ACG 4101 Chapter 4 HW Questions and Answers 2026

ACG 4101 Chapter 4 HW Questions and Answers 2026 1. Which of the following most likely would be classified as restructuring costs? Severance pay for employee layoffs associated with facility closings Lucia Limited reported net income of $137,000 for the year ended December 31, 2024. January 1 balances in accounts receivable and accounts payable were $27,800 and $27,200, respectively. Year-end balances in these accounts were $32,000 and $23,000, respectively. Assuming that all relevant information has been presented, Lucia's cash flows from operating activities would be: $128,600. =4200 =4200 = $128,600 The Compton Press Company reported income before taxes of $250,000. This amount included a $50,000 loss on discontinued operations. The amount reported as income from continuing operations, assuming a tax rate of 25%, is: $225,000 (250,000+50,000) * (1-0.25) = 225,000 Which of the following captions would more likely be found in a multiple-step income statement? Operating income. On May 31, 2024, the Arlene Corporation adopted a plan to sell its cosmetics line of business, considered a component of the entity. The assets of the component were sold on October 13, 2024, for $1,120,000. The component generated operating income of $300,000 from January 1, 2024, through disposal. In its income statement for the year ended December 31, 2024, the company reported before-tax income from operations of a discontinued component of $620,000. What was the book value of the assets of the cosmetics component? $800,000 $1,120,000 - 320,000= $800,000 Of the $620,000 pretax income from discontinued operations, $300,000 was from income from operations. The remaining $320,000 was therefore gain on sale of the assets. If the assets were sold for $1,120,000, their book value must have been $800,000. Capstone Corp. reported $150,000 of comprehensive income for year 8. It also reported the following: Beginning retained earnings $300,000 Income tax expense $60,000 Ending retained earnings $320,000 Cash dividends declared $80,000 Other comprehensive income $50,000 What was Capstone's net income for year 8? 100,000 Earnings per share should be reported for each of the following income statement captions except: Operating income. Which of the following items would not be included as a cash flow from operating activities in a statement of cash flows? Purchase of equipment. Capstone Corp. reported $150,000 of comprehensive income for year 8. It also reported the following: Beginning retained earnings$300,000 Income tax expense$60,000 Ending retained earnings $320,000 Cash dividends declared$80,000 Other comprehensive income$50,000 What was Capstone's net income for year 8? $100,000 300,000 retained earinings -80,000 dividens = 220,000 320,000 ending retained earnings - 220,000 = 100,000 Pandora Corporation operates several factories in the Midwest that manufacture consumer electronics. The December 31, 2024, year-end trial balance contained the following income statement items: Account TitleDebitsCreditsSales revenue $ 13,600,000 Interest revenue 61,000 Loss on sale of investments $ 111,000 Cost of goods sold 6,310,000 Selling expenses 631,000 General and administrative expenses 1,630,000 Interest expense 51,000 Research and development expense 1,310,000 Income tax expense 911,000 Required: Calculate the company's operating income for the year. Operating Revenues: Sales revenue selected answer correct $13,600,000 Total operating revenue 13,600,000 Less operating expenses: Cost of goods sold $6,310,000 Selling expensesselected 6,310,000 General and administrative expenses 1,630,000 Research and development expenses 1,310,000 Total operating expenses 9,881,000 Operating income $3,719,000 The following items appeared in the year-end trial balance for Coffee Bean Company: Debits Credits Revenues $ 600,000 Operating expenses $ 420,000 Income on discontinued operations 200,000 Restructuring costs 100,000 Interest expense 20,000 Gain on sale of investments 30,000 Income tax expense has not yet been accrued. The company's income tax rate is 25%. What amount should be reported in the company's income statement as income from continuing operations after taxes? $67,500 Misty Company reported the following before-tax items during the current year: Sales revenue $ 1,400 Selling and administrative expenses 740 Restructuring charges 20 Loss on discontinued operations 40 Misty's effective tax rate is 25%. What is Misty's net income for the current year? $450 Income from continuing operations before taxes ($1,400 − 740 − 20)$ 640 Income tax expense ($640 × 25%) 160 Income from continuing operations $ 480 Loss on discontinued operations (net of $10 tax benefit)(30) Net income $ 450 Lucia Limited reported net income of $135,100 for the year ended December 31, 2024. January 1 balances in accounts receivable and accounts payable were $28,300 and $26,100, respectively. Year-end balances in these accounts were $30,300 and $22,300, respectively. Assuming that all relevant information has been presented, Lucia's cash flows from operating activities would be: Multiple Choice $129,300. Net income $ 135,100 Subtract increase in Accounts receivable (2,000) Subtract decrease in Accounts payable (3,800) Cash flows from operating activities $ 129,300