Details of this Paper

ACC 620 Exam 2 Problems

Description

solution


Question

Question;Exercise 12-4Presented below is selected information for Palmiero Company.Answer the questions asked about each of the factual situations.1. Palmiero purchased a patent from Vania Co. for $1,733,600 on January 1, 2010. The patent is being amortized over its remaining legal life of 10 years, expiring on January 1, 2020. During 2012, Palmiero determined that the economic benefits of the patent would not last longer than 6 years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2012?The amount to be reported $ 2. Palmiero bought a franchise from Dougherty Co. on January 1, 2011, for $314,900. The carrying amount of the franchise on Dougherty?s books on January 1, 2011, was $465,100. The franchise agreement had an estimated useful life of 30 years. Because Palmiero must enter a competitive bidding at the end of 2020, it is unlikely that the franchise will be retained beyond 2020. What amount should be amortized for the year ended December 31, 2012?The amount to be amortized $ Amount to be amortized = 314900/10 =3. On January 1, 2012, Palmiero incurred organization costs of $292,800. What amount of organization expense should be reported in 2012?The amount to be reported $ Organization costs are expensed as incurred. So Amount reported =4. Palmiero purchased the license for distribution of a popular consumer product on January 1, 2012, for $132,100. It is expected that this product will generate cash flows for an indefinite period of time. The license has an initial term of 5 years but by paying a nominal fee, Palmiero can renew the license indefinitely for successive 5-year terms. What amount should be amortized for the year ended December 31, 2012?The amount to be amortized $Because the license has indefinitely life it should not be amortized but checked for Impairment every year. Amount to be amortized = Exercise 12-10During 2009, a) Thompson Corporation spent $171,600 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2009, and had a legal life of 20 years and a useful life of 10 years. b) Legal costs of $41,760 related to the patent were incurred as of October 1, 2009.(1) Prepare all journal entries required in 2009 and 2010 as a result of the transactions above. (Round answers to 0 decimal places, e.g. 8,564. Credit account titles are automatically indented when amount is entered. Do not indent manually.)No. Date Account Titles and Explanation Debit Credit(2) On June 1, 2011, Thompson spent $12,520 to successfully prosecute a patent infringement suit. As a result, the estimate of useful life was extended to 12 years from June 1, 2011. Prepare all journal entries required in 2011 and 2012. (Round answers to 0 decimal places, e.g. 8,564. Credit account titles are automatically indented when amount is entered. Do not indent manually.)Date Account Titles and Explanation Debit Credit (3) In 2013, Thompson determined that a competitor?s product would make the New Age Piano obsolete and the patent worthless by December 31, 2014. Prepare all journal entries required in 2013 and 2014. (Round answers to 0 decimal places, e.g. 8,564. Credit account titles are automatically indented when amount is entered. Do not indent manually.)Account Titles and Explanation Debit CreditExercise 12-13On July 1, 2012, Gissel Corporation purchased Mills Company by paying $259,060 cash and issuing a $150,500 note payable. At July 1, 2012, the balance sheet of Mills Company was as follows.Cash $50,860 Accounts payable $206,790Accounts receivable 90,830 Stockholders? equity 235,260Inventory 103,170 $442,050Land 40,230 Buildings (net) 74,840 Equipment (net) 70,230 Copyrights 11,890 $442,050 The recorded amounts all approximate current values except for land (fair value of $80,550), inventory (fair value of $124,840), and copyrights (fair value of $17,552).(a) Prepare the July 1 entry for Gissel Corporation to record the purchase. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)Account Titles and Explanation Debit Credit(b) Prepare the December 31 entry for Gissel Corporation to record amortization of intangibles. The copyright has an estimated useful life of 4 years with a residual value of $4,992. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)Account Titles and Explanation Debit CreditThe following are selected 2012 transactions of Darby Corporation.Sept. 1 Purchased inventory from Orion Company on account for $51,750. Darby records purchases gross and uses a periodic inventory system.Oct. 1 Issued a $51,750, 12-month, 8% note to Orion in payment of account.Oct. 1 Borrowed $89,020 from the Shore Bank by signing a 12-month, zero-interest-bearing $95,300 note.(a) Prepare journal entries for the selected transactions above. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)Date Account Titles and Explanation Debit Credit(b) Prepare adjusting entries at December 31. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)Account Titles and Explanation Debit Credit(c) Compute the total net liability to be reported on the December 31 balance sheet for:(1) The interest-bearing note (2) The zero-interest-bearing note Exercise 13-11Selzer Equipment Company sold 645 Rollomatics during 2012 at $6,420 each. During 2012, Selzer spent $60,600 servicing the 2-year warranties that accompany the Rollomatic. All applicable transactions are on a cash basis.(a) Prepare 2012 entries for Selzer using the expense warranty approach. Assume that Selzer estimates the total cost of servicing the warranties will be $202,000 for 2 years. Use "Inventory" account to record the warranty expense. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)No. Account Titles and Explanation Debit Credit(b) Prepare 2012 entries for Selzer assuming that the warranties are not an integral part of the sale. Assume that of the sales total, $175,700 relates to sales of warranty contracts. Selzer estimates the total cost of servicing the warranties will be $202,000 for 2 years. Estimate revenues earned on the basis of costs incurred and estimated costs. Use "Inventory" account to record the warranty expense. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)No. Account Titles and Explanation Debit CreditPresented below are three independent situations.1. Marquart Stamp Company records stamp service revenue and provides for the cost of redemptions in the year stamps are sold to licensees. Marquart?s past experience indicates that only 80% of the stamps sold to licensees will be redeemed. Marquart?s liability for stamp redemptions was $13,469,000 at December 31, 2011. Additional information for 2012 is as follows.Stamp service revenue from stamps sold to licensees $9,586,000Cost of redemptions (stamps sold prior to 1/1/12) 6,062,000If all the stamps sold in 2012 were presented for redemption in 2013, the redemption cost would be $5,708,700. What amount should Marquart report as a liability for stamp redemptions at December 31, 2012?Liability for stamp redemptions at December 31, 2012 $ 2. In packages of its products, Wiseman Inc. includes coupons that may be presented at retail stores to obtain discounts on other Wiseman products. Retailers are reimbursed for the face amount of coupons redeemed plus 10% of that amount for handling costs. Wiseman honors requests for coupon redemption by retailers up to 3 months after the consumer expiration date. Wiseman estimates that 60% of all coupons issued will ultimately be redeemed. Information relating to coupons issued by Wiseman during 2012 is as follows.Consumer expiration date 12/31/12Total face amount of coupons issued $890,300Total payments to retailers as of 12/31/12 389,900What amount should Wiseman report as a liability for unredeemed coupons at December 31, 2012?Liability for unredeemed coupons $ 3. Newell Company sold 667,800 boxes of pie mix under a new sales promotional program. Each box contains one coupon, which when submitted with $4.10, entitles the customer to a baking pan. Newell pays $6.10 per pan and $0.60 for handling and shipping. Newell estimates that 70% of the coupons will be redeemed, even though only 312,700 coupons had been processed during 2012. What amount should Newell report as a liability for unredeemed coupons at December 31, 2012?Exercise 14-10On January 1, 2012, Osborn Company sold 12% bonds having a maturity value of $878,000 for $980,452, which provides the bondholders with a 9% yield. The bonds are dated January 1, 2012, and mature January 1, 2017, with interest payable December 31 of each year. Osborn Company allocates interest and unamortized discount or premium on the effective-interest basis.(a) Prepare the journal entry at the date of the bond issuance. (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)Account Titles and Explanation Debit Credit(b) Prepare a schedule of interest expense and bond amortization for 2012?2014. (Round answers to 0 decimal places, e.g. $38,548.)Schedule of Interest Expense and Bond Premium Amortization Effective-Interest MethodDate Cash Paid Interest Expense Premium Amortized Carrying Amount of Bonds(c) Prepare the journal entry to record the interest payment and the amortization for 2012. (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)Account Titles and Explanation Debit Credit(d) Prepare the journal entry to record the interest payment and the amortization for 2014. (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)Account Titles and Explanation Debit CreditExercise 14-13Robinson, Inc. had outstanding $5,032,000 of 13% bonds (interest payable July 31 and January 31) due in 10 years. On July 1, it issued $7,118,000 of 10%, 15-year bonds (interest payable July 1 and January 1) at 98. A portion of the proceeds was used to call the 13% bonds at 102 on August 1. Unamortized bond discount and issue cost applicable to the 13% bonds were $138,000 and $37,500, respectively.Prepare the journal entries necessary to record (a) issue of the new bonds and (b) the refunding of the bonds. (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

 

Paper#42105 | Written in 18-Jul-2015

Price : $27
SiteLock