Financial accounting-Chapter 6,8,9,10,11,12

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MGMT 202                                                                             Ch 6:  Exercises

 

Entity C uses the periodic inventory method and had the following inventory information available:

                                                                Units               Unit Cost           Total Cost

1/1         Beginning Inventory                    100                    $3                   $   300

1/20       Purchase                                     500                    $4                     2,000

7/25       Purchase                                     100                    $5                        500

10/20     Purchase                                     300                    $6                     1,800

                                                               1,000                                           $4,600

 

A physical count of inventory on December 31 revealed that there were 380 units on hand.

 

Instructions

Answer the following independent questions and show computations supporting your answers.

1.   Assume that the company uses the FIFO method. Compute the values of the ending inventory at December 31 and the cost of goods sold.

 

 

 

 

 

 

 

 

2.   Assume that the company uses the average cost method. Compute the value of the ending inventory on December 31.

 

 

 

 

 

 

3.  Assume that the company uses the LIFO method. Compute the value of the ending inventory on December 31 and the cost of goods sold.

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Item 2:

 

Entity D uses the lower-of-cost-or-market basis for its inventory. The following data are available at December 31.

 

 

 

Market

 

Cost

Value

Cameras

 

 

    Minolta

$175

$168

    Canon

  148

  152

Light Meters

 

 

    Vivitar

  125

  119

    Kodak

  120

  135

 

What amount should be reported on Entity D's financial statements, assuming the lower-of-cost-or-market rule is applied item-by item?

 

 

 

 

Item 3:

Should the following items be included (I) or excluded (E) from Entity E's inventory at December 31?

 

_____ 1.  Goods held on consignment that belong to Charleston Co.

 

_____ 2.  Goods that were shipped F.O.B destination to a customer on December 30.  The goods arrived at the customer's location on January 2.

 

_____ 3.  Entity E  purchased goods from an out-of-state supplier on December 30.  The goods were shipped F.O.B. shipping point, but did not arrive at Entity E's warehouse until January 6.

 

_____ 4.  Office supplies were included in the merchandise inventory.

 

 

 

 _____ 5. Goods that were shipped F.O.B destination to Entity E on December 30.  The goods arrived the next day.

 

MGMT 202                                                                             Ch 8:  Exercises

 

Item 1:  Entity G uses the allowance method in accounting for uncollectible accounts.  Past experience indicates that 6% of accounts receivable will eventually be uncollectible.  Selected account balances at December 31, 2018, and December 31, 2019, appear below:

 

                                                                                 12/31/2018            12/31/2019

         Net Credit Sales                                              $400,000               $500,000

         Accounts Receivable                                          80,000                 100,000

         Allowance for Doubtful Accounts                         4,000                            ?

 

 

Instructions

Set up a T-account for Allowance for Doubtful Accounts beginning with the balance in ADA as of 12/31/2018 and then post the following transactions:  

Dr.___Allowance for Doubtful Accounts___Cr.

        

                                                                                               

 

 

 (a)  Prepare journal entries for the following events in 2019.

        Aug.    10        Determined that the account of Kurt West for $900 is uncollectible.

 

 

 

 

        Sept.   12        Determined that the account of Jill Lynch for $3,000 is uncollectible.

 

 

 

 

 

        Oct.    10        Received a check for $300 as payment on account from Kurt West, whose account had previously been written off as uncollectible.

 

 

 

 

(b)   Prepare the adjusting journal entry to record the bad debt provision for the year ended December 31, 2019.

 

 

 

 

(c)   Prepare a partial balance sheet for Accounts Receivable after the December 31, 2019 adjustment:

 

 

 

 

Item 2:

 

Prepare journal entries to record the following transactions entered into by Entity H:

 

  2019   

June    1     Received a $10,000, 6%, 1-year note from Dan Gore as full payment on his account.

 

 

 

 

 

 

 

 

Dec.  31     Accrued interest on Dan Gore's note.

 

 

 

 

 

 

 

 

  2020   

June    1     Dan Gore honored his promissory note by payment of the face amount plus interest.

 

 MGMT 202                                                                             Ch 9:  Exercises

 

Item 1:  Entity I purchased land adjacent to its plant to improve access for trucks making deliveries.  Expenditures incurred in purchasing the land were as follows:

Purchase price                                               $55,000

Broker’s fees                                                       6,000

Title search and other fees                                 5,000

Demolition of an old building on the property,   5,700

Grading                                                               1,200

Digging foundation for the road                          3,000

Laying and paving driveway                             25,000

Lighting                                                                7,500

Signs                                                                   1,500.

 

List the items and amounts that should be included in the Land account.

 

 

 

 

 

 

 

 

 

 

Item 2:  Equipment with a cost of $480,000 has an estimated salvage value of $30,000 and an estimated life of 4 years.  Compute the annual depreciation and then show what this asset looks like on the balance sheet at the end of the second year.

 

 

 

 

 

 

 

Item 3:  Equipment that cost $72,000 and on which $60,000 of accumulated depreciation has been recorded was disposed of for $18,000 cash.  Make the entry to record this transaction.  Hint:  Compute BV and then gain (loss).

 

 

 

 

 

 

 

Item 4:  Equipment costing $60,000 with a salvage value of $8,000 and an estimated life of 8 years has been depreciated using the straight-line method for 2 years.  Assuming a revised estimated total life of 5 years and no change in the salvage value, compute the revised annual depreciation expense and make the entry.

 

 MGMT 202                                                                             Ch 10:  Exercises

 

 

Part A:  Entity J issued $400,000, 10%, 10-year bonds on January 1, 2018, at 105. Interest is payable annually on December 31.  Entity J uses the straight-line method of amortization and has a calendar year end.

 

Instructions

Prepare all journal entries made in 2018 related to the bond issue and a partial balance sheet showing the bonds at December 31. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Part B:  On September 1, Entity K borrows $80,000 from New National Bank by signing a 6-month, 6%, interest-bearing note.

 

Instructions

Prepare the necessary entries below associated with the note payable on the books of Cooper Company.

(a)        Prepare the entry on September 1 when the note was issued.

(b)        Prepare any adjusting entries necessary on December 31 in order to prepare the financial statements.  Assume no other interest accrual entries have been made.

(c)        Prepare the entry to record payment of the note at maturity.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 MGMT 202                                                                             Ch 11:  Exercises

 

Item 1:  On January 1, 2017, Entity L had 75,000 shares of $1 par value common stock issued and outstanding. During the year, the following transactions occurred:

Mar.      1      Issued 90,000 shares of common stock for $675,000

June     1      Declared a cash dividend of $2.00 per share to stockholders of record on June 15

June   30      Paid the $2.00 cash dividend

Dec.     1      Purchased 5,000 shares of common stock for the treasury for $18 per share

 

Instructions: Prepare journal entries to record the above transactions.

 

 

 

 

 

 

 

 

 

 

 

 

 

Item 2:  The December 31, 2018 balance sheet of Entity M showed the following:

Treasury stock (30,000 shares)............................................................... $   630,000

Paid-in capital in excess of par value – common stock.......................... 27,000,000

8% preferred stock, $20 par value, cumulative,

      30,000 shares authorized; 15,000 shares issued............................... $   300,000

Common stock, $10 par value, 3,000,000 shares authorized;

      1,950,000 shares issued, ____? shares outstanding......................... 19,500,000

Paid-in capital in excess of par value – preferred stock.........................       60,000

Retained earnings       .............................................................................   7,650,000

 

Instructions: What is total stockholders’ equity?  Prepare the stockholders’ equity section of the balance sheet.

 

 

 

 

 

 

 

 

 

 

 

 

 MGMT 202                                                                             Ch. 12 Exercises

Item 1:  Classify each transaction as either an operating activity “OA”,  an investing activity “IA,” or a financing activity “FA,” or (d) a noncash investing and financing activity “NC.”

Selected transactions for the Entity N Company are listed below.

_____ 1.         Collected accounts receivable.

_____ 2.         Declared and paid dividends on common stock.

_____ 3.         Sold long-term investments for cash.

_____ 4.         Issued stock for equipment.

_____ 5.         Repaid five year note payable.

_____ 6.         Paid employee wages.

_____ 7.         Converted bonds payable to common stock.

_____ 8.         Acquired long-term investment with cash.

_____ 9.         Sold buildings and equipment for cash.

______10.     Sold merchandise to customers.

Item 2: 

Entity O reported net income of $225,000 for the current year. Depreciation recorded on buildings and equipment amounted to $75,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:                            End of Year               Beginning of Year

Cash                                                            $20,000                            $15,000

Accounts receivable                                   22,000                              32,000

Inventory                                                       72,000                              60,000

Accounts payable                                        12,000                              18,000

Taxes payable                                                5,000                                3,000

 

 

Instructions

Prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method.

    Financial accounting-Chapter 6,8,9,10,11,12

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