Kingsborough Community College Accounting 21 Final Exam, Spring 2018 FORMA 36) R
ID: 2409238 • Letter: K
Question
Kingsborough Community College Accounting 21 Final Exam, Spring 2018 FORMA 36) Rich Corp received cash of $6.000 on August 1, 2018 for one years The December 31 and recorded the transaction with a credit to Rent Revenue. 2018 adjusting entry is A. Debit Cash and credit Unearned Rent, $3,500o. B. Debit Rent Revenue and credit Unearned Rent, $2,500 C. Debit Rent Revenue and credit Unearned Rent, $3,500. D. Debit Unearned Rent and credit Rent Revenue, $2,500 retained 37) Which of the following statements is correct for calculating the ending balance of earnings: Start with beginning retained earnings and then: 1. Add or deduct prior period adjustments, net of tax. 2. Add net income and subtract dividends 3. Add or deduct the cumulative effect of a change in accounting principles, net 4. Add comprehensive income items, net of tax. of tax. A. Items 1, 2, 3 and 4 B. Items 1, 2 and 3 C. Only items 1 and 2 D. Only item 2 38) Which of the following items require a separate calculation of earnings per share? 1. Income from continuing operations Net Income Unusual Gain and Losses A change in the estimated life of long term assets. A. Items 1, 2, & 3 B. Only item 3. C. Item 2 & 4 D. All 5 items. 3. 4. 5. 39) Which of the following equals Operating income on the Income Statement? A. Net sales- cost of goods sold- operating expenses B. Net sales- cost of goods sold- operating expenses + other revenues C. Net sales- cost of goods sold- operating expenses - income taxes D. Net sales-cost of goods sold-operating expenses +gain on separately reported items- - other expenses losses on separately reported items. 1. Gain or loss on the sale of an operating division that has been discontinued 2. Income from continuing operations 3. Restructuring Costs 4. Error in computing deprecation from a prior year. 40) Which of the following require a separate allocation of income taxes? A Items 1, 2, and 4 B. Both 1 and 2 D. Only 2Explanation / Answer
36) c
-firstly you should understand what is happening in the scenario , what they have recorded , what is correct entry , and how the wrong affect can be removed.
when reciept of advance rent they recorded wrongly
DR cash 6000
CR rent revenue ( income) 6000.
but the correct entry is
DR Cash 6000
CR rent recieved advance( liability) 6000.
-now consider the current situation , we are at the year end so we are accrued to account rent in august , september , october , november and december (5 months)
-so rent accrued will be $ 2500 ( 6000/12 month* 5 month) ,
-please note that we already accounted for full amount in august , and now we accrued for 5 month rent , so we want to cancell only the affect of 7 month un accrued rent .
so Dr rent revenue 3500
Cr unearned income 3500
(6000-2500)
37) b
-prior year changes are adjusted in retained earning becuase it contain previous profits and can adjust profits not editing whole income statement
- net income and divident are adjusted in opening balance to find closing balance.
-the change in the accounting principle are also adjusted in retained earnings since it is retrospective
-comprehensive income are not considered in retained earnings , it is included in surplus
38) b
except net income other all option never requires sepreare calculation of eps
39) a
operating profit is sales - cost of sales - day-day expenses incurred for normal course of business
-income taxes, gain and other income are no day-day expenses or incomes
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