Details of this Paper

ACCOUNTING 450/550 Review Project part I




Question;ACCOUNTING 450/550 Review Project;This is an individual;assignment. You may confer with one another, but remember;that conferring does not mean allowing others to just copy your work. Everyone should be working hard on this!;Due: Tuesday 7/2/13?at the beginning of;class. Part 1: Adjusting entries, 2012 adjusted trial;balance and corrected 12/31/11 balance sheet.;Due: Tuesday 7/9/13?at the beginning of;class. Part 2: Using the solution to part 1 which will be;made available after part 1 is turned in on blackboard, you are to prepare the income statement, statement of;stockholders? equity, statement of cash flows, balance sheet, all in proper;form You have the option of preparing a;statement of comprehensive income or to incorporate that into the statement of;stockholders? equity.;Both parts must be typed in 10 or 12 font.;NOTE: Important! Make a copy of;your solution. The solution to the;problem will be posted on blackboard after you turn in the project.;Purpose;of this assignment;Review the adjustment/correction process;including sophisticated topics from accounting 350/351/352.Prepare all of the financial statements in proper;form.;These;are foundational to this course and your career as accountants.;Setting;You have been hired by Dillard to prepare;adjusting entries and financial statements for 2012. Previously Rinky Dink Accounting had been;performing such tasks.;Ignore tax effects.;The trial balance at 12/31/12 before you;work your magic and the balance sheet at 12/31/11 are included in a separate;excel file.;The;investments account at 12/31/12 contains stocks that were all purchased;during 2011. In discussions with;the CFO, you determine that they were made to invest excess cash. The company expects that they will need;the cash within the next year.;Here is information that you gather regarding that portfolio (in;000?s);Company;Initial;Investment Cost;Market;Value at 12/31/11;Market;Value at 12/31/12;DAG;$300;$330;$320;GLS;50;55;40;HRG;100;78;95;You also discuss with the CFO the;Investment in Timberside Corporation.;You discover that this Investment was first made 3 years ago on 1/1/10;and that the investment cost was $700,000.;The investment in 30% of the voting stock of Timberside was made in;order to be able to have representation on its board since Timberside is a key;supplier of the inventory that Dillard sells.;Dillard wants to have a say in the quality control and other decisions;that Timberside makes. You dig around;and realize that the $700,000 investment;cost was exactly equal to 30% of the book value of equity of Timberside on;1/1/10. You also determine that Dillard;has been recording dividend revenue when it receives payment. During 2010, Dillard received $10,000 in;dividends, in 2011 $25,000 and are;$25,000 in 2012. Timberside has reported;income during 2010, 2011 and 2012 of $300,000, $350,000 and $330,000 respectively.;On 1/1/08, Dillard purchased 300, $1,000;face 8% Mickey Mouse Corporation bonds, interest paid semi-annually on 7/1 and;12/31, with a maturity term of 10 years.;The purchase price was $280,488.;You discover that Dillard bought and installed equipment for;$170,000 on 1/1/10. The equipment?s;use will result in environmental damage that will need to be cleaned up;when the equipment is retired. The;estimated life of the equipment is 10 years on 1/1/10. The environmental clean-up cost is;estimated to be $50,000. The $50,000;will all be paid at the end of the equipment?s life. You notice that the equipment was;expensed when originally purchased.;A discount rate of 6% is reasonable discount rate for the clean-up;cost. Straight-line with no salvage;value is appropriate.;The company uses the;percentage of accounts receivable method and historically does not collect;5% of its ending accounts receivable.;The company has been recording warranty expense as it has been;paid. The company first warranted;its products, 4 years ago, beginning 1/1/09. Warranty costs paid by year are listed;below;Year;Warranty costs paid;2009;$7,000;2010;$10,000;2011;$12,000;2012;$11,000;After exploring the timing of sales during;the year and what seems like the company will pay given experience, you compute;the following warranty liabilities at each year ?end.;Original Sale year;Estimated liability on 12/31/09;Estimated liability on 12/31/10;Estimated liability on 12/31/11;Estimated liability at 12/31/12;2009;$4,000;$1,000;0;0;2010;9,000;$1,000;0;2011;7,000;$2,000;2012;4,000;Total;$4,000;$10,000;$8,000;$6,000;Additional information: Dillard purchased equipment for $300,000;cash this year. This transaction;was properly recorded.;You discover that the reported ending inventory for 2010, 2011;and 2012 were all wrong. This is;first detected by you this year.;Inventory on 12/31/10 was understated by $50,000, on 12/31/11;understated by $80,000 and on 12/31/12 overstated by $90,000. These appear to be independent errors.;The 10-year $400,000, 8% note payable was issued on 4/1/08 and;pays interest on 3/31 and 9/30 each year.;On 1/1/10, Dillard entered into a 5-year lease agreement for;equipment. The equipment?s;estimated life was 6 years. The 5;annual lease payments are due on 12/31 each year except there were two;payments the first year, on on 1/1 and one on 12/31. The lease payments;are $10,000 each. Dillard;guarantees a residual value of $10,000.;An incremental borrowing rate of 7% would be appropriate.;2011 is the first year;that Dillard had a separate Treasury Stock account.


Paper#42981 | Written in 18-Jul-2015

Price : $42