problems

Advanced Accounting Problems	Professor Tauber
Cash and Investments	Spring 2003

1. (CPA 577 I-22)
Davis Corporation had the following transactions in its first year of operations:

Sales (90% collected in first year)
Bad debt write-of fs
Disbursements for costs and expenses
Disbursements for income taxes
Purchases of fixed assets
Depreciation on fixed assets
Proceeds from issuance of common stock
Proceeds from short-term borrowings
Payments on short-term borrowings

$1,500,000
60,000
1,200,000
90,000
400,000
80,000
500,000
100,000
50,000

What is the cash balance at December 31 of the first year?

(A) $150,000
(B) $170,000
(C) $210,000
(D) $280,000

2. (CPA 1189 II-1)
Ral Corp.'s checkbook balance on December 31,1988 was $5,000. In
addition, Ral held the following items in its safe on that date:

Check payable to Ral Corp., dated January 2,

1989, in payment of a sale made in December

1988, not included in December 31 checkbook

balance $2,000

Check payable to Ral Corp., deposited

December 15 and included in December 31

checkbook balance, but returned by Bank on

December 30 stamped "NSF." The check was

redeposited on January 2, 1989 and cleared

on January 9. 500

Check drawn on Ral Corp. 's account, payable to

a vendor, dated and recorded in Ral's books on

December 31 but not mailed until January 10,

1989 300

The proper amount to be shown as Cash on Ral's balance sheet at December 31, 1988 is

(A) $4,800
(B) $5,300
(C) $6,500
(D) $6,800

3. (PUBLISHER)
Investments in equity securities that have readily determinable fair values
may be classified as

I. Available-for-sale securities
II. Held-to-maturity securities
III. Trading securities

(A) I only.

(B) I and II only.

(C) I and III only.

(D) I, II, and III.

4. (PUBLISHER)

Investments in debt securities should be classified as held-to-maturity

securities if the reporting entity has the

Ability to Intent to

Hold to Maturity Hold to Maturity

(A) Yes Yes

(B) Yes No

(C) No Yes

(D) No No

5. (CHA 1293 2-3)

Investment in trading securities should be valued on the statement of

financial position at

(A) Acquisition cost.

(B) Lower of cost or market for the portfolio.

(C) Lower of cost or market for individual securities.

(D) Pair value.

6. (CMA 1293 2-4)

Investments in available-for-sale securities should be valued on the

statement of financial position at

(A) Acquisition cost.

(B) Lower of cost or market for the portfolio.

(C) Lower of cost or market for individual securities.

(D) Fair value.

7. (PUBLISHER)

Investments in debt securities classified as held-to-maturity securities

should be valued at

(A) Acquisition cost.

(B) Amortized cost.

(C) Lower of cost or market.