Week 5 final | Accounting homework help

Week 5 FINAL

 

Brief Exercise 3-1

Transactions for Mehta Company for the month of May are presented below. Prepare journal entries for each of these transactions. (If no entry is required, select “No entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

May 1  Stockholders invests $4,000 cash in exchange for common stock of Mehta Company.

3          Buys equipment on account for $1,100.

13        Pays $400 to landlord for May rent.

21        Bills Noble Corp. $500 for welding work done.

 

Brief Exercise 3-3

On July 1, 2014, Crowe Co. pays $15,000 to Zubin Insurance Co. for a 3-year insurance policy. Both companies have fiscal years ending December 31. For Crowe Co., journalize the entry on July 1 and the adjusting entry on December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No entry” for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

 

Brief Exercise 3-7

Dresser Company’s weekly payroll, paid on Fridays, totals $8,000. Employees work a 5-day week. Prepare Dresser’s adjusting entry on Wednesday, December 31, and the journal entry to record the $8,000 cash payment on Friday, January 2. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No entry” for the account titles and enter 0 for the amounts.)

 

Brief Exercise 3-11

Side Kicks has year-end account balances of Sales Revenue $808,900; Interest Revenue $13,500; Cost of Goods Sold $556,200; Administrative Expenses $189,000; Income Tax Expense $35,100; and Dividends $18,900. Prepare the year-end closing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No entry” for the account titles and enter 0 for the amounts.)

 

Multiple Choice Question 56

At the time a company prepays a cost

it debits an asset account to show the service or benefit it will receive in the future.

its credits a liability account to show the obligation to pay for the service in the future.

it credits an asset account and debits an expense account.

it debits an expense account to match the expense against revenues recognized

 

Brief Exercise 4-1

Starr Co. had sales revenue of $540,000 in 2014. Other items recorded during the year were:

Cost of goods sold                                           $330,000

Salaries and wages expense                             120,000

Income tax expense                                         25,000

Increase in value of company reputation                     15,000

Other operating expenses                                 10,000

Unrealized gain on value of patents                 20,000

 

Prepare a single-step income statement for Starr for 2014. Starr has 100,000 shares of stock outstanding. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Brief Exercise 4-10

Portman Corporation has retained earnings of $675,000 at January 1, 2014. Net income during 2014 was $1,400,000, and cash dividends declared and paid during 2014 totaled $75,000. Prepare a retained earnings statement for the year ended December 31, 2014. Assume an error was discovered: land costing $80,000 (net of tax) was charged to maintenance and repairs expense in 2011. (List items that increase retained earnings first.)

 

Brief Exercise 4-11

On January 1, 2014, Richards Inc. had cash and common stock of $60,000. At that date, the company had no other asset, liability, or equity balances. On January 2, 2014, it purchased for cash $20,000 of equity securities that it classified as available-for-sale. It received cash dividends of $3,000 during the year on these securities. In addition, it has an unrealized holding gain on these securities of $4,000 net of tax. Determine the following amounts for 2014: (a) net income; (b) comprehensive income; (c) other comprehensive income; and (d) accumulated other comprehensive income (end of 2014).

(a)        Net income                                                      $

(b)        Comprehensive income                                               $

(c)        Other comprehensive income                          $

(d)        Accumulated other comprehensive income     $

 

Brief Exercise 5-1

Harding Corporation has the following accounts included in its December 31, 2014, trial balance: Accounts Receivable $110,000; Inventory $290,000; Allowance for Doubtful Accounts $8,000; Patents $72,000; Prepaid Insurance $9,500; Accounts Payable $77,000; Cash $30,000.

Prepare the current assets section of the balance sheet. (List Current Assets in order of liquidity.)

 

Brief Exercise 5-6

Patrick Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2014: Prepaid Rent $12,000; Goodwill $50,000; Franchise Fees Receivable $2,000; Franchises $47,000; Patents $33,000; Trademarks $10,000.

Prepare the intangible assets section of the balance sheet.

 

Brief Exercise 5-10

Hawthorn Corporation’s adjusted trial balance contained the following accounts at December 31, 2014: Retained Earnings $120,000; Common Stock $750,000; Bonds Payable $100,000; Paid-in Capital in Excess of Par-Common Stock $200,000; Goodwill $55,000; Accumulated Other Comprehensive Loss $150,000; Noncontrolling Interest $35,000.

Prepare the stockholders’ equity section of the balance sheet.

 

Brief Exercise 5-12

Keyser Beverage Company reported the following items in the most recent year.

Net income                                                      $40,000

Dividends paid                                                            5,000

Increase in accounts receivable                                   10,000

Increase in accounts payable                           7,000

Purchase of equipment (capital expenditure)   8,000

Depreciation expense                                      4,000

Issue of notes payable                                     20,000

 

Compute net cash provided by operating activities, the net change in cash during the year. (Show amounts that decrease cash flow with either a – sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Compute free cash flow.

Free Cash Flow $

 

Brief Exercise 5-13

Ames Company reported 2014 net income of $151,000. During 2014, accounts receivable increased by $13,000 and accounts payable increased by $9,500. Depreciation expense was $44,000.

Prepare the cash flows from operating activities section of the statement of cash flows. (Show amounts that decrease cash flow with either a – sign e.g. -15,000 or in parenthesis e.g. (15,000).)

 

Brief Exercise 5-14

Martinez Corporation engaged in the following cash transactions during 2014.

Sale of land and building                     $191,000

Purchase of treasury stock                   40,000

Purchase of land                                  37,000

Payment of cash dividend                   95,000

Purchase of equipment                                    53,000

Issuance of common stock                  147,000

Retirement of bonds                            100,000

Compute the net cash provided (used) by investing activities. (Show amounts that decrease cash flow with either a – sign e.g. -15,000 or in parenthesis e.g. (15,000).)

 

Brief Exercise 5-16

Martinez Corporation engaged in the following cash transactions during 2014.
Sale of land and building                                 $191,000

Purchase of treasury stock                               40,000

Purchase of land                                              37,000

Payment of cash dividend                               95,000

Purchase of equipment                                                53,000

Issuance of common stock                              147,000

Retirement of bonds                                        100,000

Determine Martinez’s free cash flow, assuming that it reported net cash provided by operating activities of $400,000.
Free cash flow             $

 

Exercise 5-16

A comparative balance sheet for Shabbona Corporation is presented below.

December 31

Assets                                                  2014                            2013

Cash                                                    $ 73,000                      $ 22,000

 Accounts receivable                           82,000                         66,000

 Inventory                                            180,000                       189,000

Land                                                    71,000                         110,000

 Equipment                                          260,000                       200,000

 Accumulated Depreciation-Equipment           (69,000                                    (42,000)   

Total                                                    $597,000                     $545,000

 Liabilities and Stockholders’ Equity  

Accounts payable                                $ 34,000                      $ 47,000

 Bonds payable                                                150,000                       200,000

 Common stock ($1 par)                                  214,000                       164,000

 Retained earnings                               199,000                       134,000

    Total                                                            $597,000                     $545,000

 

Additional information:

1. Net income for 2014 was $125,000.

2. Cash dividends of $60,000 were declared and paid.

3. Bonds payable amounting to $50,000 were retired through issuance of common stock.

 

Prepare a statement of cash flows for 2014 for Shabbona Corporation. (Show amounts that decrease cash flow with either a – sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Determine Shabbona Corporation’s current cash debt coverage ratio, cash debt coverage ratio, and free cash flow. (Round ratios to 2 decimal places., e.g. 0.67.)
Current cash debt coverage ratio                       :1

Cash debt coverage ratio                                   :1

Current cash debt coverage ratio                       :1

Cash debt coverage ratio                                  :1

Free cash flow$

 

Comment on its liquidity and financial flexibility.

Shabbona has 

 liquidity. Its financial flexibility is 

 

Brief Exercise 6-1

Chris Spear invested $15,000 today in a fund that earns 8% compounded annually. (Use the tables below.)

To what amount will the investment grow in 3 years? To what amount would the investment grow in 3 years if the fund earns 8% annual interest compounded semiannually? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 458,581.)

Investment at 8% annual interest         $

Investment at 8% annual interest, compounded semiannually $

 

Brief Exercise 6-14

Amy Monroe wants to create a fund today that will enable her to withdraw $25,000 per year for 8 years, with the first withdrawal to take place 5 years from today. (Use the tables below.)

If the fund earns 8% interest, how much must Amy invest today? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 458,581.)
Investment amount      $         

 

Brief Exercise 6-17

Zach Taylor is settling a $20,000 loan due today by making 6 equal annual payments of $4,727.53. (Use the tables below.)

What payments must Zach Taylor make to settle the loan at the same interest rate but with the 6 payments beginning on the day the loan is signed? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 458,581.)

Payments         $

 

Exercise 6-2

Alan Jackson invests $20,000 at 8% annual interest, leaving the money invested without withdrawing any of the interest for 8 years. At the end of the 8 years, Alan withdraws the accumulated amount of money.

Compute the amount Alan would withdraw assuming the investment earns simple interest. (Round answers to 0 decimal places, e.g. 458,581.)

Total withdrawn           $

 

Compute the amount Alan would withdraw assuming the investment earns interest compounded annually. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

Total withdrawn $

Compute the amount Alan would withdraw assuming the investment earns interest compounded semiannually. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

Total withdrawn           $

 

Brief Exercise 18-10

Guillen, Inc. began work on a $7,000,000 contract in 2014 to construct an office building. Guillen uses the completed-contract method. At December 31, 2014, the balances in certain accounts were Construction in Process $1,715,000; Accounts Receivable $240,000; and Billings on Construction in Process $1,000,000.
Indicate how these accounts would be reported in Guillen’s December 31, 2014, balance sheet.

 

Brief Exercise 18-13

Lazaro Inc. sells goods on the installment basis and uses the installment-sales method. Due to a customer default, Lazaro repossessed merchandise that was originally sold for $800, resulting in a gross profit rate of 40%. At the time of repossession, the uncollected balance is $520, and the fair value of the repossessed merchandise is $275.

Prepare Lazaro’s entry to record the repossession. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

 

Brief Exercise 24-3 (Essay)

Morlan Corporation is preparing its December 31, 2014, financial statements. Two events that occurred between December 31, 2014, and March 10, 2015, when the statements were issued, are described below.

1. A liability, estimated at $160,000 at December 31, 2014, was settled on February 26, 2015, at $170,000.

2. A flood loss of $80,000 occurred on March 1, 2015.

What effect do these subsequent events have on 2014 net income?

Brief Exercise 24-5

Foley Corporation has seven industry segments with total revenues as follows

Penley              $600                Cheng              $225

Konami                        650                  Takuhi             200

KSC                 250                  Molina             700

Red Moon        275

 

Based only on the revenues test, which industry segments are reportable?

Penley                          Cheng

Konami                                    Takuhi

KSC                             Molina

Red Moon

 

Brief Exercise 24-6

Operating profits and losses for the seven industry segments of Foley Corporation are:

Penley              $90                  Cheng              $(20)

Konami                        (40)                  Takuhi             34

KSC                 25                    Molina             150

Red Moon        50

 

Based only on the operating profit (loss) test, which industry segments are reportable?

Penley                                      Cheng             

Konami                                                Takuhi            

KSC                                         Molina            

Red Moon       

 

Brief Exercise 24-9

Heartland Company’s budgeted sales and budgeted cost of goods sold for the coming year are $144,000,000 and $99,000,000, respectively. Short-term interest rates are expected to average 10%. If Heartland can increase inventory turnover from its present level of 9 times a year to a level of 12 times per year.
Compute its expected cost savings for the coming year

Expected Cost Savings$

 

Multiple Choice Question 51

The payout ratio is calculated by dividing

cash dividends by net income plus preferred dividends

cash dividends by market price per share

dividends per share by earnings per share.

cash dividends by net income less preferred dividends.

 

Multiple Choice Question 56

Presented below are four segments that have been identified by Haley Productions:

Total Revenue             Operating

Segments                                             (Unaffiliated)               Profit (Loss)     Identifiable Assets

A                                                         $255,000                     $30,000                       $900,000

B                                                          600,000                                   (55,000)           800,000

C                                                          225,000                                   6,000               450,000

D                                                             90,000                         4,000                         225,000

 

For which of the segments would information have to be disclosed in accordance with professional pronouncements?

Segments A and B

Segments A and D

Segments A, B, C, and D

Segments A, B, and C

 

Brief Exercise 18-14

At December 31, 2014, Grinkov Corporation had the following account balances.

Installment Accounts Receivable, 2013           $65,000

Installment Accounts Receivable, 2014           110,000

Deferred Gross Profit, 2013                23,400

Deferred Gross Profit, 2014                41,800

 

Most of Grinkov’s sales are made on a 2-year installment basis.

Indicate how these accounts would be reported in Grinkov’s December 31, 2014, balance sheet. The 2013 accounts are collectible in 2015, and the 2014 accounts are collectible in 2016.

 

Grinkov Corporation
Balance Sheet
December 31, 2014

Current Assets Current Liabilities Intangible Assets Long-term Investments Long-term Liabilities Property, Plant and Equipment Stockholders’ Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders’ Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders’ Equity 

 

Deferred Gross Profit    Installment Accounts Receivable Due in 2014    Installment Accounts Receivable Due in 2015    Installment Accounts Receivable Due in 2016    $

 Deferred Gross Profit    Installment Accounts Receivable Due in 2014    Installment Accounts Receivable Due in 2015    Installment Accounts Receivable Due in 2016    $

Current Assets Current Liabilities Intangible Assets Long-term Investments Long-term Liabilities Property, Plant and Equipment Stockholders’ Equity Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders’ Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders’ Equity

 

 

Deferred Gross Profit    Installment Accounts Receivable Due in 2014    Installment Accounts Receivable Due in 2015    Installment Accounts Receivable Due in 2016    $

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