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Accounting II

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;;On January 1, 2014, Flip Corporation had 560,000 shares of $1 par value common stock issued and outstanding. There was a $3,000,000 balance in the Retained Earnings account at the beginning of the year. During the first quarter of the year, the following transactions occurred;Jan. 8;Issued 40,000 shares of its own common stock for $400,000.;Jan. 18;Declared a cash dividend of $1 per share to stockholders of record on Jan. 10.;Jan. 31;Paid the $1 cash dividend declared on Jan. 18.;Feb. 2;Purchased 3,000 shares of its own common stock for the treasury at $11 per share.;Feb. 14;Sold 2,000 shares of the treasury stock purchased on Feb. 2 for $12 per share.;March 25;Declared a 2 for 1 stock split on outstanding shares.;Instructions;Prepare journal entries to record the above transactions.;Part B.;The following information is available for Flip Corporation for the year ended December 31, 2014;Beginning retained earnings $ 340,000;Cost of goods sold 620,000;Declared cash dividends 50,000;Operating expenses 170,000;Other expenses and losses 40,000;Other revenues and gains 60,000;Sales 1,000,000;Tax rate 30%;Instructions;1. Prepare a corporate income statement in good form.;2. Prepare a retained earnings statement for the year.;Question 2: 10 points;January 1, 2014 Flip Company purchased 35,000 shares of common stock of Flop Corporation as a long-term investment for $900,000. December 31, 2014, Flop Corporation reported net income of $300,000 and paid dividends of $100,000.;Instructions;a. Assuming that the 35,000 shares represent a 10% interest in Flop Corporation;1. Prepare the journal entry to record the investment in Flop stock.;2. Prepare any entries that Flip Company should make in accounting for its investment in Flop stock during the year.;3. What is the balance of the Stock Investments account on Flip Company's books at the end of the year?;b. Repeat requirement (a) above except assume that the 35,000 shares represent a 20% interest in Flop Corporation.;Question 3: 15 points: The following information is available for Flip Corporation for the year ended December 31, 2014;Collection of principal on long-term loan to a supplier $15,000;Acquisition of equipment for cash 10,000;Proceeds from the sale of long-term investment at book value 20,000;Issuance of common stock for cash 27,000;Depreciation expense 28,000;Redemption of bonds payable at carrying (book) value 35,000;Payment of cash dividends 15,000;Net income 25,000;Purchase of land by issuing bonds payable 45,000;In addition, the following information is available from the comparative balance sheet for Flip at the end of 2013 and 2014;2014 2013;Cash $ 66,000 $14,000;Accounts receivable (net) 20,000 16,000;Prepaid insurance 18,000 13,000;Total current assets $104,000 $43,000;Accounts payable $ 30,000 $20,000;Salaries payable 3,000 7,000;Total current liabilities $ 33,000 $27,000;Instructions: Prepare Flip's statement of cash flows for the year ended December 31, 2012 using the indirect method.;Question 4: 10 points;Flip Corporation prepared the following income statement for 2014;Flip Corporation;Income Statement;For the Year Ended December 31, 2014;???????????????????????????????????????????;Sales (20,000 units).............................................................................................. $600,000;Variable expenses................................................................................................ 360,000;Contribution margin............................................................................................. 240,000;Fixed expenses..................................................................................................... 150,000;Net income........................................................................................................... $ 90,000;Instructions;Answer the following independent questions and show computations to support your answers.;1. What is the company's break-even point in units?;2. How many more units would the company have had to sell to earn net income of $150,000 in 2014?;3. If the company expects a 25% increase in sales in 2015, what would be the expected net income in 2015?;4. How much sales dollars would the company have to generate in order to earn a target net income of $160,000 in 2015?;Question 5: 7 points;Flip Inc. provided the following information;April May June;Projected merchandise purchases $184,000 $156,000 $132,000;? Flip pays 40% of merchandise purchases in the month purchased and 60% in the following month.;? General operating expenses are budgeted to be $62,000 per month of which depreciation is $8,000 of this amount. Hoover pays operating expenses in the month incurred.;? Flip makes loan payments of $8,000 per month of which $700 is interest and the remainder is principal.;Instructions: Calculate budgeted cash disbursements for May.;Question 6: 6 points;Flip Enterprises produces miniature parasols. Each parasol consists of $1.20 of variable costs and $.90 of fixed costs and sells for $4.50. A Dutch wholesaler offers to buy 8,000 units at $1.40 each, of which Pederson has the capacity to produce. Flip will incur extra shipping costs of $.12 per bear.;Instructions: Determine the incremental income or loss that Flip Enterprises would realize by accepting the special order.;Question 7: 6 points;Flip Inc. produces several models of clocks. An outside supplier has offered to produce the commercial clocks for Flip for $270 each. Flip needs 1,500 clocks annually. Flip has provided the following unit costs for its commercial clocks;Direct materials $100;Direct labor 110;Variable overhead 30;Fixed overhead (70% avoidable) 150;Instructions: Prepare an incremental analysis which shows the effect of the make-or-buy decision.;Question 8: 6 points;Flip Inc. relies heavily on a copier to process its paperwork. Recently, the copy clerk has not been able to process all the necessary copies within the regular workweek. Management is considering updating the current copier with a new faster model.;Current copier;New Model;Original purchase cost;$12,000;$22,000;Accumulated depreciation;6,000;0;Estimated annual operating costs;8,000;4,000;Useful life in years;4;4;If sold now, the current copier would have a sales value of $1,000. If operated for the remainder of its useful life, the current copier would have $0 salvage value. The new copier is expected to have $1,200 salvage value after 4 years. Prepare an analysis to show whether the company should retain or replace the copier.;Multiple choice questions allocated 1 point each. Make your selection by recording the letter in the answer box provided.;Question 9: Which one of the following would not be classified as manufacturing overhead?;a. Indirect labor;b. Direct materials;c. Insurance on factory building;d. Indirect materials;Question 10: The product cost that is most difficult to associate with a product is;a. direct materials.;b.

 

Paper#74380 | Written in 18-Jul-2015

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