South Carolina Corporation has one temporary difference at the end of 2008 that will reverse and cause taxable amounts

E19-1 (One Temporary difference, Future Taxable Amounts, One Rate, No Beginning Deferred Taxes) South Carolina Corporation has one temporary difference at the end of 2008 that will reverse and cause taxable amounts of  $55,000 in 2009, $60,000 in 2010, and $65,000 in 2011. South Carolina's pretax financial income for 2008 is $300,000 and the tax rate us 30% for all years. There are no deferred taxes at the beginning of 2008.

Instructions
a.) Compute taxable income and income taxes payable for 20008.
b.) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2008.
c.) Prepare the income tax expense section of the income statement for 2008, beginning with the line "Income before income taxes"

Click here for the solution: South Carolina Corporation has one temporary difference at the end of 2008 that will reverse and cause taxable amounts

Joni Hyde Inc. has the following amounts included in its general ledger at December 31, 2008

E12-3 (Classification Issues - Intangible Asset) Joni Hyde Inc. has the following amounts included in its general ledger at December 31, 2008.

Organization costs $24,000
Trademarks $15,000
Discount on bonds payable $35,000
Deposits with advertising agency for ads to promote goodwill of company $10,000
Excess of cost over fair value of net identifiable assets of acquired subsidiary $75,000
Cost of equipment acquired for research and development projects; the equipment has an alternative future use $90,000
Costs of developing a secret formula for a product that is expected to be marketed for at least 20 years. $80,000

Instructions
a.) On the basis of the information above, compute the total amount to be reported by Hyde for intangible assets on its balance sheet at December 31, 2008.
b.) If an item is not to be included in intangible assets, explain its proper treatment for reporting purposes.

Click here for the solution: Joni Hyde Inc. has the following amounts included in its general ledger at December 31, 2008

Shawnee Co. set up a petty cash fund for payments of small amounts

Problem 8-2A (P8-2A) Shawnee Co. set up a petty cash fund for payments of small amounts. The following transactions involving the petty cash fund occurred in May (the last month of the company’s fiscal year):

May 1 Prepared a company check for $250 to establish the petty cash fund.
15 Prepared a company check both to replenish the fund for the following expenditures made since May 1 and to increase the fund to $450.
a. Paid $78 for janitorial services.
b. Paid $63.68 for miscellaneous expenses.
c. Paid postage expenses of $43.50.
d. Paid $57.15 to The County Gazette (the local newspaper) for an advertisement.
e. Counted $11.15 remaining in the petty cash box.
31 The petty cashier reports that $293.39 cash remains in the fund and decides that the May 15 increase in the fund was too large. A company check is drawn both to replenish the fund for the following expenditures made since May 15 and to reduce the fund to $400.
f. Paid postage expenses of $48.36.
g. Reimbursed the office manager for business mileage, $38.50.
h. Paid $39.75 to deliver merchandise to a customer, terms FOB destination.

Required
1. Prepare journal entries to establish the fund on May 1, to replenish it on May 15 and on May 31, and to reflect any increase or decrease in the fund balance on those dates.

Analysis Component
2. Explain how the company’s financial statements are affected if the petty cash fund is not replenished and no entry is made on May 31.

Click here for the solution: Shawnee Co. set up a petty cash fund for payments of small amounts

Certain item descriptions and amounts are missing from the monthly schedule of cost of goods manufactured and the income statement of Pinta Manufacturing Company

P16-32B Certain item descriptions and amounts are missing from the monthly schedule of cost of goods manufactured and the income statement of Pinta Manufacturing Company.

Requirement

1. Fill in the missing words (___) and amounts (X).

Click here for the solution: Certain item descriptions and amounts are missing from the monthly schedule of cost of goods manufactured and the income statement of Pinta Manufacturing Company

The accounts of Consolidated Can contain the following amounts at December 31, 2008

P 4-3 The accounts of Consolidated Can contain the following amounts at December 31, 2008:

Cost of products sold $410,000
Dividends 3,000
Extraordinary gain (net of tax) 1,000
Income taxes 9,300
Interest expense 8,700
Other income 1,600
Retained earnings, 1/1 270,000
Sales 480,000
Selling and administrative expense 42,000

Required
Prepare a multiple-step income statement combined with a reconciliation of retained earnings for the year ended December 31, 2008.


Click here for the solution: The accounts of Consolidated Can contain the following amounts at December 31, 2008

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

The amounts of the assets and liabilities of Padre Travel Service as of June 30, 2010, the end of the current year

The amounts of the assets and liabilities of Padre Travel Service as of June 30, 2010, the end of the current year, and its revenue and expenses for the year are listed below. The retained earnings were $210,000, and the capital stock was $90,000 as of July 1, 2009, the beginning of the current year. Dividends of $180,000 were paid during the current year.

Accounts payable $71,500
Accounts receivable 188,100
Cash 318,300
Fees earned 1,579,200
Miscellaneous expense 16,000
Rent expense 226,800
Supplies 20,100
Supplies expense 42,600
Taxes expense 33,600
Utilities expense 135,000
Wages expense 790,200

Instructions
1. Prepare an income statement for the current year ended June 30, 2010.
2. Prepare a retained earnings statement for the current year ended June 30, 2010.
3. Prepare a balance sheet as of June 30, 2010.


Click here for the solution: The amounts of the assets and liabilities of Padre Travel Service as of June 30, 2010, the end of the current year

Ken paid the following amounts for interest during 2010

Ken paid the following amounts for interest during 2010:

Qualified interest on home mortgage $4,700
Auto loan interest 850
“Points" on the mortgage for acquisition of his 300 personal residence
Service charges on his checking account 40
Mastercard interest 300

Calculate Ken's itemized deduction for interest on Schedule A.


Click here for the solution: Ken paid the following amounts for interest during 2010

Bonds are frequently issued at amounts greater or less than face value

Bonds are frequently issued at amounts greater or less than face value. Describe how the market interest rate, relative to the contractual interest rate, affects the selling price of bonds. Also, explain the rationale for requiring an investor to pay accrued interest when a bond is purchased between interest payment dates.

Click here for the solution: Bonds are frequently issued at amounts greater or less than face value

At December 31, 2008, the trial balance of Worcester Company contained the following amounts before adjustment

P9-5A At December 31, 2008, the trial balance of Worcester Company contained the following amounts before adjustment.

Debits Credits
Accounts Receivable $385,000
Allowance for Doubtful Accounts $ 2,000
Sales 950,000

Instructions
(a) Based on the information given, which method of accounting for bad debts is Worcester Company using—the direct write-off method or the allowance method? How can you tell?
(b) Prepare the adjusting entry at December 31, 2008, for bad debts expense under each of the following independent assumptions.
(1) An aging schedule indicates that $11,750 of accounts receivable will be uncollectible.
(2) The company estimates that 1% of sales will be uncollectible.
(c) Repeat part (b) assuming that instead of a credit balance there is an $2,000 debit balance in Allowance for Doubtful Accounts.
(d) During the next month, January 2009, a $3,000 account receivable is written off as uncollectible. Prepare the journal entry to record the write-off.
(e) Repeat part (d) assuming that Worcester uses the direct write-off method instead of the allowance method in accounting for uncollectible accounts receivable.
(f) What type of account is Allowance for Doubtful Accounts? How does it affect how accounts receivable is reported on the balance sheet at the end of the accounting period?

Click here for the solution: At December 31, 2008, the trial balance of Worcester Company contained the following amounts before adjustment

Elizabeth Company reported the following amounts in the stockholders' equity section of its December 31, 2010, balance sheet

E15-18 (Dividends and Stockholders' Equity Section) Elizabeth Company reported the following amounts in the stockholders' equity section of its December 31, 2010, balance sheet.

Preferred stock, 8%, $100 par (10,000 shares authorized, 2,000 shares issued) $200,000
Common stock, $5 par (100,000 shares authorized, 20,000 shares issued) 100,000
Additional paid-in capital 125,000
Retained earnings 450,000
Total $875,000

During 2011, Elizabeth took part in the following transactions concerning stockholders' equity.

1. Paid the annual 2010 $8 per share dividend on preferred stock and a $2 per share dividend on common stock. These dividends had been declared on December 31, 2010.
2. Purchased 2,700 shares of its own outstanding common stock for $40 per share. Elizabeth uses the cost method.
3. Reissued 700 treasury shares for land valued at $30,000.
4. Issued 500 shares of preferred stock at $105 per share.
5. Declared a 10% stock dividend on the outstanding common stock when the stock is selling for $45 per share.
6. Issued the stock dividend.
7. Declared the annual 2011 $8 per share dividend on preferred stock and the $2 per share dividend on common stock. These dividends are payable in 2012.

Instructions
(a) Prepare journal entries to record the transactions described above.
(b) Prepare the December 31, 2011, stockholders' equity section. Assume 2011 net income was $330,000.

Click here for the solution: Elizabeth Company reported the following amounts in the stockholders' equity section of its December 31, 2010, balance sheet

Use your knowledge of balance sheets to fill in the missing amounts

Use your knowledge of balance sheets to fill in the missing amounts:

ASSETS
Cash $50,000
Accounts receivable 80,000
Inventory 100,000
Total current assets ---------
Gross plant and equipment --------
Less: accumulated depreciation 130,000
Net plant and equipment 600,000
Total assets

LIABILITIES
Accounts payable $12,000
Notes payable 50,000
Total current liabilities _____
Long-term debt _____
Total liabilities ------
Common stock ($1 par, 100,000 shares)_____
Paid-in capital 250,000
Retained earnings 200,000
Total stockholders' equity _____
Total liabilities and equity 830,000

Click here for the solution: Use your knowledge of balance sheets to fill in the missing amounts

Use your knowledge of balance sheets and common-size statements to fill in the missing dollar amounts

Use your knowledge of balance sheets and common-size statements to fill in the missing dollar amounts:

ASSETS
Cash $25,000 3.4%
Accounts receivable $125,000 _____
Inventory _______ 27.1%
Total current assets $350,000 ______
Gross plant and equipment _______ 95.0%
Less: accumulated depreciation $313,000 42.5%
Net plant and equipment _______ ______
Total assets $737,000 100.0%

LIABILITIES
Accounts payable _______ 15.7%
Notes payable $29,000 3.9%
Total current liabilities _______ _____
Long-term debt $248,000 33.6%
Total liabilities $393,000 _____
Common stock ($.01 par, 450,000 shares) $4,500 0.6%
Paid-in capital $220,500 29.9%
Retained earnings _______ _____
Total stockholders’ equity $344,000 46.7%
Total liabilities and equity _______ 100.0%

Click here for the solution: Use your knowledge of balance sheets and common-size statements to fill in the missing dollar amounts

Balance sheet accounts for Joyner Company contained the following amounts at the end of Years 1 and 2

Problem 15–9 Prepare a Statement of Cash Flows (Indirect Method); Free Cash Flow

Balance sheet accounts for Joyner Company contained the following amounts at the end of Years 1 and 2:

Debit Balance Accounts Year 2 Year 1
Cash $4,000 $21,000
A/R $250,000 $170,000
Inventory $310,000 $260,000
Prepaid Exp $7,000 $14,000
Loan to Hymas Company $40,000 $-
Plant & Equp $510,000 $400,000
Total Debits $1,121,000 $865,000

Credit Balance Accounts
Accum Depreciation $132,000 $120,000
A/P $310,000 $250,000
Accrued Liabilities $20,000 $30,000
Bonds Payable $190,000 $70,000
Deferred Income Taxes $45,000 $42,000
Common Stock $300,000 $270,000
Retained Earnings $124,000 $83,000
Total Credits $1,121,000 $865,000

The company’s income statement for Year 2 follows:

Sales . . . . . . . . . . . . . . . . . . . $900,000
Cost of goods sold . . . . . . . . . 500,000
Gross margin . . . . . . . . . . . . . 400,000
Selling and administrative
expenses . . . . . . . . . . . . . . 328,000
Net operating income . . . . . . . 72,000
Gain on sale of equipment . . . 8,000
Income before taxes . . . . . . . . 80,000
Income taxes . . . . . . . . . . . . . 24,000
Net income . . . . . . . . . . . . . . . $ 56,000


Equipment that had cost $40,000 and on which there was accumulated depreciation of $30,000 was sold during Year 2 for $18,000. Cash dividends totaling $15,000 were declared and paid during Year 2.

Required:
1. Using the indirect method, compute the net cash provided by operating activities for Year 2.
2. Prepare a statement of cash flows for Year 2.
3. Compute the free cash f ow for Year 2.
4. Briefly explain why cash declined so sharply during the year.

Click here for the solution: Balance sheet accounts for Joyner Company contained the following amounts at the end of Years 1 and 2

Drew Carey Corporation reported the following amounts in 2007, 2008, and 2009

Brief Exercise 15-2 (BE15-2) Drew Carey Corporation reported the following amounts in 2007, 2008, and 2009.

2007 2008 2009
Current assets 200,000 230,000 240,000
Current liabilities 160,000 168,000 184,000
Total assets 500,000 600,000 620,000

Instructions
(a) Identify and describe the three tools of financial statement analysis.
(b) Perform each of the three types of analysis on Drew Carey’s current assets

Click here for the solution: Drew Carey Corporation reported the following amounts in 2007, 2008, and 2009

(Computation of Present Value) Using the appropriate interest table, compute the present values of the following periodic amounts due at the end of the designated periods

ACC 421 Week 5

Exercise 6-5 (E6-5) (Computation of Present Value)
Using the appropriate interest table, compute the present values of the following periodic amounts due at the end of the designated periods.
(a) $30,000 receivable at the end of each period for 8 periods compounded at 12%.
(b) $30,000 payments to be made at the end of each period for 16 periods at 9%.
(c) $30,000 payable at the end of the seventh, eighth, ninth, and tenth periods at 12%.

Click here for the solution: (Computation of Present Value) Using the appropriate interest table, compute the present values of the following periodic amounts due at the end of the designated periods