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1.  

Cash includes $1,200 in a petty cash fund and $15,000 in a bond sinking fund.

2.  

The net accounts receivable balance is comprised of the following two items: (a) accounts receivable $44,000 and (b) allowance for doubtful accounts $3,500.

3.  

Inventory costing $5,300 was shipped out on consignment on July 31, 2014. The ending inventory balance does not include the consigned goods. Receivables in the amount of $5,300 were recognized on these consigned goods.

4.  

Equipment had a cost of $112,000 and an accumulated depreciation balance of $28,000.

5.  

Income taxes payable of $6,000 were accrued on July 31. Geronimo Company, however, had set up a cash fund to meet this obligation. This cash fund was not included in the cash balance but was offset against the income taxes payable amount.

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1.  

January 2015 cash disbursements entered as of December 2014 included payments of accounts payable in the amount of $39,000, on which a cash discount of 2% was taken.

2.  

The inventory included $27,000 of merchandise that had been received at December 31 but for which no purchase invoices had been received or entered. Of this amount, $12,000 had been received on consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30.

3.  

Sales for the first four days in January 2015 in the amount of $30,000 were entered in the sales journal as of December 31, 2014. Of these, $21,500 were sales on account and the remainder were cash sales.

4.  

Cash, not including cash sales, collected in January 2015 and entered as of December 31, 2014, totaled $35,324. Of this amount, $23,324 was received on account after cash discounts of 2% had been deducted; the remainder represented the proceeds of a bank loan.

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1.  

The current assets section includes cash $150,000, accounts receivable $170,000 less $10,000 for allowance for doubtful accounts, inventories $180,000, and unearned rent revenue $5,000. Inventoy is stated on the lower-of-FIFO-cost-or-market.

2.  

The investments section includes the cash surrender value of a life insurance contract $40,000; investments in common stock, short-term (trading) $80,000 and long-term (available-for-sale) $270,000; and bond sinking fund $250,000. The cost and fair value of investments in common stock are the same.

3.  

Property, plant, and equipment includes buildings $1,040,000 less accumulated depreciation $360,000; equipment $450,000 less accumulated depreciation $180,000; land $500,000; and land held for future use $270,000.

4.  

Intangible assets include a franchise $165,000; goodwill $100,000; and discount on bonds payable $40,000.

5.  

Current liabilities include accounts payable $140,000; notes payable—short-term $80,000 and long-term $120,000; and income taxes payable $40,000.

6.  

Long-term liabilities are composed solely of 7% bonds payable due 2022.

7.  

Stockholders' equity has preferred stock, no par value, authorized 200,000 shares, issued 70,000 shares for $450,000; and common stock, $1.00 par value, authorized 400,000 shares, issued 100,000 shares at an average price of $10. In addition, the corporation has retained earnings of $320,000.

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1.  

Aero liquidated its available-for-sale investment portfolio at a loss of $5,000.

2.  

A tract of land was purchased for $38,000.

3.  

An additional $30,000 in common stock was issued at par.

4.  

Dividends totaling $10,000 were declared and paid to stockholders.

5.  

Net income for 2014 was $35,000, including $12,000 in depreciation expense.

6.  

Land was purchased through the issuance of $30,000 in additional bonds.

7.  

At December 31, 2014, Cash was $70,200, Accounts Receivable was $42,000, and Accounts Payable was $40,000.

1.  

The corporation erected its present factory building in 1999. Depreciation was calculated by the straight-line method, using an estimated life of 35 years. Early in 2014, the board of directors conducted a careful survey and estimated that the factory building had a remaining useful life of 25 years as of January 1, 2014.

2.  

An additional assessment of 2013 income taxes was levied and paid in 2014.

3.  

When calculating the accrual for officers' salaries at December 31, 2014, it was discovered that the accrual for officers' salaries for December 31, 2013, had been overstated.

4.  

On December 15, 2014, Arenes Corporation declared a cash dividend on its common stock outstanding, payable February 1, 2015, to the common stockholders of record December 31, 2014.

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(a)  

What is the future value of 20 periodic payments of $4,000 each made at the beginning of each period and compounded at 8%?

(b)  

What is the present value of $2,500 to be received at the beginning of each of 30 periods, discounted at 10% compound interest?

(c)  

What is the future value of 15 deposits of $2,000 each made at the beginning of each period and compounded at 10%? (Future value as of the end of the fifteenth period.)

(d)  

What is the present value of six receipts of $1,000 each received at the beginning of each period, discounted at 9% compounded interest?

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(a)  

8%?

(b)  

10%?

(c)  

12%?

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Building A:

Purchase for a cash price of $600,000, useful life 25 years.

Building B:

Lease for 25 years with annual lease payments of $69,000 being made at the beginning of the year.

Building C:

Purchase for $650,000 cash. This building is larger than needed; however, the excess space can be sublet for 25 years at a net annual rental of $7,000. Rental payments will be received at the end of each year. The Black Knights Inc. has no aversion to being a landlord.

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(a)  

On January 1, 2014, Fishbone Corporation sold a building that cost $250,000 and that had accumulated depreciation of $100,000 on the date of sale. Fishbone received as consideration a $240,000 non-interest-bearing note due on January 1, 2017. There was no established exchange price for the building, and the note had no ready market. The prevailing rate of interest for a note of this type on January 1, 2014, was 9%. At what amount should the gain from the sale of the building be reported?

(b)  

On January 1, 2014, Fishbone Corporation purchased 300 of the $1,000 face value, 9%, 10-year bonds of Walters Inc. The bonds mature on January 1, 2024, and pay interest annually beginning January 1, 2015. Fishbone purchased the bonds to yield 11%. How much did Fishbone pay for the bonds?

(c)  

Fishbone Corporation bought a new machine and agreed to pay for it in equal annual installments of $4,000 at the end of each of the next 10 years. Assuming that a prevailing interest rate of 8% applies to this contract, how much should Fishbone record as the cost of the machine?

(d)  

Fishbone Corporation purchased a special tractor on December 31, 2014. The purchase agreement stipulated that Fishbone should pay $20,000 at the time of purchase and $5,000 at the end of each of the next 8 years. The tractor should be recorded on December 31, 2014, at what amount, assuming an appropriate interest rate of 12%?

(e)  

Fishbone Corporation wants to withdraw $120,000 (including principal) from an investment fund at the end of each year for 9 years. What should be the required initial investment at the beginning of the first year if the fund earns 11%?

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(a)  

$55,000 immediate cash.

(b)  

$4,000 every 3 months payable at the end of each quarter for 5 years.

(c)  

$18,000 immediate cash and $1,800 every 3 months for 10 years, payable at the beginning of each 3-month period.

(d)  

$4,000 every 3 months for 3 years and $1,500 each quarter for the following 25 quarters, all payments payable at the end of each quarter.

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