Project #5688 - Accounting

                                 Intermediate Accounting II

 

                                               Exam 3

 

 

 

Name _____________________________

 

 

 

 

 

 

 

1.

 

St. Joe’s Inc. reported a $15,000 net loss for 2008. Below are the increases and decreases in selected accounts for 2006:

 

Accounts Receivable

$10,000 increase

Inventory

    2,000 decrease

Prepaid Expense

    5,000 decrease

Accounts Payable

    3,000 increase

Interest Payable

    2,000 decrease

Accumulated Depreciation

    8,000 increase

 

St. Joe’s Inc. had no changes in its plant or equipment.

 

 

 

Required:

 

Prepare the operating activities section of the statement of cash flows for St. Joe’s Inc. for 2008, using the indirect method.

 

 

 

 

 

 

 

 

 

 

 

2.  Below is a list of cash inflows and outflows for Buckle Corporation:

 

 

 

1.         Cash from the issuance of debt         ___________

 

2.         Cash from interest                            ___________

 

3.         Cash to lenders for interest                ___________

 

4.         Cash to purchase property                    ____________

 

5.         Cash to repay debt                               ______________

 

6.         Cash from the collection of loans        __________

 

7.         Cash from the issuance of debt             __________

 

8.         Cash to employees for wages                _____________

 

9.         Cash from the sale of marketable securities ___________

 

10.       Cash to pay dividends                             ______________

 

11.       Cash from sale of goods to customers    _______________

 

12.       Cash to others for expenses                   ________________

 

13.       Cash to purchase investments                 _________________

 

14.       Cash to government agencies for taxes _________________

 

15.       Cash from sale of plant                          _________________

 

 

 

Required:

 

I.    Indicate where each of the cash flows above would appear on the statement of cash flows for Buckle Corporation. Select from:

 

a.   Cash inflows from operating activities

 

b.   Cash outflows from operating activities

 

c.   Cash inflows from investing activities

 

d.   Cash outflows from investing activities

 

e.   Cash inflows from financing activities

 

f.    Cash outflows from financing activities

 

 

 

 

 

 

 

 

 

3.  PXE Company presented the following comparative balance sheets at December 31, 2005 and 2006, and the income statement for the year ended December 31, 2006:

 

PXE Company

Balance Sheets

December 31, 2006 and 2005

 

 

December 31, 2006

 

December 31, 2005

Assets

 

 

 

Cash

 $    12,200

 

$  28,200

Accounts receivable

      16,000

 

   18,000

Inventory

      19,500

 

   22,000

Prepaid rent

          200

 

        300

     Total current assets

 $   47,900

 

$ 68,500

Land

     58,000

 

   30,000

Equipment

     65,000

 

   60,000

Accumulated depreciation

     (11,000)

 

     (4,000)

Total assets

 $159,900

 

$154,500

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

Accounts payable

$  13,000

 

$   25,000

Salaries payable

      2,000

 

       2,500

Interest payable

      2,500

 

       4,000

Income tax payable

      6,500

 

       3,000

Dividends payable

      4,000

 

             0

     Total current liabilities

$   28,000

 

$  34,500

Long-term notes payable

    10,000

 

    40,000

Common stock, $1 par

    30,000

 

    28,000

Preferred stock, $4 par

    24,000

 

    10,000

Additional paid-in capital

    45,000

 

    30,000

Retained earnings

    22,900

 

    12,000

Total liabilities and stockholders’ equity

$159,900

 

$154,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PXE Company

Income Statement

For the Year Ended December 31, 2006

 

Sales

 

 

$  400,000

Cost of goods sold

 

 

   (250,000)

Gross profit

 

 

$  150,000

General and administrative expenses

$80,000

 

 

Salaries expense

  31,000

 

 

Rent expense

    3,600

 

 

Depreciation expense

    7,000

 

 

Total operating expenses

 

 

   (121,600)

Other revenue and expenses:

 

 

 

Gain on sale of land

$  3,000

 

 

Interest revenue

       300

 

 

Interest expense

   (2,800)

 

           500

Income before income taxes

 

 

$    28,900

Income tax expense

 

 

       (8,000)

Net income

 

 

$    20,900

 

 

 

Additional information:

 

a.   The company declared dividends in the amount of $10,000 during the year.

 

b.   Additional land and equipment were purchased for cash.

 

c.   Land that had originally cost $9,000 was sold for $12,000 cash.

 

d.   All accounts payable are related to merchandise purchases.

 

e.   The company uses a perpetual LIFO inventory system and uses straight-line depreciation for all depreciable assets.

 

 

 

Required:

 

1.    Prepare the operating activities section of the statement of cash flows using the indirect method.

 

 

 

 

 

 

 

 

 

 

 

 

 

4.

 

Howard Sports Inc. incurred the following transactions involving its common stock:

 

 

 

January 1

Beginning balance

100,000 shares

April 1

Issued for cash

6,000 shares

June 1

Purchased as treasury stock

1,200 shares

October 31

Issued for cash

9,000 shares

 

 

 

Required:

 

1.   Calculate the  weighted-average number of common shares outstanding for Howard Sports Inc.

 

 

 

 

 

 

 

5.  Ramon Inc. reported net income of $300,000 for the year ended December 31, 2006. Ramon Inc. had 50,000 shares of common stock outstanding throughout 2006. On January 1, 2012, Ramon Inc. issued 500, five-year, $1,000 face value bonds at par. The bonds pay 7 percent interest, and each bond can be converted into 30 shares of common stock. Assume Ramon Inc. has a 32 percent income tax rate. None of the bonds were converted in 2006.

 

Required:

 

1.   Compute the basic EPS and diluted EPS for Ramon Inc. for 2012.

 

 

 

 

 

.

 

 

 

 

 

.

 

 

 

 

 

 

 

.

 

 

 

 

 

  1. Salary expense on the books was $43000. Salary payable at the beginning of the year was $13000 and at the end of the year was $12500. How much cash was paid out for salaries?

 

 

 

 

 

 

 

7. Rent expense on the books was $15000. Prepaid rent at the beginning of the year was $3000 and at the end of the year was $1250. How much cash was paid out for rent?

 

 

 

 

 

 

 

8. Sales revenue on the books was $118000. Accounts receivable at the end of the year was $14000 and accounts receivable at the beginning of the year was $16000. How much cash was received for sales?

 

 

 

 

 

 

 

9.      Sales revenue on the books was $175000. Unearned revenue at the end of the year was $12000 and unearned revenue at the beginning of the year was $4500. How much cash was received from revenue?

 

 

 

 

 

 

 

 

 

       10 . Harp’s Business Machines Inc. reported the following items from its comparative balance sheet for the calendar year 2008:

 

 

 

 

2008

 

2007

Inventory

$125,000

 

$100,000

Land

100,000

 

200,000

Building

570,000

 

500,000

Equipment

45,000

 

30,000

Accumulated depreciation

(105,000)

 

(50,000)

Notes payable

100,000

 

150,000

Common stock

300,000

 

200,000

 

 

 

Additional information for 2008:

 

1.  A piece of land was sold for $65,000, resulting in a $5,000 gain.

 

2.  A smaller section of land was sold for $26,000, resulting in a $14,000 loss.

 

3.  A building was started and completed costing $70,000.  All costs were paid in cash.

 

4.  Depreciation expense totaled $55,000 for the year.

 

 

 

Required:

 

Determine the cash flows from investing activities for Harp’s Business Machines Inc. for 2008.

 

 

 

 

 

11   Checker’s Games Co. reported the following items on its comparative balance sheet for 2008:

 

 

 

 

2008

 

2007

Accounts payable

$200,000

 

$175,000

Dividends payable

10,000

 

0

Notes payable

280,000

 

240,000

Common stock

315,000

 

290,000

Additional paid-in capital

120,000

 

100,000

Land

175,000

 

150,000

Goodwill

45,000

 

75,000

 

 

 

Additional information for 2008:

 

1.  A $70,000 note payable was issued for cash.

 

2.  Interest expense totaled $15,000 for the year of which $13,500 was paid in cash.

 

3.  Stock was issued for cash (the transaction involved common stock).

 

4.  A note payable for $30,000 was repaid.

 

5.  Dividends of $50,000 were declared of which $40,000 have been paid.

 

 

 

Required: Prepare the financing section of the cash flow statement in good form for Checker’s Games Co.

 

 

 

 

 

 

 

12. As of Jan 1, 2010 DEF Corp had 20000 common shares outstanding and 3000 convertible preferred shares of 4% par value $100 outstanding. Each share of preferred stock is convertible into .5 shares of common. During 2010 no new common shares were issued and no preferred stock was converted. The tax rate for DEF was 25%. Net income was $250,000.

 

a) How much were basic earnings per share?

 

b) How much were diluted earnings per share?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13.  On January 1, 2008, ABC Company bought equipment for $12,000 with an estimated useful life of 5 years and no salvage value. ABC uses straight-line depreciation. On January 1, 2010, it was decided that the sum-of-the-years-digits was more appropriate.

 

 

 

What journal entry do you make on January 1, 2010?

 

 

 

 

 

 

 

14.  You failed to accrue wage expense of $1600 in 2011.  In 2012 you debited wages payable and credited cash for $1600.

 

 

 

Assume the books are closed for 2011, what is the correcting entry?

 

 

 

 

 

 

 

 

 

 

 

15.  On October 1 2011, you bought an insurance policy for 3 years in advance for $2400, you debited prepaid insurance.  You forgot to adjust as of December 31, 2011. 

 

 

 

What is the correcting entry as of 2012, assuming the books are closed for 2011?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16.  Use the same information as #15 except on October 1, 2007 you debited insurance expense for $2400. 

 

 

 

What is the correcting entry in 2008 assuming the books in 2007 are closed?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17.  On Oct 1, 2009 you received rent in advance of $12,000 for 2 years.  You credited unearned rent. 

 

 

 

You forgot to make an adjusting entry on December 31, 2009.  What is the correcting entry to be made in 2010 assuming the books for 2009 are closed?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18.  Assume the same information in #17 except you credited rent payable for $12000.

 

 

 

What is the correcting entry in 2010 assuming the books in 2009 are closed?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     

 

Subject Mathematics
Due By (Pacific Time) 05/08/2013 12:00 am
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