Dept. of Accounting
College of Business
Al Azhar University-Gaza
بسم الله الرحمن الرحيم
Intermediate Accounting (1)
Final Exam: Fall 2012
Instructor:
Emad AbuShaaban
Time: 2 hrs.
Answer The Following Questions:
Problem #1:
Uhura Resort opened for business on June 1 with eight air-conditioned units.
Its trial balance on August 31 is as follows.
Other data:
1. The balance in prepaid insurance is a one-year premium paid on June 1, 2012.
2. An inventory count on August 31 shows $650 of supplies on hand.
3. Annual depreciation rates are buildings (4%) and equipment (10%). Salvage value is estimated to be 10% of cost.
4. Unearned Rent Revenue of $3,800 was earned prior to August 31.
5. Salaries of $375 were unpaid at August 31.
6. Rentals of $800 were due from tenants at August 31.
7. The mortgage interest rate is 8% per year.
Instructions
(a) Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.
(b) Prepare an adjusted trial balance on August 31.
Problem #2:
The following information was taken from the records of Gibson Inc. for the year 2012: income tax applicable to income from continuing operations $119,000; income tax applicable to loss on discontinued operations $25,500; income tax applicable to extraordinary gain $32,300; income tax applicable to extraordinary loss $20,400; and unrealized holding gain on available-for-sale securities $15,000.
Shares outstanding during 2012 were 100,000.
Instructions
(a) Prepare a single-step income statement for 2012.
(b) Prepare a retained earnings statement for 2012.
(c) Show how comprehensive income is reported using the second income statement format.
Problem #3:
The comparative balance sheets of Menachem Corporation at the beginning and end of the year 2012 appear below.
Net income of $34,000 was reported, and dividends of $23,000 were paid in 2012. New equipment was purchased and none was sold.
Instructions
(a) Prepare a statement of cash flows for the year 2012.
(b) Compute the current ratio (current assets 4 current liabilities) as of January 1, 2012, and
December 31, 2012, and compute free cash flow for the year 2012.
(c) In light of the analysis in (b), comment on Menachem’s liquidity and financial flexibility.
Best Wishes