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survey of Accounting_Problems

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Question;Problem;1.;Define the following principles, concepts and terminology. Give an;example of each;Matching;Cost;Conservatism;Entity;Going Concern;Depreciation;Breakeven;Variable cost;2. Under;the balance sheet classification of property, plant, and equipment, some;accounts need ad at the end of each month and others do not. Which do and why?;Which do NOT and why?;3.;Classify the following items as;a.;accrued revenue (accrued asset);b.;deferred revenue (unearned revenue);c.;accrued expense (accrued liability);d.;deferred expense (prepaid expense);(1);Three months' rent paid in advance;(2);Rental income for six months received in advance;(3);Jobs completed but not yet billed at month-end;(4);Interest payable accrued on a note, but not yet paid;(5);Telephone bill owed but not yet paid;(6);A three-year premium paid on auto fleet insurance policy;4.;Details of invoices for purchases of merchandise are as follows;Merchandise Transportation Terms Returns and Allowances;a. $1,000 $25 FOB shipping point, 1/10, n/30 $200;b. 5,000 FOB;destination, n/30 400;c. 4,000 50 FOB shipping point, 2/10;n/30 150;d. 5,000 FOB;destination, 1/10, n/30;Determine the amount to be paid in full;settlement of each of the invoices, assuming that credit for returns and;allowances was received prior to payment and that all invoices were paid within;the discount.;5. Determine the amount to be added to;Allowance for Doubtful Accounts in each of the following cases;(a);Balance of $500 in the allowance account just prior to adjustment.;Analysis of accounts receivable indicates doubtful accounts of $9,500.;(b);Balance of $950 in the allowance account just prior to adjustment.;Uncollectible are estimated at 3.5% of sales, which totaled $1,000,000 for the;year.;6.;The following units are available for sale during the year;January 1 Beginning;Inventory 10 Units @ 18;April 3 Purchases 30 Unis @ 20;August 31 Purchases 28 Units @ 25;September 29 Purchases 17;Units @ 30;December 31 Ending Inventory 21;Units;Determine ending inventory cost by (a);FIFO, (b) LIFO, and (c) average cost.;7.On the basis of the following data related;to current assets for Mission Co. at December 2010, prepare a partial balance;sheet in good form.;Cash and cash equivalents $100,000;Notes receivable 50,000;Accounts receivable 290,000;Allowance for doubtful accounts 20,000;Interest receivable 750;Merchandise inventory-at lower of cost;(first-in, first-out method) or market 120,000;8. Indicate the section of the balance;sheet (current assets, fixed assets, investments, current liabilities, long- term;liabilities, and stockholders' equity) in which each of the following is;reported;(a);Note receivable due in 3 years;(b);Note receivable due in 90 days;(c);Allowance for doubtful accounts;9.;You have been hired by a high-growth startup company to assist in the;determination of what depreciation method to employ for financial reporting.;The company's fixed assets are equally divided among buildings and high-tech;equipment (heavily used in the initial years).;(a);Can the company select different methods of depreciation for financial;reporting? Explain.;(b);Explain to company management which method of depreciation would be;suitable for each type of fixed assets the company employs. Also, state why.;(c);Which method of depreciation would the company choose for taxes? Explain;why.;10.;A machine with a useful life of 6 years and a residual value of $3,000;was purchased at the beginning of year 1 for $30,000. The machine was sold for;$15,000 on April 1 in year 4.;(a);What was the book value of the equipment at the end of year 3 assuming;the straight-line method of depreciation is used?;(b);Illustrate the effects on the accounts and financial statements of the;depreciation from January 1 to April 1 of year 4.;(c);Illustrate the effects on the accounts and financial statements of the;sale of the machine on April 1.;11. A company acquired mineral rights for;$7,500,000. The mineral deposit is estimated at 600,000 tons and during the;year 100,000 tons were extracted and sold.;(a);Calculate depletion expense for the year.;(b);Show the effects on the accounts and financial statements of the;company.;(c);What is the book value of the mineral rights at the end of the current;year?;12. During 2009, Lexie, Inc. acquired;Lena, Inc. for $10,000,000. The fair market value of the net assets of Lena;Inc. was $8,500,000 on the date of purchase. During 2012, Lexie, Inc.;determined the goodwill resulting from the Lena acquisition was impaired and;had a value of $1,000,000.;(a);Determine the amount of goodwill implied during 2009.;(b);Illustrate the effects on the accounts and the financial statements of;the amortization for 2012.;13.;For each of the following items indicate whether the transactions listed;below increased (+), decreased (-)or had no effect (o)by;inserting the appropriate symbol.;Net Income;Assets;Liabilities;Owner's Equity;Cash Flow;(a);Sold;Equipment for cash at a gain;(b);Recorded;amortization expense on patents;?;Paid;Cash for minor repairs to an asset;(d);Recorded;a revenue expenditure incurred on account;?;Paid;Cash to remove old building from land being prepared for use;14. Indicate whether the following actions;would (+) increase, (-) decrease, or (0) not affect a company's total assets;liabilities, and stockholders' equity.;Assets;Liabilities;Stockholder's Equity;(1);Declaring;a cash dividend;(2);Paying;the cash dividend declared in (1);(3);Declaring;a stock dividend;(4);Issuing;stock certificates for the stock dividends declared in (3);15.;Tops Company sells Products D and E and has made the following estimates;for the coming year;Product Unit;Selling Price Unit;Variable Cost Sales Mix;D $30 $24 60%;E 70 56 40;Fixed costs are estimated at $202,400.;Determine (a) the estimated sales in units of the overall product necessary to;reach the break-even point for the coming year, (b) the estimated number of;units of each product necessary to be sold to reach the break-even point for;the coming year, and (c) the estimated sales in units of the overall product;necessary to realize an operating income of $119,600 for the coming year.;(a);If Henry Company's budgeted sales are $800,000, fixed costs are;$350,000, and variable costs are $600,000, what is the budgeted contribution;margin ratio?;(b);If the contribution margin ratio is 30% for Gray Company, sales are;$900,000, and fixed costs are $180,000, what is the operating profit?;16. A corporation, which had 20,000 shares;of common stock outstanding, declared a 3-for-l stock split.;(a);What will be the number of shares outstanding after the split?;(b);If the common stock had a market price of $240 per share before the;stock split, would be an approximate market price per share after the split?;17. Smith Co. is considering the following;alternative plans for financing the company;Plan;I Plan II;Issue 10% Bonds (at face) $1,000,000;Issue $10 Common Stock $3,000,000 $2,000,000;Income tax is estimated at 40% of income.;Determine the earnings per share of common;stock under the two alternative financing plans, assuming income before bond;interest and income tax is $1,000,000.

 

Paper#38269 | Written in 18-Jul-2015

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