Download ACG 2021

ACG 2021
Take home Test Three
Fall 2004-1
Instructions:
 All work is due on Wed, December 8, 2004 at 1:30pm. No exceptions
will be allowed.
 All work must be individual work. Duplicates or cheating will not be
tolerated. Students involved will receive a grade of ZERO on the
examinations.
 All work must be completed on the computer. Use Excel or Word.
Hand written work will NOT be accepted.
 Each problem must be a separate spreadsheet with your name and
problem number on top.
 Please format examination currently. Points will be taken off for
sloppy work or failure to properly format the answers.
Problem 1:
The following series of transactions occurred during 2004 and 2005 when Linwood Co.
sold merchandise to John Moore.
Linwood's annual accounting period ends on December 31.
10/01/04
11/15/04
12/31/04
03/15/05
03/22/05
12/31/05
Sold $12,000 of merchandise to John Moore, terms 2/10, n/30.
Moore reports that he cannot pay the account until early next year. He
agrees to exchange the account for a 120-day, 12% note receivable.
Prepared the adjusting journal entry to record accrued interest on the note.
Linwood receives a check from Moore for the maturity value (with interest)
of the note.
Linwood receives notification that Moore's check is being returned for nonsufficient funds (NSF).
Linwood writes off Moore's account as uncollectible.
Prepare Linwood Co.'s journal entries to record the above transactions assuming they use
the allowance method of accounting for uncollectible accounts.
Problem 2:
Prepare general journal entries for the following transactions of Viking Company,
assuming they use the allowance method to account for uncollectible accounts.
Apr
1
15
30
May
June
July
30
30
15
Sold $2,500 of merchandise to Arthur Co., receiving an 8%, 90-day,
$2,500 note.
Wrote off $1,500 owed by Network Co.
Received a $6,000, 5%, 30-day note receivable from Calvin Co. as
exchange for its $6,000 account receivable.
The note received from Calvin on April 30 was collected in full.
Arthur Co. Was unable to pay the note on the due date.
Network Co. paid $1,000 of the amount written off on April 15.
Problem 3:
Cairo Co. uses the allowance method of accounting for uncollectible accounts. Cairo Co.
accepted a $5,000, 12%, 90-day note dated May 16, from Alexandria Co. as in exchange
for its past-due account receivable. Make the necessary general journal entries for Cairo
Co. on May 16 and the August 14 maturity date, assuming that the:
a. Note is held until maturity and collected in full at that time.
b. Note is dishonored; the amount of the note and its interest are written off as
uncollectible.
Problem 4:
Prepare general journal entries for the following transactions of this company for the
current year:
Apr 25: Sold $4,500 of merchandise to CBC Corp receiving a 10%, 60-day, $4,500
note receivable
June 24: the note of CBC Corp received on April 25 was dishonored
Problem 5:
On December 31, of the current year, a company's unadjusted trial balance revealed the
following: Accounts receivable of $185,600; Sales Revenue of $1,280,000; (75% were on
credit), and Allowance for Doubtful Accounts of $1,600 (credit balance).
Prepare the adjusting journal entry to record the estimate for bad debts assuming:
1. 6% of the accounts receivable balance is assumed to be uncollectible.
2. Bad debts expense is estimated to be 1.5% of credit sales.
Problem 6:
A company purchased a music distributor's collection of lyrics and songs for $1,425,000.
The copyrights are expected to last another 30 years. Prepare the journal entry to record
the amortization expense for the first year.
Problem 7:
A company purchased a leasehold property for $8,400,000. The leasehold expires in 15
years. Prepare the journal entry to record the first year's amortization expense.
Problem 8:
On January 2 of the current year, a company purchased a patent for $35,000 with a useful
life of 10 years. Prepare the journal entry to amortize the patent at the end of the first
year.
Problem 9:
A company purchased mining property containing 7,350,000 tons of ore for $1,837,500.
In 2004 it mined and sold 857,000 tons of ore and in 2005 it mined and sold 943,000 tons
of ore. Calculate the depletion expense for 2004 and 2005. What was the book value of
the property at the end of 2005?
Problem 10:
A company traded an old forklift for a new forklift, receiving a $10,500 trade-in
allowance and paying the remaining $37,200 in cash. The old forklift had cost $39,000,
and straight-line accumulated depreciation of $27,200 had been recorded as of the
exchange date under the assumption it would last five years and have a $5,000 salvage
value.
1. What was the book value of the old forklift on the date of the exchange?
2. What amount of gain or loss (indicate which) should be recognized in recording the
exchange?
3. What amount should be recorded as the cost of the new forklift?
Problem 11:
Mason Company sold a piece of equipment for $25,000 cash on December 31 after
recording the annual depreciation on the asset. The equipment had an original cost of
$92,500 and accumulated depreciation of $60,000. Prepare the general journal entry to
record the sale of this asset.
Problem 12:
On April 1 of the current year, a company traded an old machine that originally cost
$32,000 and that had accumulated depreciation of $24,000 for a similar new machine that
had a cash price of $40,000.
1. Give the entry to record the exchange under the assumption that a $5,000 trade-in
allowance was received and the balance of $35,000 was paid in cash.
2. Give the entry to record the exchange under the assumption that instead of a $5,000
trade-in allowance, a $12,500 trade-in allowance was received and the balance of
$27,500 was paid in cash.
Problem 13:
A company purchased office equipment for $4,300 by trading in old equipment with a
cost of $2,000 and that had accumulated depreciation of $1,900 as of the exchange date.
The company received a $75 trade-in allowance for the old equipment with the balance of
$4,225 paid in cash. Prepare the journal entry to record the exchange.
Problem 14:
On April 1 of the current year, a company disposed of an automobile that had cost
$20,000. The auto had a salvage value of $2,000, and a useful life of 5 years. The
accounting records showed accumulated depreciation for this automobile of $8,100 as of
April 1 of the current year . The asset was discarded after an accident, and $10,500 cash
was received from an insurance claim.
Prepare the journal entry to record the disposal of the automobile.
Problem 15:
On April 1 of the current year, a company disposed of an automobile that had cost
$20,000. The auto had a salvage value of $2,000, and a useful life of 5 years. The
accounting records showed accumulated depreciation for this automobile of $8,100 as of
April 1 of the current year . The asset was discarded after an accident, and $10,500 cash
was received from an insurance claim.
Prepare the journal entry to record the disposal of the automobile.
Problem 16:
A company had a building destroyed by fire. The building originally cost $650,000, and
its accumulated depreciation as of the date of the fire was $300,000. The company
received $400,000 cash from an insurance policy that covered the building and will use
that money to help rebuild. Prepare the single journal entry to record the destruction of
the building and the receipt of cash from the insurance company.
Problem 17:
On January 1, a company purchased a machine for $75,000 that had a 6-year useful life
and a salvage value of $6,000. After three years of straight-line depreciation, on January
1, 2004 the company paid $7,500 cash to improve the efficiency of the machine. The
effect of the expenditure was to increase the productivity of the machine without
increasing its remaining useful life or changing its salvage value. Straight-line
depreciation is used throughout the machine's life.
1. Prepare the journal entry to record the $7,500 expenditure.
2. What amount of depreciation expense should be reported for 2004?
Problem 18:
On January 1, a machine costing $260,000 with a 4-year life and an estimated $5,000
salvage value was purchased. It was also estimated that the machine would produce
500,000 units during its life. The actual units produced during its first year of operation
were 110,000. Determine the amount of depreciation expense for the first year under
each of the following assumptions:
1. The company uses the straight-line method of depreciation.
2. The company uses the units-of-production method of depreciation.
3. The company uses the double-declining-balance method of depreciation.
Problem 19:
Record the following transactions of a company in general journal form:
(a) Reacquired 8,000 of its own $10 par value common stock at $40 cash per share. The
stock was originally issued at $15 per share.
(b) Sold 2,000 shares of the stock reacquired under part (a) at $43 cash per share.
(c) Sold 3,000 shares of the stock reacquired under part (a) at $39 cash per share.
Problem 20:
A company had the following stockholders' equity on January 1:
Common Stock - $1 par value; 1,000,000 shares authorized,
400,000 shares issued and outstanding................................ ...
Contributed capital in excess of par value, common stock
Retained earnings ................................ ................................ .....
Total stockholders’ equity................................ .........................
$ 400,000
300,000
364,000
$1,064,000
On January 10, the company declared a 40% stock dividend to holders of record on
January 25, to be distributed January 31. The market value of the stock on January 10
prior to the dividend was $20 per share. What is the book value per common share on
February 1?
Problem 21:
A corporation had stockholders' equity on January 1 as follows: Common Stock, $5 par
value, 1,000,000 shares authorized, 500,000 shares issued; Contributed Capital in Excess
of Par Value, Common Stock, $1,000,000; Retained Earnings, $3,000,000. Prepare
journal entries to record the following transactions:
Feb. 15
The board of directors declared a 5% stock dividend to stockholders of record on
March 1,to be issued on March 20.The stock was trading at $6 per share prior to the
dividend.
Mar. 1
The date of record
Mar. 20
Issued the stock dividend.
Problem 22:
On May 1, a company's board of directors declared a 10% stock dividend to be
distributed on June 1 to the stockholders of record on May 21. The company had
250,000 shares of $10 par value common stock outstanding with a market value of $22
per share. Prepare the journal entries required on May 1, May 21, and June 1.
Problem 23:
A corporation has 200,000 shares of $10 par value common stock outstanding. The
following selected transactions related to the company's stock took place during the
current year:
Apr. 15
May 1
May 10
Declared a 40% stock dividend to stockholders of record on May 1, to be
issued May 10. The current market value is $15 per common share.
Date of record.
Issued the common stock dividend.
Problem 24:
For each of the following independent transactions a through d, prepare the necessary
journal entry:
(a) Declared a $0.40 per share cash dividend on 200,000 shares of preferred stock
outstanding.
(b) Declared and distributed a 12% stock dividend on 800,000 shares of $5 par value
common stock outstanding. Market price per common share on this date was $25.
(c) Declared and distributed a 2-for-1 stock split on 500,000 shares of $10 par value
common stock outstanding.
(d) Declared and distributed a 30% stock dividend on 400,000 common shares of $5 par
value common stock outstanding. Market price per common share on this date was $20.
Problem 25:
A company has $100,000 of 10% noncumulative, nonparticipating, preferred stock
outstanding, and $150,000 of common stock outstanding. In the company's first year of
operation, no dividends were paid, but during the second year, it paid cash dividends of
$25,000. Compute the dividends to be distributed to (1) preferred shares and (2) common
shares.
Extra Credit
A corporation had the following stock outstanding when the company's board of directors
declared a $95,000 cash dividend during the current year:
Preferred stock, $100 par, 6%, 5,000 shares issued........
Common stock, $10 par, 75,000 shares issued...............
Total ................................ ................................ ............
$ 500,000
750,000
$1,250,000
Allocate the cash dividend between the preferred and common stockholders assuming the
preferred stock is cumulative and nonparticipating and dividends are one year in arrears.