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ACC - Second Test One Web 2014

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Question;Accounting II ? Test #1QUESTION #1Dick Acer and George Dooley decide to form a partnership. Acer invests $25,000 cashand accounts receivable of $30,000 less allowance for doubtful accounts of $2,000.Dooley contributes $20,000 cash and equipment having a $6,000 book value. It isagreed that the allowance account should be $3,000 and the fair market value of theequipment is $10,000.InstructionsPrepare the necessary journal entry to record the formation of the partnership.QUESTION #2Hope & Crosby Co. reports net income of $34,000. The partnership agreement providesfor annual salaries of $24,000 for Hope and $15,000 for Crosby and interest allowancesof $4,000 to Hope and $6,000 to Crosby. Any remaining income or loss is to be shared70% by Hope and 30% by Crosby.InstructionsCompute the amount of net income distributed to each partner.QUESTION #3The Howell and Parks Partnership has partner capital account balances as follows:Howell, CapitalParks, Capital$550,000250,000The partners share income and losses in the ratio of 60% to Howell and 40% to Parks.InstructionsPrepare the journal entry on the books of the partnership to record the admission ofTyler as a new partner under the following two independent circumstances.1. Tyler pays $350,000 to Howell and $150,000 to Parks for one-half of each of theirownership interest in a personal transaction.2. Tyler invests $850,000 in the partnership for a one-third interest in partnershipcapital.QUESTION #4The corporate charter of Preston Corporation allows the issuance of a maximum of2,500,000 shares of $1 par value common stock. During its first three years of operation,Hunter issued 1,500,000 shares at $15 per share. It later acquired 30,000 of theseshares as treasury stock for $25 per share.InstructionsBased on the above information, answer the following questions:(a) How many shares were authorized?(b) How many shares were issued?(c) How many shares are outstanding?(d) What is the balance of the Common Stock account?(e) What is the balance of the Treasury Stock account?QUESTION #5Quaker Corporation is authorized to issue 1,000,000 shares of $5 par value commonstock. During 2018, its first year of operation, the company has the following stocktransactions.Jan. 1 Paid the state $2,000 for incorporation fees.Jan. 15 Issued 500,000 shares of stock at $7 per share.Jan. 30 Attorneys for the company accepted 500 shares of common stock aspayment for legal services rendered in helping the company incorporate. Thelegal services are estimated to have a value of $8,000.July 2 Issued 100,000 shares of stock for land. The land had an asking price of$900,000. The stock is currently selling on a national exchange at $8 pershare.Sept. 5 Purchased 15,000 shares of common stock for the treasury at $10 per share.Dec. 6 Sold 11,000 shares of the treasury stock at $11 per share.InstructionsJournalize the transactions for Quaker Corporation.QUESTION #6The stockholders' equity section of Perry Corporation at December 31, 2017, includedthe following:6% preferred stock, $100 par value, cumulative,10,000 shares authorized, 8,000 shares issued and outstanding.......$ 800,000Common stock, $10 par value, 250,000 shares authorized,200,000 shares issued and outstanding.............................................$2,000,000Dividends were not declared on the preferred stock in 2017 and are in arrears.On September 15, 2018, the board of directors of Ellis Corporation declared dividendson the preferred stock for 2017 and 2018, to stockholders of record on October 1, 2018,payable on October 15, 2018.On November 1, 2018, the board of directors declared a $.90 per share dividend on thecommon stock, payable November 30, 2018, to stockholders of record on November 15,2018.InstructionsPrepare the journal entries that should be made by Ellis Corporation on the datesindicated below:September 15, 2018November 1, 2018October 1, 2018November 15, 2018October 15, 2018November 30, 2018QUESTION #7Detroit Corporation has 120,000 shares of $5 par value common stock outstanding. Itdeclared a 15% stock dividend on June 1 when the market price per share was $12. Theshares were issued on June 30.InstructionsPrepare the necessary entries for the declaration and payment of the stock dividend.QUESTION #8Presented below are three independent situations:(a) Howell Corporation purchased $250,000 of its bonds on June 30, 2018, at 102 andimmediately retired them. The carrying value of the bonds on the retirement datewas $229,500. The bonds pay semiannual interest and the interest payment due onJune 30, 2018, has been made and recorded.(b) Justice, Inc. purchased $200,000 of its bonds at 97 on June 30, 2018, andimmediately retired them. The carrying value of the bonds on the retirement datewas $196,500. The bonds pay semiannual interest and the interest payment due onJune 30, 2018, has been made and recorded.(c) Starr Company has $80,000, 10%, 12-year convertible bonds outstanding. Thesebonds were sold at face value and pay semiannual interest on June 30 and December31 of each year. The bonds are convertible into 40 shares of Starr $5 par valuecommon stock for each $1,000 par value bond. On December 31, 2018, after thebond interest has been paid, $30,000 par value of bonds were converted. The marketvalue of Starr's common stock was $38 per share on December 31, 2018.InstructionsFor each of the independent situations, prepare the journal entry to record the retirementor conversion of the bonds.QUESTION #9Unruh Company issued $900,000, 10%, 20-year bonds on January 1, 2018, at 104.Interest is payable semiannually on July 1 and January 1. Unruh uses the straight-linemethod of amortization and has a calendar year end.InstructionsPrepare the January 1, 2018 and the July 1, 2018 journal entries related to the bond issue.QUESTION #10Karly Company issued $250,000, 11%, 10-year bonds on December 31, 2018, for$230,000. Interest is payable semiannually on June 30 and December 31. Karly uses thestraight-line method of amortization and has a calendar year end.InstructionsPrepare the appropriate journal entries on(a) December 31, 2018.(b) June 30, 2019.QUESTION #11The adjusted trial balance for Payne Corporation at the end of the current year (2014)contained the following accounts:Bonds payable, 10%...............................................................Bond interest payable.............................................................Discount on bonds payable....................................................Lease liability.........................................................................Mortgage notes payable, 9%, due 2015.................................Accounts payable...................................................................$800,00020,00040,00060,00080,000120,000Instructions(a) Prepare the long-term liabilities section of the balance sheet.(b) Indicate the proper balance sheet classification for the accounts listed above that donot belong in the long-term liabilities section.

 

Paper#41871 | Written in 18-Jul-2015

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