The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2009

P11-5 Property, plant, and equipment and intangible assets; comprehensive

The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2009. The accounting department of Thompson has started the fixed-asset and depreciation schedule presented below. You have been asked to assist in completing this schedule. In addition to ascertaining that the data already on the schedule are correct, you have obtained the following information from the company's records and personnel:

a. Depreciation is computed from the first of the month of acquisition to the first of the month of disposition.

b. Land A and Building A were acquired from a predecessor corporation. Thompson paid $812,500 for the land and building together. At the time of acquisition, the land had a fair value of $72,000 and the building had a fair value of $828,000.

c. Land B was acquired on October 2, 2009, in exchange for 3,000 newly issued shares of Thompson's common stock. At the date of acquisition, the stock had a par value of $5 per share and a fair value of $25 per share. During October 2009, Thompson paid $10,400 to demolish an existing building on this land so it could construct a new building.

d. Construction of Building B on the newly acquired land began on October 1, 2010. By September 30, 2011, Thompson had paid $210,000 of the estimated total construction costs of $300,000. Estimated completion and occupancy are July 2012.

e. Certain equipment was donated to the corporation by the city. An independent appraisal of the equipment when donated placed the fair value at $16,000 and the residual value at $2,000.

f. Machine A's total cost of $110,000 includes installation charges of $550 and normal repairs and maintenance of $11,000. Residual value is estimated at $5,500. Machine A was sold on February 1, 2011.

g. On October 1, 2010, Machine B was acquired with a down payment of $4,000 and the remaining payments to be made in 10 annual installments of $4,000 each beginning October 1, 2011. The prevailing interest rate was 8%.

Required:
Supply the correct amount for each numbered item on the schedule. Round each answer to the nearest dollar.

Click here for the solution: The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2009

Copa Company, a manufacturer of stereo systems, started its production in October 2008 (ACC 560 Week 2)

ACC 560 Week 2 Assignment

P1-2A Copa Company, a manufacturer of stereo systems, started its production in October 2008. For the preceding 3 years Copa had been a retailer of stereo systems. After a thorough survey of stereo system markets, Copa decided to turn its retail store into a stereo equipment factory.

Raw materials cost for a stereo system will total $74 per unit. Workers on the production lines are on average paid $12 per hour. A stereo system usually takes 5 hours to complete. In addition, the rent on the equipment used to assemble stereo systems amounts to $4,900 per month. Indirect materials cost $5 per system. A supervisor was hired to oversee production; her monthly salary is $3,000.

Janitorial costs are $1,300 monthly. Advertising costs for the stereo system will be $8,500 per month. The factory building depreciation expense is $7,200 per year. Property taxes on the factory building will be $9,000 per year.

Required:
(a) Prepare an answer sheet. Assuming that Copa manufactures, on average, 1,300 stereo systems per month, enter each cost item on your answer sheet, placing the dollar amount per month under the appropriate headings. Total the dollar amounts in each of the columns.
(b) Compute the cost to produce one stereo system.

Click here for the solution: Copa Company, a manufacturer of stereo systems, started its production in October 2008 (ACC 560 Week 2)

For its fiscal year ending October 31, 2008, Molini Corporation reports the following partial data (ACC 560 Week 10 Assignment)

ACC 560 Week 10 Assignment

E14-12 For its fiscal year ending October 31, 2008, Molini Corporation reports the following partial data.

Income before income taxes $540,000
Income tax expense (30% $390,000) 117,000
Income before extraordinary items 423,000
Extraordinary loss from flood 150,000
Net income $273,000

The flood loss is considered an extraordinary item. The income tax rate is 30% on all items.

Instructions
a) Prepare a correct income statement, beginning with income before income taxes.
b) Explain in memo form why Molini's reported income statement data are incorrect


Click here for the solution: For its fiscal year ending October 31, 2008, Molini Corporation reports the following partial data (ACC 560 Week 10 Assignment)

On October 31, the stockholders' equity section of Omar Company consists of common stock $600,000 and retained earnings $900,000

E11-15 On October 31, the stockholders' equity section of Omar Company consists of common stock $600,000 and retained earnings $900,000. Omar is considering the following two courses of action: (1) declaring a 5% stock dividend on the 60,000, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $14 per share.

Instructions
Prepare a tabular summary of the effects of the alternative actions on the components of stockholders' equity, outstanding shares, and book value per share. Use the following column headings:

Before Action, After Stock Dividend, and After Stock Split.


Click here for the solution: On October 31, the stockholders' equity section of Omar Company consists of common stock $600,000 and retained earnings $900,000

For its fiscal year ending October 31, 2008, Molini Corporation reports the following partial data

E15-12 For its fiscal year ending October 31, 2008, Molini Corporation reports the following partial data.

Income before income taxes $540,000
Income tax expense (30% $390,000) 117,000
Income before extraordinary items 423,000
Extraordinary loss from flood 150,000
Net income $273,000

The flood loss is considered an extraordinary item. The income tax rate is 30% on all items.

Instructions
a) Prepare a correct income statement, beginning with income before income taxes.
b) Explain in memo form why Molini's reported income statement data are incorrect


Click here for the solution: For its fiscal year ending October 31, 2008, Molini Corporation reports the following partial data

On October 10, 2010, Mason Engineering Company completed negotiations on a contract for the purchase of new equipment

On October 10, 2010, Mason Engineering Company completed negotiations on a contract for the purchase of new equipment. Under the terms of the agreement, the equipment may be purchased now or Mason may wait until January 10, 2011, to make the purchase. The cost of the equipment is $400,000. It will be financed by a note bearing interest at the market rate. Straight-line depreciation over a 10-year life will be used for book purposes. A double-declining balance over seven years will be used for tax purposes. (One-half year of depreciation will be taken in the year of purchase regardless of the date of purchase.)

Required:
a. Discuss the financial statement impacts of postponing the purchase of the equipment. Would the market price of the firm’s common stock be affected by any or all of these impacts? Do not assume in your discussion that the postponement will affect revenues or any operating costs other than depreciation.
b. Discuss any cash flow impacts related to postponing the purchase of the equipment.
c. Efficient markets assume that stockholder wealth is affected by the amount and timing of cash flows. Which alternative is more favorable to them: purchasing before year-end or waiting until January? Explain your answer.


Click here for the solution: On October 10, 2010, Mason Engineering Company completed negotiations on a contract for the purchase of new equipment

On October 31, the stockholders’ equity section of Huth Company consists of common stock $300,000 and retained earnings $900,000

On October 31, the stockholders’ equity section of Huth Company consists of common stock $300,000 and retained earnings $900,000. Huth is considering the following two courses of action:

(1) Declaring a 5% stock dividend on the 30,000, $10 par value shares outstanding, or
(2) Effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $14 per share.

Instructions
Prepare a tabular summary of the effects of the alternative actions on the components of stockholders’ equity, outstanding shares, and par value per share. Use the following column headings: Before Action, After Stock Dividend, and After Stock Split


Click here for the solution: On October 31, the stockholders’ equity section of Huth Company consists of common stock $300,000 and retained earnings $900,000

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

At the beginning of the 2010 school year, Britney Logan decided to prepare a cash budget for the months of September, October, November, and December

At the beginning of the 2010 school year, Britney Logan decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the soring semester tuition, which is the same as the fall tuition. The following information relates to the budget:

Cash balance, September 1(from a summer job) $7,000
Purchase season football tickets in September 100
Additional entertainment for each month 250
Pay fall semester tuition on September 3 3,800
Pay rent at the beginning of each month 350
Pay for food each month 200
Pay apartment deposit on September 2(to be returned Dec 15) 500
Part-time job earnings each month (net of taxes) 900

a. Prepare a cash budget for September, October, November, and December.
b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?
c. What are the budget implications for Britney Logan?

Click here for the solution: At the beginning of the 2010 school year, Britney Logan decided to prepare a cash budget for the months of September, October, November, and December

Through a "Type B" reorganization, Golden Corporation acquired 90% of RetrieverCo stock by October 2 of the current tax year ending December 31

Through a "Type B" reorganization, Golden Corporation acquired 90% of RetrieverCo stock by October 2 of the current tax year ending December 31. At the time the 90% was acquired, RetrieverCo was worth $800,000 and the Federal long-term tax-exempt rate was 3%. RetrieverCo holds captial loss carryovers of $50,000. If Golden reports taxable income of $300,000 which includes $30,000 of capital gains, how much of the RetrieverCo capital loss carryover may Golden use in the current year to offset its income?

Click here for the solution: Through a "Type B" reorganization, Golden Corporation acquired 90% of RetrieverCo stock by October 2 of the current tax year ending December 31

On October 1, Keisha King organized Real Answers, a new consulting firm

On October 1, Keisha King organized Real Answers, a new consulting firm. On October 31, the company’s records show the following items and amounts. Use this information to prepare an October income statement for the business.

Cash . . . . . . . . . . . . . . . . . . $11,500    Cash dividends . . . . . . . . . . . . . . $ 2,000

Accounts receivable . . . . . . . 12,000     Consulting fees earned . . . . . . . . 14,000

Office supplies . . . . . . . . . . . 24,437     Rent expense . . . . . . . . . . . . . . . 2,520

Land . . . . . . . . . . . . . . . . . . . 46,000   Salaries expense . . . . . . . . . . . . . 5,600

Office equipment . . . . . . . . . 18,000     Telephone expense . . . . . . . . . . . 760

Accounts payable . . . . . . . . . 25,037    Miscellaneous expenses . . . . . . . 580

Common stock . . . . . . . . . . . 84,360

Check: Net income, $4,540

Click here for the solution: On October 1, Keisha King organized Real Answers, a new consulting firm