CPA FAR Practice Exam 3

Dunn Corp. is preparing its Year 1 balance sheet. The following issues were identified during the review:<br/>1. A $50,000 check received from a customer on December 30, Year 1, was not recorded until January 2, Year 2.<br/>2. Inventory valued at $35,000, shipped FOB shipping point by a vendor on December 28, Year 1, was received on January 4, Year 2, and was excluded from Year 1 ending inventory.<br/>3. A $20,000 check written to a vendor on December 29, Year 1, was mailed on January 3, Year 2, but was recorded as a cash disbursement in Year 1.<br/><br/>What is the net effect of correcting these errors on Dunn's Year 1 Current Assets?

On October 1, Year 1, Host Co. approved a plan to dispose of a component of its business. The disposal meets the criteria for discontinued operations. The component was sold on January 15, Year 2. <br/>For the year ended December 31, Year 1, the component had:<br/>- Operating loss (pre-tax): $300,000<br/>- Estimated costs to sell: $50,000<br/>- Carrying amount of net assets: $2,000,000<br/>- Fair value of net assets: $1,600,000<br/><br/>The effective tax rate is 25%. What amount should Host report as the Loss from Discontinued Operations in its Year 1 Income Statement?

Selected financial information for Zeno Corp. for the year ended December 31, Year 1:<br/>- Cost of Goods Sold: $800,000<br/>- Inventory balance increase: $50,000<br/>- Accounts Payable balance decrease: $20,000<br/><br/>Using the direct method, what amount of cash was paid to suppliers for inventory in Year 1?

Parch Co. owns 80% of Scribe Inc. During Year 1, Parch sold inventory to Scribe for $500,000. The cost of the inventory to Parch was $350,000. At December 31, Year 1, 40% of this inventory remained in Scribe's warehouse. <br/>Both companies have a 30% tax rate. What amount of unrealized gross profit must be eliminated from the consolidated inventory balance at December 31, Year 1?

A company had the following equity transactions in Year 1:<br/>- Jan 1: 100,000 shares outstanding.<br/>- Apr 1: Issued 20,000 shares.<br/>- July 1: Declared and issued a 10% stock dividend.<br/>- Oct 1: Purchased 12,000 shares as treasury stock.<br/><br/>What is the weighted average number of shares outstanding (WASO) for Year 1?