Part A (15 points each for a possible total of 30 points)
(1) After several years of business, Abel, Barney, and Cole are liquidating. The following are post-closing account balances.Cash 18,000Inventory 73,000Other assets 157,000 Accounts Payable 61,000 Abel, Capital 50,000 Barney, Capital 50,000 Cole, Capital 87,000Non-cash assets are sold for $275,000. Profits and losses are shared equally.After all liabilities are paid, divide the remaining cash amongst the partners.
(2) The partnership of Brandon and Ryan is being liquidated. All gains and losses are shared in a 3:1 ratio, respectively. Before liquidation, their balance sheet balances are as follows:Cash $10,000Other Assets 8,000Liabilities 4,000Brandon, Capital 7,000Ryan, Capital 7,000a. If the Other Assets are sold for $10,000, how much will each partner receive before paying liabilities and distributing the remaining assets?
b. If the Other Assets are sold for $8,000, how much will each partner receive before paying liabilities and distributing remaining assets?
Part B (20 points each for a possible total of 40 points)
(1) Simon Brothers pays $47,000 into a bond sinking fund each year to redeem the future maturity of its bonds. During the first year, the fund earned $3,825. At the time of bond redemption, the fund has a balance of $417,000. Of this, $400,000 was used to redeem the bonds. Journalize the following entries.a. Initial depositb. The first year's interestc. The redemption of the bonds
(2) On January 1, Auctions Online issued $300,000, 9%, 10-year bonds to lenders at the contract rate. Interest is to be paid semiannually on July 1 and January 1. Journalize the following entries.a. Issued the bondsb. Paid first semiannual interest paymentc. Retired the bonds at maturity
Part C (15 points each for a possible total of 30 points)
(1) Prepare a statement of retained earnings in proper form for White Corporation for the year ended December 31, 2012, from the following:Retained Earnings, January 1, 2012 $2,000Dividends paid during the year 800Net income for the year 3,000Correction of prior year error. Purchaseof land recorded as rent expense 1,000
(2) Curtis Corporation's balance sheet included the following:Common Stock, $5 par value, 5,000 shares issuedand outstanding $25,000Retained Earnings 20,000Total Stockholders' Equity $45,000Prepare journal entries for the following transactions.May 3 Issued 500 shares at $6 per share. 9 Reacquired 100 shares at $4 per share. 15 Reissued 50 of the Treasury shares at $7 per share. 17 Reissued 10 of the Treasury shares at $3 per share.
Part A (5 points each for a possible total of 15 points)
The following information is given for Tripp Company, which uses the indirect method.Net income $20,000Depreciation expense 3,000Increase in accounts receivable 2,000Payment of dividends 2,000Proceeds from sale of equipment 6,000Increase in accounts payable 4,000Decrease in inventory 3,000From the information provided, answer the following questions:
(1) The cash flow from operating activities is ________.
(2) The cash flow from investing activities is ________.
(3) The cash flow from financing activities is ________.
Part B (5 points each for a possible total of 25 points)Selected data for Stick's Design are given as of December 31, Year 1 and Year 2 (rounded to the nearest hundredth). Year 2 Year 1Net Credit Sales $25,000 $30,000Cost of Goods Sold 16,000 18,000Net Income 2,000 2,800Cash 5,000 900Accounts Receivable 3,000 2,000Inventory 2,000 3,600Current Liabilities 6,000 5,000Compute the following:
(1) Current ratio for Year 2.
(2) Acid-test ratio for Year 2.
(3) Accounts receivable turnover for Year 2.
(4) Average collection period for Year 2.
(5) Inventory turnover for Year 2.
Part C (30 points)Prepare an income statement showing departmental contribution margin based on the following: Dept. X Dept. Y Rent ExpenseSpace (square feet) 17,500 35,000Net Sales $60,000 $40,000Cost of Goods Sold 18,000 16,000Rent Expense (allocated based on square feet) $2,700
Part D (5 points each for a possible total of 30 points)From the following transactions, prepare the appropriate general journal entries for the month of April.
(1) Raw materials costing $60,000 were issued from the storeroom.
(2) Direct labor of $53,000 was charged to production.
(3) Indirect labor costs of $17,000 were incurred.
(4) Overhead was applied at the rate of 40% of direct labor dollars.(5) Completed products costing $42,000 were transferred to finished goods.
(6) Products costing $32,000 were sold.
The solution a