Questions 1-10 - Multiple Choice Questions (10 Marks-1 mark per question) Circle the Correct Answer 1.) Which of the following accounts have a normal debit balance? a) Contributed Surplus b) Accumulated Depreciation e) Dividends Distributable d) Unearned Revenue c) Loss on Disposal of Asset 2.) Which of the following intangible assets have an infinite life (assuming all appropriate fees are paid)? a) Patents b) Goodwill c) Copyrights d) Trademarks e) Both A and C 3.) If a company has a 2:1 stock split on common shares which of the following will be true? a) Total Share Capital will increase b) Total number of common shares will decrease c) The market price for common shares will increase d) Retained Earnings will not change e) None of the above 4.) Which of the following accounts could appear on a post-closing trial balance? a) Retained Earnings b) Dividends Declared c) Employee Benefits Expense d) Income Summary e) All of the above 5.) On September 1, a company made sales of $5,000 to a customer on account with 2/10 N/30 terms. On September 3, the customer returned $1,000 of the product. Both the original sale and the return had 5% GST applied on top of the amounts. If the customer paid off their account in full on September 23, how much cash was received by the company? a) S4,000 b) $3.920 c) $4.200 d) $4,250 e) $6,300 6.) A company has basic earnings per share of $0.53 for 2018 and 80.60 for 2019. Net income for the company was S1.OM for both 2018 and 2019. What could be the reason for the change in carnings per share? a) In 2019 the company declared and paid a $500,000 cash dividend on common shares b) In 2019 the company issued a 10% stock dividend c) During 2019 the company repurchased some shares al cost d) The market price for shares has increased between 2018 and 2019 e) All of the above are possible reasons 7.) In a periodic inventory system what are the missing items needed to calculate Cost of Goods Sold? Beginning Inventory ??? Cost of Goods Available for Sale ??? Cost of Goods Sold a) Ending Inventory, Freight Out b) Purchase Discounts, Purchase Returns c) Sales Discounts, Sales Returns d) Cost of Purchases, Ending inventory e) None of the above 8.) On March 1, 2020 a company takes out a 5 year loan from the bank for $360,000 at 4% interest rate. The loan is a blended principal and interest loan with monthly payments of S6,630 The first installment payment is due on April 1, 2020. How much principal reduction will there be on the May 1, 2020 installment payment (rounded to the nearest dollar)? a) S5.448 b) 55.430 c) S6,630 d) $1.200 e) S1,182 9.) Which of the following is not part of the accounting cycle? a) Completing a journal entry to record the revenue from services provided b) Completing an internal control risk assessment c) Closing journal entries d) Completing an income statement e) All of the above are part of the accounting cycle 10.) On January 1, 2019 a public company has 35,000 common shares outstanding and the shares were trading at $3.00 per share. On March 15, 2019 the company had 40,000 shares outstanding and the shares were trading at $3.50 per share. What is the market capitalization of the company on March 15, 2019? a) S122,500 b) $140,000 c) S105,000 d) $17.500 e) $2,500 The following information is used for questions 11-13. McFly Inc. Adjusted Trial Balance As at December 31, 2019 Debit Credit 12,000 32,000 80,000 2,500 2,000 50,000 140,000 25,000 55,000 1,000 124,000 16,000 6,000 1,000 9,000 1,500 7,000 1,200 Accounts Payable Accounts Receivable Accumulated Depreciation - Building Allowance for Doubtful Accounts Bad Debt Expense Bank Loan Payable (Long Term) Building Cash Common Shares Contributed Surplus Cost of Goods Sold Depreciation Expense Dividends Declared Dividends Payable Employee Benefits Expense Employee Benefits Payable Goodwill GST Payable Income Tax Expense Insurance Expense Interest Expense Inventory Land Loss on disposal of Asset Preferred Shares Prepaid Insurance Property Tax Expense Property Tax Payable Retained Earnings Salaries Expense Sales Discounts Sales Returns Sales Revenue Travel Expense Unearned Revenue TOTAL 1,900 1,100 4,500 36,000 100,000 1,600 2,000 1,200 4,200 1,800 77,100 42,000 1,100 21,000 294,000 6,000 2.500 581,600 581,600 - Additional Info - During the year 5,000 additional common shares were issued at $1.00 per share - No Shares were repurchased during the year - Portion of Bank Loan due within 1 year = $2,000 11.) Using the adjusted trial balance for McFly Incorporated, complete a multi-step income statement for the year ended December 31, 2019. (9 Marks) 12.) Complete a Statement of Changes in Equity for McFly Incorporated for the year ended December 31, 2019. (7 Marks) 13.) Complete a Statement of Financial Position for McFly Incorporated as at December 31, 2019. (9 Marks) The following information is used for questions 14 - 16. On November 15, 2017 the Regina Airport Authority (RAA) purchased a runway sweeper to keep the snow and ice of the runways. The base cost of the asset was $118.500 and there was an extra $2.500 worth of freight charges paid to get it to the airport. The sweeper also required a specialized winter enhancement that cost an additional $3,000. The sweeper was setup and ready for use on December 1 at which time RAA purchased a one year insurance policy on the sweeper that cost $4,000. The sweeper has an estimated useful life of 18,000 kilometers and has an estimated residual value of $25,000. The RAA has a March 31 year end and adjusts its accounts annually Each runway at the Regina airport is 2.5 kilometers long. The number of runways the sweeper cleared for the year ended March 31, 2018 was 328. The number of runways cleared for the year ended March 31, 2019 was 564 14) Calculate the amount of depreciation on the sweeper for cach of the years ended March 31, 2018 and March 31, 2019. Complete the required journal entries to record depreciation for March 31, 2018 and March 31, 2019. (6 Marks) 15) What is the total accumulated depreciation and the carrying value of the sweeper on March 31, 2019? (2 marks) TOTAL ACCUMULATED DEPRECIATION: CARRYING VALUE 16.) On December 1, 2019, RAA sold the asset for S105.000. Calculate the pain or loss on the sale of the sweeper and complete any journal entries required for the transaction. The amount of runways cleared between April 1, 2019 and November 30, 2019 was 1965 Marks) The following information is related to questions 17 & 18 Sunspot Service Inc. (SSI) received their bank statement for the month ended April 30. The statement noted a bank account balance of $83.983. The company records indicate a cash balance of $73,478 on April 30. Upon investigation the following items were discovered: There were services charges from the bank related to credit card processing for the month of April. The charges were for $4,862 SSI made a night deposit on April 30 for $1.998. This was recorded in the company's books. There were cash receipts from a customer paying off their account that came in by EFT. On April 29, SI0.587 was received. This was not recorded by the company in April SSI issued cheques in March and April for $45,098, and $56,981 respectively. The total amount of outstanding cheques for March was $834. The total outstanding cheques for April was $6,438 The bank returned an NSF cheque from a customer. The amount of the cheque was for $454 and the bank charged a S40 NSF fee. The bank discovered an error on April 15 that they overcharged the March credit card fees by S380. The money was refunded on April 19. SSI recorded this correction in April. 17.) Complete a bank account reconciliation for April 30. (7 marks) 18.) Complete any adjusting journal entries required from the reconciliation completed above (4 marks) The information below is used for questions 19-20. The below chart represents the inventory and accounts receivable balances for the MegaMart Sales Corporation at specific points in 2019. Date January 15 March 27 July 5 October 28 December 30 Inventory 133,554 214,899 200,365 182,432 140,145 A/R 77,511 90,147 83,541 77,898 82,258 Total Sales $ Total Sales Returns $ Total COGS $ 1,824,575 93,254 956,990 For 2019,61% of total sales were made on credit, 54% of the returns were related to credit sales. 19.) On average, how long did it take for MegaMart to cycle through inventory in 2019? (3 marks) 20.) On average, how long did it take MegaMart to collect the sales made on credit during the year? (4 Marks) Jason's Janitorial Company (JJC) is a publically company that has shares traded on the Toronto Stock Exchange. On January 1, 2019 the company had total share capital of $43,400 and 5,000 common shares outstanding. The following is information pertaining to 2019: The company announces plans to open a retail store. To help pay for the store the company issued 6,000 common shares at $7.50 per share on January 31. The store is proving to be more expensive than previously budgeted and the company issued 3,000 additional common shares at $9.50 per share on February 21. The store is completed. To celebrate the grand opening, JJC unveils its flagship products; a smart bathroom complete with a talking toilet imported from Japan. As a reward for the shareholders' patience, the company announced on July 30 that a cash dividend of $0.40 per share will be paid on September 1 to all common shareholders on record as of August 15. The market price for the shares on July 30 is $9.30. The sales of the smart bathroom have been lower than anticipated and Royal Flush Inc., a significant shareholder of JJC, is upset with the latest quarterly results of the company The poor results have caused the market price of the shares to drop to $7.00 per share as of December 1. In response to this, JJC has agreed to reacquire and retire the shares owned by Royal Flush Inc. All 2,500 common shares owned by Royal Flush Inc. were reacquired at $8.00 per share on December 1, 2019. 21.) Complete any journal entries required for JJC for the 2019 year. (8 marks) Below is information from the comparative balance sheet for Last Chance LTD Last Chance LTD. Statement of Financial Position (partial) December 31, 2018 2018 Cash Accounts Receivable Prepaid Insurance Inventory Equipment Accumulated Depreciation 87,000 87,500 2.000 105,000 293,000 (78,600 2017 85.000 76,000 3.000 120,000 220,000 (83,000) Accounts Payable Dividends Payable Long Term Bank Loan Retained Earnings Common Shares 24,000 5,000 186,000 194.500 86.400 26,000 8.000 160,000 149,000 78,000 Additional Information: Net income for 2018 was $65,500 No common shares were repurchased during the year New bank loans were acquired. Payments on existing bank loans for the year were $24,000 Equipment was sold for loss of $5,000. The equipment had a historical cost of $60,000 and a carrying value of $30,000. New equipment was also purchased Dividends were declared and paid during the year. Depreciation expense for the year was $25,600 Prepare a statement of cash flows for the year ended December 31, 2018 using the indirect method This section can be used for any T-account calculations you may require for the cash flow statement. NOTE: These are just to help you out, they are not required to get full marks for the Cash Flow statement 22.) Prepare a statement of cash flows for the year ended December 31, 2018 using the indirect method. (9 marks)