ACC 421 Final Exam.Get an A++. - 63910

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Question 1

Transactions for Mehta Company for the month of May are presented below.May 1 B.D. Mehta invests $3,291 cash in exchange for common stock of Mehta Company, a small welding corporation.

3 Buys equipment on account for $1,387.

13 Pays $472 to landlord for May rent.

21 Bills Noble Corp. $559 for welding work done.

Prepare journal entries for each of these transactions.

 

Question 2

On July 1, 2012, Crowe Co. pays $19,555 to Zubin Insurance Co. for a 3-year insurance contract. Both companies have fiscal years ending December 31. For Crowe Co. journalize the entry on July 1 and the adjusting entry on December 31. (Round answers to zero decimal places, e.g. 2,555.)

 

Question 3

Dresser Company’s weekly payroll, paid on Fridays, totals $7,100. Employees work a 5-day week. Prepare Dresser’s adjusting entry on Wednesday, December 31, and the journal entry to record the $7,100 cash payment on Friday, January 2. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

 

Question 4

Side Kicks has year-end account balances of Sales $902,570; Interest Revenue $18,140; Cost of Goods Sold $572,550; Operating Expenses $220,930; Income Tax Expense $37,320; and Dividends $22,093. Prepare the year-end closing entries. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

 

Question 5

Starr Co. had sales revenue of $604,500 in 2012. Other items recorded during the year were:

 

Cost of goods sold322,300

Salaries and wages expense122,800

Income tax expense27,500

Increase in value of company reputation16,200

Other operating expenses11,700

Unrealized gain on value of patents20,100

Prepare a single-step income statement for Allen for 2012. Allen has 100,000 shares of stock outstanding. (List multiple entries from largest to smallest amount, e.g. 10, 5, 2. Round earnings per share to 2 decimal places, e.g. 0.20. Enter all amounts as positive amounts and subtract where necessary.)

 

Question 6

Portman Corporation has retained earnings of $706,900 at January 1, 2012. Net income during 2012 was $1,793,610, and cash dividends declared and paid during 2012 totaled $79,870. Prepare a retained earnings statement for the year ended December 31, 2012. Assume an error was discovered: land costing $80,150 (net of tax) was charged to repairs expense in 2009. (Enter all amounts as positive amounts and subtract where necessary.)

 

Question 7

On January 1, 2012, Richards Inc. had cash and common stock of $65,420. At that date the company had no other asset, liability or equity balances. On January 2, 2012, it purchased for cash $28,230 of equity securities that it classified as available-for-sale. It received cash dividends of $3,550 net of tax during the year on these securities. In addition, it has an unrealized holding gain on these securities of $6,010 net of tax. Determine the following amounts for 2012: (a) net income; (b) comprehensive income; (c) other comprehensive income; and (d) accumulated other comprehensive income (end of 2012)

 

Question 8

Armstrong Corporation reported the following for 2012: net sales $1,242,900; cost of goods sold $757,400; selling and administrative expenses $348,000; and an unrealized holding gain on available-for-sale securities $20,800.

Prepare a statement of comprehensive income, using the two-income statement format. Ignore income taxes and earnings per share. (Enter all amounts as positive amounts and subtract where necessary.)

 

Question 9

Guillen, Inc. began work on a $7,181,000 contract in 2012 to construct an office building. Guillen uses the completed-contract method. At December 31, 2012, the balances in certain accounts were construction in process $1,739,200; accounts receivable $248,000; and billings on construction in process $1,023,400. Indicate how these accounts would be reported in Guillen’s December 31, 2012, balance sheet.

 

Question 10

Lazaro, Inc. sells goods on the installment basis and uses the installment-sales method. Due to a customer default, Lazaro repossessed merchandise that was originally sold for $940, resulting in a gross profit rate of 40%. At the time of repossession, the uncollected balance is $700, and the fair value of the repossessed merchandise is $285. Prepare Lazaro’s entry to record the repossession. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

 

Question 11

Harding Corporation has the following accounts included in its December 31, 2012, trial balance: Accounts Receivable $119,410; Inventories $293,200; Allowance for Doubtful Accounts $9,810; Patents $77,520; Prepaid Insurance $9,860; Accounts Payable $86,460; Cash $36,310. Prepare the current assets section of the balance sheet listing the accounts in proper sequence.

 

Question 12

Patrick Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2012: Prepaid Rent $18,900; Goodwill $50,030; Franchise Fees Receivable $4,970; Franchises $44,250; Patents $31,290; Trademarks $10,930. Prepare the intangible assets section of the balance sheet. (List amounts from largest to smallest, e.g. 10, 5, 3, 2.)

 

Question 13

Hawthorn Corporation’s adjusted trial balance contained the following accounts at December 31, 2012: Retained Earnings $121,160; Common Stock $704,200; Bonds Payable $102,300; Additional Paid-in Capital $206,890; Goodwill $55,220; Accumulated Other Comprehensive Loss $157,890. Prepare the stockholders’ equity section of the balance sheet. (List entries in order of stock preferred status. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)

 

Question 14

Keyser Beverage Company reported the following items in the most recent year.

 

Net income41,290

Dividends paid5,000

Increase in accounts receivable13,100

Increase in accounts payable8,600

Purchase of equipment (capital expenditure)8,480

Depreciation expense7,600

Issue of notes payable21,580

Compute net cash flow provided by operating activities and the net change in cash during the year. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)

 

Question 15

Linden Corporation is preparing its December 31, 2012, financial statements. Two events that occurred between December 31, 2012, and March 10, 2013, when the statements were issued, are described below.

1. A liability, estimated at $155,680 at December 31, 2012, was settled on February 26, 2013, at $182,280.

2. A flood loss of $81,420 occurred on March 1, 2013.

What effect do these subsequent events have on 2012 net income? (If there is no impact select not change and 0 for the amount.)

Net income will by $ as a result of the adjustment of the liability.

Net income will by $ as a result of the adjustment of the flood loss.

 

Question 16

Roder Corporation has seven industry segments with total revenues as follows.

 

Penley546Cheng182

Konami624Takuhi156

KSC208Molina650

Red Moon234

Based only on the total revenues test, which industry segments are reportable?

Enter 1 if the segment is reportable. Enter 0 if the segment is not reportable.

 

Question 17

Operating profits and losses for the seven industry segments of Roder Corporation are:

 

Penley $182 Cheng $(42)

Konami (84) Takuhi 63

KSC 56 Molina 301

Red Moon 105

Based only on the operating profit (loss) test, which industry segments are reportable?

Enter 1 if the segment is reportable. Enter 0 if the segment is not reportable.

 

Question 18

Heartland Company’s budgeted sales and budgeted cost of goods sold for the coming year are $146,760,000 and $34,737,000 respectively. Short-term interest rates are expected to average 10%. If Heartland can increase inventory turnover from its present level of 9 times a year to a level of 12 times per year, compute its expected cost savings for the coming year.

 

Question 19

Ames Company reported 2012 net income of $155,890. During 2012, accounts receivable increased by $17,980 and accounts payable increased by $9,720. Depreciation expense was $48,850. Prepare the cash flows from operating activities section of the statement of cash flows.(List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)

 

Question 20

 

Martinez Corporation engaged in the following cash transactions during 2012.

 

Sale of land and building$200,580

Purchase of treasury stock44,280

Purchase of land42,910

Payment of cash dividend93,900

Purchase of equipment55,990

Issuance of common stock151,880

Retirement of bonds104,020

Compute the net cash provided (used) by investing activities. (List multiple entries from the largest positive to the smallest positive amount followed by the most negative to the least negative amount, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)

 

Question 22

Martinez Corporation engaged in the following cash transactions during 2012.

 

Sale of land and building$181,630

Purchase of treasury stock41,000

Purchase of land46,090

Payment of cash dividend85,330

Purchase of equipment58,610

Issuance of common stock151,840

Retirement of bonds108,310

Determine Martinez’s free cash flow, assuming that it reported net cash provided by operating activities of $407,130. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)

 

Question 23

(Preparation of a Statement of Cash Flows)

A comparative balance sheet for Orozco Corporation is presented below.

December 31

 

Assets2,0122,011

Cash62,42922,000

Accounts receivable84,37368,944

Inventory182,373191,944

Land73,373112,944

Equipment267,627197,056

Accumulated depreciation – equipment(71,373)(44,944)

 Total598,802547,944

Liabilities and Stockholders’ Equity

Accounts payable36,37349,944

Bonds payable150,000200,000

Common stock ($1 par)214,000164,000

Retained earnings198,429134,000

 Total598,802547,944

Additional information:

1. Net income for 2012 was $109,746.

2. Cash dividends of $45,317 were declared and paid.

3. Bonds payable amounting to $50,000 were retired through issuance of common stock.

(a) Prepare a statement of cash flows for 2012 for Orozco Corporation. (List multiple entries from the largest positive to the smallest positive amount followed by the most negative to the least negative amount, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)

 

Question 24

Chris Spear invested $11,482 today in a fund that earns 12% compounded annually. To what amount will the investment grow in 3 years? To what amount would the investment grow in 3 years if the fund earns 12% annual interest compounded semiannually? (Round answers to 2 decimal places, e.g. 12,250.25. Hint: Use tables in text.)

Investment at 12% annual interest $

Investment at 12% annual interest compounded semiannually $

 

Question 25

Amy Monroe wants to create a fund today that will enable her to withdraw $29,170 per year for 8 years, with the first withdrawal to take place 5 years from today. If the fund earns 9% interest, how much must Amy invest today? (Round the answer to zero decimal places, e.g. 120,250. Hint: Use tables in text.)

 

Question 26

Zach Taylor is settling a $28,000 loan due today by making 6 equal annual payments of $6,056.83.

What payments must Zach Taylor make to settle the loan at the interest rate of 8%, but with the 6 payments beginning on the day the loan is signed? (Round answer to 2 decimal places, e.g. 2,250.25. Hint: Use tables in text.)

 

Question 27

(Simple and Compound Interest Computations)

Lyle O ‘Keefe invests $28,800 at 8% annual interest, leaving the money invested without withdrawing any of the interest for 9 years. At the end of the 9 years, Lyle withdrew the accumulated amount of money.

 

(a) Compute the amount Lyle would withdraw assuming the investment earns simple interest.

(b) Compute the amount Lyle would withdraw assuming the investment earns interest compounded annually. (Round to 2 decimal places, e.g. 25,250.25. Hint: Use tables in text.

(c) Compute the amount Lyle would withdraw assuming the investment earns interest compounded semiannually. (Round to 2 decimal places, e.g. 25,250.25. Hint: Use tables in text.)

 

Question 28

(Preparation of a Statement of Cash Flows) 

Solution Description

Question 1

Transactions for Mehta Company for the month of May are presented below.May 1 B.D. Mehta invests $3,291 cash in exchange for common stock of Mehta Company, a small welding corporation.

3 Buys equipment on account for $1,387.

13 Pays $472 to landlord for May rent.

21 Bills Noble Corp. $559 for welding work done.

Prepare journal entries for each of these transactions.

 

Question 2

On July 1, 2012, Crowe Co. pays $19,555 to Zubin Insurance Co. for a 3-year insurance contract. Both companies have fiscal years ending December 31. For Crowe Co. journalize the entry on July 1 and the adjusting entry on December 31. (Round answers to zero decimal places, e.g. 2,555.)

 

Question 3

Dresser Company’s weekly payroll, paid on Fridays, totals $7,100. Employees work a 5-day week. Prepare Dresser’s adjusting entry on Wednesday, December 31, and the journal entry to record the $7,100 cash payment on Friday, January 2. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

 

Question 4

Side Kicks has year-end account balances of Sales $902,570; Interest Revenue $18,140; Cost of Goods Sold $572,550; Operating Expenses $220,930; Income Tax Expense $37,320; and Dividends $22,093. Prepare the year-end closing entries. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

 

Question 5

Starr Co. had sales revenue of $604,500 in 2012. Other items recorded during the year were:

 

Cost of goods sold322,300

Salaries and wages expense122,800

Income tax expense27,500

Increase in value of company reputation16,200

Other operating expenses11,700

Unrealized gain on value of patents20,100

Prepare a single-step income statement for Allen for 2012. Allen has 100,000 shares of stock outstanding. (List multiple entries from largest to smallest amount, e.g. 10, 5, 2. Round earnings per share to 2 decimal places, e.g. 0.20. Enter all amounts as positive amounts and subtract where necessary.)

 

Question 6

Portman Corporation has retained earnings of $706,900 at January 1, 2012. Net income during 2012 was $1,793,610, and cash dividends declared and paid during 2012 totaled $79,870. Prepare a retained earnings statement for the year ended December 31, 2012. Assume an error was discovered: land costing $80,150 (net of tax) was charged to repairs expense in 2009. (Enter all amounts as positive amounts and subtract where necessary.)

 

Question 7

On January 1, 2012, Richards Inc. had cash and common stock of $65,420. At that date the company had no other asset, liability or equity balances. On January

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