ADVANCED FINANCIAL ACCOUNTING EXAM 2023 VERIFIED QUESTIONS AND ANSWERS

ADVANCED FINANCIAL ACCOUNTING EXAM 2023 VERIFIED QUESTIONS AND ANSWERS A foreign subsidiary of the Bart Corporation has certain balance sheet accounts on December 31, 20X2. Information relating to these accounts in U.S. dollars is as follows: Restated at Current Rates Historical Rates Marketable (AFS and Trading) Securities $ 75,000 $ 85,000 Inventories, carried at average cost $ $ 600,000 $ 700,000 Refundable Deposits $ 25,000 $ 30,000 Goodwill $ 55,000 $ 70,000 Total $ 755,000 $ 885,000 What total should be included in Bart's balance sheet on December 31, 20X2, as a result of the preceding information? Foreign Currency is Functional Currency a.) $755,000 b.) $880,000 c.) $780,000 d.) $870,000 U.S. Dollar is Functional Currency a.) $755,000 b.) $780,000 c.) $880,000 d.) $870,000 - a.) $755,000, d.) $870,000A foreign subsidiary's functional currency is its local currency, which has not experienced significant inflation. The weighted-average exchange rate for the current year would be the appropriate exchange rate for translatingSales to Customers Wages Expense a.) No. No. b.) Yes. Yes. c.) No. Yes. d.) Yes. No. - b.) Yes, Yes. A wholly owned foreign subsidiary of Nick Inc. has certain expense accounts for the year ended December 31, 20X4, stated in local currency units (LCU) as follows: LCU Depreciation of Equipment (related assets were purchased January 1, 20X2) 120,000 Provision for Uncollectible Accounts 80,000 Rent 200,000 The exchange rates at various dates were as follows: Dollar Equivalent of 1 LCU January 1, 20X2 0.50 December 31, 20X4 0.40 Average, 20X4 0.44 What total dollar amount should be included in Nick's income statement to reflect the preceding expenses for the year ended December 31, 20X4? Foreign Currency is Functional Currency U.S. Dollar is Functional Currency a.) $183,200 b.) $176,000 c.) $168,000 d.) $160,000 a.) $168,000 b.) $160,000 c.) $176,000 d.) $183,200 - b.) $176,000, d.) $183,200An entity denominated a December 15, 20X6, purchase of goods in a currency other than its functional currency. The transaction resulted in a payable fixed in terms of the amount of foreign currency and was paid on the settlement date, January 20, 20X7. The exchange rates between the functional currency and the currency in which the transaction was denominated changed at December 31, 20X6, resulting in a loss that should a.) Not be reported until January 20, 20X7, the settlement date. b.) Be included as a separate component of stockholders' equity at December 31, 20X6. c.) Be included as a deferred charge at December 31, 20X6. d.) Be included as a component of income from continuing operations for 20X6. - d.) Be included as a component of income from continuing operations for 20X6. An entity denominated a sale of goods in a currency other than its functional currency. The sale resulted in a receivable fixed in terms of the amount of foreign currency to be received. The exchange rate between the functional currency and the currency in which the transaction was denominated changed. The effect of the change should be included as a a.) Separate component of stockholders' equity whether the change results in a gain or a loss. b.) Separate component of stockholders' equity if the change results in a gain and as a component of income if the change results in a loss. c.) Component of income if the change results in a gain and as a separate component of stockholders' equity if the change results in a loss. d.) Component of income whether the change results in a gain or a loss. - d.) Component of income whether the change results in a gain or a loss. Bar Corporation had a realized foreign exchange loss of $13,000 for the year ended December 31, 20X2, and must also determine whether the following items will require year-end adjustment: Bar had a $7,000 credit resulting from the restatement in dollars of the accounts of its wholly owned foreign subsidiary for the year ended December 31, 20X2. Bar had an account payable to an unrelated foreign supplier to be paid in the supplier's local currency. The U.S. dollar equivalent of the payable was $60,000 on the October 31, 20X2, invoice date and $64,000 on December 31, 20X2. The invoice is payable on January 30, 20X3.What amount of the net foreign exchange loss in computing net income should be reported in Bar's 20X2 consolidated income statement? LCU is Functional Currency a.) $17,000 b.) $ 6,000 c.) $13,000 d.) $10,000 U.S. Dollar is Functional Currency a.) $ 6,000 b.) $17,000 c.) $10,000 d.) $13,000 - a.) $17,000, c.) $10,000 Cash $ 20,000 Other Assets 180,000 $ 200,000 Liabilities $ 50,000 Alex, Capital (40%) 37,000 Betty, Capital (40%) 65,000 Claire, Capital (20%) 48,000 Total Liabilities and Capital $ 200,000 If A is the total capital of a partnership before the admission of a new partner, B is the total capital of the partnership after the new partner's investment, C is the amount of the new partner's investment, and D is the amount of capital credit to the new partner, then there is a.) Neither bonus nor goodwill if B = A - C and D C. b.) Goodwill to the new partner if B ( A + C ) and D C. c.) A bonus to the new partner if B = A + C and D C. d.) Goodwill to the old partners if B ( A + C ) and D = C. - d.) Goodwill to the old partners if B ( A + C ) and D = C. Cash $ 20,000 Other Assets 180,000 $ 200,000 Liabilities $ 50,000Alex, Capital (40%) 37,000 Betty, Capital (40%) 65,000 Claire, Capital (20%) 48,000 Total Liabilities and Capital $ 200,000 At December 31, Rod and Sheri are partners with capital balances of $40,000 and $20,000, and they share profits and losses in the ratio of 2:1, respectively. On this date, Pete invests $17,000 in cash for a 20 percent interest in the new partnership's capital and profit. Assuming that the bonus method is used, how much should be credited to Pete's capital account on December 31? a.) $15,400 b.) $17,000 c.) $15,000 d.) $12,000 - a.) $15,400 Cash $ 20,000 Other Assets 180,000 $ 200,000 Liabilities $ 50,000 Alex, Capital (40%) 37,000 Betty, Capital (40%) 65,000 Claire, Capital (20%) 48,000 Total Liabilities and Capital $ 200,000 Fred and Ralph are partners who share profits and losses in the ratio of 7:3, respectively. Their respective capital accounts are as follows: Fred $ 35,000 Ralph 30,000 They agreed to admit Lute as a partner with a one-third interest in the capital and profits and losses upon an investment of $25,000. The new partnership will begin with total capital of $90,000. Immediately after Lute's admission, what are the capital balances of Fred, Ralph, and Lute, respectively? a.) $31,500, $28,500, $30,000 b.) $30,000, $30,000, $30,000 c.) $31,667, $28,333, $30,000d.) $35,000, $30,000, $25,000 - a.) $31,500, $28,500, $30,000 Cash $ 20,000 Other Assets 180,000 $ 200,000 Liabilities $ 50,000 Alex, Capital (40%) 37,000 Betty, Capital (40%) 65,000 Claire, Capital (20%) 48,000 Total Liabilities and Capital $ 200,000 The capital accounts of the partnership of Ella, Nick, and Brandon follow with their respective profit and loss ratios: Ella $ 139,000 (.500 ) Nick 209,000 (.333 ) Brandon 96,000 (.167 ) Tony was admitted to the partnership when he purchased directly, for $132,000, a proportionate interest from Ella and Nick in the partnership's net assets and profits. As a result, Tony acquired a 20 percent interest in the firm's net assets and profits. Assuming that implied goodwill is not to be recorded, what is the combined gain realized by Ella and Nick upon the sale of a portion of their partnership interests to Tony? a. )$62,400 b.) $43,200 c.) $0 d.) $82,000 - b.) $43,200 Cash $ 20,000 Other Assets 180,000 $ 200,000 Liabilities $ 50,000 Alex, Capital (40%) 37,000 Betty, Capital (40%) 65,000 Claire, Capital (20%) 48,000 Total Liabilities and Capital $ 200,000 (Note: Figures shown parenthetically reflect agreed-upon profit and loss-sharing percentages.)Select the correct answer for each of the following questions. 1. If the assets are fairly valued on this balance sheet and the partnership wishes to admit Denise as a new one-sixth-interest partner without recording goodwill or bonus, Denise should contribute cash or other assets of a.) $40,000. b.) $30,000. c.) $36,000. d.) $33,333. - b.) $30,000. Cash $ 20,000 Other Assets 180,000 $ 200,000 Liabilities $ 50,000 Alex, Capital (40%) 37,000 Betty, Capital (40%) 65,000 Claire, Capital (20%) 48,000 Total Liabilities and Capital $ 200,000 Boris and Richard are partners who share profits and losses in the ratio of 6:4. On May 1, 20X9, their respective capital accounts were as follows: Boris $ 60,000 Richard 50,000 On that date, Lisa was admitted as a partner with a one-third interest in capital and profits for an investment of $40,000. The new partnership began with a total capital of $150,000. Immediately after Lisa's admission, Boris's capital should be a.) $56,667. b.) $60,000. c.) $50,000. d.) $54,000. - d.) $54,000. Cash $ 20,000 Other Assets 180,000 $ 200,000Liabilities $ 50,000 Alex, Capital (40%) 37,000 Betty, Capital (40%) 65,000 Claire, Capital (20%) 48,000 Total Liabilities and Capital $ 200,000 (Note: Figures shown parenthetically reflect agreed-upon profit and loss-sharing percentages.) Select the correct answer for each of the following questions. 2. If assets on the initial balance sheet are fairly valued, Alex and Betty give their consent, and Denise pays Claire $51,000 for her interest, the revised capital balances of the partners would be a.) Alex, $37,000; Betty, $65,000; Denise, $48,000. b.) Alex, $38,500; Betty, $66,500; Denise, $48,000. c.) Alex, $38,000; Betty, $66,500; Denise, $51,000. d.) Alex, $37,000; Betty, $65,000; Denise, $51,000. - a.) Alex, $37,000; Betty, $65,000; Denise, $48,000. Cash $ 20,000 Other Assets 180,000 $ 200,000 Liabilities $ 50,000 Alex, Capital (40%) 37,000 Betty, Capital (40%) 65,000 Claire, Capital (20%) 48,000 Total Liabilities and Capital $ 200,000 (Note: Figures shown parenthetically reflect agreed-upon profit and loss-sharing percentages.) Select the correct answer for each of the following questions. 3. On December 31, 20X4, Alan and Dave are partners with capital balances of $80,000 and $40,000, and they share profit and losses in the ratio of 2:1, respectively. On this date, Scott invests $36,000 cash for a 20 percent interest in the capital and profit of thenew partnership. The partners agree that the implied partnership goodwill is to be recorded simultaneously with Scott's admission. The firm's total implied goodwill is a.) $30,000. b.) $24,000. c.) $4,800. d.) $6,000 - b.) $24,000. Certain balance sheet accounts in a foreign subsidiary of Shaw Company on December 31, 20X1, have been restated in U.S. dollars as follows: Restated at Current Rates Historical Rates Accounts Receivable, Current $ 100,000 $ 110,000 Accounts Receivable, Long-Term 50,000 55,000 Prepaid Insurance 25,000 30,000 Patents 40,000 45,000 Total $ 215,000 $ 240,000 What total should be included in Shaw's balance sheet for December 31, 20X1, for these items? a.) $215,000 b.) $230,000 c.) $225,000 d.) $240,000 a.) $230,000 b.) $215,000 c.) $225,000 d.) $240,000 - a.), c.) Cobb Co. purchased merchandise for 300,000 pounds from a vendor in London on November 30, 20X5. Payment in British pounds (£) was due on January 30, 20X6. The exchange rates to purchase 1 pound were as follows: November 30, 20X5 December 31, 20X5 Spot rate $ 1.65 $ 1.62 30-day rate 1.64 1.5960-day rate 1.63 1.56 In its December 31, 20X5, income statement, what amount should Cobb report as a foreign exchange gain? a.) $0 b.) $12,000 c.) $9,000 d.) $6,000 - c.) $9,000 credit-balancing item resulting from the process of restating a foreign entity's financial statement from the local currency unit to U.S. dollars should be included as a(an) Foreign Currency is Functional Currency a.) Deferred credit. b.) Separate component of stockholders' equity. c.) Component of income from continuing operations. d.) Extraordinary item. U.S. Dollar is Functional Currency a.) Deferred credit. b.) Extraordinary item. c.) Separate component of stockholders' equity. d.) Component of income from continuing operations. - b.) Separate component of stockholders' equity, d.) Component of income from continuing operations. Dale Inc., a U.S. company, bought machine parts from a German company on March 1, 20X1, for €30,000, when the spot rate for euros was $0.4895. Dale's year-end was March 31, when the spot rate was $0.4845. On April 20, 20X1, Dale paid the liability with €30,000 acquired at a rate of $0.4945. Dale's income statements should report a foreign exchange gain or loss for the years ended March 31, 20X1 and 20X2 of a.) $0 $0 b.) $0 $150 Loss c.) $150 Loss $0 d.) $150 Gain $300 Loss - d.) $150 Gain $300 LossGate Inc. had a $30,000 credit adjustment for the year ended December 31, 20X2, from restating its foreign subsidiary's accounts from their local currency units into U.S. dollars. Additionally, Gate had a receivable from a foreign customer payable in the customer's local currency. On December 31, 20X1, this receivable for 200,000 local currency units (LCU) was correctly included in Gate's balance sheet at $110,000. When the receivable was collected on February 15, 20X2, the U.S. dollar equivalent was $120,000. In Gate's 20X2 consolidated income statement, how much should be reported as foreign exchange gain in computing net income? LCU is Functional Currency a.) $30,000 b.) $10,000 c.) $0 d.) $40,000. U.S. Dollar is Functional Currency a.) $40,000 b.) $30,000 c.) $10,000 d.) $0 - b.) $10,000, a.) $40,000 If 1 Canadian dollar can be exchanged for 90 cents of U.S. currency, what fraction should be used to compute the indirect quotation of the exchange rate expressed in Canadian dollars? a.) 1/.90 b.) 1.10/1 c.) 1/1.10 d.) 0.90/1 - a.) 1/.90 In a partnership liquidation, the final cash distribution to the partners should be made in accordance with the a.) Ratio of capital contributions less withdrawals by the partners. b.) Ratio of the capital contributions by the partners. c.) Partners' profit and loss-sharing ratio.d.) Balances of the partners' capital accounts. - d.) Balances of the partners' capital accounts. Linser Corporation owns a foreign subsidiary with 2,600,000 local currency units (LCU) of property, plant, and equipment before accumulated depreciation on December 31, 20X4. Of this amount, 1,700,000 LCU were acquired in 20X2 when the rate of exchange was 1.5 LCU = $1, and 900,000 LCU were acquired in 20X3 when the rate of exchange was 1.6 LCU = $1. The rate of exchange in effect on December 31, 20X4, was 1.9 LCU = $1. The weighted average of exchange rates that were in effect during 20X4 was 1.8 LCU = $1. Assuming that the property, plant, and equipment are depreciated using the straight-line method over a 10-year period with no salvage value, how much depreciation expense relating to the foreign subsidiary's property, plant, and equipment should be charged in Linser's income statement for 20X4? (Round your final answers to nearest dollar amount.) Foreign Currency is Functional Currency a.) $162,000 b.) $173,333 c.) $169,583 d.) $144,444 U.S. Dollar is Functional Currency a.) $169,583 b.) $162,000 c.) $144,444 d.) $173,333 - d.) $144,444, a.) $169,583 Marvin Company's receivable from a foreign customer is denominated in the customer's local currency. This receivable of 900,000 LCUs has been translated into $315,000 on Marvin's December 31, 20X5, balance sheet. On January 15, 20X6, the receivable was collected in full when the exchange rate was 3 LCU to $1. The journal entry Marvin should make to record the collection of this receivable is a.) Foreign Currency Units 300,000 Accounts Receivable 300,000 b.) Foreign Currency Units 300,000 Exchange Loss 15,000 Accounts Receivable 315,000c.) Foreign Currency Units 300,000 Deferred Exchange Loss 15,000 Accounts Receivable 315,000 d.) Foreign Currency Units 315,000 Accounts Receivable 315,000 - b.) Foreign Currency Units 300,000 Exchange Loss 15,000 Accounts Receivable 315,000 n April 8, 20X3, Trul Corporation purchased merchandise from an unaffiliated foreign company for 10,000 units of the foreign company's local currency. Trul paid the bill in full on March 1, 20X4, when the spot rate was $0.45. The spot rate was $0.60 on April 8, 20X3, and was $0.55 on December 31, 20X3. For the year ended December 31, 20X4, Trul should report a transaction gain of a.) $1,500. b.) $1,000. c.) $500. d.) $0. - b.) $1,000. On January 1, 20X1, Pat Company formed a foreign subsidiary. On February 15, 20X1, Pat's subsidiary purchased 100,000 local currency units (LCU) of inventory. Of the original inventory purchased on February 15, 20X1, 25,000 LCU made up the entire inventory on December 31, 20X1. The exchange rates were 2.2 LCU = $1 from January 1, 20X1, to June 30, 20X1, and 2 LCU = $1 from July 1, 20X1, to December 31, 20X1. The December 31, 20X1, inventory balance for Pat's foreign subsidiary should be restated in U.S. dollars in the amount of (Round your final answers to nearest dollar amount.) Foreign Currency is Functional Currency a.) $10,500. b.) $12,500. c.) $11,364. d.) $11,905. U.S. Dollar is Functional Currency a.) $12,500.b.) $10,500. c.) $11,364. d.) $11,905. - b.) $12,500, c.) $11,364. On January 1, 20X7, the partners of Casey, Dithers, and Edwards, who share profits and losses in the ratio of 5:3:2, decided to liquidate their partnership. On this date, its condensed balance sheet was as follows: Assets Cash $ 50,000 Inventory 250,000 Total Assets $300,000 Liabilities and Equities Liabiliites $ 60,000 Casey, Capital 80,000 Dithers, Capital 90,000 Edwards, Capital 70,000 Total L & E $ 300,000 On January 15, 20X7, the first cash sale of other assets with a carrying amount of $150,000 realized $120,000. Safe installment payments to the partners were made on the same date. How much cash should be distributed to each partner? C D E A 15,000 51,000 $44,000 B 40,000 45,000 35,000 C 55,000 33,000 22,000 D 60,000 36,000 24,000 a.) Option A b.) Option B c.) Option C d.) Option D - a.) Option A On July 1, 20X1, Black Company lent $120,000 to a foreign supplier, evidenced by an interest-bearing note due on July 1, 20X2. The note is denominated in the borrower's currency and was equivalent to 840,000 LCUs on the loan date. The note principal was appropriately included at $140,000 in the receivables section of Black's December 31, 20X1, balance sheet. The note principal was repaid to Black on the July 1, 20X2, due date when the exchange rate was 8 LCUs to $1. In its income statement for the year ended December 31, 20X2, what amount should Black include as a foreign currency transaction gain or loss on the note principal?a.) $0 b.) $15,000 loss c.) $15,000 gain d.) $35,000 loss - d.) $35,000 loss On July 1, 20X4, Bay Company borrowed 1,680,000 local currency units (LCUs) from a foreign lender evidenced by an interest-bearing note due on July 1, 20X5, which is denominated in the currency of the lender. The U.S. dollar equivalent of the note principal was as follows: Date Amount 7/1/X4 (date borrowed) $ 210,000 12/31/X4 (Bay's year-end) 240,000 7/1/X5 (date repaid) 280,000 In its income statement for 20X5, what amount should Bay include as a foreign exchange gain or loss on the note principal? a.) $ 70,000 gain b.) $ 70,000 loss c.) $ 40,000 gain d.) $ 40,000 loss - d.) $ 40,000 loss On November 15, 20X3, Chow Inc., a U.S. company, ordered merchandise FOB shipping point from a German company for €200,000. The merchandise was shipped and invoiced on December 10, 20X3. Chow paid the invoice on January 10, 20X4. The spot rates for euros on the respective dates were November 15, 20X3 $ 0.4955 December 10, 20X3 0.4875 December 31, 20X3 0.4675 January 10, 20X4 0.4475 In Chow's December 31, 20X3, income statement, the foreign exchange gain is a.) $4,000.b.) $8,000. c.) $1,600. d.) $9,600. - a.) $4,000. On October 1, 20X5, Stevens Company, a U.S. company, contracted to purchase foreign goods requiring payment in pesos one month after their receipt in Stevens's factory. Title to the goods passed on December 15, 20X5. The goods were still in transit on December 31, 20X5. Exchange rates were 1 dollar to 22 pesos, 20 pesos, and 21 pesos on October 1, December 15, and December 31, 20X5, respectively. Stevens should account for the exchange rate fluctuations in 20X5 as a.) A loss included in other comprehensive income. b.) A loss included in income before discontinued operations. c.) A gain included in other comprehensive income. d.) A gain included in income before discontinued operations. - d.) A gain included in income before discontinued operations. On October 2, 20X5, Louis Co., a U.S. company, purchased machinery from Stroup, a German company, with payment due on April 1, 20X6. If Louis's 20X5 operating income included no foreign exchange gain or loss, the transaction could have a.) Resulted in a loss to be included in other comprehensive income. b.) Been denominated in U.S. dollars. c.) Caused a foreign currency translation gain to be reported as a separate component of stockholders' equity. d.) Caused a foreign currency gain to be reported as a contra account against machinery. - b.) Been denominated in U.S. dollars. On September 1, 20X1, Cott Corporation received an order for equipment from a foreign customer for 300,000 LCUs when the U.S. dollar equivalent was $96,000. Cott shipped the equipment on October 15, 20X1, and billed the customer for 300,000 LCUs when the U.S. dollar equivalent was $100,000. Cott received the customer's remittance in full on November 16, 20X1, and sold the 300,000 LCUs for $105,000. In its income statement for the year ended December 31, 20X1, Cott should report a foreign exchange gain of a.) $4,000.b.) $9,000. c.) $5,000. d.) $0. - c.) $5,000. Stees Corporation had the following foreign currency transactions during 20X2. First, it purchased merchandise from a foreign supplier on January 20, 20X2, for the U.S. dollar equivalent of $90,000. The invoice was paid on March 20, 20X2, at the U.S. dollar equivalent of $96,000. Second, on July 1, 20X2, Stees borrowed the U.S. dollar equivalent of $500,000 evidenced by a note that was payable in the lender's local currency on July 1, 20X4. On December 31, 20X2, the U.S. dollar equivalents of the principal amount and accrued interest were $520,000 and $26,000, respectively. Interest on the note is 10 percent per annum. In Stees's 20X2 income statement, what amount should be included as a foreign exchange loss? a.) $0 b.) $6,000 c.) $21,000 d.) $27,000 - d.) $27,000 t what rates should the following balance sheet accounts in the foreign currency financial statements be restated into U.S. dollars? Foreign Currency is Functional Currency Equipment Accumulated Dep a.) Current. Current. b.) Current. Average for year. c.) Historical. Current. d.) Historical. Historical. U.S. Dollar is Functional Currency Equipment Accumulated Dep a.) Current. Current. b.) Current. Average for year. c.) Historical. Current. d.) Historical. Historical. - a.) Current. Current, d.) Historical. Historical.The balance in Simpson Corp.'s foreign exchange loss account was $15,000 on December 31, 20X2, before any necessary year-end adjustment relating to the following: Simpson had a $20,000 debit resulting from the restatement in dollars of the accounts of its wholly owned foreign subsidiary for the year ended December 31, 20X2. Simpson had an account payable to an unrelated foreign supplier, payable in the supplier's local currency on January 27, 20X3. The U.S. dollar equivalent of the payable was $100,000 on the November 28, 20X2, invoice date, and $106,000 on December 31, 20X2. In Simpson's 20X2 consolidated income statement, what amount should be included as foreign exchange loss in computing net income? LCU is Functional Currency a.) $41,000 b.) $15,000 c.) $35,000 d.) $21,000 U.S. Dollar is Functional Currency a.) $41,000 b.) $15,000 c.) $21,000 d.) $35,000 - d.) $21,000, a.) $41,000 The balance sheet for the Art, Blythe, and Cooper Partnership is as follows. Figures shown parenthetically reflect agreed-upon profit and loss-sharing percentages. Assets Cash $ 20,000 Inventory 180,000 Total Assets $200,000 Liabilities and Equities Liabiliites $ 50,000 Casey, Capital 37,000 Dithers, Capital 65,000 Edwards, Capital 48,000 Total L & E $ 200,000 - The balance sheet for the partnership of Joan, Charles, and Thomas, whose shares of profits and losses are 40, 50, and 10 percent, respectively is as follows:Assets Cash $ 50,000 Inventory 360,000 Total Assets $410,000 Liabilities and Equities Accounts Payable $ 150,000 Joan, Capital 160,000 Charles, Capital 45,000 Thomas, Capital 55,000 Total L & E $ 410,000 In accounting for partnership liquidation, cash payments to partners after all creditors' claims have been satisfied but before the final cash distribution should be according to a.) The partners' relative profit and loss-sharing ratios. b.) The final balances in partner capital accounts. c.) The partners' relative share of the gain or loss on liquidations. d.) Safe payments computations. - d.) Safe payments computations. The balance sheet for the partnership of Joan, Charles, and Thomas, whose shares of profits and losses are 40, 50, and 10 percent, respectively is as follows: Assets Cash $ 50,000 Inventory 360,000 Total Assets $410,000 Liabilities and Equities Accounts Payable $ 150,000 Joan, Capital 160,000 Charles, Capital 45,000 Thomas, Capital 55,000 Total L & E $ 410,000 After all noncash assets have been converted into cash in the liquidation of the Adam and Kay Partnership, the ledger contains the following account balances: Debit Credit Cash $ 47,000 Accounts Payable $32,000 Loan Payable to Adam 15,000 Adam, Capital 7,000 Kay, Capital 7,000a.) $7,000 to Adam and $8,000 to Kay. b.) $8,000 to Adam and $7,000 to Kay. c.) $7,500 each to Adam and Kay. d.) $15,000 to the loan payable to Adam. - b.) $8,000 to Adam and $7,000 to Kay. The balance sheet for the partnership of Joan, Charles, and Thomas, whose shares of profits and losses are 40, 50, and 10 percent, respectively is as follows: Assets Cash $ 50,000 Inventory 360,000 Total Assets $410,000 Liabilities and Equities Accounts Payable $ 150,000 Joan, Capital 160,000 Charles, Capital 45,000 Thomas, Capital 55,000 Total L & E $ 410,000 F, A, S, and B are partners sharing profits and losses equally. The insolvent partnership is to be liquidated. The status of the partnership and each partner is as follows: PCB PA PL F $ (15,000 ) $ 100,000 $40,000 A (10,000 ) 30,000 60,000 S 20,000a 80,000 5,000 B 30,000a 1,000 28,000 T $25,000a a = deficit a.) From the personal assets of any of the partners for all or some of their claims. b.) From the partnership, including additional contributions from F and S. c.) From the personal assets of either F or A. d.) From the personal assets of either S or B. - b.) From the partnership, including additional contributions from F and S. The balance sheet for the partnership of Joan, Charles, and Thomas, whose shares of profits and losses are 40, 50, and 10 percent, respectively is as follows:Assets Cash $ 50,000 Inventory 360,000 Total Assets $410,000 Liabilities and Equities Accounts Payable $ 150,000 Joan, Capital 160,000 Charles, Capital 45,000 Thomas, Capital 55,000 Total L & E $ 410,000 F, A, S, and B are partners sharing profits and losses equally. The insolvent partnership is to be liquidated. The status of the partnership and each partner is as follows: Partnership Capital Balance Personal Assets (exclusive of partnership interest) Personal Liabilities (exclusive of partnership interest) PCB PA PL F $ (15,000 ) $ 100,000 $40,000 A (10,000 ) 30,000 60,000 S 20,000a 80,000 5,000 B 30,000a 1,000 28,000 T $25,000a a = deficit a.) Have first claim to the partnership assets before any partner's personal creditors have rights to those assets. b.) Will have to share A's interest in the partnership on a pro rata basis with A's personal creditors. c.) Will not be paid in full regardless of how they proceed legally because the partnership assets are less than its liabilities. d.) Must first seek recovery against S because she is personally solvent and has a negative capital balance. - a.) Have first claim to the partnership assets before any partner's personal creditors have rights to those assets. The balance sheet for the partnership of Joan, Charles, and Thomas, whose shares of profits and losses are 40, 50, and 10 percent, respectively is as follows:Assets Cash $ 50,000 Inventory 360,000 Total Assets $410,000 Liabilities and Equities Accounts Payable $ 150,000 Joan, Capital 160,000 Charles, Capital 45,000 Thomas, Capital 55,000 Total L & E $ 410,000 Assume Charles is insolvent, if the inventory is sold for $180,000, how much should Thomas receive upon liquidation? a.) $55,000 b.) $28,000 c.) $32,500 d.) $37,000 - b.) $28,000 The balance sheet for the partnership of Joan, Charles, and Thomas, whose shares of profits and losses are 40, 50, and 10 percent, respectively is as follows: Assets Cash $ 50,000 Inventory 360,000 Total Assets $410,000 Liabilities and Equities Accounts Payable $ 150,000 Joan, Capital 160,000 Charles, Capital 45,000 Thomas, Capital 55,000 Total L & E $ 410,000 Assume Charles is insolvent, the partnership will be liquidated in installments. As cash becomes available, it will be distributed to the partners. If inventory costing $200,000 is sold for $140,000, how much cash should be distributed to each partner at this time? Joa. Cha. Tho. A. $56,000 $70,000 $14,000 B. $16,000 $20,000 $4,000 C. $32,000 $0 $8,000 D. $20,000 $0 $20,000a.) Option A b.) Option B c.) Option C d.) Option D - d.) Option D The balance sheet for the partnership of Joan, Charles, and Thomas, whose shares of profits and losses are 40, 50, and 10 percent, respectively is as follows: Assets Cash $ 50,000 Inventory 360,000 Total Assets $410,000 Liabilities and Equities Accounts Payable $ 150,000 Joan, Capital 160,000 Charles, Capital 45,000 Thomas, Capital 55,000 Total L & E $ 410,000 Assume Charles is insolvent, if the inventory is sold for $300,000, how much should Joan receive upon liquidation? a.) $100,000 b.) $160,000 c.) $136,000 d.) $48,000 - c.) $136,000 The functional currency of Dahl Inc.'s subsidiary is the European euro. Dahl borrowed euros as a partial hedge of its investment in the subsidiary. In preparing consolidated financial statements, Dahl's debit balance of its translation adjustment exceeded its exchange gain on the borrowing. How should the translation adjustment and the exchange gain be reported in Dahl's consolidated financial statements? a.) The translation adjustment should be reported in the income statement, and the exchange gain should be reported separately in the stockholders' equity section of the balance sheet.b.) The translation adjustment should be netted against the exchange gain, and the excess translation adjustment should be reported in the income statement in computing net income. c.) The translation adjustment is reported as a component of other comprehensive income and then accumulated in the stockholders' equity section of the balance sheet, and the exchange gain should be reported in the income statement in computing net income. d.) The translation adjustment should be netted against the exchange gain, and the excess translation adjustment should be reported in the stockholders' equity section of the balance sheet. - d.) The translation adjustment should be netted against the exchange gain, and the excess translation adjustment should be reported in the stockholders' equity section of the balance sheet. When remeasuring foreign currency financial statements into the functional currency, which of the following items would be remeasured using a historical exchange rate? Bonds payable. a.) Bonds payable b.) Trading securities carried at market values. c.) Accrued liabilities. d.) Inventories carried at cost. - d.) Inventories carried at cost.