In a working paper for combined financial statements of home office and branch, the branch's net income is included in

MULTIPLE CHOICE

1. In a working paper for combined financial statements of home office and branch, the branch's net income is included in: (Points : 1)

2. If both the home office and the branch of a business enterprise use the perpetual inventory system, a Shipments to Branch ledger account appears in the accounting records of: (Points : 1)

3. The following journal entry (explanation omitted) appeared in the accounting records of Marty Corporation's only branch:
Operating Expenses 600,000
Home Office 600,000
The journal entry indicates that: (Points : 1)

4. Direct out-of-pocket costs of a business combination that are part of the cost of the combinee do not include: (Points : 1)

5. The Income: Branch ledger account is maintained in the accounting records of: (Points : 1)

6. In a business combination, the appropriate accounting for an excess of current fair values the combinee's identifiable net assets over the combinor's cost is to: (Points : 1)

7. The Shipments to Branch ledger account in the accounting records of the home office of a business enterprise: (Points : 1)

8. The business enterprises that enter into a business combination are termed the: (Points : 1)

9. If at the end of an accounting period the balance of the Investment in Branch ledger account in the accounting records of the home office is $20,000 and the balance of the Home Office account in the accounting records of the branch (after the branch recorded closing entries) is $25,500, the most likely explanation for the discrepancy of $5,500 is a: (Points : 1)

10. The Home Office ledger account in the accounting records of a branch is best described as: (Points : 1)


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PB4-4 Learn to Play December 31, 2010

PB4-4 Learn to Play December 31, 2010
Account names Debit Credit
Cash $23,800 as reported on December 31 bank statement
Supplies 300 based on count only $200 supplies still exist
Unearned revenue $1,500 of this amount, $500 received in December lessons and $1,000 for January
Lessons
Wages Payable 0 employee paid $500 for 10 days as of 12/28 not pd 12/29-12/30
Income tax payable 0 paid last year not this year yet
Interest payable 0 paid $100 interest owed on note payable for current period
Notes payable $12,000 one-year note taken out December 1
Contributed capital 1,000 contributed in prior years
Retained earnings 3,000 balance reported at the end of last year
Lesson revenue 25,500 cash when provided, but some customers paid in advance
Wage Expense 18,100 work through December 30, but didn’t work 12/31

Supplies Expense 800 cost of supplies used through November 30
Interest Expense 0 the company hasn’t paid $100 interest owed on the note payable for the current period
Income Tax expense 0
Totals $43,000 $43,000

REQUIRED
Calculate the (preliminary) unadjusted net income for the year ending December 31,2010

Prepare adjusting journal entries that are required at December 31,2010

Calculate the adjusted net income that the company should report for the year ending December 31,2010. By how much did the adjustments in requirement (4) cause net income to increase or decrease?

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Benjamin O'Henry has owned and operated O'Henry's Data Services since its beginning ten years ago

Benjamin O'Henry has owned and operated O'Henry's Data Services since its beginning ten years ago. From all appearances, the business has prospered. In the past few years, you have become friends with O'Henry and his wife. Recently, O'Henry mentioned that he has lost his zest for the business and would consider selling it for the right price. You are interested in buying this business, and you obtain its most recent monthly unadjusted trial balance which follows:
O'Henry's Data Services

Unadjusted Trial Balance

November 30, 20XX
Cash………………………………     $9,700     
Accounts receivable………………………     7,900      
Prepaid expenses…………     2,600     
Furniture, fixtures, & equipment     151,300     
Accumulated depreciation          $15,600
Accounts payable…………          3,800
Salary payable………………          
Unearned service revenue          6,700
Benjamin O'Henry, capital          137,400
Benjamin O'Henry, withdrawals     2,000     
Service revenue…………          14,300
Rent expense……………          
Salary expense…………     3,400     
Utilities expense………     900     
Depreciation expense          
Supplies expense……          
Total………………………………………….      $177,800     $177,800
Revenues and expenses vary little from month to month, and November is a typical month. Your investigation reveals that the unadjusted trial balance does not include the effects of monthly revenues of $2,100 and monthly expenses totaling $2,750. If you were to buy O'Henry's Data Services, you would hire a manager who would require a monthly salary of $3,000.
The most you would pay for the business is 20 times the monthly net income you could expect to earn from it. Compute this possible price. The least O'Henry will take for the business is his ending capital. Compute this amount. Under these conditions, how much should you offer O'Henry? Give your reason.

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