ACCt 4001

Acct 4001 NET Final Spring 2021

Name

Problem 1 – 16 points

Zeno Incorporated, has 6,000,000 shares of common stock outstanding on December 31, 2018. An additional 1,000,000 shares of common stock were issued on April 1, 2019, and 500,000 more on July 1, 2019. On March 1, 2019, Zeno issued 25,000, $1,000 face value, 8% convertible bonds. Each bond is convertible into 10 shares of common stock. No bonds were converted into common stock in 2019. Net income after taxes is $15,000,000 and the tax rate is 25%. Compute EPS and DEPS. Show all computations for the numerators and the denominators

Problem 2 – 16 points

Post Co as a lessee records a finance lease of machinery on 1/1/19. The 7 annual lease payments of $210,000 are paid at the end of each year. The present value of the lease payments at 10% is $1,022,400.

Prepare a lease amortization schedule from 1/1/19 to 12/31/20.

Prepare the journal entries from 1/1/19 to 12/31/20.

Show all computations.

Problem 3 – 9 points

Bronks Co. had pension plan assets and PBO of $160,000 on 1/1/19. Service cost for the year was $40,000. It contributed $30,000 during the year and paid benefits of $20,000. The interest rate was 10%. The actual return was $15,000. Compute pension expense, PBO and PA at the end of the year.

Show computations. Optional: you may use a pension worksheet.

Problem 4 – 9 points

X and Y invest $100,000 and $50,000 respectively in a partnership and agree to a division of net income that provides for an allowance of interest at 10% on original investments, salary allowances of $12,000 and $24,000 respectively, with the remainder divided equally. What would be X's & Y’s share of a periodic net income of $60,000? Show computations.

Problem 5 – 9 points

Chico and Dino share net income and losses in a 7:3 ratio and have capital balances of $35,000 and $30,000 respectively. Filo invests $35,000 for a one fourth interest in the partnership. Prepare the journal entry if the bonus method is used.

Show computations.

PROBLEM 6 – 16 points

The ABC Partnership decided to terminate its affairs as of December 31, 2018. The following information is taken from the balance sheet that was prepared as of the date of termination:

All noncash assets were sold for $750,000. (Hint: On your worksheet, combine all noncash assets as $1,000,000.) All liabilities were paid. All partners are personally solvent.

Prepare a worksheet showing sale of assets, payment of liabilities and distribution to partners. Show all computations.

Problem 7 – 25 points

Choy Co. purchased rice from China for 150,000 renminbi (r) on Nov. 1, 2015. Payment is due on Jan. 30, 2016. Choy also entered into a 90 day forward contract with an exchange broker to purchase 150,000 renmimbi. The rates were as follows:

Date Spot Rate Forward Rate

Nov. 1, 2015 $0.120 $0.126 – 90 days

Dec. 31, 2015 $0.124 $0.129 – 30 days

Jan. 30, 2016 $0.127

a) Record all journal entries on the transaction, balance sheet and settlement dates. Show computations.

b) What is Choy’s overall gain or loss from these transactions? Show computations.

Cash

$ 100,000

Liabilities

$ 80,000

Receivables (net)

240,000

A, Capital (30%)

580,000

Inventories

180,000

B, Capital (20%)

360,000

Fixed Assets (net)

580,000

C, Capital (50%)

80,000

Total Liabilities

Total Assets

$1,100,000

Capital

$1,100,000