Project #3455 - Accounting

INTERMEDIATE ACCOUNTING II

 

EXAM 1

 

 

 

 

 

Name _________________________________    

 

 

 

To receive full credit show computations where necessary.                                                 

 

 

 

1.            XYZ Co. owns securities, which are considered to be available for sale.

 

 

 

 

Cost

FMV Dec. 31, YI

FMV Dec. 31, YII

FMV Dec. 31, YIII

A

30,000

25,000

33,000

29,000

B

60,000

62,000

64,000

 

C

40,000

38,000

42,000

27,000

D

 

 

50,000

51,000

E

 

 

 

62,000

 

 

 

 

 

In Year II, XYZ purchased security D for $57,000.  In Year III XYZ sold security B for $54,000 and purchased security E for $58,000.

 

 

 

Prepare adjusting entries for Year I, II, and III and for the purchase and sale of securities during Years II and III.

 

 

 

 

 

 

 

Dec 31, Year I Adjustment

 

 

 

 

 

 

 

Year II Purchase

 

 

 

 

 

 

 

Dec 31, Year II Adjustment

 

 

 

 

 

 

 

Year III Sale

 

 

 

 

 

Year III Purchase

 

 

 

 

 

 

 

 

 

Dec 31, Year III Adjustment

 

 

 

 The following information pertains to Crystal Inc.’s portfolio of investments for the year ended December 31, 2010:

 

 

 

 

Cost

 

Fair

Value

12/31/09

 

 

2010

Purchases

 

 

2010

Sales

 

Fair

Value

12/31/10

Held-to-maturity securities

 

 

 

 

 

 

 

 

 

Security Joy

 

 

 

 

$128,000

 

 

 

$130,000

 

 

 

 

 

 

 

 

 

 

Trading equity securities

 

 

 

 

 

 

 

 

 

Security Kris

$700,000

 

$725,000

 

 

 

 

 

  705,000

Security Andrew

  100,000

 

  110,000

 

 

 

$130,000

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale equity securities

 

 

 

 

 

 

 

 

 

Security Stan

  400,000

 

  380,000

 

 

 

  510,000

 

 

Security Lloyd

  100,000

 

    95,000

 

 

 

 

 

  105,000

 

 

 

Assume that Security Joy is a debt security that was purchased at a premium. The premium amortization for 2010 was $4,000. All declines in fair value are considered temporary. Answer questions 2-8 using the above information.

 

 

 

2.         What is the amount of Security Joy at December 31, 2010 that should be carried on the balance sheet?

 

 

 

 

 

 

 

 

 

 

 

 3.        What is the amount of Security Kris at December 31, 2010 that should be carried on the balance sheet?

 

 

 

 

 

 

 

4.                     What is the amount of Security Lloyd at December 31, 2010 that should be carried on the balance sheet?

 

 

 

 

 

 

 

5.         What is the journal entry recorded on the sale of Security Andrew?

 

 

 

 

 

6.         What is the amount of realized gain or loss on Security Stan?

 

 

 

 

 

 

 

7.         What is the amount of unrealized gain or loss to be reported on the 2010 income statement?

 

 

 

 

 

8.      What is the amount of unrealized gain or loss to be reported at December 31, 2010, as a separate component of stockholders’ equity?

 

 

 

 

 

 

 

 

 

9. On Jan 1, 2005, XYZ purchased 4000 shares of ABC Co for $16 a share as a trading security.  ABC reported net income of $80,000 and paid dividends of $8,000.  On Dec 31, 2005, ABC had a market value of $15 a share.  Make the appropriate entries for 2005.

 

 

 

 

 

 

 

 

 

10.

 

Interest income on the books for XYZ Company was $112,000 on December 31, 2011. XYZ uses the accrual basis of accounting. Interest receivable on January 1 was $11,200 and $9800 on December 31. How much cash was received in 2011 for interest?

 

 

 

 

 

 

 

11.        Interest income on the books for XYZ Company was $134,000 on December 31, 2011. XYZ uses the accrual basis of accounting. Unearned Interest on January 1 was $16,450 and $7,200 on December 31. How much cash was received in 2011 for interest?

 

 

 

 

 

12.        Interest expense on the books for XYZ Company was $154,000 on December 31, 2011. XYZ uses the accrual basis of accounting. Interest payable on January 1 was $11,825 and $13,400 on December 31. How much cash was paid in 2011 for interest?

 

 

 

 

 

 

 

13.        Interest expense on the books for XYZ Company was $121,000 on December 31, 2011. XYZ uses the accrual basis of accounting. Prepaid Interest on January 1 was $16042 and $9756 on December 31. How much cash was paid in 2011 for interest?

 

 

 

 

 

 

 

       14.       Cameron Inc. is a defendant in a lawsuit. The company’s attorney has indicated that a loss is probable. The amount of loss can be estimated to be within a range of $5 million to $15 million. How should Cameron handle this situation on the books? Prepare a journal entry if necessary.

 

 

 

 

 

 

 

     15.      Mill Co.’s trial balance included the following account balances at December 31, 2004:

 

      Accounts Payable                                    $15,000

 

      Bonds Payable, due 2005                           25,000

 

      Discount on Bonds Payable, due 2005         3,000

 

      Dividends Payable, 1/31/05                          8,000

 

      Notes Payable, due 2006                            20,000

 

 

 

What amount should be included in the current liabilities section of Mill’s December 31, 2004, balance sheet?

 

 

 

 

 

 

 

16.  During 2010, Gum Co. introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to dollar sales are 2 percent within twelve months following the sale and 4 percent in the second twelve months following the sale. Sales and actual warranty expenditures for the years ended December 31, 2010 and 2011, are as follows:

 

 

Sales

 

Actual Warranty Expenditures

2010

$150,000

 

$2,250

2011

  250,000

 

  7,500

 

$400,000

 

$9,750

 

 

 

What amount should Gum report as estimated warranty liability on its December 31, 2011 balance sheet?

 

 

 

 

 

17.         Assume that on January 1, 2005, Weber Company issues bonds with a face value of $300,000 that pay 10 percent interest, semiannually (5 percent per period) and mature in 10 years. Assume that the market interest rate at the date of issuance is 8 percent (4 percent per semiannual period). Record the journal entry for the bond issuance on January 1, 2005.

 

 

 

 

 

 

 

 

 

     18.  Assume that on March 1, 2005, Austin Company issues, at 103 plus accrued interest, 10-year bonds with a face value of $100,000 and a face interest rate of 6 percent. Interest is paid semiannually on June 30 and December 31. The bond is dated January 1, 2005, and will be due on January 1, 2015. Record the journal entry for the bond issuance on March 1, 2005.

 

 

 

 

 

 

 

 

 

19.  Assume that a company issues bonds with a $100,000 face value at 100 and must pay $5,000 of costs associated with the issuance. Assume that the life of the bond is five years and that the company amortizes bond issue costs on a straight-line basis each semiannual period. What is the amount of cash received from the bond issuance?

 

 

 

 

 

 

 

 

 

20.

 

Assume that a bond is issued with the following characteristics:

 

Date of bonds: January 1, 2005; maturity date: January 1, 2010; face value: $200,000; face interest rate: 10 percent paid semiannually (5 percent per period); market interest rate: 8 percent (4 percent per semiannual period); issue price: $216,222; bond premium is amortized using the straight-line method of amortization. What is the amount of bond premium amortization for the June 30, 2005, adjusting entry?

 

 

 

 

 

 

 

21.   Assume that a bond is issued with the following characteristics:

 

Date of bonds: January 1, 2005; maturity date: January 1, 2010; face value: $200,000; face interest rate: 10 percent paid semiannually (5 percent per period); market interest rate: 8 percent (4 percent per semiannual period); issue price: $216,222; bond premium is amortized using the effective interest method of amortization. What is the amount of bond premium amortization for the June 30, 2005, adjusting entry?

 

 

 

 

 

 

 

 

 

 

 

 

 

22.

 

      Bonds with the following characteristics are retired on January 1, 2005, at 104:

 

Issue date: January 1, 2004; maturity date: January 1, 2009; face value: $300,000; bond issue costs: $5,000, amortized semiannually using the straight-line method of amortization. The unamortized bond discount is $8,500 as of January 1, 2005. What is the amount of the gain or loss on the bond retirement?

 

 

 

 

 

23.

 

Wheat Corp. issued 10,000 shares of its $1 par value common stock for a building. The building was listed for sale at $500,000. Wheat’s common stock is currently selling for $45 per share. Prepare the journal entry.

 

 

 

 

 

 

 

24. If a company reissued at $20 per share 100 shares of treasury stock that it had previously acquired for $28 per share and there wasn’t any Paid-in Capital from Treasury Stock, prepare the journal entry.

 

 

 

 

 

 

 

25..  The journal entry to record a 10 percent stock dividend to common stockholders when the market price of the stock is $40 per share and there are 100,000 shares of $1 par value stock outstanding is

 

 

 

 

 

 

 

 

 

26.  Arp Corp.'s outstanding capital stock at December 15, 2010, consisted of the following:

 

30,000 shares of 5 percent cumulative preferred stock, par value $10 per share, fully participating as to dividends. No dividends were in arrears.

 

200,000 shares of common stock, par value $1 per share.

 

 

 

On December 15, 2010, Arp declared dividends of $100,000. What was the amount of dividends payable to Arp's common stockholders?

 

 

 

 

 

 

 

27..   At December 31, 2005 and 2006, Carr Corp. had outstanding 4,000 shares of $100 par value, 6 percent cumulative preferred stock and 20,000 shares of $10 par value common stock. At December 31, 2005, dividends in arrears on the preferred stock were $12,000. Cash dividends declared in 2006 totaled $44,000. Of the $44,000, what amounts were payable on each class of stock?

 

 


 

 

 

 

 

 

 

 

 

 

Subject Mathematics
Due By (Pacific Time) 03/21/2013 11:59 pm
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