Final Exam Review Essay

FINAL EXAM review articleBE15-4. Lump-Sum SalesRavo light upte Corporation issued 300 shares of $10 rack up rank common buy in and 100 shares of $50 par value preferred express for a lump sum of $13,500. The common stock has a market price of $20 per share, and the preferred stock has a market price of $90 per share. trail journal doorway. P15-2. Treasury Stock ProblemClemson Company had the following stockholders rectitude as of January 1, 2012. Common stock, $5 par value, 20,000 shares issued $100,000 Paid-in capital in excess of parcommon stock 300,000 Retained earnings 320,000Total stockholders equity $720,000Feb. 1 Clemson repurchased 2,000 shares of treasury stock at a price of $19 per share. Mar. 1 800 shares of treasury stock repurchased above were reissued at $17 per share. Mar. 18 500 shares of treasury stock repurchased above were reissued at $14 per share. Apr. 22 600 shares of treasury stock repurchased above were reissued at $20 per share. Stock Divid destroy P roblem (Page 17 in Moodle Ch. 15 Notes) CS, $5 par, 40,000 shares issued and outstanding $ 200,000 Paid-in capital in excess of par 835,000Retained earnings 2,160,000Shares of the bon tons stock are selling at this time at $22. 1. A 10% stock dividend is declared and issued.2. A 50% stock dividend is declared and issued.3. A 2-for-1 stock split is declared and issued.E3.9. Adjusting EntriesSupplies Accounts dueBeg. Bal. 800 10/31 470 10/17 2,100 10/31 1,650 Salaries and Wages set d throw Salaries and Wages collectable10/15 800 10/31 60010/31 600 Unearned Service Revenue Supplies Expense10/31 400 10/20 650 10/31 470 Service Revenue 10/17 2,100 10/31 1,650 10/31 400Instructions Reconstruct 3 performance entries and 4 adjusting entries.P4.3. (Irregular Items)Maher Inc. reported income from continuing operations in advance taxes during 2012 of $790,000. Additional transactions occurring in 2012 but non considered in the $790,000 are as follows. 1. The corpor ation experienced an uninsured flood loss (extraordinary) in the nitty-gritty of $90,000 during the social class. The tax set out on this item is 46%. 2. At the beginning of 2010, the corporation purchased a elevator car for $54,000 ( keep value of $9,000) that had a useful life of 6 geezerhood. The bookkeeper used straight-line depreciation for 2010, 2011, and 2012 but failed to deduct the salvage value in computing the depreciation base. 3. Sale of securities held as a part of its portfolio resulted in a loss of $57,000 (pretax).4. When itspresident died, the corporation realized $150,000 from an insurance policy. The cash surrender value of this policy had been carried on the books as an investment in the amount of $46,000 (the gain is nontaxable). 5. The corporation disposed of its recreational division at a loss of $115,000 before taxes. Assume that this transaction meets the criteria for discontinued operations. 6. The corporation decided to change its mode of inven tory pricing from average cost to the FIFO method. The effect of this change on prior years is to increase 2010 income by $60,000 and decrease 2011 income by $20,000 before taxes. The FIFO method has been used for 2012. The tax rate on these items is 40%.Instructions Prepare an income statement for the year 2012 starting with income from continuing operations before taxes. Compute earnings per share as it should be shown on the face of the income statement. Common shares outstanding for the year are 120,000 shares. (Assume a tax rate of 30% on all items, unless indicated otherwise.) Time Value of currency ProblemsBE6.5.Sally Medavoy go out invest $8,000 a year for 20 years in a fund that willing earn 12% annual gratify. If the first payment into the fund occurs today, what amount will be in the fund in 20 years? If the first payment occurs at year-end, what amount will be in the fund in 20 years?BE6.7.John Fillmores lifelong dream is to own his own fishing gravy boat to use in his retirement. John has recently come into an inheritance of $400,000. He estimates that the boat he wants will cost $300,000 when he retires in 5 years. How much of his inheritance must he invest at an annual rate of 12% (compounded annually) to buy the boat at retirement?BE6.8.Refer to the selective information in BE6.7. Assuming quarterly compounding of amounts invested at 12%, how much of John Fillmores inheritance must be invested to have enough at retirement to buy the boat?BE6.12.Maria Alvarez is investing $300,000 in a fund that earns 8% interestcompounded annually. What equal amounts can Maria withdraw at the end of each of the next 20 years?BE6.14.Amy Monroe wants to create a fund today that will enable her to withdraw $25,000 per year for 8 years, with the first withdrawal to take place 5 years from today. If the fund earns 8% interest, how much must Amy invest today?Bad Debt Expense EntriesBE7.4. Wilton, Inc. had net gross revenue in 2012 of $1,400,000. At declinati on 31, 2012, before adjusting entries, the balances in selected accounts were Accounts Receivable $250,000 debit, and Allowance for Doubtful Accounts $2,400 credit. If Wilton estimates that 2% of its net sales will prove to be uncollectible, prepare the December 31, 2012, journal entry to present faulty debt expense. BE7.5. Use the information presented in BE7.4 for Wilton, Inc. (a) Instead of estimating the uncollectibles at 2% of net sales, assume that 10% of accounts due will prove to be uncollectible. Prepare the entry to record bad debt expense. (b) Instead of estimating uncollectibles at 2% of net sales, assume Wilton prepares an aging schedule that estimates total uncollectible accounts at $24,600. Prepare the entry to record bad debt expense.Non-Interest Bearing Note ReceivableBE7.7.Dold Acrobats lent $16,529 to Donaldson, Inc., accepting Donaldsons 2-year, $20,000, zero-interest-bearing note on 1/1/2012. The implied interest rate is 10%. Prepare Dolds journal entries for the initial transaction, recognition of interest each year, and the collection of $20,000 at maturity.Inventory Errors (From Moodle Notes Ch. 8)1. Merchandise purchased on account in 2010 was not enter until 2011, when the companys bookkeeper received an invoice for $5,430. The shipment had arrived and was counted in physical inventory at the end of 2010.a) What entry was NOT made in 2010?b) What adjusting entry was made at 12/31/10?c) What is the correcting entry in 2011?2. Goods costing $22,000 were shipped f.o.b. shipping point by a supplier on December 28, 2011. The company received the invoice and recorded it on December 29 however, the goods were not included in the physical count of inventory since they were in transit. a) What entry was correctly made in 2011?b) What incorrect adjusting entry was made on 12/31/11?c) What is the correcting entry in 2012?BE9.2. Lower of court or MarketFloyd Corporation has the following four items in its ending inventory. Item Cost Repla cement Cost Net Realizable Value (NRV) NRV less Normal Profit Margin Jokers $2,000 $2,050 $2,100 $1,600Penguins 5,000 5,100 4,950 4,100Riddlers 4,400 4,550 4,625 3,700Scarecrows 3,200 2,990 3,830 3,070Determine inventory value and record loss using allowance method.BE9.7.Gross Profit MethodFosbre Inc.s April 30 inventory was done for(p) by fire. January 1 inventory was $150,000, and purchases for January through April totaled $500,000. Sales for the same period were $700,000. Fosbres pattern gross profit percentage is 35% on sales. Using the gross profit method, estimate Fosbres April 30 inventory that was destroyed by fire.