AC 5230 Problem Set 1_Five Problems

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AC 5230 Problem Set 1

Instructions:

Create a single Excel document with one worksheet/tab for each problem. Each problem is worth 20 points.

Problem 1

The following accounts appeared on the trial balance of Gaudette Company at December 31, 2008. All accounts have normal balances.

 

Notes Payable

$64,000

Accounts Receivable

$172,800

Accumulated Depreciation - Bldg.

$261,000

Prepaid Expenses

$18,750

Supplies on Hand

$12,600

Customers' Deposits

$1,250

Accrued Salaries and Wages

$11,400

Common Stock***

$375,000

*Investments in Debt Securities

$93,800

  

Cash

$56,750

Inventories (average cost)

$526,750

Bonds Payable Due 1/1/12

$400,000

Land at Cost

$155,000

Allowance for Doubtful Accts.

$2,600

Trading Securities****

$24,400

Franchise

$64,300

Accrued Interest on Notes Payable

$650

Notes Receivable

$46,000

Buildings at Cost

$642,000

Income Taxes Payable

$52,000

Accounts Payable

$136,650

Preferred Stock**

$250,000

Additional Paid-in Capital

$54,600

Appropriated Retained Earnings

$98,000

  

Unappropriated Retained Earnings

???

  

*The company intends to hold the securities until maturity, which is in ten years.
**8% cumulative; $10 par value; 25,000 shares authorized and outstanding.
***$1 par value; 400,000 shares authorized; 375,000 shares issued and outstanding.
****The company intends to sell the trading securities in the next year.

Directions (20 Points): Prepare a classified balance sheet for Gaudette Company on December 31, 2008 on a separate Excel spreadsheet as directed on the Problem Set 1 directions.

 

 

 

 

Problem 2

The following balance sheet was prepared by the bookkeeper for Perry Company as of December 31, 2008.

Perry Company

Balance Sheet

as of December 31, 2008

 

Cash                                             $  80,000            Accounts payable                                    $  75,000

Accounts receivable (net)                    52,200            Long-term liabilities                                   100,000

Inventories                                        57,000            Stockholders' equity                                   218,500

Investments                                       76,300

Equipment (net)                                 96,000

Patents                                              32,000                                                                                      

                                                     $393,500                                                                          $393,500

The following additional information is provided:

1.    Cash includes the cash surrender value of a life insurance policy $9,400, and a bank overdraft of $2,500 has been deducted.

2.    The net accounts receivable balance includes:

      (a)   accounts receivable—debit balances $60,000;

      (b)  accounts receivable—credit balances $4,000;

      (c)   allowance for doubtful accounts $3,800.

3.    Inventories do not include goods costing $3,000 shipped out on consignment. Receivables of $3,000 were recorded on these goods.

4.    Investments include investments in common stock, trading $19,000 and available-for-sale $48,300, and franchises $9,000.

5.    Equipment costing $5,000 with accumulated depreciation $4,000 is no longer used and is held for sale.  Accumulated depreciation on the other equipment is $40,000.

 

Directions (20 points)Prepare a balance sheet in good form (stockholders' equity details can be omitted.)

Problem 3

Presented below is financial information of the Lilley Corporation for 2008

Beginning Retained Earnings, 1/1/08

$950,000

Gain on the Sale of Investments (normal recurring)

$110,000

Sales for the Year

$30,000,000

Loss Due to Flood Damage (unusual & infrequent)

$125,000*

Cost of Goods Sold

$21,000,000

Loss on Disposal of Retail Division

$450,000*

Interest Revenue

$70,000

Loss on Operations of Retail Division

$460,000*

Selling and Administrative Expenses

5,500,000

Dividends Declared on Common Stock

$230,000

Write-Off of Goodwill

$520,000

Dividends Declared on Preferred Stock

$80,000

Federal Income Tax on Operations for 2008

1,600,000


*net of tax

Lilley Corporation decided to discontinue its retail operations and to retain its manufacturing operations. On August 15, Lilley sold the retail operations to Schoen Company. During 2008, there were 250,000 shares of common stock outstanding all year.

Directions (20 Points): Prepare a multiple-step income statement for the year 2008 on a separate Excel spreadsheet as directed in the Problem Set 1 directions.


 

Problem 4

 

December 31

 

2009

2008

Cash

$90,000

$27,000

Accounts Receivable

$92,000

$80,000

Allowance for Doubtful Accounts

($4,500)

($3,100)

Inventory

$155,000

$175,000

Prepaid Expenses

$7,500

$6,800

Land

$90,000

$60,000

Buildings

$287,000

$244,000

Accumulated Depreciation

($32,000)

($13,000)

Patents

$20,000

$35,000

 

$705,000

$611,700

Accounts Payable

$90,000

$84,000

Accrued Liabilities

$54,000

$63,000

Bonds Payable

$125,000

$60,000

Common Stock

$100,000

$100,000

Retained Earnings - Appropriated

$80,000

$10,000

Retained Earnings - Unappropriated

$271,000

$302,700

Treasury Stock, At Cost

($15,000)

($8,000)

 

$705,000

$611,700


For 2009 Year

Net Income

$58,300

Depreciation Expense

$19,000

Amortization of Patents

$5,000

Cash Dividends Declared and Paid

$20,000

Gain Or Loss On Sale of Patents

None


Directions (20 Points):
Given the above information, prepare a statement of cash flows for Doug Corporation for the year 2009 on a separate Excel spreadsheet as directed on the Problem Set 1 directions.


 

Problem 5

The net changes in the balance sheet accounts of Lenon, Inc. for the year 2008 are shown below:

                  Account                                                                           Debit                         Credit     

Cash                                                                                                 $   125,600

Accounts receivable                                                                                                            $     64,000

Allowance for doubtful accounts                                                                                                14,000

Inventory                                                                                               217,200

Prepaid expenses                                                                                     20,000

Long-term investments                                                                                                           144,000

Land                                                                                                     300,000

Buildings                                                                                               600,000

Machinery                                                                                              100,000

Office equipment                                                                                                                      28,000

Accumulated depreciation:

         Buildings                                                                                                                         24,000

         Machinery                                                                                                                       20,000

         Office equipment                                                                            12,000

Accounts payable                                                                                   183,200

Accrued liabilities                                                                                                                       72,000

Dividends payable                                                                                                                   128,000

Premium on bonds                                                                                                                   32,000

Bonds payable                                                                                                                        800,000

Preferred stock ($50 par)                                                                          60,000

Common stock ($10 par)                                                                                                         156,000

Additional paid-in capital—common                                                                                        223,200

Retained earnings                                                                                     87,200                                

                                                                                                         $1,705,200                  $1,705,200

Additional information:

    1.                                                                                          Net income for the year was $140,000.

    2.  Cash dividends of $128,000 were declared December 15, 2008, payable January 15, 2009.  A 5% stock dividend was issued March 31, 2008, when the market value was $22 per share.

    3.  The long-term investments were sold for $140,000.

    4.  A building and land which cost $480,000 and had a book value of $300,000 were sold for $400,000.  The cost of the land, included in the cost and book value above, was $20,000.

    5.  The following entry was made to record an exchange of an old machine for a new one:

                           Machinery .............................................................................................        160,000

                           Accumulated Depreciation—Machinery......................................          40,000

                           .............................................................................................. Machinery                                          60,000

                           ......................................................................................................... Cash                                          140,000

    6.  A fully depreciated copier machine which cost $28,000 was written off.

    7.  Preferred stock of $60,000 par value was redeemed for $80,000.

    8.  The company sold 12,000 shares of its common stock ($10 par) on June 15, 2008 for $25 a share.  There were 87,600 shares outstanding on December 31, 2008.

    9.  Bonds were sold at 104 on December 31, 2008.

 

Directions (20 points) Prepare a statement of cash flows. Ignore tax effects.

 

 

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