Semester Assistance: Expert Guidance for Accounting Students
36. Notes Receivable with Unrealistic Interest Rate On December 31,
Notes Receivable with Unrealistic Interest Rate On December 31, 2009, Hurly Co. performed environmental consulting services for Cascade Co. Cascade was short of cash, and Hurly Co. agreed to accept a $300,000 zero-interest-bearing note due December 31, 2011, as payment in full. Cascade is somewhat of a credit risk and typically borrows funds at a rate of 10%. Hurly is much more creditworthy and has various lines of credit at 6%.
(a) Prepare the journal entry to record the transaction of December 31, 2009, for the Hurly Co.
(b) Assuming Hurly Co.’s fiscal year-end is December 31, prepare the journal entry for December 31, 2010.
(c) Assuming Hurly Co.’s fiscal year-end is December 31, prepare the journal entry for December 31, 2011.
(d) Assume that Hurly Co. elects the fair value option for this note. Prepare the journal entry at December 31, 2010, if the fair value of the note is $320,000.
37. Stanley and Jones Lawn Service Company (S&J) maintains its books on a cash basis.
Stanley and Jones Lawn Service Company (S&J) maintains its books on a cash basis. However, the company recently borrowed $170,000 from a local bank and the bank requires S&J to provide annual financial statements prepared on an accrual basis. During 2013, the following cash flows were recorded: |
Cash collected from customers | $ | 390,000 | |||
Cash paid for: | |||||
Salaries | $ | 187,000 | |||
Supplies | 32,000 | ||||
Rent | 16,000 | ||||
Insurance | 6,000 | ||||
Miscellaneous | 27,000 | 268,000 | |||
Net operating cash flow | $ | 122,000 | |||
You are able to determine the following information about accounts receivable, prepaid expenses, and accrued liabilities: |
January 1, 2013 | December 31, 2013 | |||||
Accounts receivable | $ | 39,000 | $ | 30,500 | ||
Prepaid insurance | 0 | 2,700 | ||||
Supplies | 1,700 | 1,850 | ||||
Accrued liabilities | 3,100 | 4,200 | ||||
In addition, you learn that the bank loan was dated September 30, 2013, with principal and interest at 6% due in one year. Depreciation on the company's equipment is $17,000 for the year. |
Required: |
Prepare an accrual basis income statement for 2013. (Ignore income taxes.) |
38. When you purchased your car, you took out a five-year
When you purchased your car, you took out a five-year annual-payment loan with an interest rate of 6% per year. The annual payment on the car is $5000. You have just made a payment and have now decided to pay the loan off by repaying the outstanding balance. What is the payoff amount if
a. you have owned the car for one year (so there are four years left on the loan)?
b. you have owned the car for four years (so there is one year left on the loan)?
39. Hiring an employee and taking a sales order are business
Hiring an employee and taking a sales order are business activities but are not accounting transactions requiring journal entries. Make a list of some other business activities that would not be captured as journal entries in traditional AIS. Do you think managers or investors would be interested in knowing about these activities? Why or why not?
40. Ming Xu believes revenues from credit sales may be recorded before they are collected in cash. Do...
Ming Xu believes revenues from credit sales may be recorded before they are collected in cash. Do you agree? Explain.
41. Schuss Inc. issued euro 3,000,000 of 10%, 10-year convertible bonds on April 1, 2015, at 98. The ...
Schuss Inc. issued euro 3,000,000 of 10%, 10-year convertible bonds on April 1, 2015, at 98. The bonds were dated April 1, 2015, with interest payable April 1 and October 1. Bond discount is amortized semiannually using the effective-interest method. The net present value of the bonds without the conversion feature discounted at 12% (its market rate) was euro 2, 655, 888. On April 1, 2016, euro 1,000,000 of these bonds were converted into 30,000 shares of euro 20 par value ordinary shares. Accrued interest was paid in cash at the time of conversion. Instructions (a) Prepare the entry to record the issuance of the convertible bond on April 1, 2015. (b) Prepare the entry to record the interest expense at October 1, 2015. (c) Prepare the entry(ies) to record the conversion on April 1, 2016. (The book value method is used.)
42. Rajesh purchased seven trucks on hire purchase on 1st July, 2014. The cash purchase price of each...
ajesh purchased seven trucks on hire purchase on 1st July, 2014. The cash purchase price of each truck was ~ 50,000. He was to pay 20% of the cash purchase price at the time of delivery and the balance in five half-yearly instalments starting from 31st December, 2014 with interest at 5% p.a.
On Rajesh’s failure to pay the instalment due on 30th June 2015, it was agreed that Rajesh would return 3 trucks to the vendor and remaining four would be retained by him. The returning price of 3 trucks was ~ 40,500. Rajesh charged depreciation @ 20% p.a. Vendor after spending ~ 1,000 on repairs, sold away all three trucks for ~ 40,000.
Show Trucks Account and Vendor’s Account in the books of Rajesh and Rajesh Account and Goods Repossessed Account in the books of the vendor, assuming that their books are closed on 30th June every year.
43. Alou Equipment Repair has a September 30 year end. The company adjusts and closes...
Alou Equipment Repair has a September 30 year end. The company adjusts and closes its accounts on an annual basis. On August 31, 2017, the account balances of Alou Equipment Repair were as follows: ALOU EQUIPMENT REPAIR Trial Balance August 31, 2017 Debit Credit Cash $ 2,790 Accounts receivable 7,910 Supplies 8,500 Equipment 9,000 Accumulated depreciation—equipment $ 1,800 Accounts payable 3,100 Unearned revenue 400 J. Alou, capital 21,200 J. Alou, drawings 15,600 Service revenue 49,600 Rent expense 5,500 Salaries expense 24,570 Telephone expense 2,230 $76,100 $76,100 During September, the following transactions were completed: Sept. 1Borrowed $10,000 from the bank and signed a two-year, 5% note payable. 2Paid September rent, $500. 8Paid employee salaries, $1,050. 12Received $1,500 cash from customers on account. 15Received $5,700 cash for services performed in September. 17Purchased additional supplies on account, $1,300. 20Paid creditors $2,300 on account. 21Paid September telephone bill, $200. 22Paid employee salaries, $1,050. 27Performed services on account and billed customers for services provided, $900. 29Received $550 from customers for services to be provided in the future. 30Paid J. Alou $800 cash for personal use.
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Completion of the Accounting Cycle https://edugen.wileyplus.com/edugen/courses/crs9382/ebook/c04/d2V5... Cumulative Coverage - Chapters 2 to 4 Alou Equipment Repair has a September 30 year end. The company adjusts and closes its accounts on an annual basis. On August 31, 2017, the account balances of Alou Equipment Repair were as follows: ALOU EQUIPMENT REPAIR Trial Balance August 31, 2017 Debit Credit Cash $ 2,790 Accounts receivable 7,910 Supplies 8,500 Equipment 9,000 Accumulated depreciation—equipment $ 1,800 Accounts payable 3,100 Unearned revenue 400 J. Alou, capital 21,200 J. Alou, drawings 15,600 Service revenue 49,600 Rent expense 5,500 Salaries expense 24,570 Telephone expense 2,230 $76,100 $76,100 During September, the following transactions were completed: Sept. 1Borrowed $10,000 from the bank and signed a two-year, 5% note payable. 2Paid September rent, $500. 8Paid employee salaries, $1,050. 12Received $1,500 cash from customers on account. 15Received $5,700 cash for services performed in September. 17Purchased additional supplies on account, $1,300. 20Paid creditors $2,300 on account. 21Paid September telephone bill, $200. 22Paid employee salaries, $1,050. 27Performed services on account and billed customers for services provided, $900. 29Received $550 from customers for services to be provided in the future. 30Paid J. Alou $800 cash for personal use. Adjustment data consist of the following: 1.Supplies on hand at September 30 cost $1,000. 2.Accrued salaries payable at September 30 total $630. 3.The equipment has an expected useful life of five years. 4.Unearned revenue of $450 is still not earned at September 30. 5.Interest is payable on the first of each month. 1 of 2 2017-05-04, 11:22 PMCompletion of the Accounting Cycle https://edugen.wileyplus.com/edugen/courses/crs9382/ebook/c04/d2V5... Instructions (a) Prepare T accounts and enter the August 31 balances. (b) Journalize the September transactions. (c) Post to T accounts. (d) Prepare a...
44. Dominik Corporation purchased a machine 5 years ago for $527,000 when it launched product M08Y. U...
Dominik Corporation purchased a machine 5 years ago for $527,000 when it launched product M08Y. Unfortunately, this machine has broken down and cannot be repaired. The machine could be replaced by a new model 310 machine costing $545,000 or by a new model 240 machine costing $450,000. Management has decided to buy the model 240 machine. It has less capacity than the model 310 machine, but its capacity is sufficient to continue making product M08Y. Management also considered, but rejected, the alternative of dropping product M08Y and not replacing the old machine. If that were done, the $450,000 invested in the new machine could instead have been invested in a project that would have returned a total of $532,000. |
$95,000
$5,000
$77,000
$18,000
45. Cardinal Industries had the following operating results for 2018: Sales = $34,116; Cost of goods ...
Cardinal Industries had the following operating results for 2018: Sales = $34,116; Cost of goods sold = $24,114; Depreciation expense = $5,977; Interest expense = $2,700; Dividends paid = $1,978. At the beginning of the year, net fixed assets were $19,920, current assets were $7,040, and current liabilities were $3,980. At the end of the year, net fixed assets were $24,484, current assets were $8,672, and current liabilities were $4,655. The tax rate for 2018 was 25 percent. a. What is net income for 2018? (Do not round intermediate calculations.) b. What is the operating cash flow for 2018? (Do not round intermediate calculations.) c. What is the cash flow from assets for 2018? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.) d-1. If no new debt was issued during the year, what is the cash flow to creditors? (Do not round intermediate calculations.) d-2. If no new debt was issued during the year, what is the cash flow to stockholders? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)
46. 1. Explain why achieving strategic fit is critical to a company’s overall success. 2. Describe how a
1. Explain why achieving strategic fit is critical to a company’s overall success.
2. Describe how a company achieves strategic fit between its supply chain strategy and its competitive strategy.
3. Discuss the importance of expanding the scope of strategic fit across the supply chain.
47. Can services be delivered by means of process operations? Suppor
Can services be delivered by means of process operations? Support your answer with an example.
48. Richards Corporation uses the FIFO method of process costing. The following information is availa...
Show transcribed image text Richards Corporation uses the FIFO method of process costing. The following information is available for October in its Fabricating Department: Units: Beginning Inventory: 80,000 units, 60% complete as to materials and 20% complete as to conversion. Units started and completed: 250,000. Units completed and transferred out: 330,000. Ending Inventory: 30,000 units, 40% complete as to materials and 10% complete as to conversion. Costs: Costs in beginning Work in Process - Direct Materials: $37, 200. Costs in beginning Work in Process - Conversion: $79, 700. Costs incurred in October - Direct Materials: $646, 800. Costs incurred in October - Conversion: $919, 300. Calculate the cost per equivalent unit of conversion. $2.76 $ 3.15
Bennett Enterprises issues a $400,000, 90-day, 5% not on Spectrum Industries for merchandise inventory.
A. Journalize Bennett Enterprises' entrie to record:
1. the issuance of the note.
2. the payment of the note at maturity.
B. Journalize Spectrum Industries' entries to record:
1. the receipt of the note.
2. the receipt of the payment of the note at maturity.
50. Bit's product manager is under pressure to increase market share, but is uncertain about how to m...
Bit's product manager is under pressure to increase market share, but is uncertain about how to make the product more competitive. The product is reasonably well-positioned in the Thrift segment and enjoys relatively high awareness and accessibility. Which of the following would most likely result in a quick increase in market share?
A) Re-position the product to the ideal spot within the segment
B) Increase awareness by 5%
C) Lower the unit selling price to the bottom limit of the segment price range
D) Increase the unit contribution margin by decreasing the MTBF