Can someone help me with getting the answer for question 1 about Hank Inc. in the practice exam document that is under UCLA- Accounting 456 (Also attached here)- thank you!

NCC5000: Financial and Managerial Accounting PRACTICE MIDTERM EXAM Name: I Accounting cycle II Analyzing account flows* TOTAL Maximum Possible Points Actual Score 150 50 200 Instructions You will have two (2) hours to complete the exam. You must answer the questions on the paper provided. You may use pens, pencils and calculators. No computers, smartphones or tablets please. You are allowed to have one sheet with your notes on it. Read the problems carefully. Answer no more and no less than what is asked. Good luck! Page\t2\tof\t12 Q1. Hank Inc. bought an existing business from Al on 1st January 2013. Al developed a new product called Bokboks, and has established a supply chain to make the products. Hank has plans to open a flagship store in New York to sell the product and is looking to expand the operations to sell Bokboks around the country through other retailers, as well as set up a new service and repair facility for customers. The company's balance sheet on 1st January, 2013 contained the following balances: Cash 40,000; Inventory ?; Goodwill 170,000; Intangible Assets 230,000; Common Stock 400,000; Additional Paid in Capital 98,000; Retained Earnings 43,000. The following transactions occurred during the first quarter of 2013. 1. Hank Inc. issued 100,000 new shares of $10 par value for $1,200,000 on 1st January 2013. 2. On the same day, it took out a bank loan for $500,000. The loan carries an interest of 8% which is payable semiannually on 30th June and 31st December. 3. On the same day, the company leased some property in The Bronx for its corporate offices, and repair and servicing shops. It paid $180,000 for the land and buildings representing three years' lease rental. Also, it paid advance rent for a whole year on retail stores rented by the company on Fifth Avenue for $120,000. 4. On the same day, furniture and fixtures worth $94,000 was purchased. This included furniture for the corporate office that cost $22,000, and for the retail stores that cost $72,000. It is expected that the furniture at the stores will suffer more wear and tear, and have an estimated life of 4 years, and no salvage value. The office furniture is expected to have a life of 8 years. 5. On January 5th, it received its first shipment of Bokboks from its suppliers, BB of Taiwan Inc. The cost of the materials received was $740,000. The terms call for payment in 30 days which the company did by sending a money transfer on February 4th. On March 26th, it placed another order with its supplier for $800,000 of Bokboks which it expects to receive on April 5th. 6. On January 7th, it received an advance order from one of its customers worth $220,000, who enclosed a check with the order. The company banked the check on the same day. 7. On January 10th, the company supplied the goods against the order. The cost of the materials shipped against this order was $110,000. 8. On March 2nd, it made a sale of $540,000 to another customer. The cost of materials to Hank was $270,000. The company gave the customer 30 days to pay. 9. Sales at the flagship store during the quarter amounted to $486,000. Sales at the store are made for cash. Cost of goods sold was $243,000. 10. On March 25, the CEO of Hank Inc. attended a dinner in Silicon valley on tech processes Financial\tAccounting,\tPractice\tMidterm Page\t3\tof\t12 in Bokboks and the company believes that the knowledge he gained will reduce expenses by at least $60,000 per year from the next year. 11. During the quarter, the company paid salaries of $52,000. Since salaries are paid on the first of each month, March salaries of $26,000 was due at the end of March and paid by the company on 1st April. 12. The company hired Publicis to manage its advertising. Publicis billed the company $10,000 on 1st March, 2013. The company paid the bill on March 15. At the end of the month, the company determined that of this amount, $5,000 represents expense of the quarter and the balance will be used up in the following quarter. 13. Publicis told the company that since one of the company employees had won a snowboarding gold at the Sochi Olympics, there should be at least 50% better returns on the promotion dollars being spent. Required: [Please answer Question 1 on sheets provided at the end of this booklet.] a. What is the balance in the inventory account at the beginning of the year? b. Record each transaction on a spreadsheet format using the accounting equation approach. Add columns to the spreadsheet format provided if necessary. Make sure that all the adjusting entries that result from the information above are recorded. Finally, make the closing entry, and compute the balance in the balance sheet accounts that will be carried over to the next quarter. (Note: If you are more comfortable doing T accounts, that is also acceptable.) c. Prepare the income statement for the first quarter. d. Prepare the balance sheet at the end of the quarter. e. Prepare the statement of cash flows for the quarter, using the indirect method. [Please answer Question 1 on sheets provided at the end of this booklet.] Financial\tAccounting,\tPractice\tMidterm Page\t4\tof\t12 Q2. You are given the following information about the June Bug Company. Income Statement of JuneBug Inc. 31Dec 2013 For the year ended Net Revenues 29,300 Cost of Sales 18,700 Depreciation & Amortization 1,220 Rent expense 1,900 Compensation costs 4,320 Operating Income 3,160 Interest expense (net) 295 Provision for tax 1,020 1,845 Net Income Balance Sheet of JuneBug Inc. As at ASSETS Cash Account receivable Inventory Prepaid rent Current Assets PP&E (Net) Intangible assets Total Assets Commercial paper Accounts payable Accrued compensation Accrued taxes Accrued interest Dividend payable Current Liabilities Bank loan Total Liabilities Common Stock APIC Retained Earnings Total Liabilities & Sh. Equity Required: 31Dec 2013 31Dec 2012 130 3,200 3,900 1,200 8,430 4,910 3,450 16,790 189 2,980 3,920 900 7,989 4,820 3,680 16,489 200 4,200 390 165 40 125 5,120 2,100 7,220 1,000 2,980 5,590 16,790 200 4,125 305 170 25 155 4,980 2,800 7,780 1,000 2,980 4,729 16,489 Financial\tAccounting,\tPractice\tMidterm Page\t5\tof\t12 Using the information provided above answer the following questions: a. Accounts receivable increased from $2,980 to $3,200 during the year. What did June Bug collect from its receivables during the year? b. June Bug reported rent expense of $1,900. What was the actual cash payment for rent during the year? c. What was the actual payment ($) for tax during the year 2013? d. What was the amount of dividend declared during 2013? e. How much dividend was actually paid? [Please answer Question 2 in the space below.] a. Collections from Accounts Receivable b. Cash payment for Rent Financial\tAccounting,\tPractice\tMidterm Page\t6\tof\t12 c. Cash payment for tax d. Dividend declared e. Dividend paid Financial\tAccounting,\tPractice\tMidterm Q.1 Asset side columns Cash Op Date 1 1Jan 2 1Jan 3 1Jan 4 1Jan 5 5Jan 6 7Jan 7 10Jan 7 10Jan 5 4Feb 8 2Mar 8 2Mar 9 31Mar 9 31Mar 11 31Mar 12 15Mar 12 31Mar A1 31Mar A2 31Mar A3 31Mar TB Closing Entry EB Prepaid Advert Furniture Acc.Dep. Goodwill Intangibles Opening Balance AR Prepaid Inventory Rent Page\t8\tof\t12 Liability side columns Op Date 1 1Jan 2 1Jan 3 1Jan 4 1Jan 5 5Jan 6 7Jan 7 10Jan 7 10Jan 5 4Feb 8 2Mar 8 2Mar 9 31Mar 9 31Mar 11 31Mar 12 15Mar 12 31Mar A1 31Mar A2 31Mar A3 31Mar TB Closing Entry EB Accounts Deferred Accrued Accrued Payable Revenue Interest Salary Bank Loan Financial\tAccounting,\tPractice\tMidterm Retained Earnings Common Stock APIC Page\t9\tof\t12 Income statement columns Op Date 1 1Jan 2 1Jan 3 1Jan 4 1Jan 5 5Jan 6 7Jan 7 10Jan 7 10Jan 5 4Feb 8 2Mar 8 2Mar 9 31Mar 9 31Mar 11 31Mar 12 15Mar 12 31Mar A1 31Mar A2 31Mar A3 31Mar TB Closing Entry EB Sales COGS Salaries Advert Interest Rent Depr. Expense Expense Expense Expense Exp. Financial\tAccounting,\tPractice\tMidterm Page\t10\tof\t12 Hank Inc., Income Statement for First Quarter 2013 Financial\tAccounting,\tPractice\tMidterm Page\t11\tof\t12 Hank Inc., Balance Sheet as of 3/31/2013 Assets 31Mar 2013 31Dec 2012 Liabilities/SE 31Mar 2013 31Dec 2012 Financial\tAccounting,\tPractice\tMidterm Hank Inc., Statement of Cash Flows, First Quarter 2013 Change in cash Beginning Cash Ending Cash