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4- On Dec. 31, 2006, X Inc. signed an operating lease for a warehouse for 10
years at $ 24,000 per year. Upon execution of the lease, X paid $ 48,000
covering rent for the first two years. How much should be shown in X's
income statement for the year ended Dec. 31, 2006, as rent expense?
a. $ 0 b. $ 24,000 c. $ 48,000 d. $ 72,000
Q4. (8 Points)
Year AC Method FIFO Method LIFO Method
2004 33,000 30,000 21,000
2005 27,000 28,000 24,000
2006 30,000 34,000 26,000
Management is contemplating a change in inventory methods for 2007.
Required:
- Prepare the journal entry necessary to record.
A- A change from AC method to the FIFO method.
B- A change from FIFO method to the AC method.
C- A change from LIFO method to the AC method.
D- A change from LIFO method to the FIFO method.
JUAREZ COMPANY
Income Statement for the year ended 31, 2005
Revenues $ 975,000
Cost of goods sold $ 660,000
Operating expenses (excluding
176,000
depreciation)
Depreciation expense 18,000
Loss on sale of store equipment 1,000 855,000
Income before income taxes 120,000
Income tax expense 36,000
Net Income $ 84,000
Additional information
1- In 2005, the company declared and paid $ 32,000 cash dividend.
2- Bonds were issued at face value for $ 130,000 in cash.
3- Equipment costing $ 180,000 was purchased for cash.
4- Equipment costing $ 20,000 was sold for $ 17,000 cash when the book value of
the equipment was $ 18,000.
5- Common stock of $ 60,000 was issued to acquire land.
Required:
Prepare a statement of cash flows using the direct method.
GOOD LUCK