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Question;Transaction AnalysisFor each of the following transactions, show the effect if any of the transaction or adjustments on the appropriate balance sheet category or on net income by ensuring for each category affected the account name and amount and indicate whether this is an addition (+) or subtraction (-) using the horizontal analysis. Items that affect net income should not also be shown as affecting owners? equity.a. Bonds payable with a face amount of $15,000 are issued at par on August 1. The coupon interest rate is 8% and interest is paid semi-annually.b. At the end of December the company accrues the interest that is payable on the bonds issued in (a).c. On Feb. 1 the company pays the interest on the bondsd. Bonds payable with a face amount of $5,000 are issued at a price of 99 (That means at 99% of par value)e. Of the proceeds from the bonds issued in (d), $3,000 is used to purchase land for future expansionf. Because of warranty claims, finished goods inventories costing $200 is sent to customers to replace defective productsg. The 4 month 10% (annual interest rate) note payable with face amount of $12,000 was signed. The bank made the loan on a discount basis.h. A long-term bond with principal of $25,000 will become due within the current year.i. At the end of the month, the company recognizes its rent obligation of $4000 which it has not yet paid.j. In the next month the company pays both the current month?s rent of $4000 and pays the previous month?s rent which it had accrued.1AssetsLiabilitiesTransaction / AdjustmentCurrent AssetNoncurrent AssetCurrent LiabilityNoncurrent LiabilityOwners EquityNet Incomea.Bonds payable with a face amount of $15,000 are issued at par.Cash + 15,000Bonds Payable +15,000b.At the end of December the company accrues the interest that is payable on the bonds issued in (a)c.On Feb. 1 the company pays the interest on the bondsdBonds payable with a face amount of $5,000 are issued at a price of 99.eOf the proceeds from the bonds issued in part (d), $3,000 is used to purchase land for future expansionfBecause of warranty claims, finished goods inventories costing $200 is sent to customers to replace defective productsgThe company borrwed $12,000 for 4 months at a 10% (annual) interest rate) from a bank. The bank made the loan on a discount basishA long-term bond with principal of $25,000 will become due within the current yeariAt the end of the month, the company recognizes its rent obligation of $4000 which it has not yet paid.jIn the next month the company pays both the current month?s rent of $4000 and pays the previous month?s rent which it had accruedBonds payable ? calculate issue price and bond discountOn January 01, 2009 Roberts Inc. issued $2 million face amount of 10-year 10% coupon rate bonds when market interest rates were 12%. The bonds pay interest annually and mature on Dec. 31, 2018.a. Using the present value tables the appendix at the end of the book or your calculators), calculate the proceeds (issue price) of Drennen?s bonds on January 1, 2009, assuming that the bonds were sold to provide a market rate of return to the investorb. Show the accounting entry for the issuance of the bonds.c. What is the annual interest expense?d. Show the accounting entry for this payment.b.AssetsLiabilitiesOwners? EquityNet IncomeRevenuesExpensesDebitCreditd.AssetsLiabilitiesOwners? EquityNet IncomeRevenuesExpensesDebitCreditCommon stock balance sheet disclosureThe balance sheet caption for common stock is the following:Common stock, $5 par value, 2,000,000 shares authorized, 1,400,000 shares issued, 1,250,000 shares outstanding$???a. Calculate the dollar amount that will appear in the caption above.b. Calculate the total amount of a cash dividend of $0.15 per share.c. What accounts for the difference between the issued shares and outstanding shares?Calculate Earned RevenuesBig Blue University has a fiscal year that ends on June 30. 2009 Summer Session of the university runs seven weeks from June 9 through July 28. Total tuition paid by students for the summer session amount to $1.4 million.a. How much revenue should be reflected in fiscal year ended June 30, 2009? Explain your answer (Hint: Calculate the number of weeks or days & the proportion before June 30)b. Would your answer to Part A be any different if the university had a tuition refund policy that no tuition would be refunded after the end of the third week of the summer session classes? Explain your answer.Calculate Operating Income and Net IncomeThe following information is available from the accounting records of Monofill Inc. the year ended December 31, 2009:Net cash provided by financing activities$127,000Dividends paid28,000Extraordinary loss from flood, net of tax savings of $35,000135,000Income tax expense16,000Depreciation31,000Interest Expense12,500Net sales864,000Advertising expense25,000Accounts receivable77,000Cost of goods sold559,000General and administrative expenses183,000a. Calculate the operating income for the companyb. Calculate the company?s net income for the yearCash flows from operating, investing and financing activities ? direct methodThe following information is available from Moonvessel Co.?s accounting records of the year ended December 31, 2009 (amounts in millions):Cash dividends declared and paid$340Interest and taxes paid110Collections from customers1,530Net Income120Repayment of long-term debt320Purchase of land and buildings70Cash paid to suppliers and employees1230Depreciation70Issuance of common stock400Purchase of new delivery trucks80a. Calculate the net cash provided (used) by operating activities for the company for the yearb. Calculate the net cash provided [used] by investing activitiesc. Calculate the net cash provided (used) by financing activitiesd. Calculate the net increase (decrease) in cash for the yearOperating income versus net incomeIf you were interested in evaluating the profitability of a company and could have only limited historical data, which you prefer to know the company?s operating income or net income for the past 5 years? Explain your answer.Accrual to cash flowsFor each of the following items, calculate the cash and sources for cash uses that should be recognized on the statement of cash flows for Baldwin Co. for the year ended Dec. 31, 2009.a. Sales on account (all are collectible) amounted to $760,000, and accounts receivable decreased by $24,000. How much cash was collected from customers?b. Income tax expense for the year was $148,000.00, and income taxes payable decreased by $34,000, how much cash was paid for income taxes?c. Cost of goods sold amounted to $408,000, accounts payable increased by $19,000, and inventories increased by $14,000. How much cash was paid to suppliers?d. The net book value of buildings increased by $240,000. No buildings were sold, and depreciation expense for the year was $190,000. How much cash was paid to purchase the buildings?4. Circle-Square Ltd is in the process of liquidating and going out of business. When a company liquidates it sells all of its assets, realizing whatever cash it can, and pays off its liabilities. Any difference between the book value of the asset (or liability) and the amount of cash received (or paid) is recorded as a gain or loss which is reflected in the Owners? Equity account.At the date the firm decides to liquidate, its Balance Sheet shows $22,800 in cash, $114,200 in Accounts Receivable, $61,400 in Inventory, $265,000 in Plant & Equipment, and Total Liabilities of $305,600.It is estimated that:1) the inventory can be disposed of in a liquidation sale for 80% of its cost.2) all but 5 % of the accounts receivable can be collected3) plant and equipment can be sold for $190,000.4) liabilities must be paid off in total.6Set up the accounting equation and show the effects of the transactions described. Since total assets must equal total liabilities and owners? equity, the unadjusted owners? equity can be calculated by subtracting liabilities from the total of the assets given.ItemCash+ Accounts Receivable+Inventory+ Plant & Equipment- Liabilities+ Owners? EquityaStarting Position22800+114200+61400+265000= 305600+157800bCollection of Accts ReceivablecInventory liquidationdSale of Plant & EquipmentePayment of liabilitiesfBalance

 

Paper#43435 | Written in 18-Jul-2015

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