Acc 421 final exxam question

Question 1

Transactions for Mehta Company for the month of May are presented below.

May	1		B.D. Mehta invests $3,309 cash in exchange for common stock of Mehta Company, a small welding corporation.
	3		Buys equipment on account for $1,427.
	13		Pays $477 to landlord for May rent.
	21		Bills Noble Corp. $534 for welding work done.

Prepare journal entries for each of these transactions.

Date	Description/Account	Debit	Credit
May 1
May 3
May 13
May 21

Question 2

On July 1, 2012, Crowe Co. pays $18,036 to Zubin Insurance Co. for a 3-year insurance contract. Both companies have fiscal years ending December 31. For Crowe Co. journalize the entry on July 1 and the adjusting entry on December 31.  (Round answers to zero decimal places, e.g. 2,555.)

Date	Description/Account	Debit	Credit
July 1
Dec. 31

Question 3

Dresser Company's weekly payroll, paid on Fridays, totals $9,300. Employees work a 5-day week. Prepare Dresser's adjusting entry on Wednesday, December 31, and the journal entry to record the $9,300 cash payment on Friday, January 2.  (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

Date	Description/Account	Debit	Credit
Dec. 31
Jan. 2

Question 4

Side Kicks has year-end account balances of Sales $860,370; Interest Revenue $16,860; Cost of Goods Sold $563,130; Operating Expenses $191,430; Income Tax Expense $38,960; and Dividends $19,143. Prepare the year-end closing entries.  (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

Description/Account	Debit	Credit
(To close sales account.)
(To close expense accounts.)
(To close net income to retained earnings.)
(To close dividends to retained earnings.)

Question 7

Starr Co. had sales revenue of $617,400 in 2012. Other items recorded during the year were:   Cost of goods sold $321,700   Wage expense 121,600   Income tax expense 29,100   Increase in value of company reputation 18,700   Other operating expenses 12,300   Unrealized gain on value of patents 22,600 Prepare a single-step income statement for Allen for 2012. Allen has 100,000 shares of stock outstanding.  (List multiple entries from largest to smallest amount, e.g. 10, 5, 2. Round earnings per share to 2 decimal places, e.g. 0.20. Enter all amounts as positive amounts and subtract where necessary.) STARR CO. Income Statement For the Year 2012 Revenues              $       Expenses            $                                           Total Expenses   Net Income   $       Earnings per share   $

Question 8

Portman Corporation has retained earnings of $774,780 at January 1, 2012. Net income during 2012 was $1,571,050, and cash dividends declared and paid during 2012 totaled $79,850. Prepare a retained earnings statement for the year ended December 31, 2012. Assume an error was discovered: land costing $81,890 (net of tax) was charged to repairs expense in 2009.  (Enter all amounts as positive amounts and subtract where necessary.)

PORTMAN CORPORATION
Retained Earnings Statement
For the Year Ended December 31, 2012
	$
Add:
Less:
	$

Question 9

On January 1, 2012, Richards Inc. had cash and common stock of $60,930. At that date the company had no other asset, liability or equity balances. On January 2, 2012, it purchased for cash $20,010 of equity securities that it classified as available-for-sale. It received cash dividends of $4,270 net of tax during the year on these securities. In addition, it has an unrealized holding gain on these securities of $5,690 net of tax. Determine the following amounts for 2012: (a) net income; (b) comprehensive income; (c) other comprehensive income; and (d) accumulated other comprehensive income (end of 2012).

(a)

Net income

$

(b)

Comprehensive income

$

(c)

Other comprehensive income

$

(d)

Accumulated other comprehensive income

$

Question 10

(Comprehensive Income)

Armstrong Corporation reported the following for 2012: net sales $1,225,200; cost of goods sold $773,000; selling and administrative expenses $345,500; and an unrealized holding gain on available-for-sale securities $21,900.

Prepare a statement of comprehensive income, using the two-income statement format. Ignore income taxes and earnings per share.  (Enter all amounts as positive amounts and subtract where necessary.)

ARMSTRONG CORPORATION
Income Statement and Statement of Comprehensive Income
For the Year Ended December 31, 2012
	$
Gross Profit
Net income	$
Net income	$
Unrealized holding gain
Comprehensive income	$

Question 11

Guillen, Inc. began work on a $7,168,000 contract in 2012 to construct an office building. Guillen uses the completed-contract method. At December 31, 2012, the balances in certain accounts were construction in process $1,751,800; accounts receivable $250,000; and billings on construction in process $1,175,000. Indicate how these accounts would be reported in Guillen's December 31, 2012, balance sheet.

Current assets
		$
Inventories
	$
Less:

Question 12

Lazaro, Inc. sells goods on the installment basis and uses the installment-sales method. Due to a customer default, Lazaro repossessed merchandise that was originally sold for $860, resulting in a gross profit rate of 40%. At the time of repossession, the uncollected balance is $660, and the fair value of the repossessed merchandise is $302. Prepare Lazaro's entry to record the repossession.  (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

Description/Account	Debit	Credit

Question 30

(Simple and Compound Interest Computations)

Lyle O 'Keefe invests $23,600 at 8% annual interest, leaving the money invested without withdrawing any of the interest for 8 years. At the end of the 8 years, Lyle withdrew the accumulated amount of money.

(a)	Compute the amount Lyle would withdraw assuming the investment earns simple interest.
	$

(b)	Compute the amount Lyle would withdraw assuming the investment earns interest compounded annually.  (Round to 2 decimal places, e.g. 25,250.25. Hint: Use tables in text.)
	$

(c)	Compute the amount Lyle would withdraw assuming the investment earns interest compounded semiannually.  (Round to 2 decimal places, e.g. 25,250.25. Hint: Use tables in text.)
	$

Question 29

Zach Taylor is settling a $21,000 loan due today by making 6 equal annual payments of $4,821.76.

What payments must Zach Taylor make to settle the loan at the interest rate of 10%, but with the 6 payments beginning on the day the loan is signed?  (Round answer to 2 decimal places, e.g. 2,250.25. Hint: Use tables in text.)

Payments

$

Question 28

Amy Monroe wants to create a fund today that will enable her to withdraw $30,850 per year for 8 years, with the first withdrawal to take place 5 years from today. If the fund earns 10% interest, how much must Amy invest today?  (Round the answer to zero decimal places, e.g. 120,250. Hint: Use tables in text.)

Investment amount

$

Question 27

Chris Spear invested $11,638 today in a fund that earns 10% compounded annually. To what amount will the investment grow in 3 years? To what amount would the investment grow in 3 years if the fund earns 10% annual interest compounded semiannually?  (Round answers to 2 decimal places, e.g. 12,250.25. Hint: Use tables in text.)

Investment at 10% annual interest	$
Investment at 10% annual interest compounded semiannually	$

Question 26

(Preparation of a Statement of Cash Flows)

A comparative balance sheet for Orozco Corporation is presented below.

		December 31
	Assets	2012	2011
	Cash	$64,537	$22,000
	Accounts receivable	84,856	67,319
	Inventories	182,856	190,319
	Land	73,856	111,319
	Equipment	267,144	198,681
	Accumulated depreciation-equipment	(71,856)	(43,319)
	Total	$601,393	$546,319
	Liabilities and Stockholders' Equity
	Accounts payable	$36,856	$48,319
	Bonds payable	150,000	200,000
	Common stock ($1 par)	214,000	164,000
	Retained earnings	200,537	134,000
	Total	$601,393	$546,319

Additional information:

1. Net income for 2012 was $110,712.

2. Cash dividends of $44,175 were declared and paid.

3. Bonds payable amounting to $50,000 were retired through issuance of common stock.

(a)	Prepare a statement of cash flows for 2012 for Orozco Corporation.  (List multiple entries from the largest positive to the smallest positive amount followed by the most negative to the least negative amount, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)

OROZCO CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2012
Cash flows from operating activities
		$
Adjustments to reconcile net income to net cash
provided by operating activities:
	$
Net cash provided by operating activities
Cash flows from investing activities
Net cash used by investing activities
Cash flows from financing activities
Net increase in cash
Cash at beginning of year
Cash at end of year		$
Noncash investing and financing activities
Issued common stock to retire $  of bonds outstanding

(b)	Determine Orozco Corporation's current cash debt coverage ratio, cash debt coverage ratio, and free cash flow.  (Round ratios to 2 decimal places, e.g. 1.55. List multiple entries from the largest positive to the smallest positive amount followed by the most negative to the least negative amount, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)
Current cash debt coverage ratio	: 1
Cash debt coverage ratio	: 1
Free Cash Flow Analysis
Net cash provided by operating activities	$
Less:
Free cash flow	$

Question 25

Martinez Corporation engaged in the following cash transactions during 2012.

	Sale of land and building	$184,060
	Purchase of treasury stock	45,070
	Purchase of land	41,350
	Payment of cash dividend	89,570
	Purchase of equipment	58,360
	Issuance of common stock	149,470
	Retirement of bonds	108,270

Determine Martinez's free cash flow, assuming that it reported net cash provided by operating activities of $404,670.   (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)

Free Cash Flow Analysis
Less:
Free cash flow	$

Question 24

Martinez Corporation engaged in the following cash transactions during 2012.

	Sale of land and building	$196,420
	Purchase of treasury stock	42,540
	Purchase of land	42,130
	Payment of cash dividend	89,500
	Purchase of equipment	60,750
	Issuance of common stock	149,790
	Retirement of bonds	105,940

Compute the net cash provided (used) by investing activities.  (List multiple entries from the largest positive to the smallest positive amount followed by the most negative to the least negative amount, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)

	$
Net cash provided by investing activities	$