P3-5A On September 1, 2008, the account balances of Rand Equipment Repair, Inc. were as follows.
No. Debits No. Credits
101 Cash $4,880 154 Accumulated Depreciation $1,500
112 Accounts Receivable 3,520 201 Accounts Payable 3,400
126 Supplies 2,000 209 Unearned Service Revenue 1,400
153 Store Equipment 15,000 212 Salaries Payable 500
311 Common Stock 15,000
320 Retained Earnings 3,600
$25,400 $25,400
During September the following summary transactions were completed.
Sept. 8 Paid $1,400 for salaries due employees, of which $900 is for September.
10 Received $1,200 cash from customers on account.
12 Received $3,400 cash for services performed in September.
15 Purchased store equipment on account $3,000.
17 Purchased supplies on account $1,200.
20 Paid creditors $4,500 on account.
22 Paid September rent $500.
25 Paid salaries $1,250.
27 Performed services on account and billed customers for services provided $1,500.
29 Received $650 from customers for future service.
Adjustment data consist of:
1. Supplies on hand $1,200.
2. Accrued salaries payable $400.
3. Depreciation is $100 per month.
4. Unearned service revenue of $1,450 is earned.
Instructions
(a) Journalize the September transactions. (Your instructor may advise you to post to ledger accounts, that should be turned in as part of the problem.)
(b) Prepare a trial balance at September 30.
(c) Journalize and post adjusting entries.
(d) Prepare an adjusted trial balance.
(e) Prepare an income statement and a retained earnings statement for September and a balance sheet at September 30.
Click here for the solution: On September 1, 2008, the account balances of Rand Equipment Repair, Inc. were as follows
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Showing posts with label follows. Show all posts
Thursday, January 14, 2016
Thursday, November 26, 2015
The comparative balance sheet of House Construction Co. for June 30, 2010 and 2009, is as follows
The comparative balance sheet of House Construction Co. for June 30, 2010 and 2009, is as follows:
Assets June 30, 2010 June 30, 2009
Cash----- 41600 28200
A/R (Net) ----121900 110700
Inventories---------- 175600 170500
Investments---------- 0 60000
Land -------174000 0
Equipment---------- 258000 210600
Accumulated Depreciation--------- -58300 -49600
Total------------ 712800 530400
Liabilities & Stockholders Equity
A/P (Merchandise Creditors) ----------121000 114200
Accrued Expense Payable (Operating Expense)------------ 18000 15800
Dividends Payable--------------- 15000 12000
Common Stock, $1 Par--------------- 67200 60000
Paid-In Capital In Excess Of Par - Common Stock------- 264000 120000
Retained Earnings ------------227600 208400
Total---------- 712800 530400
The following additional information was taken from the records of House Construction Co.:
A. Equipment and land were acquired for cash.
B. There were no disposals of equipment during the year.
C. The investments were sold for $54,000 cash.
D. The common stock was issued for cash.
E. There was a $79,200 credit to Retained Earnings for net income.
F. There was a $60,000 debit to Retained Earnings for cash dividends declared.
A. Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.
Check: Net Cash Flow from Operating Activities $86,600
Click here for the solution: The comparative balance sheet of House Construction Co. for June 30, 2010 and 2009, is as follows
Assets June 30, 2010 June 30, 2009
Cash----- 41600 28200
A/R (Net) ----121900 110700
Inventories---------- 175600 170500
Investments---------- 0 60000
Land -------174000 0
Equipment---------- 258000 210600
Accumulated Depreciation--------- -58300 -49600
Total------------ 712800 530400
Liabilities & Stockholders Equity
A/P (Merchandise Creditors) ----------121000 114200
Accrued Expense Payable (Operating Expense)------------ 18000 15800
Dividends Payable--------------- 15000 12000
Common Stock, $1 Par--------------- 67200 60000
Paid-In Capital In Excess Of Par - Common Stock------- 264000 120000
Retained Earnings ------------227600 208400
Total---------- 712800 530400
The following additional information was taken from the records of House Construction Co.:
A. Equipment and land were acquired for cash.
B. There were no disposals of equipment during the year.
C. The investments were sold for $54,000 cash.
D. The common stock was issued for cash.
E. There was a $79,200 credit to Retained Earnings for net income.
F. There was a $60,000 debit to Retained Earnings for cash dividends declared.
A. Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.
B. Prepare ratios as required
Check: Net Cash Flow from Operating Activities $86,600
Click here for the solution: The comparative balance sheet of House Construction Co. for June 30, 2010 and 2009, is as follows
The adjusted trial balance of Kobe Repairs on December 31, 2005, follows
Problem 4-3A Preparing trial balances, closing entries, and financial statements
The adjusted trial balance of Kobe Repairs on December 31, 2005, follows:
KOBE REPAIRS
Adjusted Trial Balance
December 31, 2005
No. Account Title Debit Credit
101 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,000
124 Office supplies . . . . . . . . . . . . . . . . . . . . . . . . . 1,200
128 Prepaid insurance . . . . . . . . . . . . . . . . . . . . . . . 1,950
167 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,000
168 Accumulated depreciation—Equipment . . . . . . . $ 4,000
201 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 12,000
210 Wages payable . . . . . . . . . . . . . . . . . . . . . . . . . 500
301 S. Kobe, Capital . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
302 S. Kobe, Withdrawals . . . . . . . . . . . . . . . . . . . . . 15,000
401 Repair fees earned . . . . . . . . . . . . . . . . . . . . . . 77,750
612 Depreciation expense—Equipment . . . . . . . . . . 4,000
623 Wages expense . . . . . . . . . . . . . . . . . . . . . . . . . 36,500
637 Insurance expense . . . . . . . . . . . . . . . . . . . . . . . 700
640 Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . 9,600
650 Office supplies expense . . . . . . . . . . . . . . . . . . . 2,600
690 Utilities expense . . . . . . . . . . . . . . . . . . . . . . . . 1,700
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $134,250 $134,250
Required
1. Prepare an income statement and a statement of owner’s equity for the year 2005, and a classified balance sheet at December 31, 2005. There are no owner investments in 2005.
2. Enter the adjusted trial balance in the first two columns of a six-column table. Use columns three and four for closing entry information and the last two columns for a post-closing trial balance. Insert an Income Summary account as the last item in the trial balance.
3. Enter closing entry information in the six-column table and prepare journal entries for them.
Analysis Component
4. Assume for this part only that:
a. None of the $700 insurance expense had expired during the year. Instead, assume it is a prepayment of the next period’s insurance protection.
b. There are no earned and unpaid wages at the end of the year. (Hint: Reverse the $500 wages payable accrual.) Describe the financial statement changes that would result from these two assumptions.
Check (1) Ending capital balance, $47,650
(2) P-C trial balance totals, $64,150
Click here for the solution: The adjusted trial balance of Kobe Repairs on December 31, 2005, follows
The adjusted trial balance of Kobe Repairs on December 31, 2005, follows:
KOBE REPAIRS
Adjusted Trial Balance
December 31, 2005
No. Account Title Debit Credit
101 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,000
124 Office supplies . . . . . . . . . . . . . . . . . . . . . . . . . 1,200
128 Prepaid insurance . . . . . . . . . . . . . . . . . . . . . . . 1,950
167 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,000
168 Accumulated depreciation—Equipment . . . . . . . $ 4,000
201 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 12,000
210 Wages payable . . . . . . . . . . . . . . . . . . . . . . . . . 500
301 S. Kobe, Capital . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
302 S. Kobe, Withdrawals . . . . . . . . . . . . . . . . . . . . . 15,000
401 Repair fees earned . . . . . . . . . . . . . . . . . . . . . . 77,750
612 Depreciation expense—Equipment . . . . . . . . . . 4,000
623 Wages expense . . . . . . . . . . . . . . . . . . . . . . . . . 36,500
637 Insurance expense . . . . . . . . . . . . . . . . . . . . . . . 700
640 Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . 9,600
650 Office supplies expense . . . . . . . . . . . . . . . . . . . 2,600
690 Utilities expense . . . . . . . . . . . . . . . . . . . . . . . . 1,700
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $134,250 $134,250
Required
1. Prepare an income statement and a statement of owner’s equity for the year 2005, and a classified balance sheet at December 31, 2005. There are no owner investments in 2005.
2. Enter the adjusted trial balance in the first two columns of a six-column table. Use columns three and four for closing entry information and the last two columns for a post-closing trial balance. Insert an Income Summary account as the last item in the trial balance.
3. Enter closing entry information in the six-column table and prepare journal entries for them.
Analysis Component
4. Assume for this part only that:
a. None of the $700 insurance expense had expired during the year. Instead, assume it is a prepayment of the next period’s insurance protection.
b. There are no earned and unpaid wages at the end of the year. (Hint: Reverse the $500 wages payable accrual.) Describe the financial statement changes that would result from these two assumptions.
Check (1) Ending capital balance, $47,650
(2) P-C trial balance totals, $64,150
Click here for the solution: The adjusted trial balance of Kobe Repairs on December 31, 2005, follows
Wednesday, November 11, 2015
Griffin Company has prepared departmental overhead budgets for normal activity levels before allocations as follows
12-49 Direct and Step-Down Methods of Allocation
Griffin Company has prepared departmental overhead budgets for normal activity levels before allocations as follows:
Building and grounds $ 20,000
Personnel 1,200
General factory administration* 28,020
Cafeteria operating loss 1,430
Storeroom 2,750
Machining 35,100
Assembly 56,500
Total $145,000
*To be allocated before cafeteria.
Management has decided that the most sensible product costs are achieved by using departmental overhead rates. These rates are developed after allocating appropriate service department costs to production departments.
Cost-allocation bases for allocation are to be selected from the following data:
Square Feet of Direct-Labor Number of Floor Space Total Number of Department Hours Employees Occupied Labor Hours Requisitions
Building and grounds — — — — —
Personnel* — — 2,000 — —
General factory administration — 35 7,000 — —
Cafeteria operating loss — 10 4,000 1,000 —
Storeroom — 5 7,000 1,000 —
Machining 5,000 50 30,000 8,000 3,000
Assembly 15,000 100 50,000 17,000 1,500
20,000 200 100,000 27,000 4,500
*Basis used is number of employees.
1. Allocate service department costs by the step-down method. Develop overhead rates per direct labor hour for machining and assembly.
2. Same as in number 1, using the direct method.
3. What would be the plantwide factory-overhead application rate, assuming that direct-labor hours are used as a cost-allocation base?
4. Using the following information about two jobs, prepare three different total overhead costs for each job, using rates developed in numbers 1, 2, and 3.
Direct-Labor Hours
Machining Assembly
Job K10 19 2
Job K12 3 18
Click here for the solution: Griffin Company has prepared departmental overhead budgets for normal activity levels before allocations as follows
Griffin Company has prepared departmental overhead budgets for normal activity levels before allocations as follows:
Building and grounds $ 20,000
Personnel 1,200
General factory administration* 28,020
Cafeteria operating loss 1,430
Storeroom 2,750
Machining 35,100
Assembly 56,500
Total $145,000
*To be allocated before cafeteria.
Management has decided that the most sensible product costs are achieved by using departmental overhead rates. These rates are developed after allocating appropriate service department costs to production departments.
Cost-allocation bases for allocation are to be selected from the following data:
Square Feet of Direct-Labor Number of Floor Space Total Number of Department Hours Employees Occupied Labor Hours Requisitions
Building and grounds — — — — —
Personnel* — — 2,000 — —
General factory administration — 35 7,000 — —
Cafeteria operating loss — 10 4,000 1,000 —
Storeroom — 5 7,000 1,000 —
Machining 5,000 50 30,000 8,000 3,000
Assembly 15,000 100 50,000 17,000 1,500
20,000 200 100,000 27,000 4,500
*Basis used is number of employees.
1. Allocate service department costs by the step-down method. Develop overhead rates per direct labor hour for machining and assembly.
2. Same as in number 1, using the direct method.
3. What would be the plantwide factory-overhead application rate, assuming that direct-labor hours are used as a cost-allocation base?
4. Using the following information about two jobs, prepare three different total overhead costs for each job, using rates developed in numbers 1, 2, and 3.
Direct-Labor Hours
Machining Assembly
Job K10 19 2
Job K12 3 18
Click here for the solution: Griffin Company has prepared departmental overhead budgets for normal activity levels before allocations as follows
Tuesday, November 10, 2015
A partial trial balance of Julie Hartsack Corporation is as follows on December 31, 2008
Exercise 22-19 (E22-19) (Error Analysis; Correcting Entries) A partial trial balance of Julie Hartsack Corporation is as follows on December 31, 2008.
Dr. Cr.
Supplies on hand $ 2,700
Accrued salaries and wages $ 1,500
Interest receivable on investments 5,100
Prepaid insurance 90,000
Unearned rent –0–
Accrued interest payable 15,000
Additional adjusting data:
1. A physical count of supplies on hand on December 31, 2008, totaled $1,100.
2. Through oversight, the Accrued Salaries and Wages account was not changed during 2008. Accrued salaries and wages on December 31, 2008, amounted to $4,400.
3. The Interest Receivable on Investments account was also left unchanged during 2008. Accrued interest on investments amounts to $4,350 on December 31, 2008.
4. The unexpired portions of the insurance policies totaled $65,000 as of December 31, 2008.
5. $28,000 was received on January 1, 2008 for the rent of a building for both 2008 and 2009. The entire amount was credited to rental income.
6. Depreciation for the year was erroneously recorded as $5,000 rather than the correct figure of $50,000.
7. A further review of depreciation calculations of prior years revealed that depreciation of $7,200 was not recorded. It was decided that this oversight should be corrected by a prior period adjustment.
Instructions
(a) Assuming that the books have not been closed, what are the adjusting entries necessary at December 31, 2008? (Ignore income tax considerations.)
(b) Assuming that the books have been closed, what are the adjusting entries necessary at December 31, 2008? (Ignore income tax considerations.)
Click here for the solution: A partial trial balance of Julie Hartsack Corporation is as follows on December 31, 2008
Dr. Cr.
Supplies on hand $ 2,700
Accrued salaries and wages $ 1,500
Interest receivable on investments 5,100
Prepaid insurance 90,000
Unearned rent –0–
Accrued interest payable 15,000
Additional adjusting data:
1. A physical count of supplies on hand on December 31, 2008, totaled $1,100.
2. Through oversight, the Accrued Salaries and Wages account was not changed during 2008. Accrued salaries and wages on December 31, 2008, amounted to $4,400.
3. The Interest Receivable on Investments account was also left unchanged during 2008. Accrued interest on investments amounts to $4,350 on December 31, 2008.
4. The unexpired portions of the insurance policies totaled $65,000 as of December 31, 2008.
5. $28,000 was received on January 1, 2008 for the rent of a building for both 2008 and 2009. The entire amount was credited to rental income.
6. Depreciation for the year was erroneously recorded as $5,000 rather than the correct figure of $50,000.
7. A further review of depreciation calculations of prior years revealed that depreciation of $7,200 was not recorded. It was decided that this oversight should be corrected by a prior period adjustment.
Instructions
(a) Assuming that the books have not been closed, what are the adjusting entries necessary at December 31, 2008? (Ignore income tax considerations.)
(b) Assuming that the books have been closed, what are the adjusting entries necessary at December 31, 2008? (Ignore income tax considerations.)
Click here for the solution: A partial trial balance of Julie Hartsack Corporation is as follows on December 31, 2008
Monday, October 26, 2015
Financial statement information about four different companies is as follows
ACC 557 Week 1 Assignment
P1–5A Financial statement information about four different companies is as follows.
Instructions
(a) Determine the missing amounts. (Hint: For example, to solve for (a), Assets _ Liabilities _ Stockholders’ Equity _ $45,000.)
(b) Prepare the retained earnings statement for Yates Company. Assume beginning retained earnings was $20,000.
(c) Write a memorandum explaining the sequence for preparing financial statements and the interrelationship of the retained earnings statement to the income statement and balance sheet.
Karma Yates McCain Dench
Company Company Company Company
January 1, 2008
Assets $ 95,000 $110,000 (g) $170,000
Liabilities 50,000 (d) 75,000 ( j)
Stockholders’ equity (a) 60,000 45,000 90,000
December 31, 2008
Assets (b) 137,000 200,000 (k)
Liabilities 55,000 75,000 (h) 80,000
Stockholders’ equity 60,000 (e) 130,000 170,000
Stockholders’ equity changes in year
Additional investment (c) 15,000 10,000 15,000
Dividends 25,000 (f) 14,000 20,000
Total revenues 350,000 420,000 (i) 520,000
Total expenses 320,000 385,000 342,000 (l)
Click here for the solution: Financial statement information about four different companies is as follows
P1–5A Financial statement information about four different companies is as follows.
Instructions
(a) Determine the missing amounts. (Hint: For example, to solve for (a), Assets _ Liabilities _ Stockholders’ Equity _ $45,000.)
(b) Prepare the retained earnings statement for Yates Company. Assume beginning retained earnings was $20,000.
(c) Write a memorandum explaining the sequence for preparing financial statements and the interrelationship of the retained earnings statement to the income statement and balance sheet.
Karma Yates McCain Dench
Company Company Company Company
January 1, 2008
Assets $ 95,000 $110,000 (g) $170,000
Liabilities 50,000 (d) 75,000 ( j)
Stockholders’ equity (a) 60,000 45,000 90,000
December 31, 2008
Assets (b) 137,000 200,000 (k)
Liabilities 55,000 75,000 (h) 80,000
Stockholders’ equity 60,000 (e) 130,000 170,000
Stockholders’ equity changes in year
Additional investment (c) 15,000 10,000 15,000
Dividends 25,000 (f) 14,000 20,000
Total revenues 350,000 420,000 (i) 520,000
Total expenses 320,000 385,000 342,000 (l)
Click here for the solution: Financial statement information about four different companies is as follows
Wednesday, October 14, 2015
On September 1, 2008, the account balances of Rand Equipment Repair, Inc. were as follows
P3-5A On September 1, 2008, the account balances of Rand Equipment Repair, Inc. were as follows.
No. Debits No. Credits
101 Cash $4,880 154 Accumulated Depreciation $1,500
112 Accounts Receivable 3,520 201 Accounts Payable 3,400
126 Supplies 2,000 209 Unearned Service Revenue 1,400
153 Store Equipment 15,000 212 Salaries Payable 500
311 Common Stock 15,000
320 Retained Earnings 3,600
$25,400 $25,400
During September the following summary transactions were completed.
Sept. 8 Paid $1,400 for salaries due employees, of which $900 is for September.
10 Received $1,200 cash from customers on account.
12 Received $3,400 cash for services performed in September.
15 Purchased store equipment on account $3,000.
17 Purchased supplies on account $1,200.
20 Paid creditors $4,500 on account.
22 Paid September rent $500.
25 Paid salaries $1,250.
27 Performed services on account and billed customers for services provided $1,500.
29 Received $650 from customers for future service.
Adjustment data consist of:
1. Supplies on hand $1,200.
2. Accrued salaries payable $400.
3. Depreciation is $100 per month.
4. Unearned service revenue of $1,450 is earned.
Instructions
(a) Journalize the September transactions. (Your instructor may advise you to post to ledger accounts, that should be turned in as part of the problem.)
(b) Prepare a trial balance at September 30.
(c) Journalize and post adjusting entries.
(d) Prepare an adjusted trial balance.
(e) Prepare an income statement and a retained earnings statement for September and a balance sheet at September 30.
Click here for the solution: On September 1, 2008, the account balances of Rand Equipment Repair, Inc. were as follows
No. Debits No. Credits
101 Cash $4,880 154 Accumulated Depreciation $1,500
112 Accounts Receivable 3,520 201 Accounts Payable 3,400
126 Supplies 2,000 209 Unearned Service Revenue 1,400
153 Store Equipment 15,000 212 Salaries Payable 500
311 Common Stock 15,000
320 Retained Earnings 3,600
$25,400 $25,400
During September the following summary transactions were completed.
Sept. 8 Paid $1,400 for salaries due employees, of which $900 is for September.
10 Received $1,200 cash from customers on account.
12 Received $3,400 cash for services performed in September.
15 Purchased store equipment on account $3,000.
17 Purchased supplies on account $1,200.
20 Paid creditors $4,500 on account.
22 Paid September rent $500.
25 Paid salaries $1,250.
27 Performed services on account and billed customers for services provided $1,500.
29 Received $650 from customers for future service.
Adjustment data consist of:
1. Supplies on hand $1,200.
2. Accrued salaries payable $400.
3. Depreciation is $100 per month.
4. Unearned service revenue of $1,450 is earned.
Instructions
(a) Journalize the September transactions. (Your instructor may advise you to post to ledger accounts, that should be turned in as part of the problem.)
(b) Prepare a trial balance at September 30.
(c) Journalize and post adjusting entries.
(d) Prepare an adjusted trial balance.
(e) Prepare an income statement and a retained earnings statement for September and a balance sheet at September 30.
Click here for the solution: On September 1, 2008, the account balances of Rand Equipment Repair, Inc. were as follows
The units of an item available for sale during the year were as follows
Ex 6-8 The units of an item available for sale during the year were as follows:
Jan 1 Inventory 27 units at $120
Feb 17 Purchase 54 units at $138
July 21 Purchase 63 units at $156
Nov 23 Purchase 36 units at $165
There are 50 units of the item in the physical inventory at December 31. The periodic inventory system is used.
Determine the inventory cost by (a) the first-in, first-out method, (b) the last-in, first-out method, and (c) the average cost method.
Click here for the solution: The units of an item available for sale during the year were as follows
Jan 1 Inventory 27 units at $120
Feb 17 Purchase 54 units at $138
July 21 Purchase 63 units at $156
Nov 23 Purchase 36 units at $165
There are 50 units of the item in the physical inventory at December 31. The periodic inventory system is used.
Determine the inventory cost by (a) the first-in, first-out method, (b) the last-in, first-out method, and (c) the average cost method.
Click here for the solution: The units of an item available for sale during the year were as follows
Selected transactions for D. Reyes, Inc., an interior decorating firm, in its first month of business, are as follows
E2-2 Selected transactions for D. Reyes, Inc., an interior decorating firm, in its first month of business, are as follows.
Jan. 2 Invested $10,000 cash in the business in exchange for common stock.
3 Purchased used car for $4,000 cash for use in business.
9 Purchased supplies on account for $500.
11 Billed customers $1,800 for services performed.
16 Paid $200 cash for advertising.
20 Received $700 cash from customers billed on January 11.
23 Paid creditor $300 cash on balance owed.
28 Declared and paid a $1,000 cash dividend.
Instructions
For each transaction indicate the following.
(a) The basic type of account debited and credited (asset, liability, stockholders’ equity).
(b) The specific account debited and credited (cash, rent expense, service revenue, etc.).
(c) Whether the specific account is increased or decreased.
(d) The normal balance of the specific account.
Post journal entries to standard form of account.
Use the following format, in which the January 2 transaction is given as an example.
Account Debited Account Credited
(a) (b) (c) (d) (a) (b) (c) (d)
Basic Specific Normal Basic Specific Normal
Date Type Account Effect Balance Type Account Effect Balance
Jan. 2 Asset Cash Increase Debit Stockholders' Stock Common Increase Credit
Click here for the solution: Selected transactions for D. Reyes, Inc., an interior decorating firm, in its first month of business, are as follows
Jan. 2 Invested $10,000 cash in the business in exchange for common stock.
3 Purchased used car for $4,000 cash for use in business.
9 Purchased supplies on account for $500.
11 Billed customers $1,800 for services performed.
16 Paid $200 cash for advertising.
20 Received $700 cash from customers billed on January 11.
23 Paid creditor $300 cash on balance owed.
28 Declared and paid a $1,000 cash dividend.
Instructions
For each transaction indicate the following.
(a) The basic type of account debited and credited (asset, liability, stockholders’ equity).
(b) The specific account debited and credited (cash, rent expense, service revenue, etc.).
(c) Whether the specific account is increased or decreased.
(d) The normal balance of the specific account.
Post journal entries to standard form of account.
Use the following format, in which the January 2 transaction is given as an example.
Account Debited Account Credited
(a) (b) (c) (d) (a) (b) (c) (d)
Basic Specific Normal Basic Specific Normal
Date Type Account Effect Balance Type Account Effect Balance
Jan. 2 Asset Cash Increase Debit Stockholders' Stock Common Increase Credit
Click here for the solution: Selected transactions for D. Reyes, Inc., an interior decorating firm, in its first month of business, are as follows
Friday, October 9, 2015
The May transactions of StepAside Corporation were as follows
E3-9 The May transactions of StepAside Corporation were as follows.
May 4 Paid $700 due for supplies previously purchased on account.
7 Performed advisory services on account for $6,800.
8 Purchased supplies for $850 on account.
9 Purchased equipment for $1,000 in cash.
17 Paid employees $530 in cash.
22 Received bill for equipment repairs of $900.
29 Paid $1,200 for 12 months of insurance policy. Coverage begins June 1.
Instructions
Journalize the transactions. Do not provide explanations.
Click here for the solution: The May transactions of StepAside Corporation were as follows
May 4 Paid $700 due for supplies previously purchased on account.
7 Performed advisory services on account for $6,800.
8 Purchased supplies for $850 on account.
9 Purchased equipment for $1,000 in cash.
17 Paid employees $530 in cash.
22 Received bill for equipment repairs of $900.
29 Paid $1,200 for 12 months of insurance policy. Coverage begins June 1.
Instructions
Journalize the transactions. Do not provide explanations.
Click here for the solution: The May transactions of StepAside Corporation were as follows
Sunday, September 27, 2015
Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows
PR 10-6A Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows:
a. On December 31, the company determined that $20,000,000 of goodwill was impaired.
b. Governmental and legal costs of $675,000 were incurred on June 30 in obtaining a patent with an estimated economic life of 10 years. Amortization is to be for one-half year.
c. Timber rights on a tract of land were purchased for $1,665,000 on February 16. The stand of timber is estimated at 9,000,000 board feet. During the current year, 2,400,000 board feet of timber were cut and sold.
Instructions
1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items.
2. Journalize the adjusting entries to record the amortization, depletion, or impairment for each item.
Click here for the solution: Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows
a. On December 31, the company determined that $20,000,000 of goodwill was impaired.
b. Governmental and legal costs of $675,000 were incurred on June 30 in obtaining a patent with an estimated economic life of 10 years. Amortization is to be for one-half year.
c. Timber rights on a tract of land were purchased for $1,665,000 on February 16. The stand of timber is estimated at 9,000,000 board feet. During the current year, 2,400,000 board feet of timber were cut and sold.
Instructions
1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items.
2. Journalize the adjusting entries to record the amortization, depletion, or impairment for each item.
Click here for the solution: Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows
The stockholders' equity accounts of Sigma Corporation on January 1, 2010, were as follows
The stockholders' equity accounts of Sigma Corporation on January 1, 2010, were as follows.
Preferred Stock (8%, $100 par noncumulative, 5,000 shares authorized) $300,000
Common Stock ($5 stated value, 300,000 shares authorized) 1,000,000
Paid-in Capital in Excess of Par Value - Preferred Stock 15,000
Paid-in Capital in Excess of Stated Value - Common Stock 480,000
Retained Earnings 688,000
Treasury Stock - Common (5,000 shares) 40,000
During 2010 the corporation had these transactions and events pertaining to its stockholders' equity.
Feb. 1 Issued 5,000 shares of common stock for $30,000.
Mar. 20 Purchased 1,000 additional shares of common treasury stock at $7 per share.
Oct. 1 Declared a 8% cash dividend on preferred stock, payable November 1.
Nov. 1 Paid the dividend declared on October 1.
Dec. 1 Declared a $0.50 per share cash dividend to common stockholders of record on December 15, payable December 31, 2010.
Dec. 31 Determined that net income for the year was $280,000. Paid the dividend declared on December 1.
Instructions
(a) Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.)
(b) Enter the beginning balances in the accounts and post the journal entries to the stockholders’ equity accounts. (Use T accounts.)
(c) Prepare the stockholders’ equity section of the balance sheet at December 31, 2010.
(d) Calculate the payout ratio, earnings per share, and return on common stockholders’ equity ratio. (Note: Use the common shares outstanding on January 1 and December 31 to determine the average shares outstanding.)
Click here for the solution: The stockholders' equity accounts of Sigma Corporation on January 1, 2010, were as follows
Preferred Stock (8%, $100 par noncumulative, 5,000 shares authorized) $300,000
Common Stock ($5 stated value, 300,000 shares authorized) 1,000,000
Paid-in Capital in Excess of Par Value - Preferred Stock 15,000
Paid-in Capital in Excess of Stated Value - Common Stock 480,000
Retained Earnings 688,000
Treasury Stock - Common (5,000 shares) 40,000
During 2010 the corporation had these transactions and events pertaining to its stockholders' equity.
Feb. 1 Issued 5,000 shares of common stock for $30,000.
Mar. 20 Purchased 1,000 additional shares of common treasury stock at $7 per share.
Oct. 1 Declared a 8% cash dividend on preferred stock, payable November 1.
Nov. 1 Paid the dividend declared on October 1.
Dec. 1 Declared a $0.50 per share cash dividend to common stockholders of record on December 15, payable December 31, 2010.
Dec. 31 Determined that net income for the year was $280,000. Paid the dividend declared on December 1.
Instructions
(a) Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.)
(b) Enter the beginning balances in the accounts and post the journal entries to the stockholders’ equity accounts. (Use T accounts.)
(c) Prepare the stockholders’ equity section of the balance sheet at December 31, 2010.
(d) Calculate the payout ratio, earnings per share, and return on common stockholders’ equity ratio. (Note: Use the common shares outstanding on January 1 and December 31 to determine the average shares outstanding.)
Click here for the solution: The stockholders' equity accounts of Sigma Corporation on January 1, 2010, were as follows
The units of Product YY2 available for sale during the year were as follows
The units of Product YY2 available for sale during the year were as follows:
Apr 1 Inventory 16 units @ $30
Jun 16 Purchase 30 units @ $33
Sep 28 Purchase 45 units @ $37
There are 17 units of the product in the physical inventory at March 31. The periodic inventory system is used.
Determine the difference in gross profit between the LIFO and FIFO inventory cost systems.
Click here for the solution: The units of Product YY2 available for sale during the year were as follows
Apr 1 Inventory 16 units @ $30
Jun 16 Purchase 30 units @ $33
Sep 28 Purchase 45 units @ $37
There are 17 units of the product in the physical inventory at March 31. The periodic inventory system is used.
Determine the difference in gross profit between the LIFO and FIFO inventory cost systems.
Click here for the solution: The units of Product YY2 available for sale during the year were as follows
Friday, September 25, 2015
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
Information concerning Sandro Corporation’s intangible assets is as follows
P12-3 Information concerning Sandro Corporation’s intangible assets is as follows.
1. On January 1, 2010, Sandro signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $75,000. Of this amount, $15,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $15,000 each, beginning January 1, 2011. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2010, of the 4 annual payments discounted at 14% (the implicit rate for a loan of this type) is $43,700. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Sandro’s revenue from the franchise for 2010 was $900,000. Sandro estimates the useful life of the franchise to be 10 years. (Hint: You may want to refer to Appendix 18A to determine the proper accounting treatment for the franchise fee and payments.)
2. Sandro incurred $65,000 of experimental and development costs in its laboratory to develop a patent that was granted on January 2, 2010. Legal fees and other costs associated with registration of the patent totaled $17,600. Sandro estimates that the useful life of the patent will be 8 years.
3. A trademark was purchased from Shanghai Company for $36,000 on July 1, 2007. Expenditures for successful litigation in defense of the trademark totaling $10,200 were paid on July 1, 2010. Sandro estimates that the useful life of the trademark will be 20 years from the date of acquisition.
Instructions
(a) Prepare a schedule showing the intangible assets section of Sandro’s balance sheet at December 31, 2010. Show supporting computations in good form.
(b) Prepare a schedule showing all expenses resulting from the transactions that would appear on Sandro’s income statement for the year ended December 31, 2010. Show supporting computations in good form.
Click here for the solution: Information concerning Sandro Corporation’s intangible assets is as follows
1. On January 1, 2010, Sandro signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $75,000. Of this amount, $15,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $15,000 each, beginning January 1, 2011. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2010, of the 4 annual payments discounted at 14% (the implicit rate for a loan of this type) is $43,700. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Sandro’s revenue from the franchise for 2010 was $900,000. Sandro estimates the useful life of the franchise to be 10 years. (Hint: You may want to refer to Appendix 18A to determine the proper accounting treatment for the franchise fee and payments.)
2. Sandro incurred $65,000 of experimental and development costs in its laboratory to develop a patent that was granted on January 2, 2010. Legal fees and other costs associated with registration of the patent totaled $17,600. Sandro estimates that the useful life of the patent will be 8 years.
3. A trademark was purchased from Shanghai Company for $36,000 on July 1, 2007. Expenditures for successful litigation in defense of the trademark totaling $10,200 were paid on July 1, 2010. Sandro estimates that the useful life of the trademark will be 20 years from the date of acquisition.
Instructions
(a) Prepare a schedule showing the intangible assets section of Sandro’s balance sheet at December 31, 2010. Show supporting computations in good form.
(b) Prepare a schedule showing all expenses resulting from the transactions that would appear on Sandro’s income statement for the year ended December 31, 2010. Show supporting computations in good form.
Click here for the solution: Information concerning Sandro Corporation’s intangible assets is as follows
(Mini Case) The balance sheet that follows indicates the capital structure for Nealon Inc
Assignment:
Weighted Average Cost
Complete the Mini Case on page 368 and submit to instructor. In parts "a" and "b" clearly label the calculation of the required ratios and solve using Excel. Use formulas to calculate the ratios and format the cells to insert a comma if there is more than three numbers. Round to two decimal places. No narrative analysis is called for, so clearly label the calculations so that management will be able to comprehend them.
Mini Case
The balance sheet that follows indicates the capital structure for Nealon Inc. Flotation costs are (a) 15 percent of market value for a new bond issue, and (b) $2.01 per share for preferred stock. The dividends for common stock were $2.50 last year and are projected to have an annual growth rate of 6 percent. The firm is in a 34 percent tax bracket. What is the weighted average cost of capital if the firm’s finances are in the following proportions?
TYPE OF FINANCING PERCENTAGE OF FUTURE FINANCING
Bonds (8%, $1000 par, 16-year maturity) 38%
Preferred Stock (5,000 shares outstanding, $50 par, $1.50 dividend) 15%
Common Equity 47%
Total 100%
a. Market prices are $1,035 for bonds, $19 for preferred stock, and $35 for common stock. There will be sufficient internal common equity funding (i.e. retained earnings) available such that the firm does not plan to issue new common stock. Calculate the firm’s weighted average cost of capital.
b. In part a we assumed that Nealon would have sufficient retained earnings such that it would not need to sell additional common stock to finance its new investments. Consider the situation now, when Nealon’s retained earnings anticipated or the coming year are expected to fall short of the equity requirement of 47 percent of new capital raised. Consequently, the firm foresees the possibility that new common shares will have to be issued. To facilitate the sale of shares, Nealon’s investment banker has advised management that they should expect a price discount of approximately 7 percent, or $2.45 per share. Under these terms, the new shares should provide net proceeds of about $32.55. What is Nealon’s cost of equity capital when new shares are sold, and what is the weighted average cost of the added funds involved in the issuance of new shares?
Click here for the solution: (Mini Case) The balance sheet that follows indicates the capital structure for Nealon Inc
Weighted Average Cost
Complete the Mini Case on page 368 and submit to instructor. In parts "a" and "b" clearly label the calculation of the required ratios and solve using Excel. Use formulas to calculate the ratios and format the cells to insert a comma if there is more than three numbers. Round to two decimal places. No narrative analysis is called for, so clearly label the calculations so that management will be able to comprehend them.
Mini Case
The balance sheet that follows indicates the capital structure for Nealon Inc. Flotation costs are (a) 15 percent of market value for a new bond issue, and (b) $2.01 per share for preferred stock. The dividends for common stock were $2.50 last year and are projected to have an annual growth rate of 6 percent. The firm is in a 34 percent tax bracket. What is the weighted average cost of capital if the firm’s finances are in the following proportions?
TYPE OF FINANCING PERCENTAGE OF FUTURE FINANCING
Bonds (8%, $1000 par, 16-year maturity) 38%
Preferred Stock (5,000 shares outstanding, $50 par, $1.50 dividend) 15%
Common Equity 47%
Total 100%
a. Market prices are $1,035 for bonds, $19 for preferred stock, and $35 for common stock. There will be sufficient internal common equity funding (i.e. retained earnings) available such that the firm does not plan to issue new common stock. Calculate the firm’s weighted average cost of capital.
b. In part a we assumed that Nealon would have sufficient retained earnings such that it would not need to sell additional common stock to finance its new investments. Consider the situation now, when Nealon’s retained earnings anticipated or the coming year are expected to fall short of the equity requirement of 47 percent of new capital raised. Consequently, the firm foresees the possibility that new common shares will have to be issued. To facilitate the sale of shares, Nealon’s investment banker has advised management that they should expect a price discount of approximately 7 percent, or $2.45 per share. Under these terms, the new shares should provide net proceeds of about $32.55. What is Nealon’s cost of equity capital when new shares are sold, and what is the weighted average cost of the added funds involved in the issuance of new shares?
Click here for the solution: (Mini Case) The balance sheet that follows indicates the capital structure for Nealon Inc
Sunday, September 20, 2015
Eric Johnson (using data from Problem 1.6) determines his costs to be as follows
Problems 1.7 Eric Johnson (using data from Problem 1.6) determines his costs to be as follows:
• Labor: $10 per hour
• Resin: $5 per pound
• Capital expense: 1% per month of investment
• Energy: $.50 per BTU.
Show the percent change in productivity for one month last year versus one month this year, on a multifactor basis with dollars as the common denominator.
Data from Problem 1.6
Last Year Now
Units produced 1,000 1,000
Labor (hours) 300 275
Resin (pounds) 50 45
Capital invested ($) 10,000 11,000
Energy (BTU) 3,000 2,850
Click here for the solution: Eric Johnson (using data from Problem 1.6) determines his costs to be as follows
• Labor: $10 per hour
• Resin: $5 per pound
• Capital expense: 1% per month of investment
• Energy: $.50 per BTU.
Show the percent change in productivity for one month last year versus one month this year, on a multifactor basis with dollars as the common denominator.
Data from Problem 1.6
Last Year Now
Units produced 1,000 1,000
Labor (hours) 300 275
Resin (pounds) 50 45
Capital invested ($) 10,000 11,000
Energy (BTU) 3,000 2,850
Click here for the solution: Eric Johnson (using data from Problem 1.6) determines his costs to be as follows
Task time estimates for a production line setup project at Robert Klassen’s Ontario factory are as follows
Problem 3.7 Task time estimates for a production line setup project at Robert Klassen’s Ontario factory are as follows:
Activity Time In HRS Immediate Predecessor
A 6 -
B 7.2 -
C 5 A
D 6 B,C
E 4.5 B,C
F 7.7 D
G 4 E,F
a) Develop an AON network for this problem.
b) What is the critical path?
c) What is the total project completion time?
Click here for the solution: Task time estimates for a production line setup project at Robert Klassen’s Ontario factory are as follows
Activity Time In HRS Immediate Predecessor
A 6 -
B 7.2 -
C 5 A
D 6 B,C
E 4.5 B,C
F 7.7 D
G 4 E,F
a) Develop an AON network for this problem.
b) What is the critical path?
c) What is the total project completion time?
Click here for the solution: Task time estimates for a production line setup project at Robert Klassen’s Ontario factory are as follows
The number of transistors (in millions) made at a plant in Japan during the past 5 years follows
Problem 4.33 The number of transistors (in millions) made at a plant in Japan during the past 5 years follows:
Year Transistors
1 140
2 160
3 190
4 200
5 210
a) Forecast the number of transistors to be made next year, using linear regression.
b) Compute the mean squared error (MSE) when using linear regression.
c) Compute the mean absolute percent error (MAPE).
Click here for the solution: The number of transistors (in millions) made at a plant in Japan during the past 5 years follows
Year Transistors
1 140
2 160
3 190
4 200
5 210
a) Forecast the number of transistors to be made next year, using linear regression.
b) Compute the mean squared error (MSE) when using linear regression.
c) Compute the mean absolute percent error (MAPE).
Click here for the solution: The number of transistors (in millions) made at a plant in Japan during the past 5 years follows
The Sharpe Corporation’s projected sales for the first eight months of 2004 are as follows
4-6A (Cash budget) The Sharpe Corporation’s projected sales for the first eight months of 2004 are as follows:
January $90,000 February $120,000
March $135,000 April $240,000
May $300,000 June $270,000
July $225,000 August $150,000
Of Sharpe’s sales, 10 percent is for cash, another 60 percent is collected in the month following sales, and 30 percent is collected in the second month following sales. November and December sales for 2003 were $220,000 and $175,000, respectively. Sharpe purchases its raw material two months in advance of its sales equal to 60 percent of their final sales price. The supplier is paid one month after it makes delivery. For example, purchase for April sales are made in February and payment is made in March. In addition, Sharpe pays $10,000 per month for rent and $20,000 each month for other expenditures. Tax prepayments of $22,500 are made each quarter, beginning in March. The company’s cash balance at December 31, 2003, was $22,000; a minimum balance of $15,000 must be maintained at all times. Assume that any short-term financing needed to maintain the cast balance is paid off in the month following the month of financing if sufficient funds are available. Interest on short-term loans (12 percent) is paid monthly. Borrowing to meet estimated monthly cash needs takes place at the beginning of the month. Thus, if he month of April the firm expects to have a need for additional $60,500, these funds would be borrowed at the beginning of April with interest of $605 (.12 x ½ x $60,500) owed for April and paid at the beginning of May.
A. Prepare a cash budget for Sharpe covering the first seven months of 2004.
B. Sharpe has a $200,000 in notes payable due in July that must be repaid or renegotiated for an extension. Will the firm have ample cash to repay the notes?
Click here for the solution: The Sharpe Corporation’s projected sales for the first eight months of 2004 are as follows
January $90,000 February $120,000
March $135,000 April $240,000
May $300,000 June $270,000
July $225,000 August $150,000
Of Sharpe’s sales, 10 percent is for cash, another 60 percent is collected in the month following sales, and 30 percent is collected in the second month following sales. November and December sales for 2003 were $220,000 and $175,000, respectively. Sharpe purchases its raw material two months in advance of its sales equal to 60 percent of their final sales price. The supplier is paid one month after it makes delivery. For example, purchase for April sales are made in February and payment is made in March. In addition, Sharpe pays $10,000 per month for rent and $20,000 each month for other expenditures. Tax prepayments of $22,500 are made each quarter, beginning in March. The company’s cash balance at December 31, 2003, was $22,000; a minimum balance of $15,000 must be maintained at all times. Assume that any short-term financing needed to maintain the cast balance is paid off in the month following the month of financing if sufficient funds are available. Interest on short-term loans (12 percent) is paid monthly. Borrowing to meet estimated monthly cash needs takes place at the beginning of the month. Thus, if he month of April the firm expects to have a need for additional $60,500, these funds would be borrowed at the beginning of April with interest of $605 (.12 x ½ x $60,500) owed for April and paid at the beginning of May.
A. Prepare a cash budget for Sharpe covering the first seven months of 2004.
B. Sharpe has a $200,000 in notes payable due in July that must be repaid or renegotiated for an extension. Will the firm have ample cash to repay the notes?
Click here for the solution: The Sharpe Corporation’s projected sales for the first eight months of 2004 are as follows
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