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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
1.(9 points) On October 1, 2011 Haden Railroad Co. issued $800,000 of 10-year bonds paying a 9% interest rate with interest payable semiannually on April 1 and October 1. The discount rate for such securities is 8%. Haden uses the Straight Line amortization method.Prepare the journal entry to record issuance of bond.         Prepare the journal entry to accrue the interest on March 30, 2012         Prepare the journal entry to pay the interest on April 1, 2012         2.(8 points) Equipment was acquired on January 1, 2009, at a cost of $190,000.Â
1. (9 points) On October 1, 2011 Haden Railroad Co. issued $800,000 of 10-year bonds paying a 9% interest rate with interest payable semiannually on April 1 and October 1. The discount rate for such securities is 8%. Haden uses the Straight Line amortization method.
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Prepare the journal entry to record issuance of bond.
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Prepare the journal entry to accrue the interest on March 30, 2012
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Prepare the journal entry to pay the interest on April 1, 2012
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2. (8 points) Equipment was acquired on January 1, 2009, at a cost of $190,000. The equipment was originally estimated to have a salvage value of $10,000 and an estimated life of 10 years. Depreciation has been recorded through December 31, 2011, using the straight-line method. On January 1, 2012, the estimated salvage value was revised to $16,000 and the useful life was revised to a total of 8 years.
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Instructions
Determine the depreciation expense for 2012 and prepare the journal entry to record the depreciation expense for the year of 2012. Â
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3. (10 points)
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The December 31, 2011, balance sheet of the Kramer Company had Accounts Receivable of $650,000 and a credit balance in Allowance for Doubtful Accounts of $33,000. During 2012, the following transactions occurred: sales on account $1,450,000; sales returns and allowances, $100,000; collections from customers, $1,250,000; accounts written off, $35,000; previously written off accounts of $8,000 were collected.
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Instructions
(a) Journalize the 2012 transactions.
(b) If the company uses the percentage of receivables basis to estimate bad debt expense and determines that uncollectible accounts are expected to be 6% of accounts receivable, what is the adjusting entry at December 31, 2012? Â
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4. (14 points) The cash balance per books for Wellmeyer Company on December 31, 2012, is $8,736.01. (deposits in transit from last month $5484.38)(outstanding checks from last month: No.14 $148.29) The following checks and receipts were recorded for the month of December 2012:
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Checks Receipts  Â
 No. Amount No. Amount Amount Date  Â
17 $372.96 22 $ Â 578.84 $ Â 843.86 12/5 Â Â
18 780.62 23 Â 1,687.50 941.54 12/21 Â Â
19 157.00 24 Â Â 921.30 808.58 12/27 Â Â
20 587.50 25 Â Â 246.03 967.00 12/31 Â Â
21 234.15 Â
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In addition, the bank statement for the month of December is presented below:
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Check No. 18 was correctly written for $708.62 for a payment on account. The NSF check was from S. Gill, a customer, in settlement of an account receivable. An entry has not been made for the NSF check. The credit memo is for the collection of a note receivable including interest of $60 that has not been accrued. The bank service charge is $15.00.
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Instructions (use information on previous page)
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(a) Prepare the bank reconciliation at December 31. Â Â
(b) Prepare the adjusting journal entries required by the bank reconciliation. Â
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5. (9 points) Grother Company uses the periodic inventory method and had the following inventory information available:
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Units Unit Cost Total Cost  Â
1/1 Beginning Inventory 100 $4 $ Â 400 Â Â
1/20 Purchase 500 $5 2,500 Â Â
7/25 Purchase 100 $7 700 Â Â
10/20 Purchase  300 $8  2,400  Â
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A physical count of inventory on December 31 revealed that there were 325 units on hand.
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Instructions
Answer the following independent questions and show computations supporting your answers.
1. Assume that the company uses the FIFO method. The value of the ending inventory at December 31 is $__________.
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2. Assume that the company uses the average cost method. The value of the ending inventory on December 31 is $__________.
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3. Assume that the company uses the LIFO method. The value of the ending inventory on December 31 is $__________.
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6. (6 points) Presented here are selected transactions for the Leiss Company during April. Leiss uses the perpetual inventory system.
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April 1 Sold merchandise to Mann Company for $5,000, terms 2/10, n/30. Â The merchandise sold had a cost of $2,500.
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2 Purchased merchandise from Wild Corporation for $6,000, terms 1/10, n/30.
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4 Purchased merchandise from Ryan Company for $1,000, n/30.
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10 Received payment from Mann Company for purchase of April 1 less appropriate discount.
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11 Paid Wild Corporation for April 2 purchase. Â
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Instructions
Journalize the April transactions for Leiss Company. Â
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7. (8 points) Sunkan Company prepares monthly financial statements. Below are listed some selected accounts and their balances on the September 30 trial balance before any adjustments have been made for the month of September (all adjusting entries have been made for prior months).
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SUNKAN COMPANY
Trial Balance (Selected Accounts)
September 30, 2011 Â Â
 Debit  Credit  Â
Office Supplies $ 2,700 Â Â
Prepaid Insurance 3,675 Â Â
Office Equipment 16,200 Â Â
Accumulated Depreciation—Office Equipment $ 1,000  Â
Unearned Rent Revenue 1,200 Â
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(Note: Â Debit column does not equal credit column because this is a partial listing of selected account balances.)
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An analysis of the account balances by the company's accountant provided the following additional information:
1. A physical count of office supplies revealed $1,000 on hand on September 30.
2. A two-year insurance policy was purchased on June 1.
3. Office equipment depreciates $3,000 per year.
4. The amount of rent received in advance that remains unearned at September 30 is $500.
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Instructions:
Using the information given, prepare the adjusting entries that should be made by Sunkan Company on September 30. Â
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8. (5 points, all or nothing) Selected transactions for Stockton Corporation during its first month in business are presented below:
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Sept. 1 Issued common stock in exchange for $25,000 cash received from investors. Â Â
5 Purchased equipment for $20,000, paying $2,000 in cash and the balance on account. Â Â
25 Paid $6,000 cash on balance owed for equipment. Â Â
30 Paid $1,000 cash dividend. Â
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Stockton's chart of accounts shows: Cash, Equipment, Accounts Payable, Common Stock, and Dividends.
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Instructions
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(a) Journalize the transactions. Â Â
(b) Post the transactions to T accounts. Â
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9. (13 points) These financial statement items are for Snyder Corporation at year-end, July 31, 2012.
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Salaries and wages payable $ Â 2,580 Â Â
Salaries and wages expense 48,700 Â Â
Utilities expense 22,600 Â Â
Equipment 21,000 Â Â
Accounts payable 4,100 Â Â
Service revenue 64,100 Â Â
Rent revenue 8,500 Â Â
Notes payable (due 2014) 1,800 Â Â
Common stock 16,000 Â Â
Cash 24,200 Â Â
Accounts receivable 12,780 Â Â
Accumulated depreciation 6,000 Â Â
Dividends 5,000 Â Â
Depreciation expense 4,000 Â Â
Retained earnings (beginning of the year) 35,200 Â
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Instructions
(a) Prepare an income statement and a retained earnings statement for the year. Snyder corporation did not issue any new stock during the year.
(b) Prepare a classified balance sheet at July 31. USE GOOD FORM! Â
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10. (10 points) The comparative balance sheets for Gallup Company appear below:
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GALLUP COMPANY
Comparative Balance Sheet  Â
Dec. 31, 2012 Dec. 31, 2011 Â Â
Assets  Â
Cash $ Â 28,000 $13,000 Â Â
Accounts receivable 18,000 14,000 Â Â
Prepaid expenses 7,000 9,000 Â Â
Inventory 25,000 15,000 Â Â
Long-term investments -0- 18,000 Â Â
Equipment 60,000 30,000 Â Â
Accumulated depreciation—equipment  (18,000) (14,000)  Â
Total assets $120,000 $85,000 Â
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Liabilities and Stockholders' Equity  Â
Accounts payable $ Â 25,000 $ Â 7,000 Â Â
Bonds payable 37,000 45,000 Â Â
Common stock 40,000 23,000 Â Â
Retained earnings   18,000  10,000  Â
Total liabilities and stockholders' equity $120,000 $85,000 Â
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Additional information:
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1. Depreciation Expense for 2012 was $4,000 Â Â
2. Net income for the year ending December 31, 2012, was $20,000. Â Â
3. Cash dividends of $12,000 were declared and paid during the year. Â Â
4. Long-term investments that had a book value of $18,000 were sold for $13,000. Â Â
5. Purchased equipment, paid cash. Â Â
6. Issued Common Stock for cash. Â Â
7. Retired bonds, paid cash. Â
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Instructions
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1. Prepare a statement of cash flows for the year ended December 31, 2012, using the indirect method. Â Â
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11. (8 points) The following items were shown on the balance sheet of Martin Corporation on December 31, 2012:
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Stockholders' Equity
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Paid-In Capital  Â
Capital Stock  Â
Common stock, $5 par value, 500,000 shares  Â
 authorized; ______ shares issued and ______ outstanding $2,000,000  Â
Additional paid-in capital  Â
In excess of par value   120,000  Â
Total paid in capital 2,120,000 Â Â
Retained Earnings   500,000  Â
Total paid-in capital and retained earnings 2,120,000 Â Â
Less: Â Treasury stock (20,000 shares) Â Â (240,000) Â Â
Total stockholders' equity $1,880,000 Â
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Instructions
Complete the following statements and show your computations.
(a) The number of shares of common stock issued was _______________.
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(b) The number of shares of common stock outstanding was ____________.
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(c) The total sales price of the common stock when issued was $____________.
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(d) How much did the treasury stock cost per share? Â $_______________
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