the secound 9 question

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#1, The following balance sheet was prepared by the bookkeeper for joseph Adeophonse company as of december 31th,2012'
Joseph Adephones cccompany
Balance Sheet
As of December `31,2012.
Cash 85,000 Account payable 90,000
Account Receivable (net) 52,000 Long term Liabilities 100,000
Inventory 57,000 Stockholders equity 218,500
Investment 76,000
Equipment (net) 106,000
Patent 32,000
408,500 408,500
The following additional information is provided:
1,,Cash include the cash surrender value of a life insurance policy $9,400 and a bank overdraft of $2,500has been deducted .
2, The net accounts receivable balance includes
a, Account receivable -debit balances $60,000
b, Account receivable -credit balance $4,000
c, Allowance for doubtful accounts $3,800
3, Inventory does not include goods costing $3,000 shipped out on consignment received of $3,000, were recorded on these goods
4,Investment include include investment in common stock , trading $19,000 and available for sales $48,300 , and franchises $9,000
5, Equipment costing $5,000 with accumulated deperciation $4,000 is no longer uesd and is held foe sales . Accumulated depreciation on the equipment is $40,000.
Instruction
Prepare a balance sheet in good form i.e it must balance.
#2
Selected Financial statement information. and addition data for Talib Company is presented below. Prepare a statement of cash flows for the foll sh flows for the year ending December or the year r ending December
31, 2012.
December 31
2011 2012
Cash $42,000
Accounts receivable[net] 84,000 144,200
Inventory 168,000 201,600
Land 58,800 16,000
Equipment 504,000 789,600
TOTAL $856,800 $1,226,400
Accumulated depreciation] $84,000 $115,600
Account payable 50,400 86,000
Notes payable - Short-term 67,200 29,400
Notes payable - Long-term 168,000 302,400
Common stock 420,000 487,200
Retained earning 67,200 205,800
TOTAL $856,800 $1,226,400 $1,226,400
Additional data for 2012:
1. Net income was $240,200.
2. Depreciation was $31,600.
3. Land was sold at its original cost.
4. Dividends of $101,600 were paid.
5. Equipment was purchased for $84,000 cash.
6. Along-term note for $201,600 was used to pay for an equipment purchase.
7. Common stock was issued to pay a$67,200 long-term note payable.
#3 The trial balance before adjustment of Lucas Company reports the following balances:
Debit Credit
Accounts receivable $120,000
Allowance for doubtful accounts 730
Sales $510,000
Sales returns and allowances 8,000
Give journal entries assuming that the estimate of uncollectibless is determined by taking (1) (1) 5% of gross accounts
receivable and able and (2) 1% of net sales.
#4 On December 31,2012,Durgapersad Company finished consultation services and accepted in exchange a promissory note with a face value of $600,000, a due date of December 31, 2015, and a stated rate of 5%, with interest receivable at the end of each year. The fair value of the services is not readily determinable and the note ory note
with a face value of $600,000, a due date of December 31, 2015, and a stated rate of 5%, with interest receivable at the end of each year. The fair value of the services is not readily determinable and the note is not readily marketable
each year.The fair value of services is not readily determinable and the note is not is readily marketable, Under t . Under the circumstaces, the note is considered
to have anappropriate imputed rate of intrest of 10% rate of intrest of 10%. erst of 10% .
The following factor are provided .
Intrest rate
Table factor for three periods. 5% 10%
Future Value of 1 1.15763 1.331
present Value of 1 0.86384 0.75132
futre value of ordinary Annuity of 1 3.1525 3.31
present Value of 1 value of ordinary annuity of 1 2.72325 2.48685
determine the present value of the note.
#5 French Leasing Company purchased specialized equipment from Bryant Company on December 31, 2013 for $400,000. On the same date,it leased this equipment to Holmes Company for 5 years, the useful life of the equipment. The lease payments begin january 1,2014 and are made every 6 months until july 1, 2018. French Leasing wants to earn 10% annually on its investment.
Various Factors at 10%
Periods Future Present Future Value of an Present Value of an
or Rents Value of $ 1 Value of $ 1 Ordinary Annuity Ordinary Annuity
9 2.35795 0.4241 13.57948 5.75902
10 2.59374 0.38554 15.93743 6.14457
11 2.85312 0.35049 18.53117 6.49506
Various Factors at 5%
Periods Future Present Future Value of an Present Value of an
or Rents Value of $ 1 Value of $ 1 Ordinary Annuity Ordinary Annuity
9 1.55133 0.64461 11.02656 7.10782
10 1.62889 0.61391 12.57789 7.72173
11 1.71034 0.58468 14.20679 8.30641
(a) Calculate the amount of each rent.
(b) How much interest revenue will Frence earn in 2014?
#6 Abdulla Company owns a plot of land on which buried toxic wastes have been discovered.Since it will require several years and a
considerable sum of money before the property is fully detoxified and capable of generating revenues, Abdulla wishes to sell the land
now.He has located two potential buyers:Holmes, who is willing to pay $320,000 for the land now,and Watson,who is willing to make
20 annual payments of $50,000 each,With the first payment to be made 5 years from today. Assuming that the appropriate rate of
interest is 9%, to whom should Abdulla sell the land? Show ALL calculations.
#7 Raji Company sells TVs. The perpetual inventory was stated as $28,500 on the books at December 31,2012. At the close of the year,
a new approach for compiling inventory was used and apparently a satisfactory cut-off for preparation of financial statements was not
made.Some events that occurred are as follows.
1. TVs shipped to a customer january 2, 2013, coting $5,000 were included in inventory at December 31, 2012. The sale was recorded in 2013.
2. TVs costing $12,000 received December 30, 2012, were recorded as received on january 2, 2013.
3. TVs received during 2012 costing $4,600 were recorded twice in the inventory account.
4. TVs shipped to a customer December 28, 2012, f.o.b. shipping point, which cost $10,000, were not received by the customer until january,
2013. The TVs were included in the ending inventory.
5. TVs on hand that cost $6,100 were never recorded on the books.
Compute the correct inventory at December 31, 2012.
#8 Jakes Company shows the following data related to an item of inventory.
Inventory, January 1 100 units @ $5.00
Purchashe, January 9 300 units @ $5.40
Purchashe, January 19 70 units @ $6.00
Inventory, January 31 100 units
(a) What value should be assigned to the ending inventory using FIFO?
(b) What value should be assigned to cost of goods sold using LIFO?
#9 Marino Company was formed on December 1, 2012. The following information is available from
Marino's inventory record for product X.
Units Unit cost
January 1, 2013 (beginning inventory) 1,600 $18.00
Purchases:
January 5,2013 2,600 $20.00
January 25,2013 2,400 $21.00
February 16,2013 1,000 $22.00
March 15,2013 1,800 $23.00
A physical inventory on March 31, 2013, shows 2,500 units on hand.
Prepare schedules to compute the ending inventory at March 31, 2013, under each of the following
inventory methods methods :
(a) FIFO.
(b) LIFO.
(c) Weighted-average.
Show supporting computations in good form.
#10 Halle Berry is presently leasing a small business computer from Jackson Office Equipment
Company. The lease requires 10 annual payments of $4,000 at the end of each year and provides
the lessor (Jaskson) with an 8% return on its investment. You may use the following 8% interest
factors:
9 Periods 10 Periods 11 Periods
Future value of 1 1.999 2.15892 2.33164
Present value of 1 0.50025 0.46319 0.42888
Future value of Ordinary Annuity of 1 12.48756 14.48656 16.64549
Present value of Ordinary Annuity of 1 6.24689 6.71008 7.13896
Present value of Annuity Due of 1 6.74664 7.24689 7.71008
(a) Assuming the computer has a ten-year life and will have no salvage value at the expiration
of the lease, what was the original cost of the computer to Jackson?
(b)What amount would each payment be if the ten annual payments are to be made at the
the beginning of each period?
INTERMEDIATE ACCOUNTING 1
ACCT310, SECTION 4015 ACCT310, SECTION 4015
FINAL EXAM; CHAPTERS 1 - 12
MARCH 4TH,2014
#1 Holmes Manufacturing co. was incorporated on 1/2/13 but was unable to begin manufacturing activites activities
until 8/1/13 because new factory facilities were not complete until that date .The Land and Buildings account
at 12/31/13 per the books was as follows:
Date Item Amount
1/31/13 Land and dilapidated building $200,000
2/28/13 Cost of removing building 4,000
4/1/13 Legal fees 6 ,000
5/1/13 Fire insurance premium payment 5,400
5/1/13 Special tax assessment for streets 4,500
5/1/13 Partial payment of new building construction 170,000
8/1/13 Final payment on building construction 170,000
8/1/13 General expenses 30,000
12/31/13 Asset Write-up 75,000
$664,900
Additional information:
1. To acquire the land and building on 1/13/13, the company paid $100,000 cash and 1,000 shares
of its common stock (par value=$100/share) which is very actively traded and had a fair value per
share of $140.
2. When the old building was removed,Holmes paid Berry Demolition Co. $4,000, but also received
$1,500 from the sale of salvaged material.
3. Legal fees covered the following:
Cost of organization $2,500
Examination of title covering purchase of land 2,000
Legal work in connection with the building construction 1,500
$6,000
.4 The fire insurance premium covered premiums for a three-year term beginning May 1,2013.
5. General expenses covered the following for the periods d 1/2/13.
President's salary $20,000 $20,000
Plant superintendent covering supervision of new building 10,000 10,000
$30,000
6. Because of the rising land costs, the president was sure that the land was worth at least $75,000
more than what it cost the company.
Determine the proper balances as at 12/31/13 for a separate land account and a separate building buildings
account. Use separate T-accounts (one for land and one for buildings) labeling all the relevant amount ant
amounts and disclosing all computations.
#2 On May 31,2013, Holmes Company paid $3,300,000 to acquire all of the common stock of Berry
Corporation, which became a division of Holmes.Berry reported the following balance sheets at
the time of the acquisition:
Current assets $ 900,000 Current liabilities $ 600,000
Noncurrent assets 2,700,000 Long-term liabilities 500,000
Stockholders' equity 2,500,000
Total liabilities and
Total assets $3,600,000 stockholders' equity $3,600,000
It was determined at the date of the purchase that the fair value of the indentifiable not assets of Berry was
$ 2,800,000.At December 31,2013, Berry reports the following balance sheet information:
Current assets $ 800,000
Noncurrent assets(including goodwill recognized in purchase) 2,400,000
Current liabilities (700,000)
Long -term liabilities (500,000)
Net assets $2,000,000
It is determined that the fair value of the Hall division is $2,100,000. The recorded amount
for Berry's net assets (excluding goodwill) is the same as fair value, except for property, plant,
and equipment, which has a fair value of $200,000 above the carrying value.
(a) Compute the amount of goodwill recognized, if any,on Monday 31,2013.
(b) Determine the impairment loss, if any, to be recorded on December 31,
2013
(c ) Assume that the fair value of the Berry's division is $1,950,000 instead of
$2,100,000. Prepare the journal entry to record the impairment loss, if any t loss,
if any, on Dcember 31,2013.
#3 On July 1, 2012, Holmes Company purchased for $2,880,000 snow-making
equipment having an estimated useful life of 5 years with an estimated salvage
value of $120,000. Depreciation is taking for the portion of the year the assets
is used.
(a) Complete the form below by determining the depreciation expenses and the
year end book values for 2012 and 2013 using the :
1. Sum-of-the -year'-digits method.
2. double-declining balance method.
Sum-of-the-Years'-Digits Method 2012 2013
Equipment $2,880,000 $2,880,000
Less: Accumulated Depreciation
Year-End Book Value
Depreciation Expenses for the Year
Double-Declining Balance Method
Equipment $2,880,000 $2,880,000
Less: Accumulated Depreciation
Year-End Book Value
Depreciation Expenses for the Year
(b) Assume the Company had used straight-line depreciation during 2012 and 2013.
During 2014 ,the Company determined that the equipment would be useful to
the Company for only one more year beyond 2014. Salvage value is estimated at $160,000. compute the amount of depreciation expense for the 2014 income statement.
#4 Homes inc . Plans to aquire an additional machine on january 1, 2014 2014 to meet th grwoing demand for its product.
Berry company offers to provide the machines to Holmes using either of the option listed below (each option gives Holmes exactly the same machines and gives Berry company approximately the same net present value cash equivalent at 10%)
option 1- Cash purchase $1,600,000
Opttion 2- installation purchase requiring 15 annual payments of $210,358 due December 31 each year .
the expected economic life of this machines to Holmes is 15 years. Salvage value at that time is extimated to be $100,000. straight line depreciation is used . Intrest expense under option 2 is computed using the effective intrest method.
INSTRUCTION
Based upon current generally accepted accounting principles ,state how ,if at all the book value of the machine and the liabilty should appear on the December 31,2014 balaqnce sheet of Holmes inc, for each option. Present your answer on an answer sheet in the following format. if an item should not appear in the following balance sheet , write "not shown" opposite the option.
Assets Liabilties
Option1 Account name Amount account name Amount
option 2
#5 Holmes co.acquired a truck on july 1,2010. at a cost of $162,000. the truck had a six -year useful life and an estimated salvage value of $18,000. The straight-line method of depreciation was used. On January 1,2013. the truck was overhalted at a cost of $15,000, which extended the useful life of the truck fo an additional two year beyound that originally estimated (salvage value is still estimated at $18,000) . in computing depreciation for annual adjustment purposes, expense is calculated for each month the asset is owned.
Instructions
prepare the appropriate entries for January1,2013 and december 31,2013.
#6 Holmes manufacturing company decided to expand further by purchasing Berry company. The balance sheet of Berry company as of December 31,2013 was as follows.
BERRY COMPANY
balance sheet
December31,2013.
Assets liabilities and Equities
cash 210,000 Account payable 375,000
Receivable 550,000 common stock 800,000
Inventory 275,000 Retained earnings 885,000
plant Assets (net) 1,025,000
Total assets $2,060,000 Total Liabilies and equities2,060,000
An appraisal, agreed to by the parties ,indicated that the fair value of the invetory was $350,000 and the fair value of the plant assets was $1,325,000
the fair value of the receivable is equal to the amount reported on the balance sheet, the agreed purchase price was $2,275,000 and this amount was paid in cash to the previous owners of berry company.
Instruction.
Determine the amount of goodwill (if any)implied in the purchase prise of $2,275,000
#7 Holmes company exchange machinery with any appraised value of $2,925,000 a recorded cost of $4,500,000 and accumulated depreciation of $2,250,000
will Berry corporation for machinery Berry owns. The company has an appraised valu of $$2,825,000. a recorded cost of $5,400,00,and accumulated depreciation of $2,970,000. Berry also give Holmes $100,000 in the exchange. Assume depreciation has already been updated.
Instruction
prepared the entries on both companies books assuming that the exchange HAS commercial subtstance .(round all computation to the nearest dollar.)
B perpared the entries on both companies'books assuming that the exchange LACKS commercial substance (round all computation to the nearest doller.
$8 In early January 2011, Holmes corporation appalied for a patent ,incuring legal cost of $40,000, in January 2012. Holmes incured $9,000 of
legal fees in a successful defense of its patent.
Instructions
a compute 2011 amortation 12/31/11 carring value 2012 amortization.
and 12/31/12 carrying value if the company amortizes the patent over 10 year.
b Compute the 2013 amortization and the 12/31/13 carrying the value , assuming that at the beginning of 2013 . Based on new market
research , Holmes determines that the value of the patent $34,000. Estimated future cash flows from the patent are $35,000 on January 3,2013.
#9 On april 1, Holmes co, began construction of a small bulding .payment of $180,000 were made monthly for four months beginning on april 1.The building wa
was completed and ready for occupancy on August 1. for the purpose of determinning the amount of intrest cost to be capitaliszed ,calculate the weighted average accumulated expenditure on the building by completing the schedule below.
Date Expenditure Capitalization Period weighted Avg Expenditures
#10 During 2012 and 2013, Berry corporation experience several transactions involving plant assets. A number of error where made in recording
some of these transactions. For each items listed below , indicate the effect of the error (if any) in the blanks provided by using the following codes;
o=overstate; U=Understate; NE=No Effect
If no error was made , write NE in each of the four columns.
2012 2013
Net Book
value of
plant 2012
Assets net
12/31/12 income

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