E8-16 (Compute FIFO, LIFO, Average-Cost-Periodic) Presented below is information related to Blowfish radios for Hootie Company for the month of July.
Date Transaction Units In Unit Cost Total Units Sold Sell Price Total
July 1 Balance 100 $4.10 $410
July 6 Purchase 800 $4.20 $3360
July 7 Sale 300 $7.00 $2100
July 10 Sale 300 $7.30 $2190
July 12 Purchase 400 $4.50 $1800
July 15 Sale 200 $7.40 $1480
July 18 Purchase 300 $4.60 $1380
July 22 Sale 400 $7.40 $2960
July 25 Purchase 500 $4.58 $2290
July 30 Sale 200 $7.50 $1500
2100 $9240 1400 $10,230
Instructions
a.) Assuming that the periodic inventory method is used, compute the inventory cost at July 31 under each of the following cost flow assumptions:
1.) FIFO
2.) LIFO
3.) Weighted-average round the average unit cost to the nearest one tenth of one cent
b.) Answer the following questions
1.) Which of the following methods used above all will yield the lowest figure for ending figure for gross profit for the income statement? Why?
2.) Which of the methods used above will yield the lowest figure for ending inventory for the balance sheet? Why?
Click here for the solution: Presented below is information related to Blowfish radios for Hootie Company for the month of July
Showing posts with label July. Show all posts
Showing posts with label July. Show all posts
Monday, March 21, 2016
Monday, October 26, 2015
Dana La Fontsee opened Pro Window Washing Inc. on July 1, 2012
P4-8A Dana La Fontsee opened Pro Window Washing Inc. on July 1, 2012. During July the following transactions were completed.
July 1 Issued 12,000 shares of common stock for $12,000 cash.
1 Purchased used truck for $8,000, paying $2,000 cash and the balance on account.
3 Purchased cleaning supplies for $900 on account.
5 Paid $1,800 cash on 1-year insurance policy effective July 1.
12 Billed customers $3,700 for cleaning services.
18 Paid $1,000 cash on amount owed on truck and $500 on amount owed on cleaning supplies.
20 Paid $2,000 cash for employee salaries.
21 Collected $1,600 cash from customers billed on July 12.
25 Billed customers $2,500 for cleaning services.
31 Paid $290 for maintenance of the truck during month.
31 Declared and paid $600 cash dividend.
The chart of accounts for Pro Window Washing contains the following accounts: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Equipment, Accumulated Depreciation— Equipment, Accounts Payable, Salaries and Wages Payable, Common Stock, Retained Earnings, Dividends, Income Summary, Service Revenue, Maintenance and Repairs Expense, Supplies Expense, Depreciation Expense, Insurance Expense, Salaries and Wages Expense.
Instructions
(a) Journalize the July transactions.
(b) Post to the ledger accounts. (Use T accounts.)
(c) Prepare a trial balance at July 31.
(d) Journalize the following adjustments.
(1) Services provided but unbilled and uncollected at July 31 were $1,700.
(2) Depreciation on equipment for the month was $180.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $320 of cleaning supplies on hand at July 31.
(5) Accrued but unpaid employee salaries were $400.
(e) Post adjusting entries to the T accounts.
(f ) Prepare an adjusted trial balance.
(g) Prepare the income statement and a retained earnings statement for July and a classified
balance sheet at July 31.
(h) Journalize and post closing entries and complete the closing process.
(i) Prepare a post-closing trial balance at July 31.
Check Figures:
(f) Cash $5,410
(g) Total Assets $21,500
Click here for the solution: Dana La Fontsee opened Pro Window Washing Inc. on July 1, 2012
July 1 Issued 12,000 shares of common stock for $12,000 cash.
1 Purchased used truck for $8,000, paying $2,000 cash and the balance on account.
3 Purchased cleaning supplies for $900 on account.
5 Paid $1,800 cash on 1-year insurance policy effective July 1.
12 Billed customers $3,700 for cleaning services.
18 Paid $1,000 cash on amount owed on truck and $500 on amount owed on cleaning supplies.
20 Paid $2,000 cash for employee salaries.
21 Collected $1,600 cash from customers billed on July 12.
25 Billed customers $2,500 for cleaning services.
31 Paid $290 for maintenance of the truck during month.
31 Declared and paid $600 cash dividend.
The chart of accounts for Pro Window Washing contains the following accounts: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Equipment, Accumulated Depreciation— Equipment, Accounts Payable, Salaries and Wages Payable, Common Stock, Retained Earnings, Dividends, Income Summary, Service Revenue, Maintenance and Repairs Expense, Supplies Expense, Depreciation Expense, Insurance Expense, Salaries and Wages Expense.
Instructions
(a) Journalize the July transactions.
(b) Post to the ledger accounts. (Use T accounts.)
(c) Prepare a trial balance at July 31.
(d) Journalize the following adjustments.
(1) Services provided but unbilled and uncollected at July 31 were $1,700.
(2) Depreciation on equipment for the month was $180.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $320 of cleaning supplies on hand at July 31.
(5) Accrued but unpaid employee salaries were $400.
(e) Post adjusting entries to the T accounts.
(f ) Prepare an adjusted trial balance.
(g) Prepare the income statement and a retained earnings statement for July and a classified
balance sheet at July 31.
(h) Journalize and post closing entries and complete the closing process.
(i) Prepare a post-closing trial balance at July 31.
Check Figures:
(f) Cash $5,410
(g) Total Assets $21,500
Click here for the solution: Dana La Fontsee opened Pro Window Washing Inc. on July 1, 2012
Tuesday, September 15, 2015
Record the necessary journal entries from the following bank reconciliation information for July 31, 2011
10. Record the necessary journal entries from the following bank reconciliation information for July 31, 2011:
Bank Balance, July 31, 2011 $36,739
Checkbook Balance, July 31, 2011 36,444
Bank collection of note receivable 1,200 + 165 interest
Bank service charge 35
Deposits in transit 2,400
Outstanding checks 1,245
NSF check from customer 330
Correction of book error (check #456 written for $160, recorded at $610)—gas expense
Click here for the solution: Record the necessary journal entries from the following bank reconciliation information for July 31, 2011
Bank Balance, July 31, 2011 $36,739
Checkbook Balance, July 31, 2011 36,444
Bank collection of note receivable 1,200 + 165 interest
Bank service charge 35
Deposits in transit 2,400
Outstanding checks 1,245
NSF check from customer 330
Correction of book error (check #456 written for $160, recorded at $610)—gas expense
Click here for the solution: Record the necessary journal entries from the following bank reconciliation information for July 31, 2011
Friday, September 11, 2015
Consider the following June actual ending balances and July 31, 2012, budgeted amounts for Oleans.com
E22-19 Preparing a financial budget [25–30 min]
Consider the following June actual ending balances and July 31, 2012, budgeted amounts for Oleans.com:
a. June 30 inventory balance, $17,750
b. July payments for inventory, $4,300
c. July payments of accounts payable and accrued liabilities, $8,200
d. June 30 accounts payable balance, $10,600
e. June 30 furniture and fixtures balance, $34,500; accumulated depreciation balance, $29,830
f. June 30 equity, $28,360
g. July depreciation expense, $900
h. Cost of goods sold, 50% of sales
i. Other July expenses, including income tax, total $6,000, paid in cash
j. June 30 cash balance, $11,400
k. July budgeted credit sales, $12,700
l. June 30 accounts receivable balance, $5,140
m. July cash receipts, $14,200
Requirement
1. Prepare a budgeted balance sheet.
Click here for the solution: Consider the following June actual ending balances and July 31, 2012, budgeted amounts for Oleans.com
Consider the following June actual ending balances and July 31, 2012, budgeted amounts for Oleans.com:
a. June 30 inventory balance, $17,750
b. July payments for inventory, $4,300
c. July payments of accounts payable and accrued liabilities, $8,200
d. June 30 accounts payable balance, $10,600
e. June 30 furniture and fixtures balance, $34,500; accumulated depreciation balance, $29,830
f. June 30 equity, $28,360
g. July depreciation expense, $900
h. Cost of goods sold, 50% of sales
i. Other July expenses, including income tax, total $6,000, paid in cash
j. June 30 cash balance, $11,400
k. July budgeted credit sales, $12,700
l. June 30 accounts receivable balance, $5,140
m. July cash receipts, $14,200
Requirement
1. Prepare a budgeted balance sheet.
Click here for the solution: Consider the following June actual ending balances and July 31, 2012, budgeted amounts for Oleans.com
Tuesday, September 8, 2015
Linda Blye opened Cardinal Window Washing Inc. on July 1, 2010
P4-8A Linda Blye opened Cardinal Window Washing Inc. on July 1, 2010. During July the following transactions were completed.
July 1 Issued 11,000 shares of common stock for $11,000 cash.
July 1 Purchased used truck for $9,000, paying $2,000 cash and the balance on account.
July 3 Purchased cleaning supplies for $900 on account.
July 5 Paid $1,800 cash on 1-year insurance policy effective July 1.
July 12 Billed customers $3,200 for cleaning services.
July 18 Paid $1,000 cash on amount owed on truck and $500 on amount owed on cleaning supplies.
July 20 Paid $2,000 cash for employee salaries.
July 21 Collected $1,400 cash from customers billed on July 12.
July 25 Billed customers $2,500 for cleaning services.
July 31 Paid $260 for gas and oil used in the truck during month.
July 31 Declared and paid a $600 cash dividend.
Instructions
(a) Journalize the July transactions.
(b) Post to the ledger accounts. (Use T accounts.)
(c) Prepare a trial balance at July 31.
(d) Journalize the following adjustments.
(1) Services provided but unbilled and uncollected at July 31 were $1,700.
(2) Depreciation on equipment for the month was $250.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $360 of cleaning supplies on hand at July 31.
(5) Accrued but unpaid employee salaries were $400.
(e) Post adjusting entries to the T accounts.
(f) Prepare an adjusted trial balance.
(g) Prepare the income statement and a retained earnings statement for July and a classified
balance sheet at July 31.
(h) Journalize and post closing entries and complete the closing process.
(i) Prepare a post-closing trial balance at July 31.
Click here for the solution: Linda Blye opened Cardinal Window Washing Inc. on July 1, 2010
July 1 Issued 11,000 shares of common stock for $11,000 cash.
July 1 Purchased used truck for $9,000, paying $2,000 cash and the balance on account.
July 3 Purchased cleaning supplies for $900 on account.
July 5 Paid $1,800 cash on 1-year insurance policy effective July 1.
July 12 Billed customers $3,200 for cleaning services.
July 18 Paid $1,000 cash on amount owed on truck and $500 on amount owed on cleaning supplies.
July 20 Paid $2,000 cash for employee salaries.
July 21 Collected $1,400 cash from customers billed on July 12.
July 25 Billed customers $2,500 for cleaning services.
July 31 Paid $260 for gas and oil used in the truck during month.
July 31 Declared and paid a $600 cash dividend.
Instructions
(a) Journalize the July transactions.
(b) Post to the ledger accounts. (Use T accounts.)
(c) Prepare a trial balance at July 31.
(d) Journalize the following adjustments.
(1) Services provided but unbilled and uncollected at July 31 were $1,700.
(2) Depreciation on equipment for the month was $250.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $360 of cleaning supplies on hand at July 31.
(5) Accrued but unpaid employee salaries were $400.
(e) Post adjusting entries to the T accounts.
(f) Prepare an adjusted trial balance.
(g) Prepare the income statement and a retained earnings statement for July and a classified
balance sheet at July 31.
(h) Journalize and post closing entries and complete the closing process.
(i) Prepare a post-closing trial balance at July 31.
Click here for the solution: Linda Blye opened Cardinal Window Washing Inc. on July 1, 2010
Sunday, September 6, 2015
On July 1, 2011, Apache Company sold a parcel of undeveloped land to a construction company for $3,000,000
BE 5-1 On July 1, 2011, Apache Company sold a parcel of undeveloped land to a construction company for $3,000,000. The book value of the land on Apache's books was $1,200,000. Terms of the sale required a down payment of $150,000 and 19 annual payments of $150,000 plus interest at an appropriate interest rate due on each July 1 beginning in 2012. Apache has no significant obligations to perform services after the sale. How much gross profit will Apache recognize in both 2011 and 2012 applying the cost recovery method?
Click here for the solution: On July 1, 2011, Apache Company sold a parcel of undeveloped land to a construction company for $3,000,000
Click here for the solution: On July 1, 2011, Apache Company sold a parcel of undeveloped land to a construction company for $3,000,000
On July 1, a city issued, at par, $100 million in percent, twenty year general obligation bonds
6-7 On July 1, a city issued, at par, $100 million in percent, twenty year general obligation bonds. It established a debt service fund to account for resources set aside to pay interest rates. In the year that it issued the debt, the city engaged in the following transactions involving the debt service fund.
1. It estimated that it would make interest payments of $3 million and have interest earnings of $30,000 from investments. It would transfer from the general fund to the debt service fund$2.97 million to pay interest and $500,000 to provide for the payment of principal when the bonds mature. Further, as required by the bond indentures, it would transfer $1 million of the bond proceeds from the capital projects fund to the debt service fund to be held in reserve until the debt matures.
2. Upon issuing the bonds, the city transferred $1 million of the bond proceeds from the capital projects fund. It invested $977,254 of the funds in twenty – year, 6 percent Treasury bonds that had a face value of $1 million. The bond discount of $22,746 reflected an effective yield rate of 6.2 percent.
3. On December 31, the city received $30,000 interest on the Treasury bonds. This payment represented interest for six months. Correspondingly, the market value of the bonds increased by $294, reflecting the amortization of the discount.
4. On the same day the city transferred $2.97 million from the general fund to pay interest on the bonds that it had issued. It also transferred $500,000 for the eventual repayment of principal.
5. Also on December 31, it made its first interest payment of $3 million to bondholders.
a. Prepare appropriate journal entries in the debt service fund, including budgetary and closing entries.
b. The bonds issued by the city pay interest at the rate of 6 percent. The bonds in which the city invested its reserve have an effective yield of 6.2 percent. What might the differences in rates create a potential liability for the city?
Click here for the solution: On July 1, a city issued, at par, $100 million in percent, twenty year general obligation bonds
1. It estimated that it would make interest payments of $3 million and have interest earnings of $30,000 from investments. It would transfer from the general fund to the debt service fund$2.97 million to pay interest and $500,000 to provide for the payment of principal when the bonds mature. Further, as required by the bond indentures, it would transfer $1 million of the bond proceeds from the capital projects fund to the debt service fund to be held in reserve until the debt matures.
2. Upon issuing the bonds, the city transferred $1 million of the bond proceeds from the capital projects fund. It invested $977,254 of the funds in twenty – year, 6 percent Treasury bonds that had a face value of $1 million. The bond discount of $22,746 reflected an effective yield rate of 6.2 percent.
3. On December 31, the city received $30,000 interest on the Treasury bonds. This payment represented interest for six months. Correspondingly, the market value of the bonds increased by $294, reflecting the amortization of the discount.
4. On the same day the city transferred $2.97 million from the general fund to pay interest on the bonds that it had issued. It also transferred $500,000 for the eventual repayment of principal.
5. Also on December 31, it made its first interest payment of $3 million to bondholders.
a. Prepare appropriate journal entries in the debt service fund, including budgetary and closing entries.
b. The bonds issued by the city pay interest at the rate of 6 percent. The bonds in which the city invested its reserve have an effective yield of 6.2 percent. What might the differences in rates create a potential liability for the city?
Click here for the solution: On July 1, a city issued, at par, $100 million in percent, twenty year general obligation bonds
In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1
In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2011, was $2,100,000. The income tax rate is 40%.
As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows:
The market price of the common stock averaged $32 per share during 2011.
On July 12, 2009, Dow issued $800,000 of convertible 10% bonds at face value. Each $1,000 bond is convertible into 30 common shares (adjusted for the stock dividend).
Required:
Compute Dow's basic and diluted earnings per share for the year ended December 31, 2011.
Click here for the solution: In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1
As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows:
The market price of the common stock averaged $32 per share during 2011.
On July 12, 2009, Dow issued $800,000 of convertible 10% bonds at face value. Each $1,000 bond is convertible into 30 common shares (adjusted for the stock dividend).
Required:
Compute Dow's basic and diluted earnings per share for the year ended December 31, 2011.
Click here for the solution: In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1
Wednesday, September 2, 2015
Monat Construction Company, Inc., entered into a firm fixed price contract with Hyatt Clinic on July 1, 2010
Monat Construction Company, Inc., entered into a firm fixed price contract with Hyatt Clinic on July 1, 2010, to construct a four-story office building. At that time, Monat estimated that it would take between 2 and 3 years to complete the project. The total contract price for construction of the building is $4,400,000. Monat appropriately accounts for this contract under the completed-contract method in its financial statements and for income tax reporting. The building was deemed substantially completed on December 31, 2012. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to the Hyatt Clinic under the contract are shown below.
(a) Prepare schedules to compute the amount to be shown as “Cost of uncompleted contract in excess of related billings” or “Billings on uncompleted contract in excess of related costs” at December 31, 2010, 2011, and 2012. Ignore income taxes. Show supporting computations in good form.
(b) Prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2010, 2011, and 2012. Ignore income taxes. Show supporting computations in good form.
Click here for the solution: Monat Construction Company, Inc., entered into a firm fixed price contract with Hyatt Clinic on July 1, 2010
(a) Prepare schedules to compute the amount to be shown as “Cost of uncompleted contract in excess of related billings” or “Billings on uncompleted contract in excess of related costs” at December 31, 2010, 2011, and 2012. Ignore income taxes. Show supporting computations in good form.
(b) Prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2010, 2011, and 2012. Ignore income taxes. Show supporting computations in good form.
Click here for the solution: Monat Construction Company, Inc., entered into a firm fixed price contract with Hyatt Clinic on July 1, 2010
Sunday, August 23, 2015
Beech Corporation, an accrual basis taxpayer, was organized and began business on July 1, 2010
Beech Corporation, an accrual basis taxpayer, was organized and began business on July 1, 2010. During 2010, the corporation incurred the following expenses:
State fees for incorporation $ 500
Legal and accounting fees incident to organization 1,800
Expenses for the sale of stock 2,100
Organizational meeting expenses 750
Assuming that Beech Corporation does not elect to expense but chooses to amortize organizational expenditures over 15 years, calculate the corporation's deduction for its calendar tax year 2010.
Click here for the solution: Beech Corporation, an accrual basis taxpayer, was organized and began business on July 1, 2010
State fees for incorporation $ 500
Legal and accounting fees incident to organization 1,800
Expenses for the sale of stock 2,100
Organizational meeting expenses 750
Assuming that Beech Corporation does not elect to expense but chooses to amortize organizational expenditures over 15 years, calculate the corporation's deduction for its calendar tax year 2010.
Click here for the solution: Beech Corporation, an accrual basis taxpayer, was organized and began business on July 1, 2010
Saturday, August 22, 2015
Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2011
E 12-19 Fair value option; held-to-maturity investments
[This is a variation of Exercise 12-1 focusing on the fair value option.]
Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2011. Company management has the positive intent and ability to hold the bonds until maturity, but when the bonds were acquired Tanner-UNF decided to elect the fair value option for accounting for its investment. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2011, was $210 million.
Required:
1. Would this investment be classified on Tanner-UNF's balance sheet as held-to-maturity securities, trading securities, available-for-sale securities, significant-influence investments, or other? Explain.
2. Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2011.
3. Prepare the journal entries by Tanner-UNF to record interest on December 31, 2011, at the effective (market) rate.
4. Prepare any journal entry necessary to recognize fair value changes as of December 31, 2011.
5. At what amount will Tanner-UNF report its investment in the December 31, 2011, balance sheet? Why?
6. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2012, for $190 million. Prepare the journal entry to record the sale.
Click here for the solution: Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2011
[This is a variation of Exercise 12-1 focusing on the fair value option.]
Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2011. Company management has the positive intent and ability to hold the bonds until maturity, but when the bonds were acquired Tanner-UNF decided to elect the fair value option for accounting for its investment. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2011, was $210 million.
Required:
1. Would this investment be classified on Tanner-UNF's balance sheet as held-to-maturity securities, trading securities, available-for-sale securities, significant-influence investments, or other? Explain.
2. Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2011.
3. Prepare the journal entries by Tanner-UNF to record interest on December 31, 2011, at the effective (market) rate.
4. Prepare any journal entry necessary to recognize fair value changes as of December 31, 2011.
5. At what amount will Tanner-UNF report its investment in the December 31, 2011, balance sheet? Why?
6. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2012, for $190 million. Prepare the journal entry to record the sale.
Click here for the solution: Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2011
Friday, August 21, 2015
On July 1, 2006, Kingston Satellites issued $3,600,000 face value, 9%, 10-year bonds at $3,375,680
P11-6A On July 1, 2006, Kingston Satellites issued $3,600,000 face value, 9%, 10-year bonds at $3,375,680. This price resulted in an effective-interest rate of 10% on the bonds. Kingston uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest July 1 and January 1.
Instructions
(Round all computations to the nearest dollar.)
(a) Prepare the journal entry to record the issuance of the bonds on July 1, 2006.
(b) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2006.
(c) Prepare the journal entry to record the payment of interest and the amortization of the discount on July 1, 2007, assuming that interest was not accrued on June 30.
(d) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2007.
(e) Prepare an amortization table through December 31, 2007 (3 interest periods) for this bond issue.
Click here for the solution: On July 1, 2006, Kingston Satellites issued $3,600,000 face value, 9%, 10-year bonds at $3,375,680
Instructions
(Round all computations to the nearest dollar.)
(a) Prepare the journal entry to record the issuance of the bonds on July 1, 2006.
(b) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2006.
(c) Prepare the journal entry to record the payment of interest and the amortization of the discount on July 1, 2007, assuming that interest was not accrued on June 30.
(d) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2007.
(e) Prepare an amortization table through December 31, 2007 (3 interest periods) for this bond issue.
Click here for the solution: On July 1, 2006, Kingston Satellites issued $3,600,000 face value, 9%, 10-year bonds at $3,375,680
Tuesday, August 18, 2015
On October 1, 2010, Noller Company issued $3,000,000 par value, 10%, 10-year bonds dated July 1, 2010, with interest payable semiannually on January 1 and July 1
On October 1, 2010, Noller Company issued $3,000,000 par value, 10%, 10-year bonds dated July 1, 2010, with interest payable semiannually on January 1 and July 1. The bonds are issued at $3,406,500 (to yield 8%) plus accrued interest. The effective interest method is used.
(a) Prepare the journal entry at the date the bonds are issued.
(c) Prepare the entry for the interest payment on January 1, 2011.
(b) Prepare the adjusting entry at December 31, 2010, the end of the fiscal year.
Click here for the solution: On October 1, 2010, Noller Company issued $3,000,000 par value, 10%, 10-year bonds dated July 1, 2010, with interest payable semiannually on January 1 and July 1
(a) Prepare the journal entry at the date the bonds are issued.
(c) Prepare the entry for the interest payment on January 1, 2011.
(b) Prepare the adjusting entry at December 31, 2010, the end of the fiscal year.
Click here for the solution: On October 1, 2010, Noller Company issued $3,000,000 par value, 10%, 10-year bonds dated July 1, 2010, with interest payable semiannually on January 1 and July 1
Saturday, August 1, 2015
On July 1, 2010, Torvill Construction Company Inc. contracted to build an office building for Gumbel Corp. for a total contract price of $1,900,000
P18-7 (Long-Term Contract with an Overall Loss) On July 1, 2010, Torvill Construction Company Inc. contracted to build an office building for Gumbel Corp. for a total contract price of $1,900,000. On July 1, Torvill estimated that it would take between 2 and 3 years to complete the building. On December 31, 2012, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2010, 2011, and 2012.
At At At
12/31/10 12/31/11 12/31/12
Contract costs incurred to date $ 300,000 $1,200,000 $2,100,000
Estimated costs to complete the contract 1,200,000 800,000 –0–
Billings to Gumbel 300,000 1,100,000 1,850,000
Instructions
(a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2010, 2011, and 2012. (Ignore income taxes.)
(b) Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2010, 2011, and 2012. (Ignore income taxes.)
Click here for the solution: On July 1, 2010, Torvill Construction Company Inc. contracted to build an office building for Gumbel Corp. for a total contract price of $1,900,000
At At At
12/31/10 12/31/11 12/31/12
Contract costs incurred to date $ 300,000 $1,200,000 $2,100,000
Estimated costs to complete the contract 1,200,000 800,000 –0–
Billings to Gumbel 300,000 1,100,000 1,850,000
Instructions
(a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2010, 2011, and 2012. (Ignore income taxes.)
(b) Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2010, 2011, and 2012. (Ignore income taxes.)
Click here for the solution: On July 1, 2010, Torvill Construction Company Inc. contracted to build an office building for Gumbel Corp. for a total contract price of $1,900,000
The Heron Partnership was formed on July 1 of the current year and admitted Carl and Megan as equal partners on that date
The Heron Partnership was formed on July 1 of the current year and admitted Carl and Megan as equal partners on that date. The partners each contributed $ 200,000 of cash to establish a children’s clothing store in a local shopping mall. The partners spent July and August buying inventory, equipment, supplies, and advertising for their "Grand Opening" on October 1. Following are some of the costs the partnership incurred during its first year of operations:
Legal fees to form partnership 2,000
Advertising for "Grand Opening" 15,000
Advertising after opening 10,000
Consulting fees for establishing accounting system 5,000
Rent, six months at $ 2,000/ month 12,000
Utilities at $ 600 per month 3 3,600
Salaries to sales clerks 30,000
Payments to Carl and Megan for services ($ 5,000/ month each for three months, beginning in October) 30,000
Tax return preparation expense 5,000
In addition, the partnership purchased all of the assets of Granny Newcombs, Inc. Of the total purchase price for these assets, $ 60,000 was allocated to the trade name and logo.
Determine how each of the above costs is treated by the partnership, and identify the period over which the costs can be deducted, if any.
Click here for the solution: The Heron Partnership was formed on July 1 of the current year and admitted Carl and Megan as equal partners on that date
Legal fees to form partnership 2,000
Advertising for "Grand Opening" 15,000
Advertising after opening 10,000
Consulting fees for establishing accounting system 5,000
Rent, six months at $ 2,000/ month 12,000
Utilities at $ 600 per month 3 3,600
Salaries to sales clerks 30,000
Payments to Carl and Megan for services ($ 5,000/ month each for three months, beginning in October) 30,000
Tax return preparation expense 5,000
In addition, the partnership purchased all of the assets of Granny Newcombs, Inc. Of the total purchase price for these assets, $ 60,000 was allocated to the trade name and logo.
Determine how each of the above costs is treated by the partnership, and identify the period over which the costs can be deducted, if any.
Click here for the solution: The Heron Partnership was formed on July 1 of the current year and admitted Carl and Megan as equal partners on that date
Sunday, July 12, 2015
On July 1, 2011, Ted, age 73 and single, sells his personal residence of the last 30 years for $365,000
On July 1, 2011, Ted, age 73 and single, sells his personal residence of the last 30 years for $365,000. Ted's basis in his residence is $35,000. The expenses associated with the sale of his home total $20,000. On December 15, 2011, Ted purchases and occupies a new residence at a cost of $175,000. Calculate Ted's realized gain, recognized gain, and adjusted basis of his new residence.
Click here for the solution: On July 1, 2011, Ted, age 73 and single, sells his personal residence of the last 30 years for $365,000
Click here for the solution: On July 1, 2011, Ted, age 73 and single, sells his personal residence of the last 30 years for $365,000
Tuesday, July 7, 2015
On July 1, 20x1, Littleton Inc. loaned a key supplier of raw material $2,000,000 to construct a new processing facility
On July 1, 20x1, Littleton Inc. loaned a key supplier of raw material $2,000,000 to construct a new processing facility. The loan is due on July 1, 20x3 and pays interest each December 31 and June 30. The supplier insisted on a variable rate loan. The controller of Littleton wants to avoid the risk of variable rate fluctuation and entered into an interest rate swap in which it will pay the variable rate on $2,000,000 in exchange for a fixed rate of 8.3%. The swap is settled on the interest payment dates. Variable interest rates and the value of the swap on selected dates are as follow:
Variable rate Value of the swap
July1, 20x1 7.9%
December 31, 20x1 7.75% 10,400
Prepare all journal entries to record this hedge through December 20x1.
Click here for the solution: On July 1, 20x1, Littleton Inc. loaned a key supplier of raw material $2,000,000 to construct a new processing facility
Variable rate Value of the swap
July1, 20x1 7.9%
December 31, 20x1 7.75% 10,400
Prepare all journal entries to record this hedge through December 20x1.
Click here for the solution: On July 1, 20x1, Littleton Inc. loaned a key supplier of raw material $2,000,000 to construct a new processing facility
Thursday, July 2, 2015
P4-5B Lee Choi opened Choi’s Window Washing, Inc. on July 1, 2008
P4-5B Lee Choi opened Choi’s Window Washing, Inc. on July 1, 2008. During July the following transactions were completed.
July 1 Issued $12,000 of common stock for $12,000 cash.
1 Purchased used truck for $6,000, paying $3,000 cash and the balance on account.
3 Purchased cleaning supplies for $1,300 on account.
5 Paid $2,400 cash on one-year insurance policy effective July 1.
12 Billed customers $2,500 for cleaning services.
18 Paid $1,000 cash on amount owed on truck and $800 on amount owed on cleaning supplies.
20 Paid $1,200 cash for employee salaries.
21 Collected $1,400 cash from customers billed on July 12.
25 Billed customers $5,000 for cleaning services.
31 Paid gas and oil for month on truck $200.
31 Declared and paid $900 cash dividend.
The chart of accounts for Choi’s Window Washing contains the following accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 128 Cleaning Supplies, No. 130 Prepaid Insurance, No. 157 Equipment, No. 158 Accumulated Depreciation—Equipment, No. 201 Accounts Payable, No. 212 Salaries Payable, No. 311 Common Stock, No. 320 Retained Earnings, No. 332 Dividends, No. 350 Income Summary,No. 400 Service Revenue,No. 633 Gas & Oil Expense,No. 634 Cleaning Supplies Expense,No. 711 Depreciation Expense,No. 722 Insurance Expense, and No. 726 Salaries Expense.
Instructions
(a) Journalize and post the July transactions. Use page J1 for the journal and the three-column form of account.
(b) Prepare a trial balance at July 31 on a worksheet.
(c) Enter the following adjustments on the worksheet and complete the worksheet.
(1) Services provided but unbilled and uncollected at July 31 were $1,500.
(2) Depreciation on equipment for the month was $300.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $400 of cleaning supplies on hand at July 31.
(5) Accrued but unpaid employee salaries were $600.
(d) Prepare the income statement and a retained earnings statement for July and a classified balance sheet at July 31.
(e) Journalize and post adjusting entries. Use page J2 for the journal.
(f) Journalize and post closing entries and complete the closing process. Use page J3 for the journal.
(g) Prepare a post-closing trial balance at July 31.
Check:
(b) Trial balance $22,000
(c) Adjusted trial balance $24,400
(d) Net income $5,600; Total assets $19,800
(g) Post-closing trial balance $20,100
Click here for the solution: P4-5B Lee Choi opened Choi’s Window Washing, Inc. on July 1, 2008
July 1 Issued $12,000 of common stock for $12,000 cash.
1 Purchased used truck for $6,000, paying $3,000 cash and the balance on account.
3 Purchased cleaning supplies for $1,300 on account.
5 Paid $2,400 cash on one-year insurance policy effective July 1.
12 Billed customers $2,500 for cleaning services.
18 Paid $1,000 cash on amount owed on truck and $800 on amount owed on cleaning supplies.
20 Paid $1,200 cash for employee salaries.
21 Collected $1,400 cash from customers billed on July 12.
25 Billed customers $5,000 for cleaning services.
31 Paid gas and oil for month on truck $200.
31 Declared and paid $900 cash dividend.
The chart of accounts for Choi’s Window Washing contains the following accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 128 Cleaning Supplies, No. 130 Prepaid Insurance, No. 157 Equipment, No. 158 Accumulated Depreciation—Equipment, No. 201 Accounts Payable, No. 212 Salaries Payable, No. 311 Common Stock, No. 320 Retained Earnings, No. 332 Dividends, No. 350 Income Summary,No. 400 Service Revenue,No. 633 Gas & Oil Expense,No. 634 Cleaning Supplies Expense,No. 711 Depreciation Expense,No. 722 Insurance Expense, and No. 726 Salaries Expense.
Instructions
(a) Journalize and post the July transactions. Use page J1 for the journal and the three-column form of account.
(b) Prepare a trial balance at July 31 on a worksheet.
(c) Enter the following adjustments on the worksheet and complete the worksheet.
(1) Services provided but unbilled and uncollected at July 31 were $1,500.
(2) Depreciation on equipment for the month was $300.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $400 of cleaning supplies on hand at July 31.
(5) Accrued but unpaid employee salaries were $600.
(d) Prepare the income statement and a retained earnings statement for July and a classified balance sheet at July 31.
(e) Journalize and post adjusting entries. Use page J2 for the journal.
(f) Journalize and post closing entries and complete the closing process. Use page J3 for the journal.
(g) Prepare a post-closing trial balance at July 31.
Check:
(b) Trial balance $22,000
(c) Adjusted trial balance $24,400
(d) Net income $5,600; Total assets $19,800
(g) Post-closing trial balance $20,100
Click here for the solution: P4-5B Lee Choi opened Choi’s Window Washing, Inc. on July 1, 2008
Monday, June 29, 2015
(Bank reconciliation and internal control) The records of Parker Company indicate a July 31 cash balance of $10,400, which includes undeposited receipts for July 30 and 31
CP 8-5 Bank reconciliation and internal control (25th edition)
The records of Parker Company indicate a July 31 cash balance of $10,400, which includes undeposited receipts for July 30 and 31. The cash balance on the bank statement as of July 31 is $10,575. This balance includes a note of $2,250 plus $150 interest collected by the bank but not recorded in the journal. Checks outstanding on July 31 were as follows: No. 2670, $1,050; No. 3679, $675; No. 3690, $1,650; No. 5148, $225; No. 5149, $750; and No. 5151, $800. On July 25, the cashier resigned, effective at the end of the month. Before leaving on July 31, the cashier prepared the following bank reconciliation:
Cash balance per books, July 31 .................................... $10,400
Add outstanding checks:
No. 5148 ........................................................ $225
5149 ........................................................ 750
5151 ........................................................ 800 1,675
$12,075
Less undeposited receipts ......................................... 1,500
Cash balance per bank, July 31 ..................................... $10,575
Deduct unrecorded note with interest .............................. 2,400
True cash, July 31.................................................. $ 8,175
Calculator Tape of Outstanding Checks:
0*
225
750
800
1,675*
Subsequently, the owner of Parker Company discovered that the cashier had stolen an unknown amount of undeposited receipts, leaving only $1,500 to be deposited on July 31. The owner, a close family friend, has asked your help in determining the amount that the former cashier has stolen.
1. Determine the amount the cashier stole from Parker Company. Show your computations in good form.
2. How did the cashier attempt to conceal the theft?
3. a. Identify two major weaknesses in internal controls, which allowed the cashier to steal the undeposited cash receipts.
b. Recommend improvements in internal controls, so that similar types of thefts of undeposited cash receipts can be prevented.
Click here for the solution: (Bank reconciliation and internal control) The records of Parker Company indicate a July 31 cash balance of $10,400, which includes undeposited receipts for July 30 and 31
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