Project #43049 - Accounting II

Principles of Accounting II

ACCT221, Section 4010

FINAL EXAM

Chapters 13 – 20 & 23 – 26

Monday, October 6th, 2014

 

 

#1A comparative balance sheet for Bud Fox Corporation is presented below:

BUD FOX CORPORATION

Comparative Balance Sheet

                                                                                                             2014                       2013      

Assets

Cash                                                                                              $  36,000                $  31,000

Accounts receivable (net)                                                                70,000                    60,000

Prepaid insurance                                                                            25,000                    17,000

Land                                                                                                   18,000                    40,000

Equipment                                                                                         70,000                    60,000

Accumulated depreciation                                                              (20,000)                  (13,000)

         Total Assets                                                                         $199,000                $195,000

 

Liabilities and Stockholders' Equity

Accounts payable                                                                         $  11,000                 $   6,000

Bonds payable                                                                                  27,000                    19,000

Common stock                                                                               140,000                  115,000

Retained earnings                                                                            21,000                    55,000

         Total liabilities and stockholders' equity                           $199,000                $195,000

 

Additional information:

1.   Net loss for 2014 is $20,000.

2.   Cash dividends of $14,000 were declared and paid in 2014.

3.   Land was sold for cash at a loss of $4,000. This was the only land transaction during the year.

4.   Equipment with a cost of $15,000 and accumulated depreciation of $10,000 was sold for $5,000 cash.

5.   $22,000 of bonds were retired during the year at carrying (book) value.

6.   Equipment was acquired for common stock. The fair value of the stock at the time of the exchange was $25,000.

 

Instructions

Prepare a statement of cash flows for the year ended 2014, using the indirect method.

 

#2Patience Phillips’ Company budgeted the following information for 2014:

                                              May                June                 July

Budgeted purchases    $104,000       $110,000       $102,000

 

·        Cost of goods sold is 40% of sales. Accounts payable is used only for inventory acquisitions.

·        Haigler purchases and pays for merchandise 60% in the month of acquisition and 40% in the following month.

·        Selling and administrative expenses are budgeted at $40,000 for May and are expected to increase 5% per month. They are paid during the month of acquisition. In addition, budgeted depreciation is $10,000 per month.

·        Income taxes are $38,400 for July and are paid in the month incurred.

 

Instructions

 

Compute the amount of budgeted cash disbursements for July.

 

 

 

 

 
 
#3 Gabriel Shear Company manufactures sweaters. The budgeted units to be produced and sold are below:

                          Expected Production    Expected Sales

August                          6,200                          5,800

September                   5,600                          7,800

 

It takes 24 yards of yarn to produce a sweater. The company's policy is to maintain yarn at the end of each month equal to 5% of next month's production needs and to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated production needs. The cost of yarn is $0.20 a yard. At August 1, 7,440 yards of yarn were on hand.

 

Instructions

 

Compute the budgeted cost of purchases for August.

 

 

 

 

 

 

 

#4 Dean Keaton Company is considering two alternatives to finance its purchase of a new $4,000,000 office building:

 

(a)    Issue 400,000 shares of common stock at $10 per share

 

      (b) Issue 8%, 10-year bonds at par ($4,000,000).

 

Income before interest and taxes is expected to be $3,000,000. The company has a 30% tax rate and has 600,000 shares of common stock outstanding prior to the new financing.

 

Instructions

 

Calculate each of the following for each alternative:

 

(1)    Net income.

 

      (2) Earnings per share.

 

 

 

 

        

#5On June 30, 2012, Robert Cross, Inc. sold $3,000,000 (face value) of bonds. The bonds are dated June 30, 2014, pay interest semiannually on December 31 and June 30, and will mature on June 30, 2017. The following schedule was prepared by the accountant for Robert Cross, Inc. for  2014.

 Semi-Annual        Interest to          Interest                                 Unamortized           Bond

Interest Period        be Paid          Expense      Amortization        Amount      Carrying Value

                                                                                                           $75,000         $2,925,000

         1                 $120,000         $132,500           $12,500             62,500           2,987,500

 

Instructions

 

On the basis of the above information, answer the following questions. (Round your answer to the nearest dollar or percent.)

1.   What is the stated interest rate for this bond issue?

2.   What is the market interest rate for this bond issue?

3.   What was the selling price of the bonds as a percentage of the face value?

4.   Prepare the journal entry to record the sale of the bond issue on June 30, 2014.

5.   Prepare the journal entry to record the payment of interest and amortization on December 31, 2014.

 

 

 

#6A comparative balance sheet for Billy Ray Valentine Corporation is presented below:

 

VALENTINE CORPORATION

Comparative Balance Sheet

                                                                                                             2014                         2013    

Assets

Cash                                                                                              $  36,000                $  31,000

Accounts receivable (net)                                                                70,000                    60,000

Prepaid insurance                                                                            25,000                    17,000

Land                                                                                                   18,000                    40,000

Equipment                                                                                         70,000                    60,000

Accumulated depreciation                                                              (20,000)                  (13,000)

         Total Assets                                                                         $199,000                $195,000

 

Liabilities and Stockholders' Equity

Accounts payable                                                                         $  11,000                 $   6,000

Bonds payable                                                                                  27,000                    19,000

Common stock                                                                               140,000                  115,000

Retained earnings                                                                            21,000                    55,000

         Total liabilities and stockholders' equity                           $199,000                $195,000

 

Additional information:

1.   Net loss for 2014 is $20,000.

2.   Cash dividends of $14,000 were declared and paid in 2014.

3.   Land was sold for cash at a loss of $4,000. This was the only land transaction during the year.

4.   Equipment with a cost of $15,000 and accumulated depreciation of $10,000 was sold for $5,000 cash.

5.   $22,000 of bonds were retired during the year at carrying (book) value.

6.   Equipment was acquired for common stock. The fair value of the stock at the time of the exchange was $25,000.

 

Instructions

 

Prepare a statement of cash flows for the year ended 2014, using the indirect method.

 

 

 

 

 

 

 

 

#7The current sections of Marko Ramius Inc.'s balance sheets at December 31, 2013 and 2014, are presented here.

 

Marko Ramius's net income for 2014 was $203,000. Depreciation expense was $25,000.

 

                                                                                                               2014                          2013  

                        Current assets

                             Cash                                                                     $115,000                    $99,000

                             Accounts receivable                                              105,000                      89,000

                             Inventory                                                                  154,000                   172,000

                             Prepaid expense                                                     27,000                      21,000

                                    Total current assets                                      $401,000                  $381,000

                         Current liabilities

                             Accrued expenses payable                                $  15,000                    $  5,000

                             Accounts payable                                                    85,000                      93,000

                                    Total current liabilities                                  $100,000                   $ 98,000

 

Instructions

 

Prepare the net cash provided by operating activities section (ONLY!) of the company's statement of cash flows for the year ended December 31, 2014, using the indirect method.

 

 

 

 

 

 

 

 

 

#8 David Webb Corporation issued $2 million, 10-year, 6% bonds on January 1, 2014.

 

Instructions

Prepare the entry to record the sale of these bonds, assuming they were issued at:

 

(a)   98.

 

(b)   103.

 

 

.

 

 

 

 

#9Juliet Burke Corporation entered into the following transactions:

1.   On January 1, 2014 Pear Car Rental leased a car to Juliet Burke Corporation for one year. Terms of the operating lease call for monthly payments of $650.

2.   On January 1, 2014, Juliet Burke Corporation entered into an agreement to lease 20 machines from Pear Corporation. The terms of the lease agreement require an initial payment of $500,000 and then three annual rental payments of $600,000 beginning on December 31, 2014. The present value of the three rental payments is $1,492,108. The lease is a capital lease.

 

Instructions

Prepare the appropriate journal entries to be made by Juliet Burke Corporation in January related to the lease transactions.

 

 

 

 

 

#10 James Ford Company has budgeted the following unit sales:

                           2015                                      Units

                        January                                  10,000

                        February                                   8,000

                        March                                       9,000

                        April                                        11,000

                        May                                         15,000

The finished goods units on hand on December 31, 2014, was 1,000 units. Each unit requires 2 pounds of raw materials that are estimated to cost an average of $3 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 10% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 20% of the pounds needed for the following month's production. There were 3,920 pounds of raw materials on hand at December 31, 2014.

 

Instructions

 

For the first quarter of 2015, prepare:

 

 (1) a production budget

 

 (2) a direct materials budget.

 

 

 

                                             

 

BONUS (10pts)

Please provide a one-line description of EACH of the people named on this exam. This bonus problem is AON (“All or None” meaning you must get all 10 names correct to receive the bonus).  The entire class may collaberate for this problem.  NONE of the names are “real people”, i.e. they are all characters.

 

 

 

Subject Mathematics
Due By (Pacific Time) 10/12/2014 12:00 am
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