Good evening. Attached an assignment.
Your Name Here Quiz 2 Multiple Choice: 1. How many of the following items should Kelly’s Kitchen Inc.’s list in its operating section of its cash flow statement? Sale of land Increase in Stock Repurchases Increase in Wages Payable Payment of Income Taxes Issuance of Mortgage Payable Purchase of Equipment a. Two Items b. Three Items c. Four Items d. Five Items Answer _______ 2. Blinder Inc. has a portfolio of marketable equity securities that it does not intend to sell in the near term. How should Blinder Inc. classify and report gains and losses from these securities if it does not elect the fair value option to report these securities? a. Classify as trading securities and report as a separate component of other comprehensive income. b. Classify as available for sale securities and report as a separate component of other comprehensive income. c. Classify as available for sale securities and report as a component of income from continuing operations. d. Classify as trading securities and report as a component of income from continuing operations. Answer ______ 3. Which financial statement would a potential investor primarily use to assess the company's liquidity? a. Statement of retained earnings. b. Balance sheet c. Income statement. d. Statement of cash flows. Answer _______ 4. Carter Company had investments in marketable securities classified as available-for-sale costing $600,000. On June 30, 2020, Carter Company reclassified the marketable securities as held-to-maturity. The market value of the investments was as follows: $550,000 on December 31, 2019, $520,000 on June 30, 2020, and $500,000 on December 31, 2020. Carter Company does not elect the fair value option to account for these investments. What amount of loss should Carter Company report in its 2020 income statement as of December 31, 2020? a. $0 b. $30,000 c. $80,000 d. None of the above Answer _______ 5. Which of the following is not included in other comprehensive income? a. Derivative hedges b. Foreign currency translation adjustments c. Net unrealized gain/loss on available for sale securities d. Unrealized holding gains and losses on trading securities Answer _______ 6. During the current year, Barter Co. amortized a bond discount. Barter Co. prepares its statement of cash flows using the indirect method. In which section of the statement should Barter Co. report the amortization of the bond discount? a. Supplemental disclosures b. Financing activities c. Investing activities d. Operating activities Answer _______ 7. In Year One, an investor buys shares of Company A for $9,000 and shares of Company B for $14,000. By the end of that year, each investment has increased in value by $500. During Year Two, the shares of Company A are sold for $11,600. The investor then buys shares of Company C for $11,000. At the end of Year Two, the shares of Company B are worth $13,500 whereas the shares of Company C are worth $11,400. If all of these investments are viewed as trading securities, what is the total impact on the investor's net income for Year Two? a. $1,500 increase in net income b. $2,600 increase in net income c. $1,000 decrease in net income d. $1,500 decrease in net income e. None of the above Answer _______ 8. For the year ended December 31, 2020 Kart Inc. reported pretax financial statement income of $950,000. Its taxable income was $850,000. The difference is due to accelerated depreciation for income tax purposes. Kart Inc.’s effective income tax rate is 28% and Kart Inc. made estimated tax payments during 2020 of $90,000. What amount should Kart Inc. report as current income tax expense for 2020? a. $238,000 b. $212,800 c. $266,000 d. $0 e. none of the above Answer _______ 9. For its first year of operations, Dealz Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $ 315,000 Permanent difference (10,000 ) 305,000 Temporary difference-depreciation (25,000 ) Taxable income $ 280,000 Dealz 's tax rate is 21%. Assume that no estimated taxes have been paid. What should Dealz report as income tax payable for its first year of operations? A) $280,000 B) $58,800 C) $64,050 D) $0 E) none of the above Answer _______ 10. A bicycle company buys inventory and pays cash of $10,000. It also buys a bicycle rack and pays $4,000. It pays $3,000 on a long-term liability and $500 in cash dividends. On a statement of cash flows, what should be listed as the cash outflow in connection with financing activities? a. $500 b. $14,500 c. $4,000 d. $3,500 e. None of the above Answer _______ 11. Rick’s 2020 net cash flow from operating activities was $600,000. Rick reported the following items on its financial statements for 2020: Cash dividends $32,000 Depreciation 26,000 Increase in accounts receivable 19,000 Rick’s net income for 2020 was: A) $556,000 B) $593,000 C) $632,000 D) $645,000 E) none of the answers are correct Answer _______ 12. Moter Inc. began operations in January 2020. Moter Inc. recognizes income in the period of sale for financial reporting purposes. However, for income tax purposes, Moter Inc. recognizes income when it collects installment payments in cash from its customers. In 2020, Moter Inc. had $500,000 of installment sales scheduled to be collected as follows: 2020 $ 50 ,000 2021 100 ,000 2022 100 ,000 2023 125 ,000 2024 125 ,000 $ 500 ,000 Moter Inc. has a 15% income tax rate and that there were no other differences in income for financial statement and tax purposes. Ignoring operating expenses, what deferred tax liability would Moter Inc. report in its year-end 2020 balance sheet? A) $500,000 B) $67,500 C) $75,000 D) None of the answers are correct Answer _______ Calculations: 14. Required: Calculate Depreciation for Year 1 using units of production -activity based depreciation. 80 delivery vans were purchased at a cost of $50,000 each. Each delivery van is estimated to be driven a total of 80,000 miles and then be sold for an estimated $10,000. In Year 1 the vans were driven 1,500,000 miles. 15. Jim’s Wholesale Foods had temporary differences related to the following future (deductible) or taxable amounts on December 31, 2020: a) Prepaid Expenses $15,000 b) Depreciation Expense $80,000 and c) Warranty Expense ($22,000). There were no temporary differences on January 1, 2021. Taxable income was $20,000; Jim's had $100,000 of pretax accounting income. The tax rate is 35%. Prepare the journal entry to record income taxes for 2020. Cash Flow Statement 17. Using the data below, prepare a statement of cash flows (indirect method) for Colors Inc. for the year ended December 31, 2020: (page intentionally blank) Page 16 of ___