Question

12) Lee Limited began operations on January 1, 2010. The following data relate to the company's first 2 years in business: Reported Amount Correct Amount Inventory December 31, 2010 25,000 20,000 December 31, 2011 35,000 30,000 Cost of goods sold For 2010 400,000 ?????? For 2011 450,000 ?????? What is the correct cost of goods sold amount for 2011? A) $400,000 B) $405,000 C) $450,000 D) $460,000

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12) Answer is Option C) $450,000 $450,000 Cost of goods sold for 2011 Less: Difference in opening stock of 2011 -$5,000 $455,000 -$5,000 $450,000 Add: Difference in closing stock of 2011 Corrected Cost of Goods sold 13) Answer is Option C) $14,600 Net cash from Operating activities Net Income Depreciation expense Amortization expense Net cash from Operating activities $11,600 $2,000 non cash expense $1,000 non cash expense $14,600 14) Answer is Option D) $9,000 Cost of Asset Less: Accumulated depreciation Book value Add: Gain on sale of equipment Cash from sale of assets $20,000 $16,000 $4,000 $5,000 $9,000 15) Answer is Option A) $10,000 Net Income for 2011 Add: Increase in closing stock value $1,000,000 $30,000 $1,030,000 $20,000 $1,010,000 $10,000 Less: Decrease in opening stock value Difference-Income understated