QUESTION 1

Presented below is information related to Jensen Inc. pension plan for 2021.

Service cost $1,360,000

Actual return on plan assets 280,000

Interest on projected benefit obligation 520,000

Amortization of net loss 120,000

Amortization of prior service cost due to increase in benefits 220,000

Expected return on plan assets 240,000

What amount should be reported for pension expense in 2021?

1,980,000

$2,180,000

$1,940,000

$1,700,000

QUESTION 2

The following information on selected cash transactions for 2021 has been provided by

Mancuso Company:

Proceeds from sale of land $315,000

Proceeds from long-term borrowings 600,000

Purchases of plant assets 216,000

Purchases of inventories 1,020,000

Proceeds from sale of Mancuso common stock 360,000

What is the cash provided (used) by investing activities for the year ended December 31, 2021, as a result of the above information?

1,275,000

$384,000

$315,000

$99,000

QUESTION 3

Dream Home Inc., a real estate developing company, was accounting for its long-term contracts using the completed contract method prior to 2018. In 2018, it changed to the percentage-of-completion method. The company decided to continue using the competed contract method for income tax purposes. The tax rate enacted is 40%. Income before taxes under both the methods for the past three years appears below.

2016 2017 2018

Completed contract $550,000 $300,000 $150,000

Percentage-of-completion 750,000 375,000 270,000

Which of the following will be included in the journal entry made by Dream Home to record the income effect?

A debit to Retained Earning for $237,000

A debit to Retained Earnings for $165,000

A credit to Retained Earnings for $165,000

A credit to Retained Earnings for $237,000

QUESTION 4

Smiley Corp.'s transactions for the year ended December 31, 2021 included the following:

• Purchased real estate for $1,250,000 cash.
• Sold available-for-sale securities for $1,000,000.
• Paid dividends of $1,200,000.
• Issued 500 shares of common stock for $500,000.
• Purchased machinery and equipment for $250,000 cash.
• Paid $900,000 toward a bank loan.
• Reduced accounts receivable by $200,000.
• Increased accounts payable $400,000.

Smiley's net cash used in investing activities for 2021 was

$500,000

$1,500,000

$250,000

$750,000

QUESTION 5

Lindsay Corporation had net income for 2018 of $3,000,000. Additional information is as follows:

Depreciation of plant assets $1,000,000

Amortization of intangibles 220,000

Cash from sale of investment at book value 50,000

Increase in accounts receivable 420,000

Increase in accounts payable 540,000

Cash dividends paid 75,000

Lindsay's net cash provided by operating activities for 2018 was

$4,340,000

$4,465,000

$4,390,000

$4,315,000