PR 9-1A The following transactions were completed by The Bronze gallery during the current fiscal year ended December 31:
June 6: Reinstated the account of Ian Netti, which had been written off in the preceding year as uncollectible. Journalized the receipt of $1945 cash in full payment of Ian's account.
July 19: Wrote off the $11,150 balance owed by Rancho Rigging Co., which is bankrupt.
August 13: Received 35% of the $20,000 balance owed by Santori Co., a bankrupt business, and wrote off the remainder as uncollectible.
Sept 2: Reinstated the account for Sheryl Capers, which had been written off 2 years earlier as uncollectible. Recorded the receipt of $3,170 cash in full payment.
Dec 31: Wrote off the following accounts as uncollectible (compound entry): Jacoba Co., $8390; Garcia Co., $2500; Summit Furniture, $6400; Jill DePuy, $1800.
Dec 31: Based on an analysis of the $960,750 of accounts receivable, it was estimated that $4200 will be uncollectible. Journalized the adjusting entry.
Instructions
1. Record the January 1 credit balance of $40000 in a T account for allowances for doubtful accounts.
2. Journalize the transactions. Post each entry that affects the following T accounts and determine new balances:
(allowance for doubtful accounts and bad debt expense) --
3. Determine the expected net realizable value of the accounts receivable as of Dec 31. --
4. Assuming that instead of basing the provision for uncollectible accounts on an estimated expense of 3/4 of 1% of the net sales of $6,000,000 for the year, determine the following: (a) bad debt expense for the year (b) balance in the allowance account after the adjustment of Dec 31 (c) expected net realizable value of the accounts receivable as of December 31
Click here for the solution: The following transactions were completed by The Bronze gallery during the current fiscal year ended December 31
Showing posts with label completed. Show all posts
Showing posts with label completed. Show all posts
Wednesday, October 7, 2015
Sunday, September 27, 2015
Selected transactions completed by Blackwell Company during its first fiscal year ending December 31 were as follow (Chapter 11 Comprehensive Problem 3)
Chapter 11 Comprehensive Problem 3 Selected transactions completed by Blackwell Company during its first fiscal year ending December 31 were as follow:
Jan. 2. Issued a check to establish a petty cash fund of $2,000.
Mar. 4. Replenished the petty cash fund, based on the following summary of petty cash receipts: office supplies, $789; miscellaneous selling expense, $256; miscellaneous administrative expense, $378.
AND SO ON
Click here for the solution: Selected transactions completed by Blackwell Company during its first fiscal year ending December 31 were as follow (Chapter 11 Comprehensive Problem 3)
Jan. 2. Issued a check to establish a petty cash fund of $2,000.
Mar. 4. Replenished the petty cash fund, based on the following summary of petty cash receipts: office supplies, $789; miscellaneous selling expense, $256; miscellaneous administrative expense, $378.
AND SO ON
Click here for the solution: Selected transactions completed by Blackwell Company during its first fiscal year ending December 31 were as follow (Chapter 11 Comprehensive Problem 3)
(Sandusky Company) The following were selected from among the transactions completed by Sandusky Company during December of the current year
PR 6-5A The following were selected from among the transactions completed by Sandusky Company during December of the current year:
Dec 3: Purchased merchandise n account from Hillsboro Co., list price $38,000, trade discount 24%, terms FOB shipping point, 2/10, n/30, with prepaid freight of $900 added to the invoice.
Dec 5: Purchased merchandise on account from Deepwater Co., $18,750, terms FOB destination, 2/10,n/30.
Dec 7: Returned $3,000 of merchandise purchase on December 5 from Deepwater Co.
13. Paid Hillsboro Co. on account for purchase of Dec 3, less discount.
15. Paid Deepwater Co. on account for purchase of Dec 5, less return of December 7 and discount.
16. Received cash on account from sale of December 6 to Zion Co., less discount.
19. Sold merchandise on MasterCard, $58,000. The cost of the merchandise sold was $34,500.
22. Sold merchandise on account to Smith River Co., $15,400, terms 2/10,n/30. The cost of merchandise sold was $9,000.
23. Sold merchandise for cash, $33,600. The cost of merchandise sold was $20,000.
28. Received merchanfise returned by Smith River Co. from sale on December 22, $2,400. The cost of returned merchandise was $1,400.
31. Paid MasterCard service fee of $1,750.
Instructions: Journalize the transactions.
Click here for the solution: The following were selected from among the transactions completed by Sandusky Company during December of the current year
Dec 3: Purchased merchandise n account from Hillsboro Co., list price $38,000, trade discount 24%, terms FOB shipping point, 2/10, n/30, with prepaid freight of $900 added to the invoice.
Dec 5: Purchased merchandise on account from Deepwater Co., $18,750, terms FOB destination, 2/10,n/30.
Dec 7: Returned $3,000 of merchandise purchase on December 5 from Deepwater Co.
13. Paid Hillsboro Co. on account for purchase of Dec 3, less discount.
15. Paid Deepwater Co. on account for purchase of Dec 5, less return of December 7 and discount.
16. Received cash on account from sale of December 6 to Zion Co., less discount.
19. Sold merchandise on MasterCard, $58,000. The cost of the merchandise sold was $34,500.
22. Sold merchandise on account to Smith River Co., $15,400, terms 2/10,n/30. The cost of merchandise sold was $9,000.
23. Sold merchandise for cash, $33,600. The cost of merchandise sold was $20,000.
28. Received merchanfise returned by Smith River Co. from sale on December 22, $2,400. The cost of returned merchandise was $1,400.
31. Paid MasterCard service fee of $1,750.
Instructions: Journalize the transactions.
Click here for the solution: The following were selected from among the transactions completed by Sandusky Company during December of the current year
Friday, September 25, 2015
The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year
PR 11-1A The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year.
Jan 15. Purchased merchandise on account from hood Co., $200,000, terms n/30.
Feb 14. Issued 60-day, %6 note for $200,000 to Hood Co on account.
April 15. Paid Hood Co. the amount owed on the note of February 14.
June2. Borrowed $187,500 from Acme Bank, issuing a 60-day, 8% note.
July 10. Purchased tools by issuing a $190,000, 90-day note to Columbia supply Co., which discounted the note at the rate of 6%.
Aug 1. Paid Acme Bank the interest rate due on the note of June 2 and renewed the loan by issuing a new 60-day, 10% not for $187,500 (Journalize both the debit and credit to the notes payable account.)
Sept 30. Paid Acme Bank the amount due on the note of August 1.
Oct 8. Paid Columbia Supply co. the amount due on the note of July 10.
Dec 1. Purchased office equipment from Mountain Equipment co. for $120,000 paying $20,000 and issuing a series of ten 6% notes for $10,000 each coming due at 30-day intervals.
Dec 5. Settled a product liability lawsuit with a customer for $76,000, payable in January. Emerald Bay accrued the loss in litigation claims payable account.
Dec 31. paid the amount due Mountain Equipment co. on the first note in the series issued on December 1.
Instructions:
1. Journalize the transactions.
2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year.
(a) Product warranty cost $16,400;
(b) Interest on the nine remaining notes owed to Mountain Equipment Co
Click here for the solution: The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year
Jan 15. Purchased merchandise on account from hood Co., $200,000, terms n/30.
Feb 14. Issued 60-day, %6 note for $200,000 to Hood Co on account.
April 15. Paid Hood Co. the amount owed on the note of February 14.
June2. Borrowed $187,500 from Acme Bank, issuing a 60-day, 8% note.
July 10. Purchased tools by issuing a $190,000, 90-day note to Columbia supply Co., which discounted the note at the rate of 6%.
Aug 1. Paid Acme Bank the interest rate due on the note of June 2 and renewed the loan by issuing a new 60-day, 10% not for $187,500 (Journalize both the debit and credit to the notes payable account.)
Sept 30. Paid Acme Bank the amount due on the note of August 1.
Oct 8. Paid Columbia Supply co. the amount due on the note of July 10.
Dec 1. Purchased office equipment from Mountain Equipment co. for $120,000 paying $20,000 and issuing a series of ten 6% notes for $10,000 each coming due at 30-day intervals.
Dec 5. Settled a product liability lawsuit with a customer for $76,000, payable in January. Emerald Bay accrued the loss in litigation claims payable account.
Dec 31. paid the amount due Mountain Equipment co. on the first note in the series issued on December 1.
Instructions:
1. Journalize the transactions.
2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year.
(a) Product warranty cost $16,400;
(b) Interest on the nine remaining notes owed to Mountain Equipment Co
Click here for the solution: The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year
The transactions completed by Over-Nite Express Company during May 2010, the first month of the fiscal year, were as follows
PR 5-5A The transactions completed by Over-Nite Express Company during May 2010, the first month of the fiscal year, were as follows:
May1: Issued check no. 205 for May rent. $1000
2. Purchased a vehicle on account from McIntyre Sales Co. $22,300
3. Purchased office equipment on account from Office Mate $520
5. Issued Invoice No. 91 to Martin Co., $5,200
AND SO ON
Check: 2. Total Cash Receipts $73,230
Click here for the solution: The transactions completed by Over-Nite Express Company during May 2010, the first month of the fiscal year, were as follows
May1: Issued check no. 205 for May rent. $1000
2. Purchased a vehicle on account from McIntyre Sales Co. $22,300
3. Purchased office equipment on account from Office Mate $520
5. Issued Invoice No. 91 to Martin Co., $5,200
AND SO ON
Check: 2. Total Cash Receipts $73,230
Click here for the solution: The transactions completed by Over-Nite Express Company during May 2010, the first month of the fiscal year, were as follows
Thursday, September 24, 2015
Midwest Corp completed the following transactions in 2012, the first year of operation
P8-19 Midwest Corp completed the following transactions in 2012, the first year of operation.
1. Issued 20,000 shares of $10 par common stock at par.
2. Issued 2,000 shares of $30 stated value preferred stock at $32 per share.
3. Purchased 500 shares of common stock as treasury stock for $15 per share.
4. Declared a five percent dividend on preferred stock.
5. Sold 300 shares of treasury stock for $18 per share.
6. Paid the cash dividend on preferred stock that was declared in event four.
7. Earned cash service revenue of $75,000 and incurred cash operating expenses of $42,000.
8. Appropriated $6,000 of retained earnings.
Required
a. Organize the transaction in accounts under an accounting equation.
b. Prepare the stockholders equity section of the balance sheet as of December 31, 2012.
Click here for the solution: Midwest Corp completed the following transactions in 2012, the first year of operation
1. Issued 20,000 shares of $10 par common stock at par.
2. Issued 2,000 shares of $30 stated value preferred stock at $32 per share.
3. Purchased 500 shares of common stock as treasury stock for $15 per share.
4. Declared a five percent dividend on preferred stock.
5. Sold 300 shares of treasury stock for $18 per share.
6. Paid the cash dividend on preferred stock that was declared in event four.
7. Earned cash service revenue of $75,000 and incurred cash operating expenses of $42,000.
8. Appropriated $6,000 of retained earnings.
Required
a. Organize the transaction in accounts under an accounting equation.
b. Prepare the stockholders equity section of the balance sheet as of December 31, 2012.
Click here for the solution: Midwest Corp completed the following transactions in 2012, the first year of operation
Sunday, September 13, 2015
The following transactions were completed by Hobson Inc., whose fiscal year is the calendar year
The following transactions were completed by Hobson Inc., whose fiscal year is the calendar year:
2010
July 1. Issued $10,000,000 of 10-year, 15% callable bonds dated july1, 2010, at an effective of 11, receiving cash of $12,390,085. Interest is payable semi annually on December 31 and June 30. Oct. 1. Borrowed $225,000 as a six year, 8% installment note from Titan Bank. The note requires annual payments of $48,671, with the first payment occurring on September 30, 2011. Dec. 31. Accrued $4,500of interest on the installment note. The interest is payable on the date of the next installment note payment. Dec. 31. Paid the semiannual interest of the bond. Dec. 31. Recorded bond premium amortization of $119,504, which was determined using the straight line method. Dec. 31. Closed the interest expense account. 2011 June 30. Paid the semiannual interest of the bond. Sept. 30. Paid the annual payment of the note, which consist of interest of $18,000 and principal of $30, 671. Dec. 31. Accrued $3,887 of interest on the installment note. The interest is payable on the date of the next installment note payment. Dec. 31. Paid the semiannual interest of the bond. Dec. 31. Recorded bond premium amortization of $239,008, which was determined using the straight line method. Dec. 31. Closed the interest expense account. 2012 June 30. Recorded the redemption of the bonds, which were called at101,5. the balance in the bond premium account is $1,912,069 after payment of interest and amortization of premium have been recorded.(Record the redemption only) Sept. 30. Paid the second annual payment on the note, which consist of interest of $15,546 and principal of $33,125 Instructions:
1. Journalize the entries to record the foregoing transactions.
2. Indicate the amount of the interest expense in 2010 and 2011
3. Determine the carrying amount of the bonds as of December 31, 2011.
Click here for the solution: The following transactions were completed by Hobson Inc., whose fiscal year is the calendar year
2010
July 1. Issued $10,000,000 of 10-year, 15% callable bonds dated july1, 2010, at an effective of 11, receiving cash of $12,390,085. Interest is payable semi annually on December 31 and June 30. Oct. 1. Borrowed $225,000 as a six year, 8% installment note from Titan Bank. The note requires annual payments of $48,671, with the first payment occurring on September 30, 2011. Dec. 31. Accrued $4,500of interest on the installment note. The interest is payable on the date of the next installment note payment. Dec. 31. Paid the semiannual interest of the bond. Dec. 31. Recorded bond premium amortization of $119,504, which was determined using the straight line method. Dec. 31. Closed the interest expense account. 2011 June 30. Paid the semiannual interest of the bond. Sept. 30. Paid the annual payment of the note, which consist of interest of $18,000 and principal of $30, 671. Dec. 31. Accrued $3,887 of interest on the installment note. The interest is payable on the date of the next installment note payment. Dec. 31. Paid the semiannual interest of the bond. Dec. 31. Recorded bond premium amortization of $239,008, which was determined using the straight line method. Dec. 31. Closed the interest expense account. 2012 June 30. Recorded the redemption of the bonds, which were called at101,5. the balance in the bond premium account is $1,912,069 after payment of interest and amortization of premium have been recorded.(Record the redemption only) Sept. 30. Paid the second annual payment on the note, which consist of interest of $15,546 and principal of $33,125 Instructions:
1. Journalize the entries to record the foregoing transactions.
2. Indicate the amount of the interest expense in 2010 and 2011
3. Determine the carrying amount of the bonds as of December 31, 2011.
Click here for the solution: The following transactions were completed by Hobson Inc., whose fiscal year is the calendar year
Friday, September 11, 2015
Allison, CPA has completed the audit of the financial statements of Optima Corporation as of and for the year ended December 31, 2009
Auditing P 3-27 Allison, CPA has completed the audit of the financial
statements of Optima Corporation as of and for the year ended December
31, 2009. Allison also audited and reported on the Optima financial
statements for the prior year. Allison drafted the following report for
2009.
We have audited the balance sheet and statements of income and retained earnings of Optima Corporation as of December 31, 2009. We conducted our audit in accordance with generally accepted accounting standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of misstatement.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly the financial position of Optima Corporation as of December 31, 2009, and the results of its operations for the year then ended in conformity with generally accepted auditing standards, applied on a basis consistent with those of the preceding year.
Allison, CPA
(signed)
Other Information
-Optima is presenting comparative financial statements.
-Optima does not wish to present a statement of cash flows for either year.
-During 2009, Optima changed its method of accounting for long-term construction contracts and properly reflected the effect of the change in the current year's financial statements and restated the prior year's statements. Allison is satisfied with Optima's justification for making the change. The change is discussed in footnote 12.
- Allison was unable to perform normal accounts receivable confirmation procedures, but alternative procedures were used to satisfy Allison as to the existence of the receivables.
-Optima Corporation is the defendant in a litigation, the outcome of which is highly uncertain. If the case is settled in favor of the plaintiff, Optima will be required to pay a substantial amount of cash, which might require the sale of certain fixed assets. The litigation and the possible effects have been properly disclosed in footnote 11.
-Optima issued debentures on January 31, 2008, in the amount of $10 million. The funds obtained from the issuance were used to finance the expansion of plant facilities. The debenture agreement restricts the payment of future cash dividends to earnings after December 31, 2013. Optima declined to disclose this essential data in the footnotes to the financial statements.
Required:
a. Identify and explain any items included in "Other Information" that need not be part of the auditor's report.
b. Explain the deficiencies in Allison's report as drafted.
Click here for the solution: Allison, CPA has completed the audit of the financial statements of Optima Corporation as of and for the year ended December 31, 2009
We have audited the balance sheet and statements of income and retained earnings of Optima Corporation as of December 31, 2009. We conducted our audit in accordance with generally accepted accounting standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of misstatement.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly the financial position of Optima Corporation as of December 31, 2009, and the results of its operations for the year then ended in conformity with generally accepted auditing standards, applied on a basis consistent with those of the preceding year.
Allison, CPA
(signed)
Other Information
-Optima is presenting comparative financial statements.
-Optima does not wish to present a statement of cash flows for either year.
-During 2009, Optima changed its method of accounting for long-term construction contracts and properly reflected the effect of the change in the current year's financial statements and restated the prior year's statements. Allison is satisfied with Optima's justification for making the change. The change is discussed in footnote 12.
- Allison was unable to perform normal accounts receivable confirmation procedures, but alternative procedures were used to satisfy Allison as to the existence of the receivables.
-Optima Corporation is the defendant in a litigation, the outcome of which is highly uncertain. If the case is settled in favor of the plaintiff, Optima will be required to pay a substantial amount of cash, which might require the sale of certain fixed assets. The litigation and the possible effects have been properly disclosed in footnote 11.
-Optima issued debentures on January 31, 2008, in the amount of $10 million. The funds obtained from the issuance were used to finance the expansion of plant facilities. The debenture agreement restricts the payment of future cash dividends to earnings after December 31, 2013. Optima declined to disclose this essential data in the footnotes to the financial statements.
Required:
a. Identify and explain any items included in "Other Information" that need not be part of the auditor's report.
b. Explain the deficiencies in Allison's report as drafted.
Click here for the solution: Allison, CPA has completed the audit of the financial statements of Optima Corporation as of and for the year ended December 31, 2009
Selected transactions completed by Everyday Products Inc. during the fiscal year ending December 31, 2012, were as follows
Chapter 15, Comprehensive Problem 4, 24th EDITION
Selected transactions completed by Everyday Products Inc. during the fiscal year ending December 31, 2012, were as follows:
AND SO ON
Click here for the solution: Selected transactions completed by Everyday Products Inc. during the fiscal year ending December 31, 2012, were as follows
Selected transactions completed by Everyday Products Inc. during the fiscal year ending December 31, 2012, were as follows:
AND SO ON
Click here for the solution: Selected transactions completed by Everyday Products Inc. during the fiscal year ending December 31, 2012, were as follows
The following data (in thousands of dollars) have been taken from the accounting records of the Maroon Corporation for the just completed year
The following data (in thousands of dollars) have been taken from the accounting records of the Maroon Corporation for the just completed year.
Sales 1,200
Raw materials inventory, beginning 25
Raw materials inventory, ending 50
Purchases of raw materials 180
Direct labor 230
Manufacturing overhead 250
Administrative expenses 400
Selling expenses 200
Work in process inventory, beginning 150
Work in process inventory, ending 120
Finished goods inventory, beginning 100
Finished goods inventory, ending 110
Use the above data to prepare (in thousands of dollars) a schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold for the year. In addition, what is the impact on the financial statements if the ending finished goods inventory is overstated or understated?
Click here for the solution: The following data (in thousands of dollars) have been taken from the accounting records of the Maroon Corporation for the just completed year
Sales 1,200
Raw materials inventory, beginning 25
Raw materials inventory, ending 50
Purchases of raw materials 180
Direct labor 230
Manufacturing overhead 250
Administrative expenses 400
Selling expenses 200
Work in process inventory, beginning 150
Work in process inventory, ending 120
Finished goods inventory, beginning 100
Finished goods inventory, ending 110
Use the above data to prepare (in thousands of dollars) a schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold for the year. In addition, what is the impact on the financial statements if the ending finished goods inventory is overstated or understated?
Click here for the solution: The following data (in thousands of dollars) have been taken from the accounting records of the Maroon Corporation for the just completed year
Tuesday, September 8, 2015
Abraham Company completed the construction of a building at a cost of $2,242,000 and first occupied it in January 1984
Abraham Company completed the construction of a building at a cost of $2,242,000 and first occupied it in January 1984. It was estimated that the building will have a useful life of 40 years and a salvage value of $70,800 at the end of that time.
Early in 1994, an addition to the building was constructed at a cost of $554,600. At the time it was estimated that the remaining life of the building would be, as originally estimated, an additional 30 years, and that the addition would have a life of 30 years, and a salvage value of $23,600.
In 2012, it is determined that the probable life of the building and addition will extend to the end of 2043 or 20 years beyond the original estimate.
a) Using the straight-line method, compute the annual depreciation that would have been charged from 1984 through 1993
b) Compute the annual depreciation that would have been charged from 1994 through 2011
c) Is an entry necessary to adjust the account balances because of the revision of the estimated life in 2012?
d) Compute the annual depreciation to be charged beginning with 2012
Click here for the solution: Abraham Company completed the construction of a building at a cost of $2,242,000 and first occupied it in January 1984
Early in 1994, an addition to the building was constructed at a cost of $554,600. At the time it was estimated that the remaining life of the building would be, as originally estimated, an additional 30 years, and that the addition would have a life of 30 years, and a salvage value of $23,600.
In 2012, it is determined that the probable life of the building and addition will extend to the end of 2043 or 20 years beyond the original estimate.
a) Using the straight-line method, compute the annual depreciation that would have been charged from 1984 through 1993
b) Compute the annual depreciation that would have been charged from 1994 through 2011
c) Is an entry necessary to adjust the account balances because of the revision of the estimated life in 2012?
d) Compute the annual depreciation to be charged beginning with 2012
Click here for the solution: Abraham Company completed the construction of a building at a cost of $2,242,000 and first occupied it in January 1984
The Pyramid Construction Company has used the completed-contract method of accounting for construction contracts
P 20-2 Change in principle; change in method of accounting for long-term construction
The Pyramid Construction Company has used the completed-contract method of accounting for construction contracts during its first two years of operation, 2009 and 2010. At the beginning of 2011, Pyramid decided to change to the percentage-of-completion method for both tax and financial reporting purposes. The following table presents information concerning the change for 2009–2011. The income tax rate for all years is 40%.
Pyramid issued 50,000 $1 par, common shares for $230,000 when the business began, and there have been no changes in paid-in capital since then. Dividends were not paid the first year, but $10,000 cash dividends were paid in both 2010 and 2011.
Required:
1. Prepare the journal entry to record the change in accounting principle. (All tax effects should be reflected in the deferred tax liability account.)
2. Prepare the 2011–2010 comparative income statements beginning with income before income taxes.
3. Prepare the 2011–2010 comparative statements of shareholders' equity. (Hint: The 2009 statements reported retained earnings of $36,000. This is $60,000 − [$60,000 × 40%].
Click here for the solution: The Pyramid Construction Company has used the completed-contract method of accounting for construction contracts
The Pyramid Construction Company has used the completed-contract method of accounting for construction contracts during its first two years of operation, 2009 and 2010. At the beginning of 2011, Pyramid decided to change to the percentage-of-completion method for both tax and financial reporting purposes. The following table presents information concerning the change for 2009–2011. The income tax rate for all years is 40%.
Pyramid issued 50,000 $1 par, common shares for $230,000 when the business began, and there have been no changes in paid-in capital since then. Dividends were not paid the first year, but $10,000 cash dividends were paid in both 2010 and 2011.
Required:
1. Prepare the journal entry to record the change in accounting principle. (All tax effects should be reflected in the deferred tax liability account.)
2. Prepare the 2011–2010 comparative income statements beginning with income before income taxes.
3. Prepare the 2011–2010 comparative statements of shareholders' equity. (Hint: The 2009 statements reported retained earnings of $36,000. This is $60,000 − [$60,000 × 40%].
Click here for the solution: The Pyramid Construction Company has used the completed-contract method of accounting for construction contracts
Sunday, September 6, 2015
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
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
Wednesday, September 2, 2015
The Cambridge Cartage Company has partially completed its forecast of next year’s financial statements as follows
The Cambridge Cartage Company has partially completed its forecast of next year’s financial statements as follows.
Cambridge Cartage Company Financial Plan ($000)
Income Statement Balance Sheet
Next Year Next Year
Revenue $17,220 Beginning Ending
Cost/expenses 14,120 ASSETS
EBIT $3,100 Total assets $12,540 $18,330
Interest ? LIABILITIES & EQUITY
EBT ? Current liabilities $410 $680
Tax ? Debt 5,630 ?
EAT ? Equity 6,500 ?
Total L&E $12,540 $18,330
The firm pays interest at 10% on all borrowings and pays a combined state and federal tax rate of 40%. Complete the forecast income statement and balance sheet. Begin by guessing at interest expense as 10% of beginning debt.
Click here for the solution: The Cambridge Cartage Company has partially completed its forecast of next year’s financial statements as follows
Cambridge Cartage Company Financial Plan ($000)
Income Statement Balance Sheet
Next Year Next Year
Revenue $17,220 Beginning Ending
Cost/expenses 14,120 ASSETS
EBIT $3,100 Total assets $12,540 $18,330
Interest ? LIABILITIES & EQUITY
EBT ? Current liabilities $410 $680
Tax ? Debt 5,630 ?
EAT ? Equity 6,500 ?
Total L&E $12,540 $18,330
The firm pays interest at 10% on all borrowings and pays a combined state and federal tax rate of 40%. Complete the forecast income statement and balance sheet. Begin by guessing at interest expense as 10% of beginning debt.
Click here for the solution: The Cambridge Cartage Company has partially completed its forecast of next year’s financial statements as follows
Sunday, August 23, 2015
Summerborn Manufacturing, Co., completed the following transactions during 2012
P13-24A Journalizing stockholders' equity transactions
Summerborn Manufacturing, Co., completed the following transactions during 2012.
Jan 16 - Declared a cash dividend on the 5%, $100 par preferred stock (900 shares outstanding). Declared a $0.30 per share dividend on the 80,000 shares of common stock outstanding. The date of record is January 31, and the payment due date is February 15.
Feb 15 - Paid the cash dividends.
Jun 10 - Split common stock 2 for 1. Before the split, Summerborn had 80,000 shares of $6 par common stock outstanding.
Jul 30 - Distributed a 50% stock dividend on the common stock. The market value of the common stock was $9 per share.
Oct 26 - Purchased 1,000 shares of treasury stock at $13 per share.
Nov 8 - Sold 500 shares of treasury stock for $15 per share.
Nov30 - Sold 300 shares of treasury stock for $8 per share.
Requirement
1. Record the transactions in Surnmerborn's general journal..
Click here for the solution: Summerborn Manufacturing, Co., completed the following transactions during 2012
Summerborn Manufacturing, Co., completed the following transactions during 2012.
Jan 16 - Declared a cash dividend on the 5%, $100 par preferred stock (900 shares outstanding). Declared a $0.30 per share dividend on the 80,000 shares of common stock outstanding. The date of record is January 31, and the payment due date is February 15.
Feb 15 - Paid the cash dividends.
Jun 10 - Split common stock 2 for 1. Before the split, Summerborn had 80,000 shares of $6 par common stock outstanding.
Jul 30 - Distributed a 50% stock dividend on the common stock. The market value of the common stock was $9 per share.
Oct 26 - Purchased 1,000 shares of treasury stock at $13 per share.
Nov 8 - Sold 500 shares of treasury stock for $15 per share.
Nov30 - Sold 300 shares of treasury stock for $8 per share.
Requirement
1. Record the transactions in Surnmerborn's general journal..
Click here for the solution: Summerborn Manufacturing, Co., completed the following transactions during 2012
Monday, August 17, 2015
Comprehensive Problem 3 Selected transactions completed by Gampfer Company during its first fiscal year ending December 31 were as follows
Comprehensive Problem 3 Selected transactions completed by Gampfer Company during its first fiscal year ending December 31 were as follows:
Jan. 2. Issued a check to establish a petty cash fund of $3,200.
Mar. 14. Replenished the petty cash fund, based on the following summary of petty cash receipts: office supplies, $1,200; miscellaneous selling expense, $410; miscellaneous administrative expense, $620.
Apr. 21. Purchased $22,400 of merchandise on account, terms 1/10, n/30. The perpetual inventory system is used to account for inventory.
May 20. Paid the invoice of April 21 after the discount period had passed.
23. Received cash from daily cash sales for $15,120. The amount indicated by the cash register was $15,152.
June 15. Received a 60-day, 10% note for $127,500 on the Cady account.
AND SO ON
Check figures:
Current assets: 839,080
Total assets: 2,550,840
Current liabilities: 497,640
Click here for the solution: Comprehensive Problem 3 Selected transactions completed by Gampfer Company during its first fiscal year ending December 31 were as follows
Jan. 2. Issued a check to establish a petty cash fund of $3,200.
Mar. 14. Replenished the petty cash fund, based on the following summary of petty cash receipts: office supplies, $1,200; miscellaneous selling expense, $410; miscellaneous administrative expense, $620.
Apr. 21. Purchased $22,400 of merchandise on account, terms 1/10, n/30. The perpetual inventory system is used to account for inventory.
May 20. Paid the invoice of April 21 after the discount period had passed.
23. Received cash from daily cash sales for $15,120. The amount indicated by the cash register was $15,152.
June 15. Received a 60-day, 10% note for $127,500 on the Cady account.
AND SO ON
Check figures:
Current assets: 839,080
Total assets: 2,550,840
Current liabilities: 497,640
Click here for the solution: Comprehensive Problem 3 Selected transactions completed by Gampfer Company during its first fiscal year ending December 31 were as follows
Friday, August 14, 2015
The following transactions were completed by Axiom Management Company during the current fiscal year ended December 31
PR 9-1A Entries related to uncollectible accounts
The following transactions were completed by Axiom Management Company during the current fiscal year ended December 31:
Feb. 17. Received 25% of the $30,000 balance owed by Gillespie Co., a bankrupt business, and wrote off the remainder as uncollectible.
Apr. 11. Reinstated the account of Colleen Bertram, which had been written off in the preceding year as uncollectible. Journalized the receipt of $4,250 cash in full payment of Colleen’s account.
July 6. Wrote off the $9,000 balance owed by Covered Wagon Co., which has no assets.
Nov. 20. Reinstated the account of Dugan Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of $5,900 cash in full payment of the account.
Dec. 31. Wrote off the following accounts as uncollectible (compound entry): Kipp Co., $3,000; Moore Co., $4,000; Butte Distributors, $8,000; Parker Towers, $6,700.
31. Based on an analysis of the $1,200,000 of accounts receivable, it was estimated that $60,000 will be uncollectible. Journalized the adjusting entry.
Instructions
1. Record the January 1 credit balance of $40,000 in a T account for Allowance for Doubtful Accounts.
2. Journalize the transactions. Post each entry that affects the following selected T accounts and determine the new balances:
Allowance for Doubtful Accounts
Bad Debt Expense
3. Determine the expected net realizable value of the accounts receivable as of December 31.
4. Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables, the adjusting entry on December 31 had been based on an estimated expense of ¾ of 1% of the net sales of $7,500,000 for the year, determine the following:
a. Bad debt expense for the year.
b. Balance in the allowance account after the adjustment of December 31.
c. Expected net realizable value of the accounts receivable as of December 31.
Click here for the solution: The following transactions were completed by Axiom Management Company during the current fiscal year ended December 31
The following transactions were completed by Axiom Management Company during the current fiscal year ended December 31:
Feb. 17. Received 25% of the $30,000 balance owed by Gillespie Co., a bankrupt business, and wrote off the remainder as uncollectible.
Apr. 11. Reinstated the account of Colleen Bertram, which had been written off in the preceding year as uncollectible. Journalized the receipt of $4,250 cash in full payment of Colleen’s account.
July 6. Wrote off the $9,000 balance owed by Covered Wagon Co., which has no assets.
Nov. 20. Reinstated the account of Dugan Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of $5,900 cash in full payment of the account.
Dec. 31. Wrote off the following accounts as uncollectible (compound entry): Kipp Co., $3,000; Moore Co., $4,000; Butte Distributors, $8,000; Parker Towers, $6,700.
31. Based on an analysis of the $1,200,000 of accounts receivable, it was estimated that $60,000 will be uncollectible. Journalized the adjusting entry.
Instructions
1. Record the January 1 credit balance of $40,000 in a T account for Allowance for Doubtful Accounts.
2. Journalize the transactions. Post each entry that affects the following selected T accounts and determine the new balances:
Allowance for Doubtful Accounts
Bad Debt Expense
3. Determine the expected net realizable value of the accounts receivable as of December 31.
4. Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables, the adjusting entry on December 31 had been based on an estimated expense of ¾ of 1% of the net sales of $7,500,000 for the year, determine the following:
a. Bad debt expense for the year.
b. Balance in the allowance account after the adjustment of December 31.
c. Expected net realizable value of the accounts receivable as of December 31.
Click here for the solution: The following transactions were completed by Axiom Management Company during the current fiscal year ended December 31
Thursday, August 13, 2015
The following selected transactions were completed by Rayne Supplies Co
The following selected transactions were completed by Rayne Supplies Co., which sells irrigation supplies primarily to wholesalers and occasionally to retail customers:
Aug. 1. Sold merchandise on account to Tomahawk Co., $12,500, terms FOB shipping point, n/eom. The cost of merchandise sold was $7,500.
2. Sold merchandise for $20,000 plus 7% sales tax to retail cash customers. The cost of merchandise sold was $13,100.
5. Sold merchandise on account to Epworth Company, $30,000, terms FOB destination, 1/10, n/30. The cost of merchandise sold was $19,500.
8. Sold merchandise for $11,500 plus 7% sales tax to retail customers who used VISA cards. The cost of merchandise sold was $7,000.
13. Sold merchandise to customers who used MasterCard cards, $8,000. The cost of merchandise sold was $5,000.
Aug. 14. Sold merchandise on account to Osgood Co., $11,800, terms FOB shipping point, 1/10, n/30. The cost of merchandise sold was $7,000.
15. Received check for amount due from Epworth Company for sale on August 5.
16. Issued credit memo for $1,800 to Osgood Co. for merchandise returned from sale on August 14. The cost of the merchandise returned was $1,000.
18. Sold merchandise on account to Horton Company, $6,850, terms FOB shipping point, 2/10, n/30. Paid $210 for freight and added it to the invoice. The cost of merchandise sold was $4,100.
24. Received check for amount due from Osgood Co. for sale on August 14 less credit memo of August 16 and discount.
28. Received check for amount due from Horton Company for sale of August 18.
31. Paid Piper Delivery Service $2,100 for merchandise delivered during August to customers under shipping terms of FOB destination.
31. Received check for amount due from Tomahawk Co. for sale of August 1.
Sept. 3. Paid First Federal Bank $980 for service fees for handling MasterCard and VISA sales during August.
10. Paid $1,750 to state sales tax division for taxes owed on sales.
Instructions
Journalize the entries to record the transactions of Rayne Supplies Co.
Click here for the solution: The following selected transactions were completed by Rayne Supplies Co
Aug. 1. Sold merchandise on account to Tomahawk Co., $12,500, terms FOB shipping point, n/eom. The cost of merchandise sold was $7,500.
2. Sold merchandise for $20,000 plus 7% sales tax to retail cash customers. The cost of merchandise sold was $13,100.
5. Sold merchandise on account to Epworth Company, $30,000, terms FOB destination, 1/10, n/30. The cost of merchandise sold was $19,500.
8. Sold merchandise for $11,500 plus 7% sales tax to retail customers who used VISA cards. The cost of merchandise sold was $7,000.
13. Sold merchandise to customers who used MasterCard cards, $8,000. The cost of merchandise sold was $5,000.
Aug. 14. Sold merchandise on account to Osgood Co., $11,800, terms FOB shipping point, 1/10, n/30. The cost of merchandise sold was $7,000.
15. Received check for amount due from Epworth Company for sale on August 5.
16. Issued credit memo for $1,800 to Osgood Co. for merchandise returned from sale on August 14. The cost of the merchandise returned was $1,000.
18. Sold merchandise on account to Horton Company, $6,850, terms FOB shipping point, 2/10, n/30. Paid $210 for freight and added it to the invoice. The cost of merchandise sold was $4,100.
24. Received check for amount due from Osgood Co. for sale on August 14 less credit memo of August 16 and discount.
28. Received check for amount due from Horton Company for sale of August 18.
31. Paid Piper Delivery Service $2,100 for merchandise delivered during August to customers under shipping terms of FOB destination.
31. Received check for amount due from Tomahawk Co. for sale of August 1.
Sept. 3. Paid First Federal Bank $980 for service fees for handling MasterCard and VISA sales during August.
10. Paid $1,750 to state sales tax division for taxes owed on sales.
Instructions
Journalize the entries to record the transactions of Rayne Supplies Co.
Click here for the solution: The following selected transactions were completed by Rayne Supplies Co
Tuesday, August 4, 2015
Dyer Inc completed its first year of operations on December 31, 2010
E4-13 Dyer Inc completed its first year of operations on December 31, 2010. Because this is the end of the annual accounting period, the company bookkeeper prepared the following preliminary statements
Rental revenue $141,000
Income revenue:
Salaries and wages expense 28500
Maintenance expense 12000
Rent expense 9000
Utilities expense 4000
Gas and oil expense 3000
Other expenses 1000
Total expenses 57500
Income $56500
You are an independent CPA hired by the company to audit the firms accounting systems and financial statements. In your audit, you developed additional data as follows:
A) Wages for the last three days of December amounting to $310 were not recorded or paid
b)The $400 telephone bill for December 2010 has not been recorded or paid
c) Depreciation on rental autos amounting to $23000 for 2010 was not recorded
d)Interest of $500 was not recorded on the note payable by Dyer inc
e) The rental revenue account included $4000 of revenue to be earned in January 2010
f) Maintenance supplies costing $600 were used during 2010 but this has not been recorded
f) The income tax expense for 201 is $7000 but wont actually be paid until 2011.
Required:
1) What adjusting journal entry for each item a) through G) should be recorded at December 31, 2010?
2) Prepare in proper form, an adjusted income statement for 2010
3) Did the Adjustment have a significant overall affect on the company's net income?
Click here for the solution: Dyer Inc completed its first year of operations on December 31, 2010
Rental revenue $141,000
Income revenue:
Salaries and wages expense 28500
Maintenance expense 12000
Rent expense 9000
Utilities expense 4000
Gas and oil expense 3000
Other expenses 1000
Total expenses 57500
Income $56500
You are an independent CPA hired by the company to audit the firms accounting systems and financial statements. In your audit, you developed additional data as follows:
A) Wages for the last three days of December amounting to $310 were not recorded or paid
b)The $400 telephone bill for December 2010 has not been recorded or paid
c) Depreciation on rental autos amounting to $23000 for 2010 was not recorded
d)Interest of $500 was not recorded on the note payable by Dyer inc
e) The rental revenue account included $4000 of revenue to be earned in January 2010
f) Maintenance supplies costing $600 were used during 2010 but this has not been recorded
f) The income tax expense for 201 is $7000 but wont actually be paid until 2011.
Required:
1) What adjusting journal entry for each item a) through G) should be recorded at December 31, 2010?
2) Prepare in proper form, an adjusted income statement for 2010
3) Did the Adjustment have a significant overall affect on the company's net income?
Click here for the solution: Dyer Inc completed its first year of operations on December 31, 2010
Monday, August 3, 2015
The following selected transactions were completed during May between Sky Company and Big Co
Problem 6-6A Sales-Related and Purchase-Related Transactions for Seller and Buyer
The following selected transactions were completed during May between Sky Company and Big Co.:
AND SO ON
Instructions
1. Journalize the May transactions for Big Co. (the buyer).
2. Journalize the May transactions for Sky Company (the seller).
Note: 24th Edition
Click here for the solution: The following selected transactions were completed during May between Sky Company and Big Co
The following selected transactions were completed during May between Sky Company and Big Co.:
AND SO ON
Instructions
1. Journalize the May transactions for Big Co. (the buyer).
2. Journalize the May transactions for Sky Company (the seller).
Note: 24th Edition
Click here for the solution: The following selected transactions were completed during May between Sky Company and Big Co
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