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ACCT221 exam

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Question;#1 A 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 duringthe year.;4.;Equipment with a cost of $15,000 and accumulated depreciation of $10,000;wassold 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;indirectmethod.;#2 Patience;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 areexpected 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.;#3Gabriel Shear;Company manufactures sweaters. The budgeted units to be producedand 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 yarnat 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'santicipated;production needs. The cost of yarn is $0.20 a yard. At August 1, 7,440 yardsof 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 a30% 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.;#5 On June 30, 2012, Robert Cross, Inc. sold $3,000,000 (face value) of;bonds. Thebonds are;dated June 30, 2014, pay interest semiannually on December 31 and June30, and will mature on June 30, 2017. The;following schedule was prepared by theaccountant 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 onDecember 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;wassold 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, usingthe indirect method.;#7The current;sections of Marko Ramius lnc.'s balance sheets at December 31, 2013and 2014, are presented here.;Marko Ramius's;net income for 2014 was $203,000. Depreciation expense was;$25,000.;Current assets;2014;2013;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 thenet cash;provided by operating activities section (ONLY!)of thecompany's statement of cash flows for the;year ended December 31, 2014, usingtheindirect method.;#8David 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 oneyear. Terms of theoperating leasecall for monthly payments of;$650.;2.;On January 1, 2014, Juliet Burke Corporation;entered into an agreement to lease 20machines from Pear Corporation. The terms of;the lease agreement require an initialpayment of $500,000 and then;three annual rental payments of $600,000 beginningon December 31, 2014. The present;value of the three rental payments is$1,492,108. The lease is acapital lease.;Instructions;Prepare the appropriate journal;entries to be made by Juliet Burke Corporation inJanuary related to the lease transactions.;#10James 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 unitrequires 2;pounds of raw materials that are estimated to cost an average of $3 perpound. 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 ofmaintaining 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 rawmaterials;on hand at December 31, 2014.;Instructions;For thefirst quarter;of 2015,prepare;(1) a production budget;(2) a direct materials budget.;BONUS (1 Opts);Please provide a one-line description of EACH of the people named on;this exam. Thisbonus 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 thenames are "real people", i.e. they are all;characters.

 

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