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. 

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. 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.

 

Instructions

Determine the depreciation expense for 2012 and prepare the journal entry to record the depreciation expense for the year of 2012.  

 

 

 

  

    

    

  

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3. (10 points)

 

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.

 

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?  

  

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

   

  

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:

 

 

Checks Receipts   

 No. Amount No. Amount Amount Date   

17 $372.96 22 $   578.84 $   843.86 12/5   

18 780.62 23  1,687.50 941.54 12/21   

19 157.00 24     921.30 808.58 12/27   

20 587.50 25     246.03 967.00 12/31   

21 234.15  

 

In addition, the bank statement for the month of December is presented below:

 

  

 

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.

 

 

See next page for instructions

 

 

 

 

Instructions (use information on previous page)

 

(a) Prepare the bank reconciliation at December 31.   

(b) Prepare the adjusting journal entries required by the bank reconciliation.  

 

  

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

   

 

 

 

 

 

 

  

5. (9 points) Grother Company uses the periodic inventory method and had the following inventory information available:

 

Units Unit Cost Total Cost   

1/1 Beginning Inventory 100 $4 $   400   

1/20 Purchase 500 $5 2,500   

7/25 Purchase 100 $7 700   

10/20 Purchase   300 $8  2,400   

 

 

A physical count of inventory on December 31 revealed that there were 325 units on hand.

 

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 $__________.

 

 

 

 

 

 

 

2. Assume that the company uses the average cost method. The value of the ending inventory on December 31 is $__________.

 

 

 

 

 

 

 

 

3. Assume that the company uses the LIFO method. The value of the ending inventory on December 31 is $__________.

 

 

 

 

 

 

 

 

 

 

  

6. (6 points) Presented here are selected transactions for the Leiss Company during April. Leiss uses the perpetual inventory system.

 

 

April 1 Sold merchandise to Mann Company for $5,000, terms 2/10, n/30.  The merchandise sold had a cost of $2,500.

  

2 Purchased merchandise from Wild Corporation for $6,000, terms 1/10, n/30.

  

4 Purchased merchandise from Ryan Company for $1,000, n/30.

  

10 Received payment from Mann Company for purchase of April 1 less appropriate discount.

  

11 Paid Wild Corporation for April 2 purchase.  

 

Instructions

Journalize the April transactions for Leiss Company.  

  

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

   

  

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).

 

 

SUNKAN COMPANY

Trial Balance (Selected Accounts)

September 30, 2011   

  Debit   Credit   

Office Supplies $ 2,700   

Prepaid Insurance 3,675   

Office Equipment 16,200   

Accumulated Depreciation—Office Equipment $ 1,000   

Unearned Rent Revenue 1,200  

 

(Note:  Debit column does not equal credit column because this is a partial listing of selected account balances.)

 

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.

 

Instructions:

Using the information given, prepare the adjusting entries that should be made by Sunkan Company on September 30.  

  

    

    

    

    

    

    

    

    

    

    

    

   

 

  

8. (5 points, all or nothing) Selected transactions for Stockton Corporation during its first month in business are presented below:

 

 

Sept. 1 Issued common stock in exchange for $25,000 cash received from investors.   

5 Purchased equipment for $20,000, paying $2,000 in cash and the balance on account.   

25 Paid $6,000 cash on balance owed for equipment.   

30 Paid $1,000 cash dividend.  

 

Stockton's chart of accounts shows: Cash, Equipment, Accounts Payable, Common Stock, and Dividends.

 

Instructions

 

  

(a) Journalize the transactions.   

(b) Post the transactions to T accounts.  

 

  

    

    

    

    

    

    

    

    

    

    

    

    

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9. (13 points) These financial statement items are for Snyder Corporation at year-end, July 31, 2012.

 

 

Salaries and wages payable $   2,580   

Salaries and wages expense 48,700   

Utilities expense 22,600   

Equipment 21,000   

Accounts payable 4,100   

Service revenue 64,100   

Rent revenue 8,500   

Notes payable (due 2014) 1,800   

Common stock 16,000   

Cash 24,200   

Accounts receivable 12,780   

Accumulated depreciation 6,000   

Dividends 5,000   

Depreciation expense 4,000   

Retained earnings (beginning of the year) 35,200  

 

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!  

  

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

   

  

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

10. (10 points) The comparative balance sheets for Gallup Company appear below:

 

GALLUP COMPANY

Comparative Balance Sheet   

Dec. 31, 2012 Dec. 31, 2011   

Assets   

Cash $  28,000 $13,000   

Accounts receivable 18,000 14,000   

Prepaid expenses 7,000 9,000   

Inventory 25,000 15,000   

Long-term investments -0- 18,000   

Equipment 60,000 30,000   

Accumulated depreciation—equipment  (18,000) (14,000)   

Total assets $120,000 $85,000  

 

 

Liabilities and Stockholders' Equity   

Accounts payable $  25,000 $  7,000   

Bonds payable 37,000 45,000   

Common stock 40,000 23,000   

Retained earnings    18,000  10,000   

Total liabilities and stockholders' equity $120,000 $85,000  

 

Additional information:

 

1. Depreciation Expense for 2012 was $4,000   

2. Net income for the year ending December 31, 2012, was $20,000.   

3. Cash dividends of $12,000 were declared and paid during the year.   

4. Long-term investments that had a book value of $18,000 were sold for $13,000.   

5. Purchased equipment, paid cash.   

6. Issued Common Stock for cash.   

7. Retired bonds, paid cash.  

 

 

 

See next page for instructions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Instructions

 

1. Prepare a statement of cash flows for the year ended December 31, 2012, using the indirect method.   

  

  

 

  

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

   

 

 

 

  

11. (8 points) The following items were shown on the balance sheet of Martin Corporation on December 31, 2012:

 

Stockholders' Equity

 

Paid-In Capital   

Capital Stock   

Common stock, $5 par value, 500,000 shares   

  authorized; ______ shares issued and ______ outstanding $2,000,000   

Additional paid-in capital   

In excess of par value     120,000   

Total paid in capital 2,120,000   

Retained Earnings     500,000   

Total paid-in capital and retained earnings 2,120,000   

Less:  Treasury stock (20,000 shares)    (240,000)   

Total stockholders' equity $1,880,000  

 

Instructions

Complete the following statements and show your computations.

(a) The number of shares of common stock issued was _______________.

 

(b) The number of shares of common stock outstanding was ____________.

 

(c) The total sales price of the common stock when issued was $____________.

 

(d) How much did the treasury stock cost per share?  $_______________