ACC 557 Homework 1-5 Solutions
ACC 557 Homework 1-5 Solutions
ACC 557 Homework 1:
Chapters 1, 2, and 3
Due Week 2 and worth
95 points
Directions: Answer the
following questions in a separate Microsoft Word or Excel document. Explain how
you reached the answer or show your work if a mathematical calculation is
needed, or both. Submit your assignment using the assignment link in
Blackboard.
Exercises
E1-11.Two items are omitted from each of the
following summaries of balance sheet and income statement data for two
corporations for the year 2015, Plunkett Co. and Herring Enterprises.
Instructions
Determine the missing
amounts.
E2-9.Selected transactions from the journal of
Kati Tillman, investment broker, are presented below.
Instructions
1. Post the transactions to T-accounts.
2. Prepare a trial balance at August 31, 2015.
E2-11.Presented below is the ledger for Higgs Co.
Instructions
1. Reproduce the journal entries for the
transactions that occurred on October 1, 10, and 20, and provide explanations
for each.
2. Determine the October 31 balance for each of
the accounts above, and prepare a trial balance at October 31, 2015.
E3-7.The ledger of Perez Rental Agency on March 31
of the current year includes the selected accounts, shown below, before
quarterly adjusting entries have been prepared.
An analysis of the
accounts shows the following.
1. The equipment depreciates $400 per month.
2. One-third of the unearned rent revenue was
earned during the quarter.
3. Interest totaling $500 is accrued on the notes
payable for the quarter.
4. Supplies on hand total $900.
5. Insurance expires at the rate of $200 per month.
Instructions
Prepare the adjusting
entries at March 31, assuming that adjusting entries are made quarterly.
Additional accounts are Depreciation Expense, Insurance Expense, Interest
Payable, and Supplies Expense.
E3-11.A partial adjusted trial balance of Gehring
Company at January 31, 2015, shows the following.
Instructions
Answer the following
questions, assuming the year begins January 1.
1. If the amount in Supplies Expense is the
January 31 adjusting entry, and $1,000 of supplies was purchased in January,
what was the balance in Supplies on January 1?
2. If the amount in Insurance Expense is the
January 31 adjusting entry, and the original insurance premium was for one
year, what was the total premium and when was the policy purchased?
3. If $3,500 of salaries was paid in January,
what was the balance in Salaries and Wages Payable at December 31, 2014?
Problems
P1-2A.On August 31, the balance sheet of La Brava
Veterinary Clinic showed Cash $9,000, Accounts Receivable $1,700, Supplies
$600, Equipment $6,000, Accounts Payable $3,600, Common Stock $13,000, and
Retained Earnings $700. During September, the following transactions occurred.
1. Paid $2,900 cash for accounts payable due.
2. Collected $1,300 of accounts receivable.
3. Purchased additional equipment for $2,100,
paying $800 in cash and the balance on account.
4. Recognized revenue of $7,300, of which $2,500
is collected in cash and the balance is due in October.
5. Declared and paid a $400 cash dividend.
6. Paid salaries $1,700, rent for September $900,
and advertising expense $200.
7. Incurred utilities expense for month on
account $170.
8. Received $10,000 from Capital Bank on a
6-month note payable.
Instructions
1.
Prepare a tabular
analysis of the September transactions beginning with August 31 balances. The
column headings should be as follows: Cash + Accounts Receivable + Supplies +
Equipment = Notes Payable + Accounts Payable + Common Stock + Retained Earnings
+ Revenues – Expenses – Dividends.
2.
Prepare an income
statement for September, a retained earnings statement for September, and a
balance sheet at September 30.
P2-2A.Julia Dumars is a licensed CPA. During the
first month of operations of her business, Julia Dumars, Inc., the following
events and transactions occurred.
May 1
Stockholders invested $20,000 cash in exchange for common stock.
2 Hired a
secretary-receptionist at a salary of $2,000 per month.
3 Purchased $1,500 of
supplies on account from Vincent Supply Company.
7 Paid office rent of
$900 cash for the month.
11 Completed a tax
assignment and billed client $2,800 for services performed.
12 Received $3,500
advance on a management consulting engagement.
17 Received cash of
$1,200 for services performed for Orville Co.
31 Paid
secretary-receptionist $2,000 salary for the month.
31 Paid 40% of balance
due Vincent Supply Company.
Julia uses the
following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126
Supplies, No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No.
311Common Stock, No. 400 Service Revenue, No. 726 Salaries and Wages Expense,
and No. 729 Rent Expense.
Instructions
1.
Journalize the
transactions.
2.
Post to the ledger
accounts.
3.
Prepare a trial
balance on May 31, 2015.
P3-1A.Deanna Nardelli started her own consulting
firm, Nardelli Consulting, on May 1, 2015. The trial balance at May 31 is as
follows.
In addition to those
accounts listed on the trial balance, the chart of accounts for Nardelli
Consulting also contains the following accounts and account numbers: No. 150
Accumulated Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 631
Supplies Expense, No. 717 Depreciation Expense, No. 722 Insurance Expense, and
No. 732 Utilities Expense.
Other data:
1. $900 of supplies have been used during the
month.
2. Utilities expense incurred but not paid on May
31, 2015, $250.
3. The insurance policy is for 2 years.
4. $400 of the balance in the unearned service
revenue account remains unearned at the end of the month.
5. May 31 is a Wednesday, and employees are paid
on Fridays. Nardelli Consulting has two employees, who are paid $900 each for a
5-day work week.
6. The equipment has a 5-year life with no
salvage value. It is being depreciated at $190 per month for 60 months.
7. Invoices representing $1,700 of services
performed during the month have not been recorded as of May 31.
Instructions
1.
Prepare the adjusting
entries for the month of May. Use J4 as the page number for your journal.
2.
Enter the totals from
the trial balance as beginning account balances and place a check mark in the
posting reference column. Post the adjusting entries to the ledger accounts.
3.
Prepare an adjusted
trial balance at May 31, 2015.
ACC 557 Homework 2 Chapter , 4, 5 and 6
Due Week 4 and worth
105 points
Directions: Answer the
following questions on a separate Microsoft Word or Excel document. Explain how
you reached the answer or show your work if a mathematical calculation is
needed, or both. Submit your assignment using the assignment link in
Blackboard.
Exercises
E4-7. Kay Magill Company had the following
adjusted trial balance.
Instructions
1. Prepare closing entries at June 30, 2015.
2. Prepare a post-closing trial balance.
E4-13. Keenan Company has an inexperienced
accountant. During the first 2 weeks on the job, the accountant made the
following errors in journalizing transactions. All entries were posted as made.
1. A payment on account of $840 to a creditor was
debited to Accounts Payable $480 and credited to Cash $480.
2. The purchase of supplies on account for $560 was
debited to Equipment $56 and credited to Accounts Payable $56.
3. A $500 cash dividend was debited to Salaries
and Wages Expense $500 and credited to Cash $500.
Instructions
Prepare the correcting
entries.
E5-4. On June 10, Tuzun Company purchased $8,000
of merchandise from Epps Company, FOB shipping point, terms 2/10, n/30. Tuzun
pays the freight costs of $400 on June 11. Damaged goods totaling $300 are
returned to Epps for credit on June 12. The fair value of these goods is $70.
On June 19, Tuzun pays Epps Company in full, less the purchase discount. Both
companies use a perpetual inventory system.
Instructions
1. Prepare separate entries for each transaction
on the books of Tuzun Company.
2. Prepare separate entries for each transaction
for Epps Company. The merchandise purchased by Tuzun on June 10 had cost Epps
$4,800.
E5-7.Juan Morales Company had the following account
balances at year-end: Cost of Goods Sold $60,000, Inventory $15,000, Operating
Expenses $29,000, Sales Revenue $115,000, Sales Discounts $1,200, and Sales
Returns and Allowances $1,700. A physical count of inventory determines that
merchandise inventory on hand is $13,900.
Instructions
1. Prepare the adjusting entry necessary as a
result of the physical count.
2. Prepare closing entries.
E6-1. Tri-State Bank and Trust is considering
giving Josef Company a loan. Before doing so, management decides that further
discussions with Josef’s accountant may be desirable. One area of particular
concern is the inventory account, which has a year-end balance of $297,000.
Discussions with the accountant reveal the following.
1. Josef sold goods costing $38,000 to Sorci
Company, FOB shipping point, on December 28. The goods are not expected to
arrive at Sorci until January 12. The goods were not included in the physical
inventory because they were not in the warehouse.
2. The physical count of the inventory did not
include goods costing $95,000 that were shipped to Josef FOB destination on
December 27 and were still in transit at year-end.
3. Josef received goods costing $22,000 on
January 2. The goods were shipped FOB shipping point on December 26 by Solita
Co. The goods were not included in the physical count.
4. Josef sold goods costing $35,000 to Natali
Co., FOB destination, on December 30. The goods were received at Natali on
January 8. They were not included in Josef’s physical inventory.
5. Josef received goods costing $44,000 on
January 2 that were shipped FOB destination on December 29. The shipment was a
rush order that was supposed to arrive December 31. This purchase was included
in the ending inventory of $297,000.
Instructions
Determine the correct
inventory amount on December 31.
E6-6. Kaleta Company reports the following for the
month of June.
Instructions
1. Compute the cost of the ending inventory and
the cost of goods sold under (1) FIFO and (2) LIFO.
2. Which costing method gives the higher ending
inventory? Why?
3. Which method results in the higher cost of
goods sold? Why?
Problems
P4-3A.The completed financial statement columns of
the worksheet for Fleming Company are shown on below.
Instructions
1. Prepare an income statement, a retained
earnings statement, and a classified balance sheet.
2. Prepare the closing entries.
3. Post the closing entries and underline and
balance the accounts. (Use T-accounts.) Income Summary is account No. 350.
4. Prepare a post-closing trial balance.
P5-2A.Latona Hardware Store completed the following
merchandising transactions in the month of May. At the beginning of May, the
ledger of Latona showed Cash of $5,000 and Common Stock of $5,000.
May
1 Purchased merchandise on account from Gray’s
Wholesale Supply $4,200, terms 2/10, n/30.
2 Sold
merchandise on account $2,100, terms 1/10, n/30. The cost of the merchandise
sold was $1,300.
5 Received credit from
Gray’s Wholesale Supply for merchandise returned $300.
9 Received
collections in full, less discounts, from customers billed on sales of$2,100 on
May 2.
10 Paid Gray’s
Wholesale Supply in full, less discount.
11 Purchased supplies
for cash $400.
12 Purchased merchandise
for cash $1,400.
15 Received
refund for poor quality merchandise from supplier on cash purchase $150.
17 Purchased
merchandise from Amland Distributors $1,300, FOB shipping point, terms 2/10,
n/30.
19 Paid freight on May
17 purchase $130.
24 Sold merchandise
for cash $3,200. The merchandise sold had a cost of $2,000.
25 Purchased
merchandise from Horvath, Inc. $620, FOB destination, terms 2/10, n/30.
27 Paid Amland
Distributors in full, less discount.
29 Made refunds
to cash customers for defective merchandise $70. The returned merchandise had a
fair value of $30.
31 Sold
merchandise on account $1,000 terms n/30. The cost of the merchandise sold was
$560.
Latona Hardware’s
chart of accounts includes the following: No. 101 Cash, No. 112 Accounts
Receivable, No. 120 Inventory, No. 126 Supplies, No. 201 Accounts Payable, No.
311 Common Stock, No. 401 Sales Revenue, No. 412 Sales Returns and Allowances,
No. 414 Sales Discounts, and No. 505 Cost of Goods Sold.
Instructions
1. Journalize the transactions using a perpetual
inventory system.
2. Enter the beginning cash and common stock
balances and post the transactions. (Use J1 for the journal reference.)
3. Prepare an income statement through gross
profit for the month of May 2015.
P6-3A.Ziad Company had a beginning inventory on
January 1 of 150 units of Product 4-18-15 at a cost of $20 per unit. During the
year, the following purchases were made.
Mar. 15 400 units at
$23 Sept. 4
350 units at $26
July 20 250
units at $24
Dec. 2 100 units at $29
1,000 units were sold.
Ziad Company uses a periodic inventory system.
Instructions
1. Determine the cost of goods available for
sale.
2. Determine (1) the ending inventory, and (2)
the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO,
and average-cost). Prove the accuracy of the cost of goods sold under the FIFO
and LIFO methods.
3. Which cost flow method results in (1) the
highest inventory amount for the balance sheet, and (2) the highest cost of
goods sold for the income statement?
ACC 557 Homework 3: Chapters 9 and 10
Due Week 6 and worth
70 points
Directions: Answer the
following questions on a separate Microsoft Word or Excel document. Explain how
you reached the answer or show your work if a mathematical calculation is
needed, or both. Submit your assignment using the assignment link in
Blackboard.
Exercises
E9-9. Presented below are selected transactions at
Ridge Company for 2015.
Jan. 1
Retired a piece of machinery that was purchased on January 1, 2005. The machine
cost $62,000 on that date. It had a useful life of 10 years with no salvage
value.
June 30
Sold a computer
that was purchased on January 1, 2012. The computer cost $45,000. It had a
useful life of 5 years with no salvage value. The computer was sold for
$14,000.
Dec. 31
Discarded a
delivery truck that was purchased on January 1, 2011. The truck cost $33,000.
It was depreciated based on a 6-year useful life with a $3,000 salvage value.
Instructions
Journalize all entries
required on the above dates, including entries to update depreciation, where
applicable, on assets disposed of. Ridge Company uses straight-line
depreciation. (Assume depreciation is up to date as of December 31, 2014.)
E9-11. On July 1, 2015, Friedman Inc. invested
$720,000 in a mine estimated to have 900,000 tons of ore of uniform grade.
During the last 6 months of 2015, 100,000 tons of ore were mined and sold.
Instructions
1. Prepare the journal entry to record depletion
expense.
2. Assume that the 100,000 tons of ore were
mined, but only 80,000 units were sold. How are the costs applicable to the
20,000 unsold units reported?
E10-12. Whitmore Company issued $500,000 of 5-year,
8% bonds at 97 on January 1, 2015. The bonds pay interest twice a year.
Instructions
1. (1) Prepare the journal entry to record the
issuance of the bonds.
(2) Compute the total
cost of borrowing for these bonds.
1. Repeat the requirements from part (a),
assuming the bonds were issued at 105.
E10-15.Jernigan Co. receives $300,000 when it issues
a $300,000, 10%, mortgage note payable to finance the construction of a building
at December 31, 2015. The terms provide for semiannual installment payments of
$25,000 on June 30 and December 31.
Instructions
Prepare the journal
entries to record the mortgage loan and the first two installment payments.
Problems
P9-7A.The intangible assets section of Sappelt
Company at December 31, 2015, is presented below.
The patent was
acquired in January 2015 and has a useful life of 10 years. The franchise was
acquired in January 2012 and also has a useful life of 10 years. The following
cash transactions may have affected intangible assets during 2016.
Jan. 2
Paid
$27,000 legal costs to successfully defend the patent against infringement by
another company.
Jan.–June
Developed a new product, incurring
$140,000 in research and development costs. A patent was granted for the
product on July 1. Its useful life is equal to its legal life.
Sept. 1
Paid $50,000 to an
extremely large defensive lineman to appear in commercials advertising the
company’s products. The commercials will air in September and October.
Oct. 1
Acquired
a franchise for $140,000. The franchise has a useful life of 50 years.
Instructions
1. Prepare journal entries to record the
transactions above.
2. Prepare journal entries to record the 2016
amortization expense.
3. Prepare the intangible assets section of the
balance sheet at December 31, 2016.
P10-1A.On January 1, 2015, the ledger of Accardo
Company contains the following liability accounts.
Accounts Payable
$52,000
Sales Taxes
Payable
7,700
Unearned Service
Revenue 16,000
During January, the
following selected transactions occurred.
Jan.
5 Sold merchandise for
cash totaling $20,520, which includes 8% sales taxes.
12Performed services
for customers who had made advance payments of $10,000. (Credit Service
Revenue.)
14Paid state revenue
department for sales taxes collected in December 2014 ($7,700).
20Sold 900 units of a
new product on credit at $50 per unit, plus 8% sales tax.
21Borrowed $27,000
from Girard Bank on a 3-month, 8%, $27,000 note.
25Sold merchandise for
cash totaling $12,420, which includes 8% sales taxes.
Instructions
1. Journalize the January transactions.
2. Journalize the adjusting entry at January 31
for the outstanding note payable. (Hint: Use one-third of a month for the
Girard Bank note.)
3. Prepare the current liabilities section of the
balance sheet at January 31, 2015. Assume no change in accounts payable.
ACC 557 Homework 4: Chapters 11 and 12\
Due Week 8 and worth
70 points
Directions: Answer the
following questions on a separate Microsoft Word or Excel document. Explain how
you reached the answer or show your work if a mathematical calculation is
needed, or both. Submit your assignment using the assignment link in
Blackboard.
Exercises
E11-7. Quay Co. had the following transactions
during the current period.
Mar. 2
Issued
5,000 shares of $5 par value common stock to attorneys in payment of a bill for
$30,000 for services performed in helping the company to incorporate.
June 12
Issued
60,000 shares of $5 par value common stock for cash of $375,000.
July 11
Issued
1,000 shares of $100 par value preferred stock for cash at $110 per share.
Nov. 28
Purchased
2,000 shares of treasury stock for $80,000.
Instructions
Journalize the
transactions.
E11-13. On January 1, Guillen Corporation had 95,000
shares of no-par common stock issued and outstanding. The stock has a stated
value of $5 per share. During the year, the following occurred.
Apr. 1
Issued 25,000 additional shares of common stock for $17 per share.
June 15
Declared a
cash dividend of $1 per share to stockholders of record on June 30.
July 10
Paid
the $1 cash dividend.
Dec. 1
Issued
2,000 additional shares of common stock for $19 per share.
15
Declared a cash dividend on outstanding shares of $1.20 per share to
stockholders of record on December 31.
Instructions
1. Prepare the entries, if any, on each of the
three dividend dates.
2. How are dividends and dividends payable
reported in the financial statements prepared at December 31?
E12-8. Presented below are two independent
situations.
1. Gambino Cosmetics acquired 10% of the 200,000 shares
of common stock of Nevins Fashion at a total cost of $13 per share on March 18,
2015. On June 30, Nevins declared and paid a $60,000 dividend. On December 31,
Nevins reported net income of $122,000 for the year. At December 31, the market
price of Nevins Fashion was $15 per share. The stock is classified as
available-for-sale.
2. Kanza, Inc., obtained significant influence over
Rogan Corporation by buying 40% of Rogan’s 30,000 outstanding shares of common
stock at a total cost of $9 per share on January 1, 2015. On June 15, Rogan
declared and paid a cash dividend of $30,000. On December 31, Rogan reported a
net income of $80,000 for the year.
Instructions
Prepare all the
necessary journal entries for 2015 for (a) Gambino Cosmetics and (b) Kanza,
Inc.
E12-12.Uttinger Company has the following data at
December 31, 2015.
The available-for-sale
securities are held as a long-term investment.
Instructions
1. Prepare the adjusting entries to report each
class of securities at fair value.
2. Indicate the statement presentation of each
class of securities and the related unrealized gain (loss) accounts.
Problems
P11-3A.The stockholders’ equity accounts of Castle
Corporation on January 1, 2015, were as follows.
Preferred Stock (8%,
$50 par, cumulative, 10,000 shares
authorized)
$ 400,000
Common Stock ($1
stated value, 2,000,000 shares authorized)
1,000,000
Paid-in Capital in
Excess of Par—Preferred Stock
100,000
Paid-in Capital in
Excess of Stated Value—Common Stock
1,450,000
Retained Earnings
1,816,000
Treasury Stock (10,000
common shares)
50,000
During 2015, the
corporation had the following transactions and events pertaining to its
stockholders’ equity.
Feb. 1
Issued 25,000 shares of common stock for $120,000.
Apr. 14
Sold 6,000 shares of treasury stock—common for $33,000.
Sept. 3
Issued 5,000 shares of common stock for a patent valued at $35,000.
Nov. 10
Purchased
1,000 shares of common stock for the treasury at a cost of $6,000.
Dec. 31
Determined
that net income for the year was $452,000.
No dividends were
declared during the year.
Instructions
1. Journalize the transactions and the closing
entry for net income.
2. Enter the beginning balances in the accounts,
and post the journal entries to the stockholders’ equity accounts. (Use J5 for
the posting reference.)
3. Prepare a stockholders’ equity section at
December 31, 2015, including the disclosure of the preferred dividends in
arrears.
P12-6A.The following data, presented in alphabetical
order, are taken from the records of Nieto Corporation.
The investment in
Sasse common stock is considered to be a long-term available-for-sale security.
Instructions
Prepare a classified
balance sheet at December 31, 2015.
ACC 557 Homework 5: Chapter 13
Due Week 9 and worth
50 points
Directions: Answer the
following questions on a separate Microsoft Word or Excel document. Explain how
you reached the answer or show your work if a mathematical calculation is
needed, or both. Submit your assignment using the assignment link in
Blackboard.
Exercises
E13-3.Cushenberry Corporation had the following
transactions.
1. Sold land (cost $12,000) for $15,000.
2. Issued common stock at par for $20,000.
3. Recorded depreciation on buildings for
$17,000.
4. Paid salaries of $9,000.
5. Issued 1,000 shares of $1 par value common
stock for equipment worth $8,000.
6. Sold equipment (cost $10,000, accumulated
depreciation $7,000) for $1,200.
Instructions
For each transaction
above, (a) prepare the journal entry, and (b) indicate how it would affect the
statement of cash flows using the indirect method.
E13-4.Gutierrez Company reported net income of
$225,000 for 2015. Gutierrez also reported depreciation expense of $45,000 and
a loss of $5,000 on the disposal of equipment. The comparative balance sheet
shows a decrease in accounts receivable of $15,000 for the year, a $17,000
increase in accounts payable, and a $4,000 decrease in prepaid expenses.
Instructions
Prepare the operating
activities section of the statement of cash flows for 2015. Use the indirect
method.
Problems
P13-3A.The income statement of Whitlock Company is
presented here.
Additional
information:
1. Accounts receivable increased $200,000 during the
year, and inventory decreased $500,000.
2. Prepaid expenses increased $150,000 during the
year.
3. Accounts payable to suppliers of merchandise
decreased $340,000 during the year.
4. Accrued expenses payable decreased $100,000
during the year.
5. Operating expenses include depreciation
expense of $70,000.
Instructions
Prepare the operating
activities section of the statement of cash flows for the year ended November
30, 2015, for Whitlock Company, using the indirect method.
P13-7A.Presented below are the financial statements of
Nosker Company.
Additional data:
1. Dividends declared and paid were $20,000.
2. During the year equipment was sold for $8,500
cash. This equipment cost $18,000 originally and had a book value of $8,500 at
the time of sale.
3. All depreciation expense, $14,500, is in the
operating expenses.
4. All sales and purchases are on account.
Instructions
1. Prepare a statement of cash flows using the
indirect method.
2. Compute free cash flow.
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