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NAME:_____________________________
STUDENT NO.:______________________
SECTION:__________________________
_
COMMERCE 4AC3
Advanced Financial Accounting
Duration of Examination: 2.5 hours
Instructor: Dr. Kevin Veenstra
McMaster University Final
Examination
April 2016
INSTRUCTIONS:
1.
This examination paper comprises 14
pages and 3 questions. You are responsible for
ensuring that your copy of the question paper is complete. Bring any discrepancy to the
attention of the invigilator.
2.
On the first page of the examination paper and on the front of each examination booklet
remember to fill in your name, student number and section number.
3.
Do NOT start until instructed.
3.
Questions 1 and 3 are to be answered in the exam booklet provided. Question 2 is to
be answered in this question paper.
4.
Only the McMaster Standard Calculator (Casio FX 991) may be used.
5.
No notes are allowed during the exam.
6.
Show all work and calculations for full marks (with exception of question 2 – multiple choice).
7.
HAND IN ALL PAGES OF THE EXAM PAPER; otherwise a mark of zero will be awarded.
8.
Neither the invigilators nor the professors will
answer any interpretive questions during the
exam. QUESTION 1 (35 MARKS)
On January 1, 2013, Lessard acquired 80% of the share capital of Honey for $264,800. On
Marker’s Summary
Question Scor
e
Available
Marks
1
35
2
30
3
35
Total
100
Marks:
100
Weighting:
30% of Final Grade
4AC3, Final Exam, Winter 2016 DO NOT DETACH PAGES DURING EXAM
that date, the statement of financial position of Honey consisted of:
Share capital
$250,000
Retained earnings
18,000
Liabilities
197,000
$465,000
Cash
$ 35,000
Inventories
70,000
Land
65,000
Plant and equipment, net
170,000
Trademark
100,000
Goodwill
25,000
$465,000
All of Honey’s identifiable assets and liabilities were recorded at fair value except for:
Carrying amount
Fair value
Inventories
$70,000
$80,000
Land
65,000
85,000
Plant and equipment (cost $200,000)
170,000
190,000
Trademark
100,000
110,000
Additional information:
1.
The plant and equipment had a further five-year life and was expected to be used
evenly over that time. The trademark was considered to have an indefinite life.
2.
During the year ended December 31, 2013, all inventories on hand at the beginning of
the year were sold, and the land that was held on the date of acquisition was sold on
October 1, 2013, to another company for $80,000.
3.
During the current year, Honey sold a quantity of inventory to Lessard for $8,000. The
original cost of these items to Honey was $5,000. One third of this inventory was still
on hand at the end of the year.
4.
On January 1, 2013, after the acquisition by Lessard, Honey transferred an item of
plant with a carrying amount of $10,000 to Lessard for $15,000. The item was still on
hand at the end of the year. Honey depreciates the plant straight line over five years.
5.
On January 1, 2014, Honey issued additional shares, which caused Lessard’s
ownership to decrease to 75%. Honey now has shares of $300,000.
6.
The income tax rate is assumed to be 40%.
7.
Lessard uses the cost method to account for its investment in Honey.
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4AC3, Final Exam, Winter 2016 DO NOT DETACH PAGES DURING EXAM
8.
Financial information for Lessard and Honey for the year ended December 31, 2013, is
shown below.
Lessard
Honey
Sales revenue
$200,000
$172,000
Other income
85,000
35,000
285,000
207,000
Cost of sales
162,000
128,000
Other expenses
53,000
31,000
215,000
159,000
Income before tax
70,000
48,000
Income tax expense
20,000
18,000
Net income
50,000
30,000
Retained earnings (1/1/13)
30,000
18,000
80,000
48,000
Interim dividend paid
12,000
10,000
Final dividend declared (but not paid)
6,000
4,000
18,000
14,000
Retained earnings (31/12/13)
$62,000
$34,000
REQUIRED: (apply the Entity Theory under IFRS).
Show all calculations for full marks and use your choice of either the direct method or worksheet method. Indicate which question part you are answering – clearly label your work. ROUND ALL AMOUNTS TO THE NEAREST DOLLAR.
PUT YOUR ANSWER TO QUESTION 1 IN THE EXAM BOOKLET PROVIDED
1.
Prepare a schedule showing the calculation of acquisition differential, including the calculation of goodwill, as at the date Lessard obtains control over Honey. (4 marks)
2.
Prepare an “acquisition differential amortization and impairment schedule” at December 31, 2013. (2.5 marks)
3.
Prepare a schedule showing all intercompany transactions and eliminations for 2013. (5 marks)
4.
Prepare a schedule showing the calculation of consolidated net income and non-
controlling interest in income for the year ended December 31, 2013. (3.5 marks)
5.
Prepare a schedule showing the calculation of consolidated retained earnings as at December 31, 2013. (3 marks)
6.
Prepare a schedule showing the calculation of non-controlling interest as at December 31,
2013. (3 marks)
7.
Prepare the consolidated income statement for the year ended December 31, 2013. (7 marks)
8.
Prepare the statement of consolidated retained earnings as at December 31, 2013. (1.5 marks)
9.
Calculate the effect on consolidated equity of the issuance of the additional shares on January 1, 2014. (5.5 marks)
QUESTION 2 (30 MARKS)
Page 3 of 14
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4AC3, Final Exam, Winter 2016 DO NOT DETACH PAGES DURING EXAM
Select the only one
BEST answer for each of the following multiple choice questions. All questions are worth 1 mark unless otherwise noted. 1.
A Inc. owns 80% of B’s outstanding voting shares. Under which of the following scenarios would A’s ownership percentage of B change?
a) B Inc. announces a 2-for-1 stock split to all its common shareholders.
b) B issues an additional 10,000 voting shares; A acquires 8,000 shares of the new issue.
c) B issues an additional 10,000 voting shares; A acquires 6,400 shares of the new issue.
d) B retires 20,000 voting shares, and in doing so, buys back 16,000 shares from A.
2.
According to GAAP, what is the key feature of a joint arrangement?
a) One venturer has a controlling interest in the joint arrangement.
b) More than one venturer has a controlling interest in the joint arrangement.
c) Joint control, namely, no one venturer can unilaterally control the venture regardless of the size of the equity contribution.
d) The two largest equity contributors will have joint control over the venture.
3.
Under IFRS how are unrealized gains and losses on non-monetary assets contributed to jointly controlled operations recorded, if the transaction does not have commercial substance?
a) The amounts are included in deferred gains or losses.
b) The gain or loss must be eliminated against the underlying assets as a contra account.
c) The gain or loss should be recorded immediately in operating income.
d) The gain or loss should be recorded immediately as other comprehensive income and transferred to operating income as the non-monetary asset is put into service.
Use the following information for questions 4-6
John Inc. and Victor Inc. formed a joint venture on January 1, 2013. John received $240,000 in
cash and invested plant and equipment with a book value of $500,000 and a fair value of
$800,000 for a 30% interest in the venture which was to be called Jinxtor Ltd. Victor contributed
similar assets with a fair value of $2,000,000 (including $200,000 in cash) for its 70% stake in
Jinxtor. The initial ownership shares were negotiated based on relative expertise, since John has
more experience in the business. Upon formation, Jinxtor borrowed $40,000 and the cash went to
John as part of the total $240,000 cash received by John. Jinxtor reported a net income of
$3,000,000 for 2013. John’s plant and equipment were estimated to provide an additional 5
years of utility to Jinxtor. 4.
What would be the immediately recognizable gain for John Inc. arising from this transaction?
(2 marks)
a) $60,000
b) $85,500
c) $124,500
d) $142,500
5.
What would be the unrealized gain for John Inc. arising from this transaction?
a) $ 60,000
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4AC3, Final Exam, Winter 2016 DO NOT DETACH PAGES DURING EXAM
b) $ 85,500
c) $214,500
d) $142,500
6.
What would be the recognizable gain for John Inc. arising from this transaction on December
31, 2013?
a) $ 12,450
b) $ 16,500
c) $ 42,900
d) $ 30,050
Use the following information for questions 7-11
On January 1, 2013, Canadian Music International (CMI), a manufacturer of high-end recording equipment based in Toronto, shipped US$120,000 worth of inventory to its main U.S. distributor in Chicago, with full payment of these goods due by February 28, 2013. CMI has a January 31
st
year end. A list of significant dates and exchange rates is shown below.
Transaction Date: January 1, 2013 US $1= CDN $1.1410 Year-End Date: January 31, 2013 US $1= CDN $1.1420 Settlement Date: February 28, 2013 US $1= CDN $1.1450
The invoice price billed by CMI was US$120,000.
7.
At what value would CMI record the initial sale to its American distributor?
a) $105,171 CDN
b) $120,000 U.S.
c) $120,000 CDN.
d) $136,920 CDN.
8.
What is the amount of CMI’s foreign exchange gain or loss at year-end?
a) $120 loss.
b) Nil.
c) $120 gain.
d) $480 gain.
9.
What is the amount of cash (in Canadian funds) received by CMI on the settlement date?
a) $136,920.
b) $137,040.
c) $137,400.
d) $137,880.
10. What is the amount of CMI’s foreign exchange gain or loss on February 28th? (2 marks)
a) $360 loss.
b) $120 gain.
c) $360 gain.
d) $480 gain.
11. What is the total amount of CMI’s foreign exchange gain or loss on this transaction?
a) $360 loss.
Page 5 of 14
4AC3, Final Exam, Winter 2016 DO NOT DETACH PAGES DURING EXAM
b) $120 gain.
c) $360 gain.
d) $480 gain.
12. Which of the following statements accurately describes the manner in which transactions must be translated under IAS 21?
a) All individual transactions must be translated into the functional currency of the reporting
entity.
b) All individual transactions must be converted into the local currency of the reporting entity.
c) All individual transactions are to be reported into the currency of the jurisdiction where the majority of shareholders reside.
d) All individual transactions may be reported into the currency of the country where the corporation does the majority of its business.
Use the following information for questions 13-17
RXN’s year-end is on December 31. On November 1, 2014 when the U.S. dollar was worth
$1.165 CDN, RXN sold merchandise to an American client for $300,000 U.S. Full payment of
this invoice was expected by March 1, 2015. On December 1, the spot rate was $1.1450 CDN
and the three-month forward rate was $1.1250 CDN.
In order to minimize its foreign exchange risk and exposure, RXN entered into a contract with its
bank on December 1, 2014 to deliver $300,000 U.S. in three months’ time. The spot rate at year-
end was $1.16 CDN and the forward rate from December 31, 2014 to March 1, 2015 was $1.14
CDN. On March 1, 2015, RXN received the $300,000 U.S. from its client and settled its contract
with the bank. The forward contract was to be accounted for as a fair value hedge of the US
dollar receivable. Significant dates and exchange rates pertaining to this transaction are:
Transaction date: November 1, 2014.
Spot rate: US $1=$1.165 CDN.
Hedged date: December 1, 2014.
Spot rate: US $1=$1.145 CDN.
Year-end: December 31, 2014.
Spot rate: US $1=$1.16 CDN.
Settlement date: March 1, 2015.
Spot rate: US $1=$1.168 CDN.
13. At what amount (in Canadian Dollars) would RXN’s sale be recorded initially?
a) $343,500.
b) $348,000.
c) $349,500.
d) $350,400.
14. What is the amount of RXN’s foreign exchange gain or loss prior to its hedge? (2 marks)
a) A $6,000 loss.
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4AC3, Final Exam, Winter 2016 DO NOT DETACH PAGES DURING EXAM
b) Nil.
c) A $4,500 gain.
d) A $6,000 gain.
15. How much (in Canadian Dollars) will RXN expect to receive from the bank when its forward
contract is settled?
a) $337,500.
b) $343,500.
c) $347,500.
d) $349,500.
16. Assuming that the accounts receivable balance was not adjusted on December 1, 2014, what adjustment (if any) would be required to RXN’s year-end accounts receivable balance? (2 marks)
a) A $3,000 decrease.
b) A $1,500 decrease.
c) No adjustment is required.
d) A $3,000 increase.
17. If this was a cash flow hedge instead, what would be the amount of the exchange gain or loss from the recognition of the hedge discount recognized during 2014?
a) A loss of $4,500.
b) A loss of $3,000.
c) Nil.
d) A gain of $4,500. 18. Under the Current Rate Method, which of the following statements is correct?
a) All balance sheet items excluding shareholders equity are translated using the closing rate
in effect at the balance sheet date.
b) Balance sheet items are translated using the closing rate at the balance sheet date.
c) All balance sheet items are translated using the average rate in effect throughout the year.
d) Only non-current balance sheet items are translated using the closing rate in effect at the balance sheet date.
19. The cash flow exposure resulting from changes in exchange rates is referred to as:
a) translation (accounting) exposure.
b) transaction exposure.
c) economic exposure.
d) business risk.
Page 7 of 14
4AC3, Final Exam, Winter 2016 DO NOT DETACH PAGES DURING EXAM
Use the following information for questions 20-23
ABC Inc. has a single wholly-owned American subsidiary called US1 based in Los Angeles, California, which was acquired on January 1, 2014. US1 submitted its financial statements for 2014 to ABC. Selected exchange rates in effect throughout 2014 are shown below:
January 1, 2014: $1 U.S. =
$0.815 CDN December 31, 2014: $1 U.S. =
$0.8175 CDN
Average for 2014: $1 U.S. =
$0.8250 CDN
Date of Purchase of Inventory on Hand: $1 U.S. =
$0.83 CDN
Date Dividends were declared: $1 U.S. =
$0.8125 CDN
US1 Financial Results for 2014 were as follows:
US1 Financial Statements
at December 31, 2014
(in U.S. dollars)
Income Statement:
Sales
$5,000,000
Cost of Sales
$3,500,000
Depreciation Expense
$150,000
Bond Interest Expense
$100,000
Other Expense
$750,000
$4,500,000
Net Income
$500,000
Statement of Retained Earnings:
January 1, 2014:
$400,000
Net Income
$500,000
Dividends
($100,000)
December 31, 2014:
$800,000
Balance Sheet
Cash
$1,200,000
Accounts Receivable
$1,900,000
Inventory
$700,000 ($500,000 January 1, 2014)
Plant and Equipment (net)
$400,000
$4,200,000
Current Liabilities
$400,000
Bonds Payable
$2,000,000
Common Stock
$1,000,000
Retained Earnings
$800,000
$4,200,000
US1 is considered to be a self-sustaining subsidiary.
Page 8 of 14
4AC3, Final Exam, Winter 2016 DO NOT DETACH PAGES DURING EXAM
20. Which of the following rates would be used to translate the Income Statement items?
a) $1 U.S.=$0.815 CDN
b) $1 U.S.=$0.8175 CDN
c) $1 U.S.=$0.8250 CDN
d) $1 U.S.=$0.83 CDN
21. Which of the following rates would be used to translate the opening Retained Earnings?
a) $1 U.S.=$0.815 CDN
b) $1 U.S.=$0.8175 CDN
c) $1 U.S.=$0.8250 CDN
d) $1 U.S.=$0.83 CDN
22. Which of the following rates would be used to translate Dividends paid during the year?
a) $1 U.S.=$0.815 CDN
b) $1 U.S.=$0.8125 CDN
c) $1 U.S.=$0.8250 CDN
d) $1 U.S.=$0.83 CDN
23. What is the amount of the gain or loss arising from translation? (2 marks)
a) A $5,000 loss.
b) A $750 loss.
c) A $307 loss.
d) A $3,750 gain.
24. Which of the following statements is FALSE?
a)
If a subsidiary is self-sustaining, the method of valuation of assets and liabilities is of no consequence in the translation because all of the assets are translated at the closing rate. b)
If a subsidiary is an integrated foreign subsidiary, the method of valuation of assets and liabilities is of no consequence in the translation because all of the assets are translated at the closing rate.
c)
If a subsidiary is an integrated foreign subsidiary, a write-down to market may be required in the translated financial statements.
d)
If a subsidiary is an integrated foreign subsidiary, no write-down is required in the foreign currency financial statements.
25. Which of the following statements is correct in the instance where the net asset position of the foreign entity is positive and the net monetary position of the foreign entity is negative?
a) If a foreign currency weakens with respect to the Canadian dollar, both self-sustaining and integrated foreign subsidiaries will show a foreign exchange gain.
b) If a foreign currency weakens with respect to the Canadian dollar, both self-sustaining and integrated foreign subsidiaries will show a foreign exchange loss.
c) If a foreign currency weakens with respect to the Canadian dollar, a self-sustaining subsidiary will show a foreign exchange gain while an integrated foreign subsidiary will show a foreign exchange loss.
d) If a foreign currency weakens with respect to the Canadian dollar, a self-sustaining subsidiary will show a foreign exchange loss while an integrated foreign subsidiary will show a foreign exchange gain.
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QUESTION 3 (35 MARKS) Ontario Publishing Limited (OPL), a private company, sells marketing research data and one of
its activities consists of publishing business telephone directories. OPL has a December 31
st
year end and uses IFRS. The employees of OPL entered into an agreement with OPL that
requires the employees to purchase one quarter of the outstanding OPL shares according to a
valuation formula based on the financial statements for 2015 (Exhibit 1). In fiscal 2014 and prior years, OPL was audited by a firm of CPA’s. In order to save assurance
related costs, the Chief Executive Officer (hereafter, “CEO”) of OPL decided to have the 2015
financial statements of OPL (see Exhibit 2 for excerpts) reviewed (but not audited) by a local
CPA who is a sole practitioner. In fiscal 2014 and prior years, OPL experienced close to the following "normal" ratios given its
industry: a 15 percent book return on closing shareholders' equity, and a 5 percent ratio of net
income to sales. OPL has several wholly owned subsidiaries. OPL did not pay dividends in 2015,
and had a book shareholders' equity of $4,500,000 at December 31, 2014.
It is now March 2016. You work as an accountant for ADR, a dispute resolution company that
has been called in to arbitrate a dispute that set in recently when the employees of OPL saw the
2015 financial statements of OPL. Both sides of the dispute have asked you for your arbitrator's
report, which should contain a relevant overall conclusion supported by appropriate quantitative
and qualitative analysis of the issues. Information which you have obtained appears in Exhibit 3.
Your superior at ADR, who will review the draft report, stresses the need to discuss potentially
valid alternative points of view given the Purchase Agreement.
Required:
Prepare the draft report. Assume an income tax rate of zero. State all important assumptions.
Page 10 of 14
4AC3, Final Exam, Winter 2016 DO NOT DETACH PAGES DURING EXAM
Exhibit 1
Excerpts from the Purchase Agreement.
The employees of OPL will purchase from existing shareholders one quarter (25%) of OPL’s
outstanding shares at a total purchase price to be determined by the following valuation formula:
Purchase Price = 5 times normalized earnings
for fiscal 2015 times 25%, with earnings to be
computed in accordance with IFRS.
For the purposes of this agreement, the term "normalized earnings" must represent a true and
fair portrayal
of the recurring operating earnings. In the event of a dispute, an arbitrator shall be mutually agreed upon by OPL and the employees
to determine the result of the formula. The decision of the arbitrator shall be final.
Page 11 of 14
4AC3, Final Exam, Winter 2016 DO NOT DETACH PAGES DURING EXAM
Exhibit 2
Excerpts from the 2015 Consolidated Financial Statements of OPL.
Consolidated Income Statement
2015 2014
(Reviewed)
(Audited)
Revenues $17,500,000 $13,500,000
Expenses 15,000,000
12,825,000
Net Income $2,500,000
$675,000
Consolidated Balance Sheet At December 31, 2015
Assets $13,500,000
Liabilities $6,500,000 Shareholders' equity
7,000,000
$13,500,000
Page 12 of 14
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Exhibit 3
Information Obtained By You
1.
In a letter to the employees, management indicated an asking price according to the Purchase
Agreement formula as follows: five times net income of $2,500,000 times 25% =
$3,125,000.
2.
On December 15, 2012, the CEO (who is a major shareholder of OPL) announced a special
one-time promotional discount on some of its lower margin products to customers if they
place their January 2016 orders in December 2015 and take delivery in December 2015. This
resulted in additional December 2015 sales of $1 million dollars. APL enjoys a 25 percent
gross margin on these sales. The CEO remarked to you: “there is nothing within GAAP that
prevents us from doing this.”
3.
On December 1, 2015, OPL established Web Co. for the sole purpose of offering internet
access for a fee to OPL’s business telephone directories. An outside investor (OPL’s lawyer)
provided cash in exchange for 100 percent of the common shares of Web Co. OPL has veto
power on Web Co.’s operating, investing and financing decisions. The outside investor is
guaranteed a 10 percent return on the initial investment in common shares and all remaining
profits of Web Co. revert to OPL by way of dividends. On December 20, 2015, OPL sold
business telephone directories to Web Co., resulting in sales of $1 million dollars, with OPL
enjoying a 50 percent gross margin on these sales. Web Co. intends to offer its customers
internet access to these directories at a fee but earned no fee income during 2015 since it is
still in start- up mode.
4.
For some years now, the consolidated liabilities of OPL have included the Canadian dollar
equivalent of foreign currency denominated debt of 1 million foreign currency units
(hereafter, “FCU's”) which is non-cancellable. Shortly after getting into this debt position
some years ago, management of OPL established a policy that any foreign exchange risk that
could affect earnings must be hedged. Accordingly, at that time, OPL entered into a hedge by
investing in FCU denominated government treasury bills in the amount of 1 million FCU's.
On June 30, 2015, the CEO decided to unwind the hedge by selling the FCU treasury bills
and converting to Canadian dollar cash. In effect, OPL at June 30, 2015 entered into a
speculative position related to the foreign currency denominated debt. The FCU exchange
rates are as follows:
January 1, 2015:
FCU = $3.00 Canadian
June 30, 2015:
1 FCU = $2.00 Canadian
December 31, 2015: 1 FCU = $1.50 Canadian
The depreciation of the FCU in 2015 was due to a one-time event (political instability);
political stability has now been restored and the FCU is expected to appreciate relative to the
Canadian dollar in 2016. The foreign currency gain was recorded as a reduction in expenses
Page 13 of 14
4AC3, Final Exam, Winter 2016 DO NOT DETACH PAGES DURING EXAM
in the 2015 income statement of OPL.
5.
Effective December 31, 2015, OPL sold 100 percent of its investment in a wholly-owned
subsidiary, ABC Co., which had an unusually good year. The relevant facts are as follows:
Investment account balance, start of year (equity method) $1,000,000
Unrealized downstream inventory profit related to ABC Co. at start of year $ 500,000
Net income of ABC Co. for fiscal 2015 $1,000,000
Proceeds from sale of investment in ABC Co.
$2,725,000
The gain on disposition was recorded in sales in the 2015 income statement of OPL. The
CEO convinced the Board of Directors that the timing was right for the sale, based on (in his
words) “a number of strategic considerations”.
6.
DEF Co. is one of OPL’s wholly-owned subsidiaries acquired several years ago. It is a
distinct cash generating unit (hereafter, “CGU”) for goodwill impairment testing purposes.
No goodwill impairment has been recognized in past years related to DEF Co. but in 2015
DEF Co.’s sales declined due to increasing competition. The carrying value of this CGU’s net
assets at December 31, 2015 before any goodwill impairment was $2,000,000, which
includes goodwill of $500,000. The CEO tells you he did a quick back of the envelope
valuation and estimated the fair value of this CGU to be $1,750,000.
The CEO said the following to you: “We did not take any goodwill write down related to this
CGU. It would not be fair to existing shareholders to allow employees purchasing shares to
benefit from this unusual loss. They are not entitled to the windfall.”
PUT YOUR ANSWER TO QUESTION 3 IN THE EXAM BOOKLET PROVIDED
Page 14 of 14
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HCS
Debt securities sold to investors that must be repaid at a
particular date in the future
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Accounts.
Prepared by corporate management to present financial
information, management discussion, notes, and auditor's report
Used by creditors to determine if they will be paid
Assets Liabilities+Stockholder's Equity
Used by creditors and investors to analyze the organization's
cash position
Used by investors to evaluate the organization's history of
paying high dividends
The total amount paid in by stockholders for the share…
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about the homework of Intermediate Accounting: Reporting and Analysis 3rd Edition Chapter 6, Problem 17E
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Sample Worksheet
Work Sheet
For the Month Ended January 31, 2020
Trial Balance
Adjustments
Adj. T/Balance
Income Statement
Balance Sheet
Account Title
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
13,200
22,000
5,400
29,250
22,000
5,400
Cash
20,000 b-h
3,950
29,250
22,000
a
CD'S
Other Securities
5,400
Loan Payable
Owner' Equity
25,000
15,600 b
25,000
15,100
25,000
15,100
500
Revenue
a
20,000
20,000
20,000
Interest Income
Utilities expense
Internet & Telephone
Advertising Expense
C
300
300
300
150
150
150
e
300
300
300
Rent Expense
f
2,000
2,000
2,000
Supplies expense
450
450
450
Insurance expense
250
250
250
40,100
16,550
56,650
40,600
23,950
60,100
3,450
16,550
20,000
40,600
23,950
60,100
20,000
56,650
Net income
20,000
56,650
1. Cash is overstate by 500.00 and Owners Equity is overstated by $500.00.
2. Utilities Expense of $300.00 was paid on January 25.
3. Insurance expense of $250.00 was paid on January 27.
4. supplies for the month in the amount of $450.00 was purchased.
5. Rent for…
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DATE
ACCOUNT TITLE
FIVE COLUMN JOURNAL
DOC. POST
NO. REF.
GENERAL
DEBIT
CREDIT
SALES
CREDIT
DEBIT
CASH
age
CREDIT
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Question 33.
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Identify each
Record the following transaction for April in a two-column journal using this tab
entry letter (Enter the letter in the date column):
(a)
Received $12,000 from Katie Long, owner.
Purchased equipment for $25,000, paying $10,000 in cash
and giving a note payable for the remainder.
(b)
(c)
Paid $1,800 for rent for April
Purchased $9,800 of supplies on account.
Recorded $2,250 of fees earned on account
(d)
(e)
(f)Received $9,000 in cash for fees earned
(g)
Paid $300 to creditors on account
(h)
Paid wages of $1,650
(i)
Received $1,190 from customers on account.
(j)
Recorded owner's withdrawal of $2,350
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On January 1, 2024, Rick's Pawn Shop leased a truck from Corey Motors for a six-year period with an option to extend the lease for
three years.
• Rick's had no significant economic incentive as of the beginning of the lease to exercise the three-year extension option. Annual
lease payments are $12,000 due on December 31 of each year, calculated by the lessor using a 7% discount rate.
. The expected useful life of the asset is nine years, and its fair value is $90,000.
. Assume that at the beginning of the third year, January 1, 2026, Rick's had made significant improvements to the truck whose
cost could be recovered only if it exercises the extension option, creating an expectation that extension of the lease was
"reasonably certain."
The relevant interest rate at that time was 8%.
Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of $1 and PVAD of $1)
Required:
1. Prepare the journal entry, if any, on January 1 and on December 31 of…
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Subject:- Accounting
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DATE
ACCOUNT TITLE
FIVE COLUMN JOURNAL
DOC. POST
NO. REF.
GENERAL
DEBIT
CREDIT
SALES
CREDIT
4
DEBIT
CASH
$200.00
CREDIT
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The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined
overhead rate is based on a cost formula that estimated $85,500 of manufacturing overhead for an estimated activity level of $45,000
direct labor dollars. At the beginning of the year, the inventory balances were as follows:
Raw materials
Work in process
Finished goods
During the year, the following transactions were completed:
$ 10,100
$ 4,100
$ 8,700
a. Raw materials purchased on account, $169,000.
b. Raw materials used in production, $142,000 (materials costing $122,000 were charged directly to jobs; the remaining materials
were indirect).
c. Costs for employee services were incurred as follows:
Direct labor
Indirect labor
Sales commissions
Administrative salaries
$ 178,000
$ 262,200
e. Utility costs incurred in the factory, $12,000.
f. Advertising costs incurred, $14,000.
$ 25,000
$ 47,000
d. Rent for the year was $19,000 ($13,600 of this amount…
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Instructions to chapter 10 exercises - Word
eview
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AaBbCcDc AaBbCcDc AaBbC AABBCCD AaB AaBbCcD
1 Normal
1 No Spac... Heading 1 Heading 2
Title
Subtitle
Paragraph
Styles
Exer 10-4
Entries for notes payable
Obj. 1 A business issued a 120-day,5% note for $60,000 to a creditor on
account. Journalize the entries to record (a) the issuance of the note and
(b) the payment of the note at maturity, including interest.
Exer 10-6
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S9-11
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Need help with this question please. Thank you
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Purchases, Accounts Payable Subsidiary Account, and Accounts Payable Ledger
Sterling Forest Landscaping designs and installs landscaping. The landscape designers and office staff use office supplies, while field supplies (rock, bark, etc.) are used in
the actual landscaping. Purchases on account completed by Sterling Forest Landscaping during October are as follows:
Oct. 2.
Purchased office supplies on account from Meade Co., $4,720.
5.
Purchased office equipment on account from Peach Computers Co., $6,790.
9.
Purchased office supplies on account from Executive Office Supply Co., $490.
13.
Purchased field supplies on account from Yamura Co., $5,370.
14.
Purchased field supplies on account from Omni Co., $710.
17.
Purchased field supplies on account from Yamura Co., $12,780.
24.
Purchased field supplies on account from Omni Co., $3,600.
29.
Purchased office supplies on account from Executive Office Supply Co., $320.
31.
Purchased field supplies on account from Omni Co., $4,710.
Note:…
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Only E7-18 and E7-19. Thank you
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Instruction: From the following partial worksheet of Atty. Villanueva for six-month period ended December 31,
2019, prepare the financial statement in good form.
Income Statement
Balance Sheet
Trial Balance
Debit
40,000
50,000
30,000
10,000
20,000
15,000
Credit
Debit
Credit
Debit
Credit
Cash on Hand
Cash in Bank
40,000
50,000
30,000
10,000
20,000
15,000
Accounts Receivable
Note Receivable
Prepaid Insurance
Office Furniture
Accounts Payable
Notes Payable
M. Capital
M. Drawing
Service Income
Salaries Expense
Supplies Expense
Taxes and Licenses
Rent Expense
Interest Expense
20,000
10,000
77,000
20,000
10,000
77,000
5,000
5,000
150,000
150,000
36,000
8,000
5,000
24,000
2,000
3,000
36,000
8,000
5,000
24,000
2,000
3,000
Bad Debts
Allowance for Bad Debts
3,000
3,000
Depreciation Expense
Accumulated Depreciation - Furniture
Insurance Expense
Unused Supplies
Interest Income
1,500
1,500
1,500
1,500
10,000
3,000
10,000
3,000
1,000
262,500
262,500
89,500 151,000 173,000 111,500
Net Income
61,500…
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A dog training business began on December 1. The following transactions occurred during its first month.
December 1 Receives $21,000 cash as an owner investment in exchange for common stock.
December 2 Pays $6,120 cash for equipment.
December 3 Pays $3,660 cash (insurance premium) for a 12-month insurance policy. Coverage began on December 1.
December 4 Pays $1,020 cash for December rent expense.
December 7 Provides all-day training services for a large group and immediately collects $1,150 cash.
December 8 Pays $205 cash in wages for part-time help.
December 9 Provides training services for $2,420 and rents training equipment for $610. The customer is billed $3,030
for these services.
December 19 Receives $3,030 cash from the customer billed on Dec. 9.
December 20 Purchases $2,010 of supplies on credit from a supplier.
December 23 Receives $1,620 cash in advance of providing a 4-week training service to a customer.
December 29 Pays $1,305 cash as a partial payment toward the accounts…
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Hi I am having trouble completing my accouitn homework, could you help me please?
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General Accounting I 2020-2021 Fall Term Final Exam (page 18 of 25)-Google Chrome
a.tr/mod/quiz/attempt.php?attempt=361811&cmid=180187&page=17
MSKÜ-LMS
1807 ŞB: 1 ÖRGÜN General Accounting I İktisadi ve Idari Bilimler Fakültesi İktisa
8
A credit sale of $3,600 is made on July 15, terms 2/10, n/30, on which a return of $200 is granted on July 18. What amount is received as payment in full on July 247
Tanmadi
O a. $3.332
izerinden
tlenmiş
O b. $3,600
oruyu
etle
OC $3.528
O d. $3,400
Önceki sayfa
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Hello tutor please provide this question solution general accounting
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(Learning Objectives 4, 5: Account for accounts receivable and uncollectibleaccounts) Perform the following accounting for the receivables of Hawkins and Harris, a CPAfirm, at December 31, 2018.Requirements1. Set up T-accounts and start with the beginning balances for these T-accounts:■ Accounts Receivable, $104,000■ Allowance for Uncollectible Accounts, $12,000Post the following 2018 transactions to the T-accounts:a. Service revenue of $695,000, all on accountb. Collections on account, $720,000c. Write-offs of uncollectible accounts, $8,000d. Uncollectible-account expense (allowance method), $15,0002. What are the ending balances of Accounts Receivable and Allowance for UncollectibleAccounts?3. Show how Hawkins and Harris will report accounts receivable on its balance sheet atDecember 31, 2018.
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Question 9: In a journal entry for employee payroll, what type of account is credited to record each of the amounts withheld from employee earnings?
Answer:
A.
O Asset
В.
O Liability
C.
O Revenue
D.
O Expense
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- Help!!arrow_forwardabout the homework of Intermediate Accounting: Reporting and Analysis 3rd Edition Chapter 6, Problem 17Earrow_forwardSample Worksheet Work Sheet For the Month Ended January 31, 2020 Trial Balance Adjustments Adj. T/Balance Income Statement Balance Sheet Account Title Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. 13,200 22,000 5,400 29,250 22,000 5,400 Cash 20,000 b-h 3,950 29,250 22,000 a CD'S Other Securities 5,400 Loan Payable Owner' Equity 25,000 15,600 b 25,000 15,100 25,000 15,100 500 Revenue a 20,000 20,000 20,000 Interest Income Utilities expense Internet & Telephone Advertising Expense C 300 300 300 150 150 150 e 300 300 300 Rent Expense f 2,000 2,000 2,000 Supplies expense 450 450 450 Insurance expense 250 250 250 40,100 16,550 56,650 40,600 23,950 60,100 3,450 16,550 20,000 40,600 23,950 60,100 20,000 56,650 Net income 20,000 56,650 1. Cash is overstate by 500.00 and Owners Equity is overstated by $500.00. 2. Utilities Expense of $300.00 was paid on January 25. 3. Insurance expense of $250.00 was paid on January 27. 4. supplies for the month in the amount of $450.00 was purchased. 5. Rent for…arrow_forward
- DATE ACCOUNT TITLE FIVE COLUMN JOURNAL DOC. POST NO. REF. GENERAL DEBIT CREDIT SALES CREDIT DEBIT CASH age CREDITarrow_forwardQuestion 33.arrow_forwardIdentify each Record the following transaction for April in a two-column journal using this tab entry letter (Enter the letter in the date column): (a) Received $12,000 from Katie Long, owner. Purchased equipment for $25,000, paying $10,000 in cash and giving a note payable for the remainder. (b) (c) Paid $1,800 for rent for April Purchased $9,800 of supplies on account. Recorded $2,250 of fees earned on account (d) (e) (f)Received $9,000 in cash for fees earned (g) Paid $300 to creditors on account (h) Paid wages of $1,650 (i) Received $1,190 from customers on account. (j) Recorded owner's withdrawal of $2,350arrow_forward
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