Question;Test 1;Problem 1. At the;beginning of 2010, Gonzales Company's accounting records had the general ledger;accounts and balances shown in the table below. During 2010, the following;transactions occurred;1. received $80,000 cash for providing;services to customers;2. paid rent expense, $10,000;3. purchased land for $9,000 cash;4. paid $5,000 on note payable;5. paid operating expenses, $52,000;6. paid cash dividend, $6,000;Required;1) Record the transactions in the;appropriate general ledger accounts. Record the amounts of revenue, expense;and dividends in the Retained Earnings column, providing appropriate titles for;these accounts in the last column of the table.2) What is the amount of total assets as;of December 31, 2010?;3) What is the amount of total stockholders' equity as of;December 31, 2010?;Problem 2.;Given are the amounts of assets, liabilities, owner?s equity, revenues, and;expenses of AQUA Inc. at 12/31/10. The beginning amount of Retained Earnings at;1/1/10 was $20,000, and during the year Dividends of $60,000 were taken out by;the owners of Aqua Inc. Prepare the yearend Balance Sheet and Income Statement;for AQUA LLP at the end of the year.;(Include Correct Headings);Accounts Payable $59,000 Land $78,000;Accounts Receivable 15,000 Unearned;Revenue 45,000;Advertising Expense;13,000 Utilities;Expense;5,000;Building 160,000 Rent Expense 13,000;Cash 140,000 Operating;Expenses 23,000;Supplies 10,000 Common;Stock 240,000;Salary payable;2,000 Accumulated;Depreciation 10,000;Prepaid Insurance Expense 20,000 Service;Revenue 170,000;Interest Expense;9,000 Retained Earnings?;Test 2;Problem 1. The May 31, 2012, balance per bank statement for;Upton Company was $7,200. The cash balance per books was $9,500. Outstanding;checks amounted to $800, and deposits in transit were $2,400. The bank;statement contained an NSF check for $500, a service charge for $25, and a;debit memo for direct payment of the telephone bill of $175.;Required;1) Prepare a bank reconciliation to determine the true cash balance at May 31;2012.;Problem 2. Scott;Company is a merchandising business that was started in 2012. Scott uses the;perpetual inventory system. It experienced the following events during 2012.;1. Acquired $25,000 cash by issuing common stock;2. Purchased inventory on account that cost $14,000, terms 2/10, n/30;3. Sold inventory that had cost $8,400 for $15,000 cash;4. Paid for the merchandise referred to in event 2, within the discount period;Required;1) Record the events in the financial statements model below, include column;totals.;2) Prepare an income statement for 2012.;3) What is the amount of total assets at the end of 2012?;Test 3;Problem 1. Maple Company started the year with no inventory.;During the year, it purchased two identical inventory items at different times.;The first unit cost $800 and the second, $700. One of the items was sold during;the year.;Required;Based on this information, how;much product cost would be allocated to cost of goods sold and ending;inventory, assuming use of;a. LIFO;b. FIFO;c. Weighted average;Problem 2. Teague Company purchased a new machine on January 1;2012, at a cost of $150,000. The machine is expected to have an eight-year life;and a $15,000 salvage value. The machine is expected to produce 675,000;finished products during its eight-year life. Smith produced 70,000 units in;2012 and 110,000 units during 2013.;Required;1) Determine the amount of depreciation expense to be recorded on the machine;for the years 2012 and 2013 under each of the following methods;Test 4;Problem 1. Villarente Company issued 5-year $200,000 face value;bonds at 95 on January 1, 2012. The stated interest rate on these bonds is 9%;and the effective interest rate is 10.33%. Use the effective interest rate;method to complete the amortization schedule below.;Problem 2. Allen Corporation was organized on July 15, 2012. It was;authorized to issue 150,000 shares of $25 par value common stock and 50,000;shares of 6% cumulative preferred stock. The preferred stock had a stated value;of $50 per share. The following stock transactions relate to Allen Corporation.;?;Issued;55,000 shares of common stock for $33 per share.;?;Issued;2,750 shares of the class A preferred stock for $62 per share.;?;Issued;27,500 shares of common stock for $35 per share.;Required;1) Indicate the effect of each of these transactions on Allen's financial;statements. Include dollar amounts in the model, below. After recording the;three transactions, calculate column totals.;2) After these transactions have been recorded, what is the total amount of;stockholders' equity?;3) After these transactions have been recorded, how many shares of common stock;are outstanding?;Test 5;Problem 1. The following information applies to Barnhart Company;Additional information;Net;Credit Sales = $220,000Beginning;Accounts Receivable = $10,000Required;1) Compute Barnhart's;a) Quick ratio;b);Current ratio;c) Working capital;d) Accounts receivable turnover;e);Average days to collect receivables;Problem 2. The Jiffy Manufacturing Company started operations in 2012;when it acquired $100,000 from its owners. During the year, the company incurred;the following costs;The company placed 12,000 units into production, completed 10,000 units, and;sold 8,000 units. The average selling price was $17 per unit.;Required;1) Prepare a schedule of cost of goods manufactured and sold for the year ended;December 31, 2012.;2) Prepare an income statement for the year ended December;31, 2012.;Test 6;Problem 1. The following information is for a product manufactured and;sold by Rivera Corporation;Sales;price per unit, $30Variable;cost per unit, $20Total;fixed costs, $200,000Last;year, Rivera earned a profit of $60,000Required;1) How many units did Rivera sell last year?;2);Rivera's managers are considering decreasing the sales price to $28 in an;effort to increase market share. Also, the company wants a profit of $80,000.;How many units would it have to sell at the lower selling price to achieve this;target?;Problem 2. The management accountant at Melrose, Inc. provided the;following estimated costs for producing 5,000 units of a specialty product manufactured;by the firm;The company believes that direct labor hours are the most appropriate cost;driver for assigning overhead costs to its product.;Required;1) Compute the predetermined overhead rate for this company.;2) Compute the;specialty product's total estimated cost per unit.;3) Why do firms assign overhead costs using a predetermined;overhead rate instead of assigning actual costs?;Test 7;Problem 1. Ortiz Manufacturing is considering developing and;marketing one of two new products, A and B. It has accumulated the following;information about the two products;Required;1) Which of these items are relevant to Ortiz's;decision about which of these products it will launch?;Problem 2. Mae Lee owns a small retail store in Cairo, Georgia. The;following summary information regarding expectations for the month of January;is provided: As of December 31 there is $500 in the bank and the balance in;accounts receivable is $2,500. Budgeted cash and credit sales for January are $3,000;and $2,000, respectively. Ninety percent of credit sales are collected in the;month of sale and the remainder is collected in the following month. Mae's;suppliers do not extend credit. Cash payments for January are expected to be;$12,000. Mae has a line of credit that enables the store to borrow funds on;demand. However, funds must be borrowed on the first day of the month and;interest paid in cash on the last day of the month. Mae desires to maintain a;$500 cash balance before consideration is given to the payment of interest.;Mae's bank charges annual interest of 12% per year.Required;1) Compute the amount of funds that needs to be borrowed.;2) Compute the amount of interest expense that will appear;on the January 31 pro forma income statement.;Test 8;Problem 1. Creighton Company's balance sheet and income statement are;provided below;Required;1) Compute the margin, turnover, and return on investment for Creighton;Company.;2);What is the advantage of expanding the ROI formula to measure margin and;turnover separately?;Problem 2. Delta Company is evaluating two different capital;investments, Project X and Y. Either X or Y would cost $100,000, and the;company cannot afford to do both. The company expects that Project X would;provide net cash inflows of $30,000 per year for 5 years. For Project Y, the;net cash inflows are expected to be as follows;Delta's cost of capital is 12%;Required:1) Calculate the present value index for Project X and for Project Y.;2) Indicate whether each of the projects is an acceptable;investment.;3) Which of the two projects should Delta implement?
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