscal Year The Company uses a 52-53 week fiscal year ending on the Sunday closest to February 1. Results for fiscal years 2019, 2018 and 2017 represent the 52 weeks ended February 2, 2020, 52 weeks ended February 3, 2019 and 53 weeks ended February 4, 2018, respectively 1.10. Property and Equipment Property and equipment consisted of the following (in millions): As of 2/2/2020 2/3/2019 Land $1 Buildings and building improvements 53 55 Machinery, software and equipment 872 698 Furniture and fixtures 586 540 Shop-in-shops/concession locations 210 231 Leasehold improvement 349 790 Construction-in-progress 35 Total property and equipment 2,606 2,399 Accumulated depreciation (1,579) (1,414) Property and equipment, net $ 1,027 $ 985 Property, plant and equipment is stated at cost less accumulated depreciation. Depreciation is generally provided over the estimated useful lives of the related assets on a straight-line basis. The range of useful lives is as follows: Buildings and building improvements - 15 to 40 years; machinery, software and equipment -2 10 years; furniture and fixtures - 2 to 10 years; and fixtures located in shop-in-shop/concession locations and their related costs - 3 to 4 years. Leasehold improvements are depreciated using the straight-line method over the lesser of the term of the related lease or the estimated useful life of the asset. Depreciation expense totaled $275 million and $264 million in fiscal years 2019 and 2018, respectively. 8. Goodwill and Other Intangible Assets Goodwill and indefinite-lived intangible assets not subject to amortization are tested for impairment annually, at the beginning of the third quarter of each fiscal year, and between annual tests if an event occurs or circumstances change that would indicate that it is more likely than not that the carrying amount may be impaired. There was no impairment of goodwill in fiscal 2019 or 2018 respectively. Purchased intangible assets with finite lives are amortized over their estimated useful lives using the straight- line and are tested for impairment. Amortization expense related to the Company's intangible assets subject to amortization was $40 million and $63 million for fiscal year 2019 and 2018, respectivelyOn July 1, 2019, the Company acquired the Tommy Hilfiger retail business in Central and Southeast Asia (the "TH CSAP acquisition"). As a result of the TH CSAP acquisition, the Company acquired $64 million of goodwill. On May 31, 2019, the Company acquired approximately 78% ownership interests in Gaza Corporation Limited ("Gazal") that it did not already own (the "Australia acquisition"). Prior to May 31, 2019, the Company accounted for its approximately 22% interest in Gazal. The Company did not acquire any companies during fiscal 2018. The following reflects goodwill activity for fiscal 2019 and 2018 (in millions): Goodwill balance as of February 4, 2018 $ 3 835 Acquisitions 0 Other (164) Goodwill balance as of February 3, 2019 $ 3 671 Acquisitions 130 Other (123) Goodwill balance as of February 2, 2020 $ 3 678