ACCOUNTING
Assignment Type: Individual Project Deliverable Length: 2-3 paragraphs
Points Possible: 125
Les Fleurs, a boutique in Paris, France, had the following accounts in its accounting records at December 31, 20X2 (amounts in Euros, denoted as "E")
Purchases………………... E250,000
Freight In……………… E8,000
Sales discounts…………. 4,000
Purchase returns…….. 7,000
Inventory Sales…………………. 400,000
December 31, 20X1….. 20,000
Purchase discounts…. 3,000
December 31, 20X2….. 30,000
Sales returns…………. 8,000
Administrative Expenses 20,000
Balance Sheet - December 31, 20X1
Cash 10,000
Inventory 20,000
Owner's Equity 30,000
Compute the following for Les Fleurs during 20X2: (Do not convert the figures to US dollars.)
1. Net sales revenue
2. Cost of goods sold
3. Gross profit
4. Net income
5. Balance sheet, December 31, 20X2
6. Statement of Owner's Equity, December 31, 20X2
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Tuesday, July 20, 2010
Doug Maltbee formed a lawn service business as a summer job
ACCOUNTING
Assignment Type: Group Project Deliverable Length: Income Statement, Balance Sheet, and paragraph
Points Possible: 150
Group Project
Doug Maltbee formed a lawn service business as a summer job. To start the business on May 1, he deposited $1,000 in a new bank account in the name of the proprietorship. The $1,000 consisted of a $600 loan from his father and $400 of his own money. Doug rented lawn equipment, purchased supplies, and hired fellow students to mow and trim his customer's lawns.
At the end of each month, Doug mailed bills to his customers. On August 31, he was ready to dissolve the business and return to Louisiana State University for the fall semester. Because he was so busy, he kept few records other than his checkbook and a list of amounts owed to him by customers.
At August 31, Doug's checkbook shows a balance of $690, and his customers still owe him $500. During the summer, he collected $4,250 from customers. His checkbook lists payments for supplies totaling $400, and he still has gasoline, weedeater cord, and other supplies that cost a total of $50. He paid his employees $1,900, and he still owes them $200 for the final week of the summer.
Doug rented some equipment from Scholes Machine Shop. On May 1, he signed a six-month lease on mowers and paid $600 for the full lease period. Scholes will refund the unused potion of the prepayment if the equipment is in good shape. To get the refund, Doug has kept the mower in excellent condition. In fact, he had to pay $300 to repair a mower.
To transport employees and equipment to jobs, Doug used a trailer that he bought for $300. He figures that the summer's work used up one-third of the trailer's service potential. The business checkbook lists a payment of $460 for cash withdrawals by Doug during the summer. Doug paid his father back during August.
As a team, prepare the income statement of Maltbee Lawn Service for the four months May through August. Prepare the classified balance sheet of Maltbee Lawn Service at August 31.
Next, as a small group discuss the following. Was Maltbee's summer work successful? Give the reason for your answer. What are the steps in the accounting cycle?
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Assignment Type: Group Project Deliverable Length: Income Statement, Balance Sheet, and paragraph
Points Possible: 150
Group Project
Doug Maltbee formed a lawn service business as a summer job. To start the business on May 1, he deposited $1,000 in a new bank account in the name of the proprietorship. The $1,000 consisted of a $600 loan from his father and $400 of his own money. Doug rented lawn equipment, purchased supplies, and hired fellow students to mow and trim his customer's lawns.
At the end of each month, Doug mailed bills to his customers. On August 31, he was ready to dissolve the business and return to Louisiana State University for the fall semester. Because he was so busy, he kept few records other than his checkbook and a list of amounts owed to him by customers.
At August 31, Doug's checkbook shows a balance of $690, and his customers still owe him $500. During the summer, he collected $4,250 from customers. His checkbook lists payments for supplies totaling $400, and he still has gasoline, weedeater cord, and other supplies that cost a total of $50. He paid his employees $1,900, and he still owes them $200 for the final week of the summer.
Doug rented some equipment from Scholes Machine Shop. On May 1, he signed a six-month lease on mowers and paid $600 for the full lease period. Scholes will refund the unused potion of the prepayment if the equipment is in good shape. To get the refund, Doug has kept the mower in excellent condition. In fact, he had to pay $300 to repair a mower.
To transport employees and equipment to jobs, Doug used a trailer that he bought for $300. He figures that the summer's work used up one-third of the trailer's service potential. The business checkbook lists a payment of $460 for cash withdrawals by Doug during the summer. Doug paid his father back during August.
As a team, prepare the income statement of Maltbee Lawn Service for the four months May through August. Prepare the classified balance sheet of Maltbee Lawn Service at August 31.
Next, as a small group discuss the following. Was Maltbee's summer work successful? Give the reason for your answer. What are the steps in the accounting cycle?
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Benjamin O'Henry has owned and operated O'Henry's Data Services since its beginning ten years ago
ACCOUNTING
Assignment Type: Individual Project Deliverable Length: 2-3 paragraphs
Points Possible: 125
Benjamin O'Henry has owned and operated O'Henry's Data Services since its beginning ten years ago. From all appearances, the business has prospered. In the past few years, you have become friends with O'Henry and his wife. Recently, O'Henry mentioned that he has lost his zest for the business and would consider selling it for the right price. You are interested in buying this business, and you obtain its most recent monthly unadjusted trial balance which follows:
O'Henry's Data Services Unadjusted Trial Balance November 30, 20XX
Cash……………………………… $9,700
Accounts receivable……………………… 7,900
Prepaid expenses………… 2,600
Furniture, fixtures, & equipment 151,300
Accumulated depreciation $15,600
Accounts payable………… 3,800
Salary payable………………
Unearned service revenue 6,700
Benjamin O'Henry, capital 137,400
Benjamin O'Henry, withdrawals 2,000
Service revenue………… 14,300
Rent expense……………
Salary expense………… 3,400
Utilities expense……… 900
Depreciation expense
Supplies expense……
Total…………………………………………. $177,800 $177,800
Revenues and expenses vary little from month to month, and November is a typical month. Your investigation reveals that the unadjusted trial balance does not include the effects of monthly revenues of $2,100 and monthly expenses totaling $2,750. If you were to buy O'Henry's Data Services, you would hire a manager who would require a monthly salary of $3,000.
The most you would pay for the business is 20 times the monthly net income you could expect to earn from it. Compute this possible price. The least O'Henry will take for the business is his ending capital. Compute this amount. Under these conditions, how much should you offer O'Henry? Give your reason.
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Assignment Type: Individual Project Deliverable Length: 2-3 paragraphs
Points Possible: 125
Benjamin O'Henry has owned and operated O'Henry's Data Services since its beginning ten years ago. From all appearances, the business has prospered. In the past few years, you have become friends with O'Henry and his wife. Recently, O'Henry mentioned that he has lost his zest for the business and would consider selling it for the right price. You are interested in buying this business, and you obtain its most recent monthly unadjusted trial balance which follows:
O'Henry's Data Services Unadjusted Trial Balance November 30, 20XX
Cash……………………………… $9,700
Accounts receivable……………………… 7,900
Prepaid expenses………… 2,600
Furniture, fixtures, & equipment 151,300
Accumulated depreciation $15,600
Accounts payable………… 3,800
Salary payable………………
Unearned service revenue 6,700
Benjamin O'Henry, capital 137,400
Benjamin O'Henry, withdrawals 2,000
Service revenue………… 14,300
Rent expense……………
Salary expense………… 3,400
Utilities expense……… 900
Depreciation expense
Supplies expense……
Total…………………………………………. $177,800 $177,800
Revenues and expenses vary little from month to month, and November is a typical month. Your investigation reveals that the unadjusted trial balance does not include the effects of monthly revenues of $2,100 and monthly expenses totaling $2,750. If you were to buy O'Henry's Data Services, you would hire a manager who would require a monthly salary of $3,000.
The most you would pay for the business is 20 times the monthly net income you could expect to earn from it. Compute this possible price. The least O'Henry will take for the business is his ending capital. Compute this amount. Under these conditions, how much should you offer O'Henry? Give your reason.
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The proprietors of two businesses, L.L. Sams Company and Melinda Garcia Career Services, have sought business loans from you
ACCOUNTING
Assignment Type: Individual Project Deliverable Length: 2-3 paragraphs
Points Possible: 125
The proprietors of two businesses, L.L. Sams Company and Melinda Garcia Career Services, have sought business loans from you. To decide whether to make the loans, you have requested their balance sheets. Click Unit 1 Balance sheets to view.
Solely on the basis of these balance sheets, to which entity would you be more comfortable lending money? Explain fully, citing specific items such as the accounting equation and amounts from the balance sheets. In addition to balance sheet data, what other information would you require? Be specific.
Click here for the SOLUTION
Assignment Type: Individual Project Deliverable Length: 2-3 paragraphs
Points Possible: 125
The proprietors of two businesses, L.L. Sams Company and Melinda Garcia Career Services, have sought business loans from you. To decide whether to make the loans, you have requested their balance sheets. Click Unit 1 Balance sheets to view.
Solely on the basis of these balance sheets, to which entity would you be more comfortable lending money? Explain fully, citing specific items such as the accounting equation and amounts from the balance sheets. In addition to balance sheet data, what other information would you require? Be specific.
Click here for the SOLUTION
Currently,the unit selling price of a product is $280, the unit variable cost is $230, and the total fixed costs are $525,000
ACCOUNTING
Warren, Reeve and Duchac
Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 21
EX 21-13 Currently,the unit selling price of a product is $280, the unit variable cost is $230, and the total fixed costs are $525,000. A proposal is being evaluated to increase the unit selling price to $300.
a. Compute the current break-even sales (units).
b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant.
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Warren, Reeve and Duchac
Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 21
EX 21-13 Currently,the unit selling price of a product is $280, the unit variable cost is $230, and the total fixed costs are $525,000. A proposal is being evaluated to increase the unit selling price to $300.
a. Compute the current break-even sales (units).
b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant.
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Monday, July 19, 2010
Advanced Accounting: Chapter 4 E4-5 General Questions
BA 459
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 4
Exercise 4-5 (E4-5)
General questions on statement of cash flows
1. In preparing a statement of cash flows, the cost of acquiring a subsidiary is reported:
2. In computing cash flows from operating activities under the direct method, the following item is an addition:
3. In computing cash flows from operating activities under the indirect method, the following item is an addition to consolidated net income:
4. In computing cash flows from operating activities under the direct method, the following item is an addition:
5. Dividends paid as presented in a consolidated cash flow statement are:
Click here for the SOLUTION
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 4
Exercise 4-5 (E4-5)
General questions on statement of cash flows
1. In preparing a statement of cash flows, the cost of acquiring a subsidiary is reported:
2. In computing cash flows from operating activities under the direct method, the following item is an addition:
3. In computing cash flows from operating activities under the indirect method, the following item is an addition to consolidated net income:
4. In computing cash flows from operating activities under the direct method, the following item is an addition:
5. Dividends paid as presented in a consolidated cash flow statement are:
Click here for the SOLUTION
Advanced Accounting: Chapter 4 E4-3 General Questions
BA 459
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 4
Exercise 4-3 (E4-3)
General Problems
1. Peggy Corporation owns a 70% interest in Sandy Corporation, acquired several years ago at book value. On December 31, 2006, Sandy mailed a check for $10,000 to Peggy in part payment of a $20,000 account with Peggy. Peggy had not received the check when its books were closed on December 31. Peggy Corporation had accounts receivable of $150,000 (including the $20,000 from Sandy), and Sandy had accounts receivable at $220,000 at year-end. In the consolidated balance sheet of Peggy Corporation and Subsidiary at December 31, 2006, accounts receivable will be shown in the amount of:
Use the following information in answering questions 2 and 3.
Primrose Corporation purchased a 70% interest in Starman Corporation on January 1, 2006, for $15,000, when Starman’s stockholders’ equity consisted of $3,000 common stock, $10,000 additional paid-in capital, and $2,000 retained earnings. Income and dividend information for Starman for 2006, 2007, and 2008 is as follows:
2006 2007 2008
Net income (or loss) $1,000 $200 $(500)
Dividends 400 100 —
2. Primrose reported separate income of $12,000 for 2008. Consolidated net income for 2008 is:
3. Primrose’s Investment in Starman balance at December 31, 2008, under the equity method is:
Click here for the SOLUTION
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 4
Exercise 4-3 (E4-3)
General Problems
1. Peggy Corporation owns a 70% interest in Sandy Corporation, acquired several years ago at book value. On December 31, 2006, Sandy mailed a check for $10,000 to Peggy in part payment of a $20,000 account with Peggy. Peggy had not received the check when its books were closed on December 31. Peggy Corporation had accounts receivable of $150,000 (including the $20,000 from Sandy), and Sandy had accounts receivable at $220,000 at year-end. In the consolidated balance sheet of Peggy Corporation and Subsidiary at December 31, 2006, accounts receivable will be shown in the amount of:
Use the following information in answering questions 2 and 3.
Primrose Corporation purchased a 70% interest in Starman Corporation on January 1, 2006, for $15,000, when Starman’s stockholders’ equity consisted of $3,000 common stock, $10,000 additional paid-in capital, and $2,000 retained earnings. Income and dividend information for Starman for 2006, 2007, and 2008 is as follows:
2006 2007 2008
Net income (or loss) $1,000 $200 $(500)
Dividends 400 100 —
2. Primrose reported separate income of $12,000 for 2008. Consolidated net income for 2008 is:
3. Primrose’s Investment in Starman balance at December 31, 2008, under the equity method is:
Click here for the SOLUTION
Advanced Accounting: Chapter 4 E4-1 General Questions
BA 459
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 4
Exercise 4-1 (E4-1)
General questions
1. Working paper entries normally:
2. Working paper techniques assume nominal accounts are:
3. Most errors made in consolidating financial statements will appear when:
4. Net income on consolidation working papers is:
5. On consolidation working papers, individual stockholders’ equity accounts of a subsidiary are:
6. On consolidation working papers, investment income from a subsidiary is:
7. On consolidation working papers, the investment in consolidated subsidiary account balances are:
8. On consolidation working papers, consolidated net income is determined by:
9. On consolidation working papers, consolidated end-of-the-period retained earnings is determined by:
10. Under the trial balance approach to consolidation working papers, which of the following is used?
Click here for the SOLUTION
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 4
Exercise 4-1 (E4-1)
General questions
1. Working paper entries normally:
2. Working paper techniques assume nominal accounts are:
3. Most errors made in consolidating financial statements will appear when:
4. Net income on consolidation working papers is:
5. On consolidation working papers, individual stockholders’ equity accounts of a subsidiary are:
6. On consolidation working papers, investment income from a subsidiary is:
7. On consolidation working papers, the investment in consolidated subsidiary account balances are:
8. On consolidation working papers, consolidated net income is determined by:
9. On consolidation working papers, consolidated end-of-the-period retained earnings is determined by:
10. Under the trial balance approach to consolidation working papers, which of the following is used?
Click here for the SOLUTION
Sunday, July 18, 2010
Advanced Accounting: Chapter 3 E3-3 General Questions
BA 459
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 3
Exercise 3-3 (E3-3)
[AICPA adapted] General problems
Use the following information in answering questions 1 and 2:
Apex Company acquired 70% of the outstanding stock of Nadir Corporation. The separate balance sheet of Apex immediately after the acquisition and the consolidated balance sheet are as follows:
Apex Consolidated
Current assets $106,000 $146,000
Investment in Nadir—cost 100,000 —
Goodwill — 8,100
Fixed assets—net 270,000 370,000
$476,000 $524,100
Current liabilities $ 15,000 $ 28,000
Capital stock 350,000 350,000
Minority interest — 35,100
Retained earnings 111,000 111,000
$476,000 $524,100
Of the excess payment for the investment in Nadir, $10,000 was ascribed to undervaluation of its fixed assets. The balance of the excess payment was ascribed to goodwill. Current assets of Nadir included a $2,000 receivable from Apex, which arose before they became related on an ownership basis. The following two items relate to Nadir’s separate balance sheet prepared at the time Apex acquired its 70% interest in Nadir.
1. What was the total of the current assets on Nadir’s separate balance sheet immediately before Apex acquired its 70% interest?
2. What was the total stockholders’ equity on Nadir’s separate balance sheet at the time Apex acquired its 70% interest?
3. Cobb Company’s current receivables from affiliated companies at December 31, 2006, are (1) a $75,000 cash advance to Hill Corporation (Cobb owns 30% of the voting stock of Hill and accounts for the investment by the equity method), (2) a receivable of $260,000 from Vick Corporation for administrative and selling services (Vick is 100% owned by Cobb and is included in Cobb’s consolidated financial statements), and (3) a receivable of $200,000 from Ward Corporation for merchandise sales on credit (Ward is a 90%-owned, unconsolidated subsidiary of Cobb accounted for by the equity method). In the current assets section of its December 31, 2006, consolidated balance sheet, Cobb should report accounts receivable from investees in the amount of:
Use the following information in answering questions 4 and 5:
On January 1, 2006, Owen Corporation purchased all of Sharp Corporation’s common stock for $1,200,000. On that date, the fair values of Sharp’s assets and liabilities equaled their carrying amounts of $1,320,000 and $320,000, respectively. Owen’s policy is to amortize intangibles other than goodwill over 10 years. During 2006, Sharp paid cash dividends of $20,000.
Selected information from the separate balance sheets and income statements of Owen and Sharp as of December 31, 2006, and for the year then ended follows (in thousands):
Owen Sharp Balance Sheet Accounts
Investment in subsidiary $1,320 —
Retained earnings 1,240 $ 560
Total stockholders’ equity 2,620 1,120
Income Statement Accounts
Operating income $ 420 $ 200
Equity in earnings of Sharp 140 —
Net income 400 140
4. In Owen’s 2006 consolidated income statement, what amount should be reported for amortization of goodwill?
5. In Owen’s December 31, 2006, consolidated balance sheet, what amount should be reported as total retained earnings?
6. Wright Corporation has several subsidiaries that are included in its consolidated financial statements. In its December 31, 2006, trial balance, Wright had the following intercompany balances before eliminations:
Debit Credit
Current receivable due from Main Co. $ 32,000
Noncurrent receivable from Main 114,000
Cash advance from Corn Corp. 6,000
Cash advance from King Co. $ 15,000
Intercompany payable to King 101,000
7. In its December 31, 2006, consolidated balance sheet, what amount should Wright report as intercompany receivables?
Click here for the SOLUTION
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 3
Exercise 3-3 (E3-3)
[AICPA adapted] General problems
Use the following information in answering questions 1 and 2:
Apex Company acquired 70% of the outstanding stock of Nadir Corporation. The separate balance sheet of Apex immediately after the acquisition and the consolidated balance sheet are as follows:
Apex Consolidated
Current assets $106,000 $146,000
Investment in Nadir—cost 100,000 —
Goodwill — 8,100
Fixed assets—net 270,000 370,000
$476,000 $524,100
Current liabilities $ 15,000 $ 28,000
Capital stock 350,000 350,000
Minority interest — 35,100
Retained earnings 111,000 111,000
$476,000 $524,100
Of the excess payment for the investment in Nadir, $10,000 was ascribed to undervaluation of its fixed assets. The balance of the excess payment was ascribed to goodwill. Current assets of Nadir included a $2,000 receivable from Apex, which arose before they became related on an ownership basis. The following two items relate to Nadir’s separate balance sheet prepared at the time Apex acquired its 70% interest in Nadir.
1. What was the total of the current assets on Nadir’s separate balance sheet immediately before Apex acquired its 70% interest?
2. What was the total stockholders’ equity on Nadir’s separate balance sheet at the time Apex acquired its 70% interest?
3. Cobb Company’s current receivables from affiliated companies at December 31, 2006, are (1) a $75,000 cash advance to Hill Corporation (Cobb owns 30% of the voting stock of Hill and accounts for the investment by the equity method), (2) a receivable of $260,000 from Vick Corporation for administrative and selling services (Vick is 100% owned by Cobb and is included in Cobb’s consolidated financial statements), and (3) a receivable of $200,000 from Ward Corporation for merchandise sales on credit (Ward is a 90%-owned, unconsolidated subsidiary of Cobb accounted for by the equity method). In the current assets section of its December 31, 2006, consolidated balance sheet, Cobb should report accounts receivable from investees in the amount of:
Use the following information in answering questions 4 and 5:
On January 1, 2006, Owen Corporation purchased all of Sharp Corporation’s common stock for $1,200,000. On that date, the fair values of Sharp’s assets and liabilities equaled their carrying amounts of $1,320,000 and $320,000, respectively. Owen’s policy is to amortize intangibles other than goodwill over 10 years. During 2006, Sharp paid cash dividends of $20,000.
Selected information from the separate balance sheets and income statements of Owen and Sharp as of December 31, 2006, and for the year then ended follows (in thousands):
Owen Sharp Balance Sheet Accounts
Investment in subsidiary $1,320 —
Retained earnings 1,240 $ 560
Total stockholders’ equity 2,620 1,120
Income Statement Accounts
Operating income $ 420 $ 200
Equity in earnings of Sharp 140 —
Net income 400 140
4. In Owen’s 2006 consolidated income statement, what amount should be reported for amortization of goodwill?
5. In Owen’s December 31, 2006, consolidated balance sheet, what amount should be reported as total retained earnings?
6. Wright Corporation has several subsidiaries that are included in its consolidated financial statements. In its December 31, 2006, trial balance, Wright had the following intercompany balances before eliminations:
Debit Credit
Current receivable due from Main Co. $ 32,000
Noncurrent receivable from Main 114,000
Cash advance from Corn Corp. 6,000
Cash advance from King Co. $ 15,000
Intercompany payable to King 101,000
7. In its December 31, 2006, consolidated balance sheet, what amount should Wright report as intercompany receivables?
Click here for the SOLUTION
Advanced Accounting: Chapter 3 E3-2 General Questions
BA 459
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 3
Exercise 3-2 (E3-2)
General problems
1. Under FASB Statement No. 94, “Consolidation of All Majority-Owned Subsidiaries,” a parent company should exclude a subsidiary from consolidation if:
2. The FASB’s primary motivation for issuing FASB Statement No. 94, “Consolidation of All Majority-Owned Subsidiaries,” was to:
3. Parent-company and consolidated financial statement amounts would not be the same for:
4. Noncontrolling interest, as it appears in a consolidated balance sheet, refers to:
5. Pat Corporation acquired an 80% interest in Sal Corporation on January 1, 2007, and issued consolidated financial statements at and for the year ended December 31, 2007. Pat and Sal had issued separate-company financial statements in 2006.
6. The noncontrolling interest expense that appears in the consolidated income statement is computed as follows:
7. The retained earnings that appear on the consolidated balance sheet of a parent company and its 60%-owned subsidiary are:
Click here for the SOLUTION
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 3
Exercise 3-2 (E3-2)
General problems
1. Under FASB Statement No. 94, “Consolidation of All Majority-Owned Subsidiaries,” a parent company should exclude a subsidiary from consolidation if:
2. The FASB’s primary motivation for issuing FASB Statement No. 94, “Consolidation of All Majority-Owned Subsidiaries,” was to:
3. Parent-company and consolidated financial statement amounts would not be the same for:
4. Noncontrolling interest, as it appears in a consolidated balance sheet, refers to:
5. Pat Corporation acquired an 80% interest in Sal Corporation on January 1, 2007, and issued consolidated financial statements at and for the year ended December 31, 2007. Pat and Sal had issued separate-company financial statements in 2006.
6. The noncontrolling interest expense that appears in the consolidated income statement is computed as follows:
7. The retained earnings that appear on the consolidated balance sheet of a parent company and its 60%-owned subsidiary are:
Click here for the SOLUTION
Advanced Accounting: Chapter 3 E3-1 General Questions
BA 459
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 3
Exercise 3-1 (E3-1)
General problems
1. A 75%-owned subsidiary should not be consolidated under the provisions of FASB Statement No. 94, “Consolidation of All Majority-Owned Subsidiaries,” when:
2. Under the provisions of FASB Statement No. 94, an 80% owned subsidiary that cannot be consolidated must be accounted for:
3. Consolidated statements for Porter Corporation and its 60%-owned investee, Spinelli Company, will not be prepared under the provisions of FASB Statement No. 94 if:
4. Armor Industries owns 7,000,000 shares of Babbitt Corporation’s outstanding common stock (a 70% interest). The remaining 3,000,000 outstanding common shares of Babbitt are held by Ottman Insurance Company. On Armor Industries’ consolidated financial statements, Ottman Insurance Company is considered:
5. Pella Corporation owns a 60% interest in Sanico Company and an 80% interest in Talbert Company. Pella consolidates its investment in Sanico, but Talbert, which is currently under protection of the bankruptcy court, is not consolidated, and Pella accounts for this investment by the equity method. Which statement is correct?
6. On January 1, 2006, Paxton Company purchased 75% of the outstanding shares of Salem Company at a cost exceeding the book value and fair value of Salem’s net assets. Using the following notations, describe the amount at which the plant assets will appear in a consolidated balance sheet of Paxton Company and Subsidiary prepared immediately after the acquisition:
Pbv = book value of Paxton’s plant assets
Pfv = fair value of Paxton’s plant assets
Sbv = book value of Salem’s plant assets
Sfv = fair value of Salem’s plant assets
Click here for the SOLUTION
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 3
Exercise 3-1 (E3-1)
General problems
1. A 75%-owned subsidiary should not be consolidated under the provisions of FASB Statement No. 94, “Consolidation of All Majority-Owned Subsidiaries,” when:
2. Under the provisions of FASB Statement No. 94, an 80% owned subsidiary that cannot be consolidated must be accounted for:
3. Consolidated statements for Porter Corporation and its 60%-owned investee, Spinelli Company, will not be prepared under the provisions of FASB Statement No. 94 if:
4. Armor Industries owns 7,000,000 shares of Babbitt Corporation’s outstanding common stock (a 70% interest). The remaining 3,000,000 outstanding common shares of Babbitt are held by Ottman Insurance Company. On Armor Industries’ consolidated financial statements, Ottman Insurance Company is considered:
5. Pella Corporation owns a 60% interest in Sanico Company and an 80% interest in Talbert Company. Pella consolidates its investment in Sanico, but Talbert, which is currently under protection of the bankruptcy court, is not consolidated, and Pella accounts for this investment by the equity method. Which statement is correct?
6. On January 1, 2006, Paxton Company purchased 75% of the outstanding shares of Salem Company at a cost exceeding the book value and fair value of Salem’s net assets. Using the following notations, describe the amount at which the plant assets will appear in a consolidated balance sheet of Paxton Company and Subsidiary prepared immediately after the acquisition:
Pbv = book value of Paxton’s plant assets
Pfv = fair value of Paxton’s plant assets
Sbv = book value of Salem’s plant assets
Sfv = fair value of Salem’s plant assets
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Advanced Accounting: Chapter 2 E2-7 General Questions
BA 459
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 2
Exercise 2-7 (E2-7)
General problems
1. On January 3, 2006, Harrison Company purchases a 15% interest in Bennett Corporation’s common stock for $50,000 cash. Harrison accounts for the investment using the cost method. Bennett’s net income for 2006 is $20,000, but it declares no dividends. In 2007, Bennett’s net income is $80,000, and it declares dividends of $120,000. What is the correct balance of Harrison’s Investment in Bennett account at December 31, 2007?
2. Screwsbury Corporation’s stockholders’ equity at December 31, 2006, follows (in thousands):
Capital stock, $100 par $3,000
Additional paid-in capital 500
Retained earnings 500
Total stockholders’ equity $4,000
On January 3, 2007, Screwsbury sells 10,000 shares of previously unissued $100 par common stock to Pannell Corporation for $1,400,000. On this date the recorded book values of Screwsbury’s assets and liabilities equal their fair values. Goodwill from Pannell’s investment in Screwsbury at the date of purchase is:
3. On January 1, Leighton Company paid $300,000 for a 20% interest in Monroe Corporation’s voting common stock, at which time Monroe’s stockholders’ equity consisted of $600,000 capital stock and $400,000 retained earnings. Leighton was not able to exercise any influence over the operations of Monroe and accounted for its investment in Monroe using the cost method. During the year, Monroe had net income of $200,000 and paid dividends of $150,000. The balance of Leighton’s Investment in Monroe account at December 31 is:
4. Jollytime Corporation owns a 40% interest in Krazy Products acquired several years ago at book value. Krazy Products’ income statement contains the following information (in thousands):
Income before extraordinary item $200
Extraordinary loss 50
Net income $150
Jollytime should report income from Krazy Products in its income from continuing operations at:
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Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 2
Exercise 2-7 (E2-7)
General problems
1. On January 3, 2006, Harrison Company purchases a 15% interest in Bennett Corporation’s common stock for $50,000 cash. Harrison accounts for the investment using the cost method. Bennett’s net income for 2006 is $20,000, but it declares no dividends. In 2007, Bennett’s net income is $80,000, and it declares dividends of $120,000. What is the correct balance of Harrison’s Investment in Bennett account at December 31, 2007?
2. Screwsbury Corporation’s stockholders’ equity at December 31, 2006, follows (in thousands):
Capital stock, $100 par $3,000
Additional paid-in capital 500
Retained earnings 500
Total stockholders’ equity $4,000
On January 3, 2007, Screwsbury sells 10,000 shares of previously unissued $100 par common stock to Pannell Corporation for $1,400,000. On this date the recorded book values of Screwsbury’s assets and liabilities equal their fair values. Goodwill from Pannell’s investment in Screwsbury at the date of purchase is:
3. On January 1, Leighton Company paid $300,000 for a 20% interest in Monroe Corporation’s voting common stock, at which time Monroe’s stockholders’ equity consisted of $600,000 capital stock and $400,000 retained earnings. Leighton was not able to exercise any influence over the operations of Monroe and accounted for its investment in Monroe using the cost method. During the year, Monroe had net income of $200,000 and paid dividends of $150,000. The balance of Leighton’s Investment in Monroe account at December 31 is:
4. Jollytime Corporation owns a 40% interest in Krazy Products acquired several years ago at book value. Krazy Products’ income statement contains the following information (in thousands):
Income before extraordinary item $200
Extraordinary loss 50
Net income $150
Jollytime should report income from Krazy Products in its income from continuing operations at:
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Friday, July 16, 2010
Curtis Toy Curtis Toy Curtis Toy Curtis Toy Curtis Toy Curtis Toy
18. Curtis Toy Manufacturing Company is evaluating the extension of credit to a new group of customers. Although these customers will provide $240,000 in additional credit sales, 12% are likely to be uncollectible. The company will also incur $21,000 in additional collection expense. Production and marketing costs represent 72% of sales. The company is in a 30% tax bracket and has a receivables turnover of six times. No other asset buildup will be required to service the new customers. The firm has a 10% desired return on investment. a) Should Curtis extend credit to these customers? b) Should credit be extended if 14% of the new sales prove uncollectible? c) Should credit be extended if the receivables turnover drops to 1.5 and 12% of the accounts are uncollectible (as was the case in par a)?
19. Reconsider problem 18. Assume the average collection period is 120 days. All other factors are the same (including 12% uncollectible). Should credit be extended?
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19. Reconsider problem 18. Assume the average collection period is 120 days. All other factors are the same (including 12% uncollectible). Should credit be extended?
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Thursday, July 15, 2010
18 and 19 Curtis Toy Manufacturing Company
FIN 200
Axia College of University of Phoenix (UoP)
Foundations of Financial Management
Block Hirt Danielsen
Introduction to Finance: Harvesting the Money Tree
Fin 200 Week Solution
Chapter 7
18. Curtis Toy Manufacturing Company is evaluating the extension of credit to a new group of customers. Although these customers will provide $240,000 in additional credit sales, 12% are likely to be uncollectible. The company will also incur $21,000 in additional collection expense. Production and marketing costs represent 72% of sales. The company is in a 30% tax bracket and has a receivables turnover of six times. No other asset buildup will be required to service the new customers. The firm has a 10% desired return on investment. a) Should Curtis extend credit to these customers? b) Should credit be extended if 14% of the new sales prove uncollectible? c) Should credit be extended if the receivables turnover drops to 1.5 and 12% of the accounts are uncollectible (as was the case in par a)?
19. Reconsider problem 18. Assume the average collection period is 120 days. All other factors are the same (including 12% uncollectible). Should credit be extended?
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Axia College of University of Phoenix (UoP)
Foundations of Financial Management
Block Hirt Danielsen
Introduction to Finance: Harvesting the Money Tree
Fin 200 Week Solution
Chapter 7
18. Curtis Toy Manufacturing Company is evaluating the extension of credit to a new group of customers. Although these customers will provide $240,000 in additional credit sales, 12% are likely to be uncollectible. The company will also incur $21,000 in additional collection expense. Production and marketing costs represent 72% of sales. The company is in a 30% tax bracket and has a receivables turnover of six times. No other asset buildup will be required to service the new customers. The firm has a 10% desired return on investment. a) Should Curtis extend credit to these customers? b) Should credit be extended if 14% of the new sales prove uncollectible? c) Should credit be extended if the receivables turnover drops to 1.5 and 12% of the accounts are uncollectible (as was the case in par a)?
19. Reconsider problem 18. Assume the average collection period is 120 days. All other factors are the same (including 12% uncollectible). Should credit be extended?
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The following is a list of cost that were incurred in the production and sale of lawn mowers
ACCOUNTING
Warren, Reeve and Duchac
Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 18
PR 18-1A The following is a list of cost that were incurred in the production and sale of lawn mowers:
a. Attorneys fee for drafting a new lease for headquarters offices.
b. Commissions paid to sales representatives, based on the number of lawn mowers sold.
c. Property taxes on the factory building and equipment.
d. Hourly wages of operators of robotic machinery used in production.
e. Salary of vice president of marketing.
f. Gasoline engines used for lawn mowers.
g. Factory cafeteria cashier’s wages.
h. Electricity used to run the robotic machinery.
i. Maintenance costs for new robotic factory equipment, based on hours of usage.
j. License fees for use of patient for lawn mower blade, based on the number of lawn mowers produced.
k. Salary of factory supervisor.
l. Steel used in producing the lawn mowers.
m. Telephone charges for company controller’s office.
n. Paint used to coat the lawn mowers.
o. Straight-line depreciation on the robotic machinery used to manufacture the lawn mowers.
p. Tires for lawn mowers.
q. Engine oil used in mower engines prior to shipment.
r. Cash paid to outside firm for janitorial services for factory.
s. Cost of advertising in a national magazine.
t. Salary of quality control supervisor who inspects each lawn mower before it is shipped.
u. Plastic for outside housing for lawn mowers.
v. Steering wheels for lawn mowers.
w. Filter for spray gun used to paint used to paint the lawn mowers.
x. Cost of boxes used in packaging lawn mowers.
y. Premiums on insurance policy for factory buildings.
z. Payroll taxes on hourly assembly line employees.
Classify each cost as either a product cost or a period cost. Indicate whether each product cost is a direct material cost, a direct labor cost, or a factory overhead cost. Indicate whether each period cost is a selling expense or an administrative expense. Use the following tabular headings for your answer, placing an “X” in the appropriate column.
Product Costs Period Direct Direct Direct Factory Material Labor Overhead Selling Administrative Cost Cost Cost Cost Expense Expense
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Warren, Reeve and Duchac
Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 18
PR 18-1A The following is a list of cost that were incurred in the production and sale of lawn mowers:
a. Attorneys fee for drafting a new lease for headquarters offices.
b. Commissions paid to sales representatives, based on the number of lawn mowers sold.
c. Property taxes on the factory building and equipment.
d. Hourly wages of operators of robotic machinery used in production.
e. Salary of vice president of marketing.
f. Gasoline engines used for lawn mowers.
g. Factory cafeteria cashier’s wages.
h. Electricity used to run the robotic machinery.
i. Maintenance costs for new robotic factory equipment, based on hours of usage.
j. License fees for use of patient for lawn mower blade, based on the number of lawn mowers produced.
k. Salary of factory supervisor.
l. Steel used in producing the lawn mowers.
m. Telephone charges for company controller’s office.
n. Paint used to coat the lawn mowers.
o. Straight-line depreciation on the robotic machinery used to manufacture the lawn mowers.
p. Tires for lawn mowers.
q. Engine oil used in mower engines prior to shipment.
r. Cash paid to outside firm for janitorial services for factory.
s. Cost of advertising in a national magazine.
t. Salary of quality control supervisor who inspects each lawn mower before it is shipped.
u. Plastic for outside housing for lawn mowers.
v. Steering wheels for lawn mowers.
w. Filter for spray gun used to paint used to paint the lawn mowers.
x. Cost of boxes used in packaging lawn mowers.
y. Premiums on insurance policy for factory buildings.
z. Payroll taxes on hourly assembly line employees.
Classify each cost as either a product cost or a period cost. Indicate whether each product cost is a direct material cost, a direct labor cost, or a factory overhead cost. Indicate whether each period cost is a selling expense or an administrative expense. Use the following tabular headings for your answer, placing an “X” in the appropriate column.
Product Costs Period Direct Direct Direct Factory Material Labor Overhead Selling Administrative Cost Cost Cost Cost Expense Expense
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P4-6A Bullseye Ranges Bullseye Ranges
ACC 225
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
ACC 225 Solution
Help in ACC 225
Problem 4-6A (P4-6A) The following six-column table for Bullseye Ranges includes the unadjusted trial balance as of December 31, 2005.
1. Complete the six-column table by entering adjustments that reflect the following information:
a. As of December 31, 2005, employees had earned $900 of unpaid and unrecorded salaries. The next payday is January 4, at which time $1,600 of salaries will be paid.
b. The cost of supplies still available at December 31, 2005, is $2,700.
c. The notes payable requires an interest payment to be made every three months. The amount of unrecorded accrued interest at December 31, 2005, is $1,250. The next interest payment, at an amount of $1,500, is due on January 15, 2006.
d. Analysis of the unearned member fees account shows $5,600 remaining unearned at December 31, 2005.
e. In addition to the member fees included in the revenue account balance, the company has earned another $9,100 in unrecorded fees that will be collected on January 31, 2006. The company is also expected to collect $8,000 on that same day for new fees earned in January 2006.
f. Depreciation expense for the year is $12,500.
2. Prepare journal entries for the adjustments entered in the six-column table for part 1.
3. Prepare journal entries to reverse the effects of the adjusting entries that involve accruals.
4. Prepare journal entries to record the cash payments and cash collections described for January.
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Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
ACC 225 Solution
Help in ACC 225
Problem 4-6A (P4-6A) The following six-column table for Bullseye Ranges includes the unadjusted trial balance as of December 31, 2005.
1. Complete the six-column table by entering adjustments that reflect the following information:
a. As of December 31, 2005, employees had earned $900 of unpaid and unrecorded salaries. The next payday is January 4, at which time $1,600 of salaries will be paid.
b. The cost of supplies still available at December 31, 2005, is $2,700.
c. The notes payable requires an interest payment to be made every three months. The amount of unrecorded accrued interest at December 31, 2005, is $1,250. The next interest payment, at an amount of $1,500, is due on January 15, 2006.
d. Analysis of the unearned member fees account shows $5,600 remaining unearned at December 31, 2005.
e. In addition to the member fees included in the revenue account balance, the company has earned another $9,100 in unrecorded fees that will be collected on January 31, 2006. The company is also expected to collect $8,000 on that same day for new fees earned in January 2006.
f. Depreciation expense for the year is $12,500.
2. Prepare journal entries for the adjustments entered in the six-column table for part 1.
3. Prepare journal entries to reverse the effects of the adjusting entries that involve accruals.
4. Prepare journal entries to record the cash payments and cash collections described for January.
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P4-5A Adams Construction Co
ACC 225
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
ACC 225 Solution
Help in ACC 225
Problem 4-5A (P4-5A) The following unadjusted trial balance is for Adams Construction Co. as of the end of its 2005 fiscal year. The June 30, 2004, credit balance of the owner’s capital account was $52,660, and the owner invested $25,000 cash in the company during the 2005 fiscal year.
Required
1. Prepare a 10-column work sheet for fiscal year 2005, starting with the unadjusted trial balance and including adjustments based on these additional facts:
a. The supplies available at the end of fiscal year 2005 had a cost of $3,200.
b. The cost of expired insurance for the fiscal year is $3,900.
c. Annual depreciation on equipment is $8,500.
d. The June utilities expense of $550 is not included in the unadjusted trial balance because the bill arrived after the trial balance was prepared. The $550 amount owed needs to be recorded.
e. The company’s employees have earned $1,600 of accrued wages at fiscal year-end.
f. The rent expense incurred and not yet paid or recorded at fiscal year-end is $200.
g. Additional property taxes of $900 have been assessed for this fiscal year but have not been paid or recorded in the accounts.
h. The long-term note payable bears interest at 1% per month. The unadjusted Interest Expense account equals the amount paid for the first 11 months of the 2005 fiscal year. The $240 accrued interest for June has not yet been paid or recorded. (Note that the company is required to make a $5,000 payment toward the note payable during the 2006 fiscal year.)
2. Use the work sheet to enter the adjusting and closing entries; then journalize them.
3. Prepare the income statement and the statement of owner’s equity for the year ended June 30 and the classified balance sheet at June 30, 2005.
Analysis Component
4. Analyze the following separate errors and describe how each would affect the 10-column work sheet. Explain whether the error is likely to be discovered in completing the work sheet and, if not, the effect of the error on the financial statements.
a. Assume that the adjustment for supplies used consisted of a credit to Supplies for $3,200 and a debit for $3,200 to Supplies Expense.
b. When the adjusted trial balance in the work sheet is completed, the $17,500 Cash balance is incorrectly entered in the Credit column.
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Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
ACC 225 Solution
Help in ACC 225
Problem 4-5A (P4-5A) The following unadjusted trial balance is for Adams Construction Co. as of the end of its 2005 fiscal year. The June 30, 2004, credit balance of the owner’s capital account was $52,660, and the owner invested $25,000 cash in the company during the 2005 fiscal year.
Required
1. Prepare a 10-column work sheet for fiscal year 2005, starting with the unadjusted trial balance and including adjustments based on these additional facts:
a. The supplies available at the end of fiscal year 2005 had a cost of $3,200.
b. The cost of expired insurance for the fiscal year is $3,900.
c. Annual depreciation on equipment is $8,500.
d. The June utilities expense of $550 is not included in the unadjusted trial balance because the bill arrived after the trial balance was prepared. The $550 amount owed needs to be recorded.
e. The company’s employees have earned $1,600 of accrued wages at fiscal year-end.
f. The rent expense incurred and not yet paid or recorded at fiscal year-end is $200.
g. Additional property taxes of $900 have been assessed for this fiscal year but have not been paid or recorded in the accounts.
h. The long-term note payable bears interest at 1% per month. The unadjusted Interest Expense account equals the amount paid for the first 11 months of the 2005 fiscal year. The $240 accrued interest for June has not yet been paid or recorded. (Note that the company is required to make a $5,000 payment toward the note payable during the 2006 fiscal year.)
2. Use the work sheet to enter the adjusting and closing entries; then journalize them.
3. Prepare the income statement and the statement of owner’s equity for the year ended June 30 and the classified balance sheet at June 30, 2005.
Analysis Component
4. Analyze the following separate errors and describe how each would affect the 10-column work sheet. Explain whether the error is likely to be discovered in completing the work sheet and, if not, the effect of the error on the financial statements.
a. Assume that the adjustment for supplies used consisted of a credit to Supplies for $3,200 and a debit for $3,200 to Supplies Expense.
b. When the adjusted trial balance in the work sheet is completed, the $17,500 Cash balance is incorrectly entered in the Credit column.
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E4-4 E4-5 Webb Trucking Company
ACC 225
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
ACC 225 Solution
Help in ACC 225
Exercise 4-4 (E4-4) Use the following adjusted trial balance of Webb Trucking Company to prepare a classified balance sheet as of December 31, 2005.
Account Title Debit Credit
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,000
Accounts receivable . . . . . . . . . . . . . . . . . . . 16,500
Office supplies . . . . . . . . . . . . . . . . . . . . . . 2,000
Trucks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,000
Accumulated depreciation—Trucks . . . . . . . . $ 35,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . 11,000
Interest payable . . . . . . . . . . . . . . . . . . . . . . 3,000
Long-term notes payable . . . . . . . . . . . . . . . 52,000
K.Webb, Capital . . . . . . . . . . . . . . . . . . . . . 161,000
K.Webb, Withdrawals . . . . . . . . . . . . . . . . . 19,000
Trucking fees earned . . . . . . . . . . . . . . . . . . 128,000
Depreciation expense—Trucks . . . . . . . . . . . 22,500
Salaries expense . . . . . . . . . . . . . . . . . . . . . 60,000
Office supplies expense . . . . . . . . . . . . . . . . 7,000
Repairs expense—Trucks . . . . . . . . . . . . . . . 11,000
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $390,000 $390,000
Exercise 4-5 (E4-5) Use the information in the adjusted trial balance reported in Exercise 4-4 to prepare Webb Trucking Company’s (1) income statement, and (2) statement of owner’s equity. The K. Webb, Capital account balance is $161,000 at December 31, 2004.
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Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
ACC 225 Solution
Help in ACC 225
Exercise 4-4 (E4-4) Use the following adjusted trial balance of Webb Trucking Company to prepare a classified balance sheet as of December 31, 2005.
Account Title Debit Credit
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,000
Accounts receivable . . . . . . . . . . . . . . . . . . . 16,500
Office supplies . . . . . . . . . . . . . . . . . . . . . . 2,000
Trucks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,000
Accumulated depreciation—Trucks . . . . . . . . $ 35,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . 11,000
Interest payable . . . . . . . . . . . . . . . . . . . . . . 3,000
Long-term notes payable . . . . . . . . . . . . . . . 52,000
K.Webb, Capital . . . . . . . . . . . . . . . . . . . . . 161,000
K.Webb, Withdrawals . . . . . . . . . . . . . . . . . 19,000
Trucking fees earned . . . . . . . . . . . . . . . . . . 128,000
Depreciation expense—Trucks . . . . . . . . . . . 22,500
Salaries expense . . . . . . . . . . . . . . . . . . . . . 60,000
Office supplies expense . . . . . . . . . . . . . . . . 7,000
Repairs expense—Trucks . . . . . . . . . . . . . . . 11,000
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $390,000 $390,000
Exercise 4-5 (E4-5) Use the information in the adjusted trial balance reported in Exercise 4-4 to prepare Webb Trucking Company’s (1) income statement, and (2) statement of owner’s equity. The K. Webb, Capital account balance is $161,000 at December 31, 2004.
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E3-7 On March 1, 2003, a company paid a $16,200 premium on a 36-month
ACC 225
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
Exercise 3-7 (E3-7) On March 1, 2003, a company paid a $16,200 premium on a 36-month insurance policy for coverage beginning on that date. Refer to that policy and fill in the blanks in the following table:
Balance Sheet Insurance Asset Using Insurance Expense Using
Accrual Cash Accrual Cash
Basis Basis Basis Basis
Dec. 31, 2003 $_______ $_______ 2003 $_______ $_______
Dec. 31, 2004 _______ _______ 2004 _______ _______
Dec. 31, 2005 _______ _______ 2005 _______ _______
Dec. 31, 2006 _______ _______ 2006 _______ _______
Total $_______ $_______
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Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
Exercise 3-7 (E3-7) On March 1, 2003, a company paid a $16,200 premium on a 36-month insurance policy for coverage beginning on that date. Refer to that policy and fill in the blanks in the following table:
Balance Sheet Insurance Asset Using Insurance Expense Using
Accrual Cash Accrual Cash
Basis Basis Basis Basis
Dec. 31, 2003 $_______ $_______ 2003 $_______ $_______
Dec. 31, 2004 _______ _______ 2004 _______ _______
Dec. 31, 2005 _______ _______ 2005 _______ _______
Dec. 31, 2006 _______ _______ 2006 _______ _______
Total $_______ $_______
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E3-1 In the blank space beside each adjusting entry
ACC 225
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
Exercise 3-1 (E3-1) In the blank space beside each adjusting entry, enter the letter of the explanation A through F that most closely describes the entry.
A. To record this period’s depreciation expense.
B. To record accrued salaries expense.
C. To record this period’s use of a prepaid expense.
D. To record accrued interest revenue.
E. To record accrued interest expense.
F. To record the earning of previously unearned income.
______ 1. Salaries Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,280
Salaries Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,280
______ 2. Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,208
Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,208
______ 3. Insurance Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,180
Prepaid Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,180
______ 4. Unearned Professional Fees . . . . . . . . . . . . . . . . . . . . . 19,250
Professional Fees Earned . . . . . . . . . . . . . . . . . . . . . . 19,250
______ 5. Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,300
Interest Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,300
______ 6. Depreciation Expense . . . . . . . . . . . . . . . . . . . . . . . . . . 38,217
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . 38,217
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Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
Exercise 3-1 (E3-1) In the blank space beside each adjusting entry, enter the letter of the explanation A through F that most closely describes the entry.
A. To record this period’s depreciation expense.
B. To record accrued salaries expense.
C. To record this period’s use of a prepaid expense.
D. To record accrued interest revenue.
E. To record accrued interest expense.
F. To record the earning of previously unearned income.
______ 1. Salaries Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,280
Salaries Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,280
______ 2. Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,208
Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,208
______ 3. Insurance Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,180
Prepaid Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,180
______ 4. Unearned Professional Fees . . . . . . . . . . . . . . . . . . . . . 19,250
Professional Fees Earned . . . . . . . . . . . . . . . . . . . . . . 19,250
______ 5. Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,300
Interest Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,300
______ 6. Depreciation Expense . . . . . . . . . . . . . . . . . . . . . . . . . . 38,217
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . 38,217
Click here for the SOLUTION
QS 3-1 Classify the following adjusting entries as involving prepaid
ACC 225
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
Quick Study 3-1 (QS 3-1) Classify the following adjusting entries as involving prepaid expenses (PE), unearned revenues (UR), accrued expenses (AE), or accrued revenues (AR).
a. To record revenue earned that was previously received as cash in advance.
b. To record annual depreciation expense.
c. To record wages expense incurred but not yet paid (nor recorded).
d. To record revenue earned but not yet billed (nor recorded).
e. To record expiration of prepaid insurance.
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
Quick Study 3-1 (QS 3-1) Classify the following adjusting entries as involving prepaid expenses (PE), unearned revenues (UR), accrued expenses (AE), or accrued revenues (AR).
a. To record revenue earned that was previously received as cash in advance.
b. To record annual depreciation expense.
c. To record wages expense incurred but not yet paid (nor recorded).
d. To record revenue earned but not yet billed (nor recorded).
e. To record expiration of prepaid insurance.
Click here for the SOLUTION
E2-4 E2-5 Pose for Pics Exercise
ACC 225
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
Exercise 2-4 (E2-4) Prepare general journal entries for the following transactions of a new business called Pose for Pics.
Aug. 1 Hashim Paris, the owner, invested $7,500 cash and $32,500 of photography equipment in
the business.
1 Paid $3,000 cash for an insurance policy covering the next 24 months.
5 Purchased office supplies for $1,400 cash.
20 Received $2,650 cash in photography fees earned.
31 Paid $875 cash for August utilities
Exercise 2-5 (E2-5) Use the information in Exercise 2-4 to prepare an August 31 trial balance for Pose-for-Pics. Open these T-accounts: Cash; Office Supplies; Prepaid Insurance; Photography Equipment; H. Paris, Capital; Photography Fees Earned; and Utilities Expense. Post the general journal entries to these T-accounts (which will serve as the ledger), and prepare a trial balance.
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
Exercise 2-4 (E2-4) Prepare general journal entries for the following transactions of a new business called Pose for Pics.
Aug. 1 Hashim Paris, the owner, invested $7,500 cash and $32,500 of photography equipment in
the business.
1 Paid $3,000 cash for an insurance policy covering the next 24 months.
5 Purchased office supplies for $1,400 cash.
20 Received $2,650 cash in photography fees earned.
31 Paid $875 cash for August utilities
Exercise 2-5 (E2-5) Use the information in Exercise 2-4 to prepare an August 31 trial balance for Pose-for-Pics. Open these T-accounts: Cash; Office Supplies; Prepaid Insurance; Photography Equipment; H. Paris, Capital; Photography Fees Earned; and Utilities Expense. Post the general journal entries to these T-accounts (which will serve as the ledger), and prepare a trial balance.
Click here for the SOLUTION
QS 2-5 Identify whether the normal balances
ACC 225
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
Quick Study 2-5 (QS 2-5) Identify whether the normal balances (in parentheses) assigned to the following accounts are correct or incorrect:
a. To increase Store Equipment f. To decrease Unearned Revenue
b. To increase Owner Withdrawals g. To decrease Prepaid Insurance
c. To decrease Cash h. To increase Notes Payable
d. To increase Utilities Expense i. To decrease Accounts Receivable
e. To increase Fees Earned j. To increase Owner Capital
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
Quick Study 2-5 (QS 2-5) Identify whether the normal balances (in parentheses) assigned to the following accounts are correct or incorrect:
a. To increase Store Equipment f. To decrease Unearned Revenue
b. To increase Owner Withdrawals g. To decrease Prepaid Insurance
c. To decrease Cash h. To increase Notes Payable
d. To increase Utilities Expense i. To decrease Accounts Receivable
e. To increase Fees Earned j. To increase Owner Capital
Click here for the SOLUTION
QS 2-4 Identify whether a debit or credit yields the indicated change for each of the following accounts
ACC 225
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
Quick Study 2-4 (QS 2-4) Identify whether a debit or credit yields the indicated change for each of the following accounts:
a. To increase Store Equipment f. To decrease Unearned Revenue
b. To increase Owner Withdrawals g. To decrease Prepaid Insurance
c. To decrease Cash h. To increase Notes Payable
d. To increase Utilities Expense i. To decrease Accounts Receivable
e. To increase Fees Earned j. To increase Owner Capital
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
Quick Study 2-4 (QS 2-4) Identify whether a debit or credit yields the indicated change for each of the following accounts:
a. To increase Store Equipment f. To decrease Unearned Revenue
b. To increase Owner Withdrawals g. To decrease Prepaid Insurance
c. To decrease Cash h. To increase Notes Payable
d. To increase Utilities Expense i. To decrease Accounts Receivable
e. To increase Fees Earned j. To increase Owner Capital
Click here for the SOLUTION
QS 2-3 Indicate whether a debit or credit decreases the normal balance of each of the following accounts
ACC 225
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
Quick Study 2-3 (QS 2-3) Indicate whether a debit or credit decreases the normal balance of each of the following accounts:
a. Office Supplies e. Salaries Expense i. Interest Revenue
b. Repair Services Revenue f. Owner Capital j. Owner Withdrawals
c. Interest Payable g. Prepaid Insurance k. Unearned Revenue
d. Accounts Receivable h. Buildings l. Accounts Payable
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
Quick Study 2-3 (QS 2-3) Indicate whether a debit or credit decreases the normal balance of each of the following accounts:
a. Office Supplies e. Salaries Expense i. Interest Revenue
b. Repair Services Revenue f. Owner Capital j. Owner Withdrawals
c. Interest Payable g. Prepaid Insurance k. Unearned Revenue
d. Accounts Receivable h. Buildings l. Accounts Payable
Click here for the SOLUTION
Compute the following ratios for 2002 and 2003 Landry’s Restaurants
Fundamentals of Financial Accounting 1st ed.
by Phillips, Libby, and Libby
Landry’s Restaurants
Compute the following ratios for 2002 and 2003. Use the Landry’s Restaurants financial statements located in Appendix A of Fundamentals of Financial Accounting:
a. Earnings per share
b. Return on assets
c. Current ratio
d. Times interest earned
e. Asset turnover
f. Debt to total assets
g. Current cash debt coverage
h. Cash debt coverage
i. Free cash flow
Click here for the SOLUTION
by Phillips, Libby, and Libby
Landry’s Restaurants
Compute the following ratios for 2002 and 2003. Use the Landry’s Restaurants financial statements located in Appendix A of Fundamentals of Financial Accounting:
a. Earnings per share
b. Return on assets
c. Current ratio
d. Times interest earned
e. Asset turnover
f. Debt to total assets
g. Current cash debt coverage
h. Cash debt coverage
i. Free cash flow
Click here for the SOLUTION
At December 31, 2010, Rijo Corporation reported the following plant assets
ACCOUNTING
Warren, Reeve and Duchac
Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 9
Problem 9-2A (P9-2A) At December 31, 2010, Rijo Corporation reported the following plant assets.
Land $ 3,000,000
Buildings $26,500,000
Less: Accumulated depreciation—buildings 12,100,000 14,400,000
Equipment 40,000,000
Less: Accumulated depreciation—equipment 5,000,000 35,000,000
Total plant assets $52,400,000
During 2011, the following selected cash transactions occurred.
Apr. 1 Purchased land for $2,200,000.
May 1 Sold equipment that cost $600,000 when purchased on January 1, 2004. The equipment was sold for $170,000.
June 1 Sold land for $1,800,000. The land cost $1,000,000.
July 1 Purchased equipment for $1,300,000.
Dec. 31 Retired equipment that cost $500,000 when purchased on December 31, 2001. No salvage value was received.
Instructions
(a) Journalize the transactions. (Hint: You may wish to set up T accounts, post beginning balances, and then post 2011 transactions.) Rijo uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 40-year useful life and no salvage value; the equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement.
(b) Record adjusting entries for depreciation for 2011.
(c) Prepare the plant assets section of Rijo’s balance sheet at December 31, 2011.
Click here for the SOLUTION
Warren, Reeve and Duchac
Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 9
Problem 9-2A (P9-2A) At December 31, 2010, Rijo Corporation reported the following plant assets.
Land $ 3,000,000
Buildings $26,500,000
Less: Accumulated depreciation—buildings 12,100,000 14,400,000
Equipment 40,000,000
Less: Accumulated depreciation—equipment 5,000,000 35,000,000
Total plant assets $52,400,000
During 2011, the following selected cash transactions occurred.
Apr. 1 Purchased land for $2,200,000.
May 1 Sold equipment that cost $600,000 when purchased on January 1, 2004. The equipment was sold for $170,000.
June 1 Sold land for $1,800,000. The land cost $1,000,000.
July 1 Purchased equipment for $1,300,000.
Dec. 31 Retired equipment that cost $500,000 when purchased on December 31, 2001. No salvage value was received.
Instructions
(a) Journalize the transactions. (Hint: You may wish to set up T accounts, post beginning balances, and then post 2011 transactions.) Rijo uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 40-year useful life and no salvage value; the equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement.
(b) Record adjusting entries for depreciation for 2011.
(c) Prepare the plant assets section of Rijo’s balance sheet at December 31, 2011.
Click here for the SOLUTION
Lorenz Company closes its books on July 31
ACCOUNTING
Warren, Reeve and Duchac
Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 8
Problem 8-8A (P8-8A) Lorenz Company closes its books on July 31. On June 30 the Notes Receivable account balance is $23,800. Notes Receivable include the following.
Date Maker Face Value Term Maturity Date Interest Rate
May 21 Agler Inc. $ 6,000 60 days July 20 8%
May 25 Girard Co. 7,800 60 days July 24 10%
June 30 LSU Corp. 10,000 6 months December 31 9%
During July the following transactions were completed.
July 5 Made sales of $5,100 on Lorenz credit cards.
14 Made sales of $600 on Visa credit cards. The credit card service charge is 3%.
20 Received payment in full from Agler Inc. on the amount due.
24 Received payment in full from Girard Co. on the amount due.
Instructions
(a) Journalize the July transactions and the July 31 adjusting entry for accrued interest receivable. (Interest is computed using 360 days.)
(b) Enter the balances at July 1 in the receivable accounts and post the entries to all of the receivable accounts. (Use T accounts.)
(c) Show the balance sheet presentation of the receivable accounts at July 31.
Click here for the SOLUTION
Warren, Reeve and Duchac
Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 8
Problem 8-8A (P8-8A) Lorenz Company closes its books on July 31. On June 30 the Notes Receivable account balance is $23,800. Notes Receivable include the following.
Date Maker Face Value Term Maturity Date Interest Rate
May 21 Agler Inc. $ 6,000 60 days July 20 8%
May 25 Girard Co. 7,800 60 days July 24 10%
June 30 LSU Corp. 10,000 6 months December 31 9%
During July the following transactions were completed.
July 5 Made sales of $5,100 on Lorenz credit cards.
14 Made sales of $600 on Visa credit cards. The credit card service charge is 3%.
20 Received payment in full from Agler Inc. on the amount due.
24 Received payment in full from Girard Co. on the amount due.
Instructions
(a) Journalize the July transactions and the July 31 adjusting entry for accrued interest receivable. (Interest is computed using 360 days.)
(b) Enter the balances at July 1 in the receivable accounts and post the entries to all of the receivable accounts. (Use T accounts.)
(c) Show the balance sheet presentation of the receivable accounts at July 31.
Click here for the SOLUTION
On July 31, 2010, Fenton Company had a cash balance per books of $6,140
ACCOUNTING
Warren, Reeve and Duchac
Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 7
Problem 7-3A (P7-3A) On July 31, 2010, Fenton Company had a cash balance per books of $6,140. The statement from Jackson State Bank on that date showed a balance of $7,695.80. A comparison of the bank statement with the cash account revealed the following facts.
1. The bank service charge for July was $25.
2. The bank collected a note receivable of $1,500 for Fenton Company on July 15, plus $30 of interest. The bank made a $10 charge for the collection. Fenton has not accrued any interest on the note.
3. The July 31 receipts of $1,193.30 were not included in the bank deposits for July. These receipts were deposited by the company in a night deposit vault on July 31.
4. Company check No. 2480 issued to H. Coby, a creditor, for $384 that cleared the bank in July was incorrectly entered in the cash payments journal on July 10 for $348.
5. Checks outstanding on July 31 totaled $1,980.10.
6. On July 31 the bank statement showed an NSF charge of $690 for a check received by the company from P. Figura, a customer, on account.
Instructions
(a) Prepare the bank reconciliation as of July 31.
(b) Prepare the necessary adjusting entries at July 31
Click here for the SOLUTION
Warren, Reeve and Duchac
Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 7
Problem 7-3A (P7-3A) On July 31, 2010, Fenton Company had a cash balance per books of $6,140. The statement from Jackson State Bank on that date showed a balance of $7,695.80. A comparison of the bank statement with the cash account revealed the following facts.
1. The bank service charge for July was $25.
2. The bank collected a note receivable of $1,500 for Fenton Company on July 15, plus $30 of interest. The bank made a $10 charge for the collection. Fenton has not accrued any interest on the note.
3. The July 31 receipts of $1,193.30 were not included in the bank deposits for July. These receipts were deposited by the company in a night deposit vault on July 31.
4. Company check No. 2480 issued to H. Coby, a creditor, for $384 that cleared the bank in July was incorrectly entered in the cash payments journal on July 10 for $348.
5. Checks outstanding on July 31 totaled $1,980.10.
6. On July 31 the bank statement showed an NSF charge of $690 for a check received by the company from P. Figura, a customer, on account.
Instructions
(a) Prepare the bank reconciliation as of July 31.
(b) Prepare the necessary adjusting entries at July 31
Click here for the SOLUTION
Tuesday, July 13, 2010
South Coast Boards Co. is a merchandising business
ACCOUNTING
Warren, Reeve and Duchac
Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 5, Chapter 6
Comprehensive Problem 2 (CP 2)
South Coast Boards Co. is a merchandising business. the account balances for south coast boards co. as of July 1, 2010 (unless otherwise indicated), are as follows:
Check: 8. Net Income 693,800
Click here for the SOLUTION
110 Cash $63600
112 A/R $153900
115 Merchandise Inventory $602400
116 Prepaid insurance $16800
117 Store supplies $11400
123 store equipment $469500
124 Accum. Depr. --Store equip $56700
210 A/P $96600
211 Salaries payable $-
310 capital stock $100000
311 retained earnings, Aug 1 2009 $455300
312 Dividends $135000
313 Income summary $-
410 Sales $3221100
411 Sales return and allowances $92700
412 Sales discounts $59400
510 Cost of merchandise sold $1623000
520 sales salaries expense $334800
521 advertising expense $81000
522 depreciation expense $-
523 store supplies expense $-
529 misc. selling expense $12600
530 Office salaries expense $182100
531 Rent Expense $83700
532 insurance expense $-
539 Misc. Administrative expense $7800
During July, the last month of the fiscal year, the following transactions were completed:
July
1, Paid rent for July, $5000.
3, Purchased merchandise on account from Belmont Co., Terms 2/10,n/30,POB shipping point, $40000.
4, Paid freight on purchase of July 3, $600.
6, Sold merchandise on account to Modesto Co., terms 2/10,n/30, FOB shipping point, $25000. The cost of the merchandise sold was $15000.
7, Received $26500 cash from Yuba Co. on account, no discount.
10, sold merchandise for cash $80000. The cost of the merchandise sold was $50000.
13, Paid for merchandise purchased on July 3, less discount.
14, Received merchandise returned on sale of July 6, $6000. The cost of the merchandise returned was $4500.
15, Paid advertising expense for last half of July, $7500
16, received cash from sale of July 6, less return of July 14 and discount.
19, purchased merchandise for cash, $36000.
19, Paid $18000 to Blakke Co. on account, no discount
20, sold merchandise on account to Reedley Co., terms 1/10,n/30, FOB shipping point, $40000. the cost of the merchandise sold was $25000.
21, for the convenience of the customer, paid freight on sale of July 20, $1100.
21, received $17600 cash from Owen co. on account, no discount.
21, purchased merchandise on account from Nye Co., terms 1/10, n/30, FOB Destination, $20000.
24, Returned $2000 of damaged merchandise purchased on July 21, receiving credit from the seller.
26, Refunded cash on sales made for cash, $3000. The cost of the merchandise returned was $1800.
28, paid sales salaries of $22800 and office salaries of $15200.
29, purchased store supplies for cash, $2400.
30, Sold merchandise on account to Whitetail co., terms 2/10, n/30, FOB shipping point, $18750. The cost of the merchandise sold was $11250.
30, received cash from sale of July 20, less discount, plus freight paid on July 21.
31, Paid for purchase of July 21, less return of July 24 and discount.
Instructions
1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section, and place a check mark (?) in the posting reference column. Journalize the transactions for July.
2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are no required to update or post to the accounts receivable and accounts payable subsidiary ledgers.
3. Prepare and unadjusted trial balance.
4. At the end of July, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6).
a) Merchandise inventory on July 31 $ 589850
b) Insurance expired during the year $ 12500
c) Store supplies on hand on July 31 $4700
d) Depreciation for the current year $18800
e) Accrued salaries on July 31: Sale salaries $4400 Office salaries $2700 ($7100)
5. Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work Sheet), and complete the spreadsheet.
6. Journalize and post the adjusting entries.
7. Prepare an adjusted trial balance
8. Prepare an income statement, a retained earnings statement, and a balance sheet.
9. Prepare and post the closing entries. Indicated closed accounts by inserting a line in both the Balance columns opposite the closing entry. Insert the new balance in the retained earnings account.
10. Prepare a post-closing trial balance.
Check: 8. Net Income 693,800
Click here for the SOLUTION
Warren, Reeve and Duchac
Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 5, Chapter 6
Comprehensive Problem 2 (CP 2)
South Coast Boards Co. is a merchandising business. the account balances for south coast boards co. as of July 1, 2010 (unless otherwise indicated), are as follows:
Check: 8. Net Income 693,800
Click here for the SOLUTION
110 Cash $63600
112 A/R $153900
115 Merchandise Inventory $602400
116 Prepaid insurance $16800
117 Store supplies $11400
123 store equipment $469500
124 Accum. Depr. --Store equip $56700
210 A/P $96600
211 Salaries payable $-
310 capital stock $100000
311 retained earnings, Aug 1 2009 $455300
312 Dividends $135000
313 Income summary $-
410 Sales $3221100
411 Sales return and allowances $92700
412 Sales discounts $59400
510 Cost of merchandise sold $1623000
520 sales salaries expense $334800
521 advertising expense $81000
522 depreciation expense $-
523 store supplies expense $-
529 misc. selling expense $12600
530 Office salaries expense $182100
531 Rent Expense $83700
532 insurance expense $-
539 Misc. Administrative expense $7800
During July, the last month of the fiscal year, the following transactions were completed:
July
1, Paid rent for July, $5000.
3, Purchased merchandise on account from Belmont Co., Terms 2/10,n/30,POB shipping point, $40000.
4, Paid freight on purchase of July 3, $600.
6, Sold merchandise on account to Modesto Co., terms 2/10,n/30, FOB shipping point, $25000. The cost of the merchandise sold was $15000.
7, Received $26500 cash from Yuba Co. on account, no discount.
10, sold merchandise for cash $80000. The cost of the merchandise sold was $50000.
13, Paid for merchandise purchased on July 3, less discount.
14, Received merchandise returned on sale of July 6, $6000. The cost of the merchandise returned was $4500.
15, Paid advertising expense for last half of July, $7500
16, received cash from sale of July 6, less return of July 14 and discount.
19, purchased merchandise for cash, $36000.
19, Paid $18000 to Blakke Co. on account, no discount
20, sold merchandise on account to Reedley Co., terms 1/10,n/30, FOB shipping point, $40000. the cost of the merchandise sold was $25000.
21, for the convenience of the customer, paid freight on sale of July 20, $1100.
21, received $17600 cash from Owen co. on account, no discount.
21, purchased merchandise on account from Nye Co., terms 1/10, n/30, FOB Destination, $20000.
24, Returned $2000 of damaged merchandise purchased on July 21, receiving credit from the seller.
26, Refunded cash on sales made for cash, $3000. The cost of the merchandise returned was $1800.
28, paid sales salaries of $22800 and office salaries of $15200.
29, purchased store supplies for cash, $2400.
30, Sold merchandise on account to Whitetail co., terms 2/10, n/30, FOB shipping point, $18750. The cost of the merchandise sold was $11250.
30, received cash from sale of July 20, less discount, plus freight paid on July 21.
31, Paid for purchase of July 21, less return of July 24 and discount.
Instructions
1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section, and place a check mark (?) in the posting reference column. Journalize the transactions for July.
2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are no required to update or post to the accounts receivable and accounts payable subsidiary ledgers.
3. Prepare and unadjusted trial balance.
4. At the end of July, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6).
a) Merchandise inventory on July 31 $ 589850
b) Insurance expired during the year $ 12500
c) Store supplies on hand on July 31 $4700
d) Depreciation for the current year $18800
e) Accrued salaries on July 31: Sale salaries $4400 Office salaries $2700 ($7100)
5. Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work Sheet), and complete the spreadsheet.
6. Journalize and post the adjusting entries.
7. Prepare an adjusted trial balance
8. Prepare an income statement, a retained earnings statement, and a balance sheet.
9. Prepare and post the closing entries. Indicated closed accounts by inserting a line in both the Balance columns opposite the closing entry. Insert the new balance in the retained earnings account.
10. Prepare a post-closing trial balance.
Check: 8. Net Income 693,800
Click here for the SOLUTION
Aunt Ethel's Fancy Cookie Company manufactures and sells three flavors of cookies
Aunt Ethel's Fancy Cookie Company
Problem 1
Aunt Ethel's Fancy Cookie Company manufactures and sells three flavors of cookies: Macaroon, Sugar, and Buttercream. The batch size for the cookies is limited to 1,000 cookies based on the size of the ovens and cookie molds owned by the company. Based on budgetary projections, the information listed below is available:
Macaroon Sugar Buttercream
Projected sales in units
500,000 800,000 600,000
PER UNIT data:
Selling price $0.80 $0.75 $0.60
Direct materials $0.20 $0.15 $0.14
Direct labor $0.04 $0.02 $0.02 Hours per 1000-unit batch:
Direct labor hours 2 1 1
Oven hours 1 1 1
Packaging hours 0.5 0.5 0.5
Total overhead costs and activity levels for the year are estimated as follows:
Activity Overhead costs Activity levels
Direct labor 2,400 hours
Oven $210,000 1,900 oven hours
Packaging $150,000 950 packaging hours $360,000
Questions: 1. Determine the activity-cost-driver rate for packaging costs (3 points).
2. Using the ABC system, for the sugar cookie, compute the estimated overhead costs per thousand cookies (3 points).
3. Using the ABC system, for the sugar cookie, compute the estimated operating profit per thousand cookies (3 points).
4. Using a traditional system (with direct labor hours as the overhead allocation base) for the sugar cookie, compute the estimated overhead costs per thousand cookies (3 points).
5. Using a traditional system (with direct labor hours as the overhead allocation base) for the sugar cookie, compute the estimated operating profit per thousand cookies (3 points).
6. Explain the difference between the profits obtained from the traditional system and the ABC system. Which system provides a better estimate of profitability? Why? (3 points).
Problem 2:
What is activity-based management and how can it be used to improve the profitability of a company? (12 points).
Click here for the SOLUTION
Problem 1
Aunt Ethel's Fancy Cookie Company manufactures and sells three flavors of cookies: Macaroon, Sugar, and Buttercream. The batch size for the cookies is limited to 1,000 cookies based on the size of the ovens and cookie molds owned by the company. Based on budgetary projections, the information listed below is available:
Macaroon Sugar Buttercream
Projected sales in units
500,000 800,000 600,000
PER UNIT data:
Selling price $0.80 $0.75 $0.60
Direct materials $0.20 $0.15 $0.14
Direct labor $0.04 $0.02 $0.02 Hours per 1000-unit batch:
Direct labor hours 2 1 1
Oven hours 1 1 1
Packaging hours 0.5 0.5 0.5
Total overhead costs and activity levels for the year are estimated as follows:
Activity Overhead costs Activity levels
Direct labor 2,400 hours
Oven $210,000 1,900 oven hours
Packaging $150,000 950 packaging hours $360,000
Questions: 1. Determine the activity-cost-driver rate for packaging costs (3 points).
2. Using the ABC system, for the sugar cookie, compute the estimated overhead costs per thousand cookies (3 points).
3. Using the ABC system, for the sugar cookie, compute the estimated operating profit per thousand cookies (3 points).
4. Using a traditional system (with direct labor hours as the overhead allocation base) for the sugar cookie, compute the estimated overhead costs per thousand cookies (3 points).
5. Using a traditional system (with direct labor hours as the overhead allocation base) for the sugar cookie, compute the estimated operating profit per thousand cookies (3 points).
6. Explain the difference between the profits obtained from the traditional system and the ABC system. Which system provides a better estimate of profitability? Why? (3 points).
Problem 2:
What is activity-based management and how can it be used to improve the profitability of a company? (12 points).
Click here for the SOLUTION
Friday, July 9, 2010
Advanced Accounting: Chapter 2 E2-2 General Questions
BA 459
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 2
Exercise 2-2 (E2-2)
[AICPA adapted] General problems
1. Investor Company owns 40% of Alimand Corporation. During the calendar year, Alimand had net earnings of $100,000 and paid dividends of $10,000. Investor mistakenly recorded these transactions using the cost method rather than the equity method of accounting. What effect would this have on the investment account, net earnings, and retained earnings, respectively?
2. The corporation exercises control over an affiliate in which it holds a 40% common stock interest. If its affiliate completed a fiscal year profitably but paid no dividends, how would this affect the investor corporation?
3. An investor uses the cost method to account for an investment in common stock. A portion of the dividends received this year were in excess of the investor’s share of investee’s earnings after the date of the investment. The amount of dividends revenue that should be reported in the investor’s income statement for this year would be:
4. On January 1 Grade Company paid $300,000 for 20,000 shares of Medium Company’s common stock, which represents a 15% investment in Medium. Grade does not have the ability to exercise significant influence over Medium. Medium declared and paid a dividend of $1 per share to its stockholders during the year. Medium reported net income of $260,000 for the year ended December 31. The balance in Grade’s balance sheet account “Investment in Medium Company” at December 31 should be
5. On January 2, 2006, Troquel Corporation bought 15% of Zafacon Corporation’s capital stock for $30,000. Troquel accounts for this investment by the cost method. Zafacon’s net income for the years ended December 31, 2006, and December 31, 2007, were $10,000 and $50,000, respectively. During 2007 Zafacon declared a dividend of $70,000. No dividends were declared in 2006. How much should Troquel show on its 2007 income statement as income from this investment?
6. Pare purchased 10% of Tot Company’s 100,000 outstanding shares of common stock on January 2 for $50,000. On December 31, Pare purchased an additional 20,000 shares of Tot for $150,000. There was no goodwill as a result of either acquisition, and Tot had not issued any additional stock during the year. Tot reported earnings of $300,000 for the year. What amount should Pare report in its December 31 balance sheet as investment in Tot?
7. On January 1, Point purchased 10% of Iona Company’s common stock. Point purchased additional shares, bringing its ownership up to 40% of Iona’s common stock outstanding, on August 1. During October, Iona declared and paid a cash dividend on all of its outstanding common stock. How much income from the Iona investment should Point’s income statement report?
8. On January 2, Kean Company purchased a 30% interest in Pod Company for $250,000. On this date, Pod’s stockholders’ equity was $500,000. The carrying amounts of Pod’s identifiable net assets approximated their fair values, except for land, whose fair value exceeded its carrying amount by $200,000. Pod reported net income of $100,000 and paid no dividends. Kean accounts for this investment using the equity method. In its December 31 balance sheet, what amount should Kean report as investment in subsidiary?
Click here for the SOLUTION
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 2
Exercise 2-2 (E2-2)
[AICPA adapted] General problems
1. Investor Company owns 40% of Alimand Corporation. During the calendar year, Alimand had net earnings of $100,000 and paid dividends of $10,000. Investor mistakenly recorded these transactions using the cost method rather than the equity method of accounting. What effect would this have on the investment account, net earnings, and retained earnings, respectively?
2. The corporation exercises control over an affiliate in which it holds a 40% common stock interest. If its affiliate completed a fiscal year profitably but paid no dividends, how would this affect the investor corporation?
3. An investor uses the cost method to account for an investment in common stock. A portion of the dividends received this year were in excess of the investor’s share of investee’s earnings after the date of the investment. The amount of dividends revenue that should be reported in the investor’s income statement for this year would be:
4. On January 1 Grade Company paid $300,000 for 20,000 shares of Medium Company’s common stock, which represents a 15% investment in Medium. Grade does not have the ability to exercise significant influence over Medium. Medium declared and paid a dividend of $1 per share to its stockholders during the year. Medium reported net income of $260,000 for the year ended December 31. The balance in Grade’s balance sheet account “Investment in Medium Company” at December 31 should be
5. On January 2, 2006, Troquel Corporation bought 15% of Zafacon Corporation’s capital stock for $30,000. Troquel accounts for this investment by the cost method. Zafacon’s net income for the years ended December 31, 2006, and December 31, 2007, were $10,000 and $50,000, respectively. During 2007 Zafacon declared a dividend of $70,000. No dividends were declared in 2006. How much should Troquel show on its 2007 income statement as income from this investment?
6. Pare purchased 10% of Tot Company’s 100,000 outstanding shares of common stock on January 2 for $50,000. On December 31, Pare purchased an additional 20,000 shares of Tot for $150,000. There was no goodwill as a result of either acquisition, and Tot had not issued any additional stock during the year. Tot reported earnings of $300,000 for the year. What amount should Pare report in its December 31 balance sheet as investment in Tot?
7. On January 1, Point purchased 10% of Iona Company’s common stock. Point purchased additional shares, bringing its ownership up to 40% of Iona’s common stock outstanding, on August 1. During October, Iona declared and paid a cash dividend on all of its outstanding common stock. How much income from the Iona investment should Point’s income statement report?
8. On January 2, Kean Company purchased a 30% interest in Pod Company for $250,000. On this date, Pod’s stockholders’ equity was $500,000. The carrying amounts of Pod’s identifiable net assets approximated their fair values, except for land, whose fair value exceeded its carrying amount by $200,000. Pod reported net income of $100,000 and paid no dividends. Kean accounts for this investment using the equity method. In its December 31 balance sheet, what amount should Kean report as investment in subsidiary?
Click here for the SOLUTION
Advanced Accounting: Chapter 2 E2-1 General Questions
BA 459
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 2
Exercise 2-1 (E2-1)
General questions
1. Indicators of an investor company’s inability to exercise significant influence over an investee are provided in FASB Interpretation No. 35. Which of the following is not included among those indicators?
2. A 20% common stock interest in an investee company:
3. The cost of a 25% interest in the voting stock of an investee that is recorded in the investment account includes:
4. The underlying equity of an investment at acquisition:
5. Jarret Corporation is a 25%-owned equity investee of Marco Corporation. During the current year, Marco receives $12,000 in dividends from Jarret. How does the $12,000 dividend affect Marco’s financial position and results of operations?
Click here for the SOLUTION
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 2
Exercise 2-1 (E2-1)
General questions
1. Indicators of an investor company’s inability to exercise significant influence over an investee are provided in FASB Interpretation No. 35. Which of the following is not included among those indicators?
2. A 20% common stock interest in an investee company:
3. The cost of a 25% interest in the voting stock of an investee that is recorded in the investment account includes:
4. The underlying equity of an investment at acquisition:
5. Jarret Corporation is a 25%-owned equity investee of Marco Corporation. During the current year, Marco receives $12,000 in dividends from Jarret. How does the $12,000 dividend affect Marco’s financial position and results of operations?
Click here for the SOLUTION
Advanced Accounting: Chapter 1 E1-2 General Questions
BA 459
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 1
Exercise 1-2 (E1-2)
[AICPA adapted] General Problems
1. Fast Corporation paid $50,000 cash for the net assets of Agge Company, which consisted of the following:
Book Value Fair Value
Current assets $10,000 $14,000
Plant and equipment 40,000 55,000
Liabilities assumed (10,000) (9,000)
$40,000 $60,000
The plant and equipment acquired in this business combination should be recorded at:
2. On April 1, Jack Company paid $800,000 for all the issued and outstanding common stock of Ann Corporation in a transaction properly accounted for as a purchase. The recorded assets and liabilities of Ann Corporation on April 1 follow:
Cash $ 80,000
Inventory 240,000
Property and equipment (net of accumulated depreciation of $320,000) 480,000
Liabilities (180,000)
On April 1, it was determined that the inventory of Ann had a fair value of $190,000 and the property and equipment (net) had a fair value of $560,000. What is the amount of goodwill resulting from the business combination?
Click here for the SOLUTION
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 1
Exercise 1-2 (E1-2)
[AICPA adapted] General Problems
1. Fast Corporation paid $50,000 cash for the net assets of Agge Company, which consisted of the following:
Book Value Fair Value
Current assets $10,000 $14,000
Plant and equipment 40,000 55,000
Liabilities assumed (10,000) (9,000)
$40,000 $60,000
The plant and equipment acquired in this business combination should be recorded at:
2. On April 1, Jack Company paid $800,000 for all the issued and outstanding common stock of Ann Corporation in a transaction properly accounted for as a purchase. The recorded assets and liabilities of Ann Corporation on April 1 follow:
Cash $ 80,000
Inventory 240,000
Property and equipment (net of accumulated depreciation of $320,000) 480,000
Liabilities (180,000)
On April 1, it was determined that the inventory of Ann had a fair value of $190,000 and the property and equipment (net) had a fair value of $560,000. What is the amount of goodwill resulting from the business combination?
Click here for the SOLUTION
Wednesday, July 7, 2010
On January 1, 2006: January 1, 2006 Solomon Company purchased the following two machines for use in its production process
ACC 363
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Problem 10-3A (P10-3A) On January 1, 2006, Solomon Company purchased the following two machines for use in its production process.
Machine A: The cash price of this machine was $38,500. Related expenditures included: sales tax $2,200, shipping costs $175, insurance during shipping $75, installation and testing costs $50, and $90 of oil and lubricants to be used with the machinery during its first year of operation. Solomon estimates that the useful life of the machine is 4 years with a $5,000 salvage value remaining at the end of that time period.
Machine B: The recorded cost of this machine was $100,000. Solomon estimates that the useful life of the machine is 4 years with a $8,000 salvage value remaining at the end of that time period.
Instructions
(a) Prepare the following for Machine A. (1) The journal entry to record its purchase on January 1, 2006. (2) The journal entry to record annual depreciation at December 31, 2006, assuming the straight-line method of depreciation is used.
(b) Calculate the amount of depreciation expense that Solomon should record for machine B each year of its useful life under the following assumption. (1) Solomon uses the straight-line method of depreciation. (2) Solomon uses the declining-balance method.The rate used is twice the straight-line rate. (3) Solomon uses the units-of-activity method and estimates the useful life of the machine is 25,000 units. Actual usage is as follows: 2006, 6,500 units; 2007, 7,500 units; 2008, 6,000 units; 2009, 5,000 units.
(c) Which method used to calculate depreciation on machine B reports the lowest amount of depreciation expense in year 1 (2006)? The lowest amount in year 4 (2009)? The lowest total amount over the 4-year period?
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Problem 10-3A (P10-3A) On January 1, 2006, Solomon Company purchased the following two machines for use in its production process.
Machine A: The cash price of this machine was $38,500. Related expenditures included: sales tax $2,200, shipping costs $175, insurance during shipping $75, installation and testing costs $50, and $90 of oil and lubricants to be used with the machinery during its first year of operation. Solomon estimates that the useful life of the machine is 4 years with a $5,000 salvage value remaining at the end of that time period.
Machine B: The recorded cost of this machine was $100,000. Solomon estimates that the useful life of the machine is 4 years with a $8,000 salvage value remaining at the end of that time period.
Instructions
(a) Prepare the following for Machine A. (1) The journal entry to record its purchase on January 1, 2006. (2) The journal entry to record annual depreciation at December 31, 2006, assuming the straight-line method of depreciation is used.
(b) Calculate the amount of depreciation expense that Solomon should record for machine B each year of its useful life under the following assumption. (1) Solomon uses the straight-line method of depreciation. (2) Solomon uses the declining-balance method.The rate used is twice the straight-line rate. (3) Solomon uses the units-of-activity method and estimates the useful life of the machine is 25,000 units. Actual usage is as follows: 2006, 6,500 units; 2007, 7,500 units; 2008, 6,000 units; 2009, 5,000 units.
(c) Which method used to calculate depreciation on machine B reports the lowest amount of depreciation expense in year 1 (2006)? The lowest amount in year 4 (2009)? The lowest total amount over the 4-year period?
Click here for the SOLUTION
BE 11-1 Cardinal Company Cardinal Company Cardinal Company has the following obligations at December 31
ACC 363
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Brief Exercise 11-1 (BE 11-1) Cardinal Company has the following obligations at December 31: (a) a note payable for $100,000 due in 2 years, (b) a 10-year mortgage payable of $300,000 payable in ten $30,000 annual payments, (c) interest payable of $15,000 on the mortgage, and (d) accounts payable of $60,000. For each obligation, indicate whether it should be classified as a current liability.(Assume an operating cycle of less than one year.)
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Brief Exercise 11-1 (BE 11-1) Cardinal Company has the following obligations at December 31: (a) a note payable for $100,000 due in 2 years, (b) a 10-year mortgage payable of $300,000 payable in ten $30,000 annual payments, (c) interest payable of $15,000 on the mortgage, and (d) accounts payable of $60,000. For each obligation, indicate whether it should be classified as a current liability.(Assume an operating cycle of less than one year.)
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Tuesday, July 6, 2010
P10-3A: Solomon Company: Solomon Company purchased the following two machines
ACC 363
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Problem 10-3A (P10-3A) On January 1, 2006, Solomon Company purchased the following two machines for use in its production process.
Machine A: The cash price of this machine was $38,500. Related expenditures included: sales tax $2,200, shipping costs $175, insurance during shipping $75, installation and testing costs $50, and $90 of oil and lubricants to be used with the machinery during its first year of operation. Solomon estimates that the useful life of the machine is 4 years with a $5,000 salvage value remaining at the end of that time period.
Machine B: The recorded cost of this machine was $100,000. Solomon estimates that the useful life of the machine is 4 years with a $8,000 salvage value remaining at the end of that time period.
Instructions
(a) Prepare the following for Machine A. (1) The journal entry to record its purchase on January 1, 2006. (2) The journal entry to record annual depreciation at December 31, 2006, assuming the straight-line method of depreciation is used.
(b) Calculate the amount of depreciation expense that Solomon should record for machine B each year of its useful life under the following assumption. (1) Solomon uses the straight-line method of depreciation. (2) Solomon uses the declining-balance method.The rate used is twice the straight-line rate. (3) Solomon uses the units-of-activity method and estimates the useful life of the machine is 25,000 units. Actual usage is as follows: 2006, 6,500 units; 2007, 7,500 units; 2008, 6,000 units; 2009, 5,000 units.
(c) Which method used to calculate depreciation on machine B reports the lowest amount of depreciation expense in year 1 (2006)? The lowest amount in year 4 (2009)? The lowest total amount over the 4-year period?
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Problem 10-3A (P10-3A) On January 1, 2006, Solomon Company purchased the following two machines for use in its production process.
Machine A: The cash price of this machine was $38,500. Related expenditures included: sales tax $2,200, shipping costs $175, insurance during shipping $75, installation and testing costs $50, and $90 of oil and lubricants to be used with the machinery during its first year of operation. Solomon estimates that the useful life of the machine is 4 years with a $5,000 salvage value remaining at the end of that time period.
Machine B: The recorded cost of this machine was $100,000. Solomon estimates that the useful life of the machine is 4 years with a $8,000 salvage value remaining at the end of that time period.
Instructions
(a) Prepare the following for Machine A. (1) The journal entry to record its purchase on January 1, 2006. (2) The journal entry to record annual depreciation at December 31, 2006, assuming the straight-line method of depreciation is used.
(b) Calculate the amount of depreciation expense that Solomon should record for machine B each year of its useful life under the following assumption. (1) Solomon uses the straight-line method of depreciation. (2) Solomon uses the declining-balance method.The rate used is twice the straight-line rate. (3) Solomon uses the units-of-activity method and estimates the useful life of the machine is 25,000 units. Actual usage is as follows: 2006, 6,500 units; 2007, 7,500 units; 2008, 6,000 units; 2009, 5,000 units.
(c) Which method used to calculate depreciation on machine B reports the lowest amount of depreciation expense in year 1 (2006)? The lowest amount in year 4 (2009)? The lowest total amount over the 4-year period?
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BE 11-1 Cardinal Company Cardinal Company has the following obligations
ACC 363
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Brief Exercise 11-1 (BE 11-1) Cardinal Company has the following obligations at December 31: (a) a note payable for $100,000 due in 2 years, (b) a 10-year mortgage payable of $300,000 payable in ten $30,000 annual payments, (c) interest payable of $15,000 on the mortgage, and (d) accounts payable of $60,000. For each obligation, indicate whether it should be classified as a current liability.(Assume an operating cycle of less than one year.)
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Brief Exercise 11-1 (BE 11-1) Cardinal Company has the following obligations at December 31: (a) a note payable for $100,000 due in 2 years, (b) a 10-year mortgage payable of $300,000 payable in ten $30,000 annual payments, (c) interest payable of $15,000 on the mortgage, and (d) accounts payable of $60,000. For each obligation, indicate whether it should be classified as a current liability.(Assume an operating cycle of less than one year.)
Click here for the SOLUTION
P10-3A On January 1, 2006, Solomon Company Solomon Company Solomon Company purchased the following two machines for use
ACC 363
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Problem 10-3A (P10-3A) On January 1, 2006, Solomon Company purchased the following two machines for use in its production process.
Machine A: The cash price of this machine was $38,500. Related expenditures included: sales tax $2,200, shipping costs $175, insurance during shipping $75, installation and testing costs $50, and $90 of oil and lubricants to be used with the machinery during its first year of operation. Solomon estimates that the useful life of the machine is 4 years with a $5,000 salvage value remaining at the end of that time period.
Machine B: The recorded cost of this machine was $100,000. Solomon estimates that the useful life of the machine is 4 years with a $8,000 salvage value remaining at the end of that time period.
Instructions
(a) Prepare the following for Machine A. (1) The journal entry to record its purchase on January 1, 2006. (2) The journal entry to record annual depreciation at December 31, 2006, assuming the straight-line method of depreciation is used.
(b) Calculate the amount of depreciation expense that Solomon should record for machine B each year of its useful life under the following assumption. (1) Solomon uses the straight-line method of depreciation. (2) Solomon uses the declining-balance method.The rate used is twice the straight-line rate. (3) Solomon uses the units-of-activity method and estimates the useful life of the machine is 25,000 units. Actual usage is as follows: 2006, 6,500 units; 2007, 7,500 units; 2008, 6,000 units; 2009, 5,000 units.
(c) Which method used to calculate depreciation on machine B reports the lowest amount of depreciation expense in year 1 (2006)? The lowest amount in year 4 (2009)? The lowest total amount over the 4-year period?
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Problem 10-3A (P10-3A) On January 1, 2006, Solomon Company purchased the following two machines for use in its production process.
Machine A: The cash price of this machine was $38,500. Related expenditures included: sales tax $2,200, shipping costs $175, insurance during shipping $75, installation and testing costs $50, and $90 of oil and lubricants to be used with the machinery during its first year of operation. Solomon estimates that the useful life of the machine is 4 years with a $5,000 salvage value remaining at the end of that time period.
Machine B: The recorded cost of this machine was $100,000. Solomon estimates that the useful life of the machine is 4 years with a $8,000 salvage value remaining at the end of that time period.
Instructions
(a) Prepare the following for Machine A. (1) The journal entry to record its purchase on January 1, 2006. (2) The journal entry to record annual depreciation at December 31, 2006, assuming the straight-line method of depreciation is used.
(b) Calculate the amount of depreciation expense that Solomon should record for machine B each year of its useful life under the following assumption. (1) Solomon uses the straight-line method of depreciation. (2) Solomon uses the declining-balance method.The rate used is twice the straight-line rate. (3) Solomon uses the units-of-activity method and estimates the useful life of the machine is 25,000 units. Actual usage is as follows: 2006, 6,500 units; 2007, 7,500 units; 2008, 6,000 units; 2009, 5,000 units.
(c) Which method used to calculate depreciation on machine B reports the lowest amount of depreciation expense in year 1 (2006)? The lowest amount in year 4 (2009)? The lowest total amount over the 4-year period?
Click here for the SOLUTION
E10-8: Yosuke Corporation: The following are selected 2006 transactions of Yosuke Corporation
ACC 363
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Exercise 10-8 (E10-8) The following are selected 2006 transactions of Yosuke Corporation.
Jan. 1 Purchased a small company and recorded goodwill of $150,000. Its useful life is indefinite. May 1 Purchased for $60,000 a patent with an estimated useful life of 5 years and a legal life of 20 years.
Instructions
Prepare necessary adjusting entries at December 31 to record amortization required by the events above.
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Exercise 10-8 (E10-8) The following are selected 2006 transactions of Yosuke Corporation.
Jan. 1 Purchased a small company and recorded goodwill of $150,000. Its useful life is indefinite. May 1 Purchased for $60,000 a patent with an estimated useful life of 5 years and a legal life of 20 years.
Instructions
Prepare necessary adjusting entries at December 31 to record amortization required by the events above.
Click here for the SOLUTION
E10-6 Thomas Company Thomas Company Thomas Company
ACC 363
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Exercise 10-6 (E10-6) Presented below are selected transactions at Thomas Company for 2006.
Jan. 1 Retired a piece of machinery that was purchased on January 1, 1996. The machine cost $62,000 on that date. It had a useful life of 10 years with no salvage value.
June 30 Sold a computer that was purchased on January 1, 2003. The computer cost $35,000. It had a useful life of 5 years with no salvage value. The computer was sold for $12,000.
Dec. 31 Discarded a delivery truck that was purchased on January 1, 2002. The truck cost $33,000. It was depreciated based on a 6-year useful life with a $3,000 salvage value.
Instructions
Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on assets disposed of. Thomas Company uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2005.)
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Exercise 10-6 (E10-6) Presented below are selected transactions at Thomas Company for 2006.
Jan. 1 Retired a piece of machinery that was purchased on January 1, 1996. The machine cost $62,000 on that date. It had a useful life of 10 years with no salvage value.
June 30 Sold a computer that was purchased on January 1, 2003. The computer cost $35,000. It had a useful life of 5 years with no salvage value. The computer was sold for $12,000.
Dec. 31 Discarded a delivery truck that was purchased on January 1, 2002. The truck cost $33,000. It was depreciated based on a 6-year useful life with a $3,000 salvage value.
Instructions
Journalize all entries required on the above dates, including entries to update depreciation, where applicable, on assets disposed of. Thomas Company uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2005.)
Click here for the SOLUTION
E9-2 The ledger of Elburn Company Elburn Company Elburn Company
ACC 363
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Exercise 9-2 (E9-2) The ledger of Elburn Company at the end of the current year shows Accounts Receivable $110,000, Sales $840,000, and Sales Returns and Allowances $28,000.
Instructions
(a) If Elburn uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Elburn determines that Copp’s $1,400 balance is uncollectible.
(b) If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be
(1) 1% of net sales, and (2) 10% of accounts receivable.
(c) If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Exercise 9-2 (E9-2) The ledger of Elburn Company at the end of the current year shows Accounts Receivable $110,000, Sales $840,000, and Sales Returns and Allowances $28,000.
Instructions
(a) If Elburn uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Elburn determines that Copp’s $1,400 balance is uncollectible.
(b) If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be
(1) 1% of net sales, and (2) 10% of accounts receivable.
(c) If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable
Click here for the SOLUTION
E9-8 Mexico Supply Co. has the following transactions related to notes receivable during the last 2 months of 2005
ACC 363
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Exercise 9-8 (E9-8) Mexico Supply Co. has the following transactions related to notes receivable during the last 2 months of 2005.
Nov. 1 Loaned $18,000 cash to Norma Hanson on a 1-year, 10% note.
Dec. 11 Sold goods to John Countryman, Inc., receiving a $6,750, 90-day, 8% note.
16 Received a $4,000, 6-month, 9% note in exchange for Bob Shabo's outstanding accounts receivable.
31 Accrued interest revenue on all notes receivable.
Instructions
(a) Journalize the transactions for Mexico Supply Co.
(b) Record the collection of the Hanson note at its maturity in 2006.
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Exercise 9-8 (E9-8) Mexico Supply Co. has the following transactions related to notes receivable during the last 2 months of 2005.
Nov. 1 Loaned $18,000 cash to Norma Hanson on a 1-year, 10% note.
Dec. 11 Sold goods to John Countryman, Inc., receiving a $6,750, 90-day, 8% note.
16 Received a $4,000, 6-month, 9% note in exchange for Bob Shabo's outstanding accounts receivable.
31 Accrued interest revenue on all notes receivable.
Instructions
(a) Journalize the transactions for Mexico Supply Co.
(b) Record the collection of the Hanson note at its maturity in 2006.
Click here for the SOLUTION
Monday, July 5, 2010
P9-7A On January 1, 2006, Bettendorf Company had Accounts Receivable $56,900
ACC 363
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Problem 9-7A (P9-7A) On January 1, 2006, Bettendorf Company had Accounts Receivable $56,900 and Allowance for Doubtful Accounts $4,700. Bettendorf Company prepares financial statements annually. During the year the following selected transactions occurred.
Jan. 5 Sold $6,900 of merchandise to John Yockey Company, terms n/30.
Feb. 2 Accepted a $6,900, 4-month, 10% promissory note from John Yockey Company for the balance due.
Feb.12 Sold $7,800 of merchandise to Skosey Company and accepted Skosey's $7,800, 2-month, 10% note for the balance due.
Feb. 26 Sold $3,000 of merchandise to Platz Co., terms n/10.
Apr. 5 Accepted a $3,000, 3-month, 8% note from Platz Co. for the balance due.
Apr.12 Collected the Skosey Company note in full.
June 2 Collected the John Yockey Company note in full.
July 5 Platz Co. dishonors its note of April 5. It is expected that Platz will eventually pay the amount owed.
July 15 Sold $7,000 of merchandise to King Co. and accepted King's $7,000, 3-month, 12% note for the amount due.
Oct.15 King Co.'s note was dishonored. King Co. is bankrupt, and there is no hope of future settlement.
Journalize the transactions.
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Problem 9-7A (P9-7A) On January 1, 2006, Bettendorf Company had Accounts Receivable $56,900 and Allowance for Doubtful Accounts $4,700. Bettendorf Company prepares financial statements annually. During the year the following selected transactions occurred.
Jan. 5 Sold $6,900 of merchandise to John Yockey Company, terms n/30.
Feb. 2 Accepted a $6,900, 4-month, 10% promissory note from John Yockey Company for the balance due.
Feb.12 Sold $7,800 of merchandise to Skosey Company and accepted Skosey's $7,800, 2-month, 10% note for the balance due.
Feb. 26 Sold $3,000 of merchandise to Platz Co., terms n/10.
Apr. 5 Accepted a $3,000, 3-month, 8% note from Platz Co. for the balance due.
Apr.12 Collected the Skosey Company note in full.
June 2 Collected the John Yockey Company note in full.
July 5 Platz Co. dishonors its note of April 5. It is expected that Platz will eventually pay the amount owed.
July 15 Sold $7,000 of merchandise to King Co. and accepted King's $7,000, 3-month, 12% note for the amount due.
Oct.15 King Co.'s note was dishonored. King Co. is bankrupt, and there is no hope of future settlement.
Journalize the transactions.
Click here for the SOLUTION
E9-2 The ledger of Elburn Company at the end of the current year shows
ACC 363
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Exercise 9-2 (E9-2) The ledger of Elburn Company at the end of the current year shows Accounts Receivable $110,000, Sales $840,000, and Sales Returns and Allowances $28,000.
Instructions
(a) If Elburn uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Elburn determines that Copp’s $1,400 balance is uncollectible.
(b) If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be
(1) 1% of net sales, and (2) 10% of accounts receivable.
(c) If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Exercise 9-2 (E9-2) The ledger of Elburn Company at the end of the current year shows Accounts Receivable $110,000, Sales $840,000, and Sales Returns and Allowances $28,000.
Instructions
(a) If Elburn uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Elburn determines that Copp’s $1,400 balance is uncollectible.
(b) If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be
(1) 1% of net sales, and (2) 10% of accounts receivable.
(c) If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable
Click here for the SOLUTION
BYP 6-4 On April 10, 2008, fire damaged the office and warehouse of Inwood Company
ACCT 100 : Introduction to Financial Accounting
San Francisco State University (SFSU)
Financial Accounting
Jerry J. Weygandt
Decision Making Across the Organization
BYP 6-4 On April 10, 2008, fire damaged the office and warehouse of Inwood Company. Most of the accounting records were destroyed, but the following account balances were determined as of March 31, 2008: Merchandise Inventory, January 1, 2008, $80,000; Sales (January 1–March 31, 2008), $180,000; Purchases (January 1–March 31, 2008) $94,000. The company’s fiscal year ends on December 31. It uses a periodic inventory system. From an analysis of the April bank statement, you discover cancelled checks of $4,200 for cash purchases during the period April 1–10. Deposits during the same period totaled $18,500. Of that amount, 60% were collections on accounts receivable, and the balance was cash sales. Correspondence with the company’s principal suppliers revealed $12,400 of purchases on account from April 1 to April 10. Of that amount, $1,600 was for merchandise in transit on April 10 that was shipped FOB destination. Correspondence with the company’s principal customers produced acknowledgments of credit sales totaling $37,000 from April 1 to April 10. It was estimated that $5,600 of credit sales will never be acknowledged or recovered from customers.
Inwood Company reached an agreement with the insurance company that its fire-loss claim should be based on the average of the gross profit rates for the preceding 2 years. The financial statements for 2006 and 2007 showed the following data.
2007 2006
Net sales $600,000 $480,000
Cost of goods purchased 404,000 356,000
Beginning inventory 60,000 40,000
Ending inventory 80,000 60,000
Inventory with a cost of $17,000 was salvaged from the fire.
Instructions
With the class divided into groups, answer the following.
(a) Determine the balances in (1) Sales and (2) Purchases at April 10.
(b) Determine the average profit rate for the years 2006 and 2007. (Hint: Find the gross profit rate for each year and divide the sum by 2.)
(c) Determine the inventory loss as a result of the fire, using the gross profit method.
Click here for the SOLUTION
San Francisco State University (SFSU)
Financial Accounting
Jerry J. Weygandt
Decision Making Across the Organization
BYP 6-4 On April 10, 2008, fire damaged the office and warehouse of Inwood Company. Most of the accounting records were destroyed, but the following account balances were determined as of March 31, 2008: Merchandise Inventory, January 1, 2008, $80,000; Sales (January 1–March 31, 2008), $180,000; Purchases (January 1–March 31, 2008) $94,000. The company’s fiscal year ends on December 31. It uses a periodic inventory system. From an analysis of the April bank statement, you discover cancelled checks of $4,200 for cash purchases during the period April 1–10. Deposits during the same period totaled $18,500. Of that amount, 60% were collections on accounts receivable, and the balance was cash sales. Correspondence with the company’s principal suppliers revealed $12,400 of purchases on account from April 1 to April 10. Of that amount, $1,600 was for merchandise in transit on April 10 that was shipped FOB destination. Correspondence with the company’s principal customers produced acknowledgments of credit sales totaling $37,000 from April 1 to April 10. It was estimated that $5,600 of credit sales will never be acknowledged or recovered from customers.
Inwood Company reached an agreement with the insurance company that its fire-loss claim should be based on the average of the gross profit rates for the preceding 2 years. The financial statements for 2006 and 2007 showed the following data.
2007 2006
Net sales $600,000 $480,000
Cost of goods purchased 404,000 356,000
Beginning inventory 60,000 40,000
Ending inventory 80,000 60,000
Inventory with a cost of $17,000 was salvaged from the fire.
Instructions
With the class divided into groups, answer the following.
(a) Determine the balances in (1) Sales and (2) Purchases at April 10.
(b) Determine the average profit rate for the years 2006 and 2007. (Hint: Find the gross profit rate for each year and divide the sum by 2.)
(c) Determine the inventory loss as a result of the fire, using the gross profit method.
Click here for the SOLUTION
BYP 5-5 The following situation is in chronological order : Surfing USA Co
ACCT 100 : Introduction to Financial Accounting
San Francisco State University (SFSU)
Financial Accounting
Jerry J. Weygandt
Communication Activity
BYP 5-5 The following situation is in chronological order.
1. Flutie decides to buy a surfboard.
2. He calls Surfing USA Co. to inquire about their surfboards.
3. Two days later he requests Surfing USA Co. to make him a surfboard.
4. Three days later, Surfing USA Co. sends him a purchase order to fill out.
5. He sends back the purchase order.
6. Surfing USA Co. receives the completed purchase order.
7. Surfing USA Co. completes the surfboard.
8. Flutie picks up the surfboard.
9. Surfing USA Co. bills Flutie.
10. Surfing USA Co. receives payment from Flutie.
Instructions
In a memo to the president of Surfing USA Co., answer the following.
(a)When should Surfing USA Co. record the sale?
(b)Suppose that with his purchase order, Flutie is required to make a down payment.Would that change your answer?
Click here for the SOLUTION
San Francisco State University (SFSU)
Financial Accounting
Jerry J. Weygandt
Communication Activity
BYP 5-5 The following situation is in chronological order.
1. Flutie decides to buy a surfboard.
2. He calls Surfing USA Co. to inquire about their surfboards.
3. Two days later he requests Surfing USA Co. to make him a surfboard.
4. Three days later, Surfing USA Co. sends him a purchase order to fill out.
5. He sends back the purchase order.
6. Surfing USA Co. receives the completed purchase order.
7. Surfing USA Co. completes the surfboard.
8. Flutie picks up the surfboard.
9. Surfing USA Co. bills Flutie.
10. Surfing USA Co. receives payment from Flutie.
Instructions
In a memo to the president of Surfing USA Co., answer the following.
(a)When should Surfing USA Co. record the sale?
(b)Suppose that with his purchase order, Flutie is required to make a down payment.Would that change your answer?
Click here for the SOLUTION
BYP 1-4 BYP 1-4 BYP 1-4 Mary and Jack Gray Mary and Jack Gray
ACCT 100 : Introduction to Financial Accounting
San Francisco State University (SFSU)
Financial Accounting
Jerry J. Weygandt
Decision Making Across The Organization
BYP 1-4 Mary and Jack Gray, local golf stars, opened the Chip-Shot Driving Range Company on March 1, 2008. They invested $25,000 cash and received common stock in exchange for their investment. A caddy shack was constructed for cash at a cost of $8,000 and $800 was spent on golf balls and golf clubs. The Grays leased five acres of land at a cost of $1,000 per month and paid the first month’s rent. During the first month, advertising costs totaled $750, of which $150 was unpaid at March 31, and $400 was paid to members of the high school golf team for retrieving golf balls. All revenues from customers were deposited in the company’s bank account. On March 15, Mary and Jack received a dividend of $1,000. A $100 utility bill was received on March 31 but was not paid. On March 31, the balance in the company’s bank account was $18,900.
Mary and Jack thought they had a pretty good first month of operations. But, their estimates of profitability ranged from a loss of $6,100 to net income of $2,450.
Instructions
(a) How could the Grays have concluded that the business operated at a loss of $6,100? Was this a valid basis on which to determine net income?
(b) How could the Grays have concluded that the business operated a t a net income of $2,450? (Hint: Prepare a balance sheet at March 31.) Was the valid basis on which to determine net income?
(c) Without preparing an income statement, determine the actual net income for March.
(d) What was the revenue earned in March?
Click here for the SOLUTION
San Francisco State University (SFSU)
Financial Accounting
Jerry J. Weygandt
Decision Making Across The Organization
BYP 1-4 Mary and Jack Gray, local golf stars, opened the Chip-Shot Driving Range Company on March 1, 2008. They invested $25,000 cash and received common stock in exchange for their investment. A caddy shack was constructed for cash at a cost of $8,000 and $800 was spent on golf balls and golf clubs. The Grays leased five acres of land at a cost of $1,000 per month and paid the first month’s rent. During the first month, advertising costs totaled $750, of which $150 was unpaid at March 31, and $400 was paid to members of the high school golf team for retrieving golf balls. All revenues from customers were deposited in the company’s bank account. On March 15, Mary and Jack received a dividend of $1,000. A $100 utility bill was received on March 31 but was not paid. On March 31, the balance in the company’s bank account was $18,900.
Mary and Jack thought they had a pretty good first month of operations. But, their estimates of profitability ranged from a loss of $6,100 to net income of $2,450.
Instructions
(a) How could the Grays have concluded that the business operated at a loss of $6,100? Was this a valid basis on which to determine net income?
(b) How could the Grays have concluded that the business operated a t a net income of $2,450? (Hint: Prepare a balance sheet at March 31.) Was the valid basis on which to determine net income?
(c) Without preparing an income statement, determine the actual net income for March.
(d) What was the revenue earned in March?
Click here for the SOLUTION
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