What in Accounting Treatment on Prior Period Items
1) Explain where in each of the following items should appear in the financial statements of a corporation:
a) the accounting departs discovered that an entry was made last year to Prepaid Insurance instead of to Insurance Expense. The after-tax effect of the charge to Prepaid Insurance was $11,000
b) the company grants five of its employees the option to purchase 100 shares of it $5 par value common stock at it current market price of $20 per share anytime with the next five years. None of the employees exercised the options in the current year.
2) Clark Corporation purchased 40% of IT Corp for 125,000 on Jan 1. On May 20 of the same year, IT Corp declared total cash dividends of $30,000. At year-end, IT Corp reported net income of $150, 000. The balance on Clark Corp's long-term investment in IT Corp account as of Dec 31 should be:
a) 77,000
b) 125,000
c) 173,000
d) 197,000
e) 370,000
3) The blue fin Partnership agrees to dissolve. The cash balance after selling all assets and paying all liabilities is 60,000. The final capital account balances are: Smith 35,000; Nagy 29,000; and Russ (4000.00). Russ is unable to pay the capital deficiency. Prepare the journal entries to record the transaction required to dissolve the partnership