Details of this Paper

ACCOUNTING Exercises - Clinton Company, Marie Curie Inc., Moss Interior and Alex Rodriguez Inc.,




Question;Clinton Company has provided information on intangible;assets as follows.A patent was purchased from Reagan Company for $2,000,000 on;January 1, 2007. Clinton estimated the remaining useful life of the patent to;be 10 years. The patent was carried in Reagan?s accounting records at a net;book value of $2,000,000 when Reagan sold it to Clinton.During 2008, a franchise was purchased from Bush Company for;$480,000. In addition, 5% of revenue from the franchise must be paid to Bush.;Revenue from the franchise for 2008 was $2,500,000. Clinton estimates the;useful life of the franchise to be 10 years and takes a full year?s;amortization in the year of purchase.Clinton incurred research and development costs in 2008 as;follows.Materials and equipment ?.. $142,000Personnel ???????? 189,000Indirect costs ??????. 102,000$433,000Clinton estimates that these costs will be recouped by;December 31, 2011. The materials and equipment purchased have no alternative;uses.On January 1, 2008, because of recent events in the field;Clinton estimates that the remaining life of the patent purchased on January 1;2007, is only 5 years from January 1, 2008.Instructions(a) Prepare a schedule showing the intangibles section of;Clinton?s balance sheet at December 31, 2008. Show supporting computations in;good form.(b) Prepare a schedule showing the income statement effect;for the year ended December 31, 2008, as a result of the facts above. Show;supporting computations in good form.Exercise 1(a) Clinton CompanyINTANGIBLES SECTION OF BALANCE SHEETDecember 31, 2008(b) Clinton CompanyIncome Statement EffectFor the year ended December 31, 2008Fred Moss, owner of Moss Interiors, is negotiating for the;purchase of Zweifel Galleries. The balance sheet of Zweifel is given in an;abbreviated form below.Moss and Zweifel agree that:1. Land is undervalued by $30,000.2. Equipment is overvalued by $5,000.Zweifel agrees to sell the gallery to Moss for $350,000.InstructionsPrepare the entry to record the purchase of Zweifel;Galleries on Moss?sbooks.Exercise 2The journal entry to record this transaction is as follows:Account Title Debit CreditMarch 1, 2008, Heide Co. issued at 103 plus accrued interest;$3,000,000, 9% bonds. The bonds are datedJanuary 1, 2008, and pay interest semiannually on July 1 and;January 1. In addition, Heide Co. incurred$27,000 of bond issuance costs. Compute the net amount of;cash received by Heide Co. as a result of theissuance of these bonds.(b) On January 1, 2008, Reymont Co. issued 9% bonds with a;face value of $500,000 for $469,280 to yield10%. The bonds are dated January 1, 2008, and pay interest;annually. What amount is reported as bond dis-count on the issue date?c) Czeslaw Building Co. has a number of long-term bonds;outstanding at December 31, 2009. These long-termbonds have the following sinking FUND requirements and;maturities for the next 6 years.2010 $300,000 $100,0002011 100,000 250,0002012 100,000 100,0002013 200,000 ?2014 200,000 150,0002015 200,000 100,000Indicate how this information should be reported in the;FINANCIAL statements at December 31, 2009.(d) In the long-term debt structure of Marie Curie Inc., the;following three bonds were reported: mortgagebonds payable $10,000,000, collateral trust bonds;$5,000,000, bonds maturing in installments, secured byplant equipment $4,000,000. Determine the total amount, if;any, of debenture bonds outstanding.PROBLEM 12-23(a)Heide Co.Net amount of cash;received.........................................................(b)Reymont Co.Bond discount on issue;late..........................................................(c)Czeslaw Building Co.Maturities and sinking FUND requirements on long-term debtfor the next five year are as follows:2010$2013$2011$2014$2012$(d)Marie Curie Inc.Alex Rodriguez Inc., a publishing company, is preparing its;December 31, 2008, FINANCIAL statements and must determine the proper;accounting treatment for the following situations, they have retained your;group to assist them in this task.(a) Rodriguez sells subscriptions to several magazines for a;1-year, 2-year, or 3-year period. Cash receipts from subscribers are credited;to magazine subscriptions collected in advance, and this account had a balance;of $2,300,000 at December 31, 2008. Outstanding subscriptions at December 31;2008, expire as follows.During 2009?$600,000During 2010? 500,000During 2011? 800,000(b) On January 2, 2008, Rodriguez discontinued collision;fire, and theft coverage on its delivery vehicles and became self-insured for;these risks. Actual losses of $50,000 during 2007 were charged to delivery;expense.The 2006 premium for the discontinued coverage amounted to;$80,000 and the controller wants to set up a reserve for self-insurance by a;debit to delivery expense of $30,000 and a credit to the reserve for;self-insurance of $30,000.(c) A suit for breach of contract seeking damages of;$1,000,000 was filed by an author against Rodriguez on July 1, 2008. The;company?s legal counsel believes that an unfavorable outcome is probable. A;reasonable estimate of the court?s award to the plaintiff is in the range;between $300,000 and $700,000. No amount within this range is a better estimate;of potential damages than any other amount.(d) During December 2008, a competitor company filed suit;against Rodriguez for industrial espionage claiming $1,500,000 in damages. In;the opinion of management and company counsel, it is reasonably possible that;damages will be awarded to the plaintiff. However, the amount of potential;damages awarded to the plaintiff cannot be reasonably estimated.InstructionsFor each of the above situations, provide the journal entry;that should be recorded as of December 31, 2008, or explain why an entry should;not be recorded.4PROBLEM 12-8;(a);="msonormal">


Paper#40545 | Written in 18-Jul-2015

Price : $27