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Category > Accounting Posted 19 Apr 2017 My Price 12.00

ACC 201 Chapter 12 Problem set A

ACC 201 Chapter 12 Problem set A

Problem 12-1A (Part Level Submission)

PagnucciCarecenters Inc. provides financing and capital to the health-care industry, with a particular focus on nursing homes for the elderly. The following selected transactions relate to bonds acquired as an investment by Pagnucci, whose fiscal year ends on December 31.

2014
Jan. 1		Purchased at face value $2,000,000 of Franco Nursing Centers, Inc., 10-year, 8% bonds dated January 1, 2014, directly from Franco.
July 1		Received the semiannual interest on the Franco bonds.
Dec. 31		Accrual of interest at year-end on the Franco bonds.

(Assume that all intervening transactions and adjustments have been properly recorded and that the number of bonds owned has not changed from December 31, 2014, to December 31, 2016.)

2017
Jan. 1		Received the semiannual interest on the Franco bonds.
Jan. 1		Sold $1,000,000 Franco bonds at 106. The broker deducted $6,000 for commissions and fees on the sale.
July 1		Received the semiannual interest on the Franco bonds.
Dec. 31		Accrual of interest at year-end on the Franco bonds.

Problem 12-2A (Part Level Submission)

In January 2014, the management of Stefan Company concludes that it has sufficient cash to permit some short-term investments in debt and stock securities. During the year, the following transactions occurred.

Feb. 1		Purchased 600 shares of Superior common stock for $31,800, plus brokerage fees of $600.
Mar. 1		Purchased 800 shares of Pawlik common stock for $20,000, plus brokerage fees of $400.
Apr. 1		Purchased 50 $1,000, 7% Venice bonds for $50,000, plus $1,000 brokerage fees. Interest is payable semiannually on April 1 and October 1.
July 1		Received a cash dividend of $0.60 per share on the Superior common stock.
Aug. 1		Sold 200 shares of Superior common stock at $58 per share less brokerage fees of $200.
Sept. 1		Received a $1 per share cash dividend on the Pawlik common stock.
Oct. 1		Received the semiannual interest on the Venice bonds.
Oct. 1		Sold the Venice bonds for $50,000 less $1,000 brokerage fees.

At December 31, the fair value of the Superior common stock was $55 per share. The fair value of the Pawlik common stock was $24 per share.

Problem 12-3A (Part Level Submission)

On December 31, 2013, Ogallala Associates owned the following securities, held as a long-term investment. The securities are not held for influence or control of the investee.

Common Stock	Shares	Cost
Carlene Co.	2,000	$60,000
Riverdale Co.	5,000	45,000
Raczynski Co.	1,500	30,000

On December 31, 2013, the total fair value of the securities was equal to its cost. In 2014, the following transactions occurred.

July 1		Received $1 per share semiannual cash dividend on Riverdale Co. common stock.
Aug. 1		Received $0.50 per share cash dividend on Carlene Co. common stock.
Sept. 1		Sold 1,500 shares of Riverdale Co. common stock for cash at $8 per share, less brokerage fees of $300.
Oct. 1		Sold 800 shares of Carlene Co. common stock for cash at $33 per share, less brokerage fees of $500.
Nov. 1		Received $1 per share cash dividend on Raczynski Co. common stock.
Dec. 15		Received $0.50 per share cash dividend on Carlene Co. common stock.
Dec. 31		Received $1 per share semiannual cash dividend on Riverdale Co. common stock.

At December 31, the fair values per share of the common stocks were Carlene Co. $32, Riverdale Co. $8, and Raczynski Co. $18.

Problem 12-4A (Part Level Submission)

Control Alt Design acquired 30% of the outstanding common stock of Walter Company on January 1, 2014, by paying $800,000 for the 45,000 shares. Walter declared and paid $0.30 per share cash dividends on March 15, June 15, September 15, and December 15, 2014. Walter reported net income of $320,000 for the year. At December 31, 2014, the market price of Walter common stock was $24 per share.

A) B)

B) (a)		Prepare the journal entries for Control Alt Design for 2014 assuming Control Alt Design cannot exercise significant influence over Walter. Use the cost method and assume that Walter common stock should be classified as a trading security.
(b)		Prepare the journal entries for Control Alt Design for 2014, assuming Control Alt Design can exercise significant influence over Walter. Use the equity method.

(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Indicate the balance sheet and income statement account balances at December 31, 2014, under each method of accounting.

Problem 12-5A (Part Level Submission)

The following securities are in Amberwood Company’s portfolio of long-term non-trading securities at December 31, 2013.

		Cost
1,000 shares of Reginald Corporation common stock		$52,000
1,400 shares of Elderberry Corporation common stock		84,000
1,200 shares of Mattoon Corporation preferred stock		33,600

On December 31, 2013, the total cost of the portfolio equaled total fair value. Amberwood had the following transactions related to the securities during 2014.

Jan. 20		Sold all 1,000 shares of Reginald Corporation common stock at $55 per share less brokerage fees of $600.
28		Purchased 400 shares of $70 par value common stock of Hachito Corporation at $78 per share, plus brokerage fees of $480.
30		Received a cash dividend of $1.15 per share on Elderberry Corp. common stock.
Feb. 8		Received cash dividends of $0.40 per share on Mattoon Corp. preferred stock.
18		Sold all 1,200 shares of Mattoon Corp. preferred stock at $27 per share less brokerage fees of $360.
July 30		Received a cash dividend of $1 per share on Elderberry Corp. common stock.
Sept. 6		Purchased an additional 900 shares of $10 par value common stock of Hachito Corporation at $82 per share, plus brokerage fees of $1,200.
Dec. 1		Received a cash dividend of $1.50 per share on Hachito Corporation common stock.

At December 31, 2014, the fair values of the securities were:

Elderberry Corporation common stock		$64 per share
Hachito Corporation common stock		$72 per share

Problem 12-6A


	Your answer is correct.

The following data, presented in alphabetical order, are taken from the records of Radar Corporation.

Accounts payable		$240,000
Accounts receivable		140,000
Accumulated depreciation—buildings		180,000
Accumulated depreciation—equipment		52,000
Allowance for doubtful accounts		6,000
Bonds payable (10%, due 2020)		500,000
Buildings		950,000
Cash		42,000
Common stock ($10 par value; 500,000 shares authorized, 150,000 shares issued)		1,500,000
Dividends payable		80,000
Equipment		275,000
Fair value adjustment—non-trading securities (Dr)		8,000
Goodwill		200,000
Income taxes payable		120,000
Inventory		170,000
Investment in Mara common stock (30% ownership), at equity		380,000
Investment in Sasse common stock (10% ownership), at cost		278,000
Land		390,000
Notes payable (due 2015)		70,000
Paid-in capital in excess of par—common stock		130,000
Premium on bonds payable		40,000
Prepaid insurance		16,000
Retained earnings		103,000
Short-term investment, at fair value (and cost)		180,000
Unrealized gain—non-trading securities		8,000

The investment in Sasse common stock is considered to be a long-term non-trading security.

Prepare a classified balance sheet at December 31, 2014. (List assets in order of liquidity. Property, plant and equipment list in order of land, buildings and equipment.)

Answers

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Status NEW Posted 19 Apr 2017 08:04 AM My Price 12.00

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file 1492591057-ACC 201 Chapter 12 Problem set A Answers.docx preview (1440 words )

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