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Intermediate Accounting I




Question;Part A;20 Point Questions (3 questions x 20 points = 60 total points);Show all work.;1. The following information is provided in the 2011 annual report to;shareholders of The Biz Store;December 31, 2011 December 31, 2010;Accounts Receivable Y $ 6 million;Inventory $ 25 million $ 20 million;Total assets $ 250 million X;Total Stockholders? Equity W $ 130 million;Net Sales $ 115 million;Cost of goods sold Z;Net Income U;Average Collection Period 22.2 days;Average days in inventory 104 Days;Equity multiplier 1.9;Return on stockholders? Equity 16.0 %;Profit Margin on sales 17.4 %;ROA V;Required: Compute U-Z in the table;above.;2. Shown below is the activity for one of the products of Random Creations;January 1 balance, 80 units @ $50 $4,000;Purchases;January 18: 40 Units @ $51;January 28: 40 Units @ $52;Sales;January 12: 30 Units;January 22: 30 Units;January 31:45 Units;2a. Compute the ending inventory and cost of goods sold assuming Random;Creations uses FIFO.;2b. Compute the ending inventory and cost of goods sold assuming Random;Creations uses LIFO and perpetual inventory system.;2c. Compute the ending inventory and cost of goods sold assuming Random;Creations uses LIFO and a periodic inventory system.;2d. Compute the ending inventory and cost of goods sold assuming Random Creations;uses average cost and a periodic inventory system.;2e. Compute the ending inventory and cost of goods sold assuming Random;Creations uses average cost and a perpetual inventory system.;3. On January 3, 2011, Michelson & Sons acquired a tract of land just;outside the city limits. The land and existing building were purchased for $2.4;million. Michelson paid $400,000 and signed a noninterest-bearing note;requiring the company to pay the remaining $2,000,000 on December 31, 2012. An;interest rate of 7% properly reflects the time value of money for this type of;loan agreement. Transfer taxes, title insurance and other costs totaling;$24,000 were paid at closing. During February, the old building was demolished;at a cost of $120,000, and an additional $100,000 was paid to clear and grade;the land. Construction of a new building began on March 1 and was completed on;October 30. Construction expenditures were as follows;March 30 $ 800,000;June 30 1, 200,000;July 30 1,200,000;September 1 600,000;Michelson did not borrow specifically for the construction project, but did;have the following debt outstanding throughout 2011;$6,000,000, 8% long-term note payable;$2,000,000, 5% long-term note payable;In December, the company purchased equipment and office furniture and fixtures;for a lump-sum price of $800,000. The fair values of the equipment and the;furniture and fixtures were $540,000 and $360,000, respectively. In December;Michelson paid $340,000 for the construction of parking lots and landscaping.;Required;3a. Determine the initial values of the various assets that Michelson acquired;or constructed during 2011.;3b. How much interest expense will Michelson report in its 2011 income;statement?;Part B;4 points Questions (10 questions x 4 points = 40 total points);Show all Works;1. Tri Fecta, partnerships, had revenues of $360,000 in its first year of;operations. The partnership has not collected on $35,000 of its sales, and;still owes $40,000 on $150,000 of merchandise they purchased. There was no;inventory on hand at the end of the year. The partnership paid $25,000 in;salaries. The partners invested $40,000 in the business and $25,000 was;borrowed on a five-year note. The partnership paid $3,000 in interest that was;the amount owed for the year and paid $8,000 a two-year insurance policy on the;first day of business.Required;1a. Compute net income for the first year for Tri Fecta.;2a. Compute the cash balance at the end of the first year for Tri Fecta.;2. Presented below is a partial trial balance for the Messenger Corporation at;December 31, 2011.;Account Title Debits Credits;Cash and Cash Equivalents 30,000;Account Receivable 195,000;Raw materials inventory 36,000;Note receivable 120,000;Interest receivable 4,000;Interest Payable 7,000;Marketable securities 48,000;Land 100,000;Buildings 1,500,000;Accumulated depreciation-buildings 740,000;Work in process inventory 38,000;Finish goods inventory 98,000;Equipment 400,000;Accumulated depreciation ? equipment 230,000;Franchise (Net of amortization) 120,000;Prepaid insurance (for the next year) 60,000;Unearned revenue 48,000;Accounts payable 240,000;Note payable 500,000;Salaries Payable 6,000;Cash restricted for payment of Note Payable 100,000;Allowance for uncollectible Accounts 24,000;Sales revenues 900,000;Cost of goods sold 500,000PLEASE SEE ALL QUESTIONS ATTACHED IN DOCUMENT BELOW


Paper#52676 | Written in 18-Jul-2015

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