Help me 3

1.During the fourth quarter of 2008, the operations of Norris Carpet Center generated excess cash, which the company invested in securities, as follows:

Dec. 10 Purchased 2,000 shares of common stock as a trading investment, paying $15 per share.

Dec. 17 Received cash dividend of $.60 per share on the trading investment.

Dec. 31 Adjusted the trading investment to its market value of $34,000.

a) Prepare T accounts for Cash (beginning balance $85,000), Short Term Investment, Dividend Revenue and Unrealized Gain on Investment (or Unrealized Loss on Investment) (5 points)

b) Journalize the foregoing transactions and post to the T accounts. (10 points)

c) Show how to report the short term investment on Norris’s balance sheet at December 31. (5 points)

d) Show how to report whatever should appear on Norris’s income statement.

(5 points)

e) On January 6, 2009, Norris sold the trading investment for $29,000. Journalize the sale. (5 points)

2. Spice, Inc. began October with 100 shirts that cost $76 each. During October, the store made the following purchases at cost:

Oct 3 200@ $81= $16,200

Oct 12 90 @ $82= $7,380

Oct 24 240@ $85= $20,400

Spice sold 500 shirts and ended October with 130 shirts. The sale price of each shirt was $130.

a) Determine the cost of goods sold and ending inventory amounts by the average, FIFO and LIFO cost methods. Round average cost per unit to 3 decimal places, and round all other amounts to the nearest dollar. (10 points)

b) Explain why cost of goods sold is highest under LIFO. Be specific. (5 points)

c) Prepare Spice’s income statement for October. Report gross profit. Operating expenses totaled $10,000. Spice uses the LIFO method for inventory. The income tax rate is 40%. Skeleton income statement follows: (5 points)

3. On January 3, 2002, J.B. Weld Co. paid $224,000 for a computer system. In addition to the basic purchase price, the company paid a setup fee of $6,200, $6,700 sales tax, and $3,100 for a special platform on which to place the computer. J.B. Weld management estimates that the computer will remain in service 5 years and have a residual value of $20,000. The computer will process 50,000 documents the first year, with annual processing decreasing by 5,000 documents during each of the next 4 years (that is, 45,000 documents in 2003, 40,000 documents in 2004; and so on). In trying to decide which depreciation method to use, the company president has requested a depreciation schedule for each of the 3 depreciation methods (straight line, units of production and double declining balance).

a) For each of the generally accepted depreciation methods, prepare a depreciation schedule showing asset cost, depreciation expense, accumulated depreciation and asset book value. Please see below for Sample schedules. (20 points each)

b) J.B. Weld reports to stockholders and creditors in the financial statements using the depreciation method that maximizes reported income in the early years of asset use. Which depreciation method would J.B. Weld use to accomplish this goal? Explain (5 points)

4. Goldwater Corp. experienced these 5 events during the current year:

a) December sales totaled $50,000, and Goldwater collected an additional state sales tax of 6%. This amount will be sent to the state of Indiana early in January.

b) One November 30, Goldwater received rent of $6,000 in advance for a lease on unused store space. This rent will be earned evenly over 3 months.

c) On September 30, Goldwater signed a 6-month, 9% note payable to purchase store fixtures, costing $12,000. The note requires payment of principal and interest at maturity.

d) Goldwater owes $100,000 on a long term note payable. At December 31, 6% interest since July 31 and $20,000 of this principal are payable within 1 year.

For each item, indicate the account and the related amount to be reported as a current liability on the Goldwater Corp. balance sheet at December 31. (5 points each)

5. Boston Inc. reported the following summarized balance sheet at December 31, 2007:

Assets

Current assets $18,200

Property, Plant and Equipment 34,700

Total assets $52,900

Liabilities and Equity

Liabilities $ 6,200

Stockholders’ Equity:

$5 cumulative, preferred stock, $10 par,

180 shares issued 1,800

Common stock, $1 par, 2,400 shares issued 2,400

Paid in capital in excess of par, common 23,500

Retained earnings 19,000

Total liabilities and equity $52,900

During 2008, Boston completed these transactions that affected stockholders’ equity:

Feb. 22 Issued 1,000 shares of common stock for $16 per share.

May 4 Declared a regular cash dividend on the preferred stock

May 24 Paid the cash dividend

July 9 Distributed a 10% stock dividend on the common stock. Market price of the

common stock was $18 per share.

Nov 19 Reacquired 800 shares of common stock as treasury stock, paying $14 per

share.

Dec 8 Sold 600 shares of the treasury stock for $15 per share.

a) Journalize Boston’s transactions. Explanations are not required. (12 points)

b) Report Boston’s stockholders’ equity at December 31, 2008. Net income for 2008 was $62,000. Skeleton below: (8 points)

S12-4 Use cash flow to evaluate data

Top managers at Bayside Inns are reviewing company performance for 2014. The income statement reports a 20% increase in net income over 2013. However, most of the increase results from a gain on receivables. The cash flows statement, in summarized form, reports the following:

Net cash used for operating activities…………………………$(63,500)

Net cash provided by investing activities………………………..42,000

Net cash provided by financing activities………………………..29,100

Increase in cash during 2014……………………………………..$7,600

Write a memo giving Bayside Inn’s managers your assessment of 2014 operations and your outlook for the future. Focus on the information content of the cash flows data.

S12-5 report cash flow from operating activities- indirect method

Incredibly Fast Transportation (IFT) began 2014 with accounts receivable, inventory, and prepaid expenses totaling $56,000. At the end of the year, IFT had a total of $59,000 for these current assets. At the beginning of 2014, IFT owed current liabilities of $41,000, and at year end current liabilities totaled $45,000.

Net income for the year was $76,000. Included in net income were a $3,100 loss on the sale of land and depreciation expense of $12,000.

Show how IFT should report cash flows from operating activities for 2014. IFT uses the indirect method.