Spring Semester Accounting Information Systems

Published: 11 months ago

Spring Semester Accounting Information Systems

31. Calculate the WACC using the following information: Debt-Equity ratio is 50%. Cost of debt is 8.00%

Calculate the WACC using the following information: Debt-Equity ratio is 50%. Cost of debt is 8.00% Cost of equity is 10.00% Company pays tax at 35% a) 7.60% b) 8.40% c) 9.33% d) 9.00%

32. The accounting concept that is principally used to classify leases into operating and finance is

The accounting concept that is principally used to classify leases into operating and finance is

(a) Substance over form.

(b) Prudence.

(c) Neutrality.

(d) Completeness.

33. (Change in Accounting Principle) Tim Mattke Company began operations in 2012 and for simplic- ity

(Change in Accounting Principle) Tim Mattke Company began operations in 2012 and for simplic- ity reasons, adopted weighted-average pricing for inventory. In 2014, in accordance with other companies in its industry, Mattke changed its inventory pricing to FIFO. The pretax income data is reported below.

Instructions

(a) What is Mattke’s net income in 2014? Assume a 35% tax rate in all years.

(b) Compute the cumulative e f fect of the change in accounting principle f r om weighted-average to

FIFO inventory pricing.

(c) Show comparative income statements for T im Mattke Compan y , beginning with income befo r e

income tax, as p r esented on the 2014 income statement.

34. On June 30, 2011, Cole Inc., exchanged 3,000 shares of Stone Corp. $30 par value common stock for...

On June 30, 2011, Cole Inc., exchanged 3,000 shares of Stone Corp. $30 par value common stock for a patent owned by Gore Co. The Stone stock was acquired in 2009 at a cost of $80,000. At the exchange date, Stone common stock had a fair value of $45 per share, and the patent had a net carrying value of $160,000 on Gore's books. Cole should record the patent at:

• $80,000


• $90,000


• $135,000


• $160,000

35. 1) Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a.

1) Using the allowance method of accounting for uncollectible receivables, the entry to reinstate a specific receivable previously written off would include a

A. credit to Bad Debt Expense B. credit to Accounts Receivable C. debit to Allowance for Doubtful Accounts D. debit to Accounts Receivable

2) The Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable. Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible. The entry to write off this account would be which of the following?:

3) Two methods of accounting for uncollectible accounts are the

4) A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity. The journal entry to recognize this event is

5) Which of the following should be included in the acquisition cost of a piece of equipment?

6) You have just received notice that a customer of yours with an Account Receivable balance of $100 has gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry you make is to

7) Under the allowance method of accounting for uncollectible receivables, writing off an uncollectible account.

36. Teri West operates her own catering service. Summary financial data for July are presented in...

Teri West operates her own catering service. Summary financial data for July are presented in equation form as follows. Each line designated by a number indicates the effect of a transaction on the equation. Each increase and decrease in stockholders’ equity, except transaction (5), affects net   income.

                      Assets                        5 Liabilities 1                          Stockholders’ Equity                                       

Accounts

Common

Retained

Fees

    Cash    1 Supplies 1   Land    5  Payable  1  Stock   Earnings   −    dividends     1 Earned  − Expenses

a.                               Describe each transaction.

b.     What is the amount of the net increase in cash during the month?

c.     What is the amount of the net increase in stockholders’ equity during the month?

d.     What is the amount of the net income for the month?

e.     How much of the net income for the month was retained in the business?

 37. A company’s net income appears directly on the income statement

A company’s net income appears directly on the income statement and the owner’s equity statement, and it is included indirectly in the company’s balance sheet. Do you agree? Explain.

38. 1. An entity purchases a building and the seller accepts payment partly in equity shares and partly.

1. An entity purchases a building and the seller accepts payment partly in equity shares and partly in debentures of the entity. This transaction should be treated in the cash flow statement as follows: (a) The purchase of the building should be investing cash outflow and the issuance of shares and the debentures financing cash outflows. (b) The purchase of the building should be investing cash outflow and the issuance of debentures financing cash outflows while the issuance of shares investing cash outflow. (c) This does not belong in a cash flow statement and should be disclosed only in the footnotes to the financial statements. (d) Ignore the transaction totally since it is a noncash transaction. No mention is required in either the cash flow statement or anywhere else in the financial statements.

39. Eisentrout Corporation has two production departments, Machining and Customizing. The company use...

Eisentrout Corporation has two production departments, Machining and Customizing. The company uses ajob-order costing system and computes a predetermined overhead rate in each production department. The Machining Department's predetermined overhead rate is based on machine-hours and the Customizing Department's predetermined overhead rate is based on direct labor-hours. At the beginning ofthe current year, the company had made the following estimates: Machining Customizing 27,000 Machine-hours 26,000 Direct labor-hours 18,000 2,000 $153,400 $11,600 Total fixed manufacturing overhead cost variable manufacturing overhead per machine- 1.40 hour Variable manufacturing overhead per direct 3.20 labor-hour During the current month the company started and finished Job T272. The following data were recorded for this job: Job T272 Customizing Machining Machine-hour 40 10 Direct labor-hours 30 40 The estimated total manufacturing overhead for the Machining Department is closest to:

40. A company had incurred fixed expenses of Rs. 4,50,000 with a sales of Rs. 15,00,000 and earned a...

A company had incurred fixed expenses of Rs. 4,50,000 with a sales of Rs. 15,00,000 and earned a profit of Rs. 3,00,000 during the first half-year. In the second half, it suffered a loss of Rs. 1,50,000.

Calculate:

1. P/V Ratio, BEP and MS for the first half-year.


2. Sales for the second half-year assuming that the Selling Price and fixed expenses remained unchanged during the second half-year.


3. The BEP and MS for the whole year.

41. Z-Mart uses the perpetual inventory system and allows customers to use the Z-Mart store credit ca...

Show transcribed image text Z-Mart uses the perpetual inventory system and allows customers to use the Z-Mart store credit card in charging purchases. Z-Mart assesses a per-month interest fee for any unpaid balance on its store credit card at each month-end. Apr. 30 Z-Mart sold merchandise for $1,000 (that had cost $650) and accepted the customer's z-Mart store credit card. May 31 Z-Mart recorded $4 of interest earned from its store credit card as of this month-end. Prepare journal entries to record the above selected credit card transactions of Z-Mart.

42. Superior Company provided the following account balances for the year ended December 31 (all raw mat

Superior Company provided the following account balances for the year ended December 31 (all raw materials are used in production as direct materials):

Selling Expenses...............................................................................................$140,000

Purchases of raw materials................................................................................$290,000

Direct labor.........................................................................................................?

Administrative expenses.....................................................................................$100,000

Manufacturing overhead applied to work in process...........................................$285,000

Total actual manufacturing overhead costs.........................................................$270,000

Inventory balances at the beginning of the month and end of the year were as follows:

                                                                                                                               Beginning Year           End year

Raw Materials...........................................................................................              $40,000                         $10,000

Finished goods........................................................................................                $50,000                             ?

Work in Process................                                                                                            ?                              $35,000

The total manufacturing costs for the year were $683,000: the cost of goods available for sale totaled $740,000: the unadjusted cost of goods sold totaled $660,000: and the net operating income was $30,000. The company's overapplied or underapplied overhead is closed entirely to Cost of Goods Sold.

Requried:

Prepare schedules of cost of goods manufactured and cost of goods sold and an income statement. (Hint: Prepare the income statement and schedule fo cost of goods sold first followed by the schedule of cost of goods manufactured.)

43. Quake Corporation paid $1,680,000 for a 30 percent interest in

Quake Corporation paid $1,680,000 for a 30 percent interest in Tremor Corporation’s outstanding voting stock on January 1, 2011. The book values and fair values of Tremor’s assets and liabilities on January 1, along with amortization data, are as follows (in thousands):



Tremor Corporation reported net income of $1,200,000 for 2011 and paid dividends of $600,000.

REQUIRED

1. Prepare a schedule to allocate the investment fair values/book value differentials relating to Quake’s investment in Tremor.

2. Calculate Quake’s income from Tremor for 2011.

3. Determine the balance of Quake’s Investment in Tremor account at December 31,2011.

44. The general ledger of the Karlin Company, a consulting company, at January 1, 2013, contained the...

The following is a summary of the transactions for the year:

8. Prepare a post-closing trial balance.

45. For this question I had to make a journal entry (which I already did), so now how do I log these...

For this question I had to make a journal entry (which I already did), so now how do I log these into the following T-Accounts: Cash, Prepaid Insurance, Supplies, Equipment, Accounts Payable, Unearned Revenue, Common Stock, Service Revenue, Advertising Expense, and Legal Fees Expense?

Also, how would I prepare a trial balance for this question?

Tony and Suzie graduate from college in May 2015 and begin developing their new business. They begin by offering clinics for basic outdoor activities such as mountain biking or kayaking. Upon developing a customer base, they'll hold their first adventure races. These races will involve four-person teams that race from one checkpoint to the next using a combination of kayaking, mountain biking, orienteering, and trail running. In the long run, they plan to sell outdoor gear and develop a ropes course for outdoor enthusiasts.

On July 1, 2015, Tony and Suzie organize their new company as a corporation, Great Adventures Inc. The articles of incorporation state that the corporation will sell 20,000 shares of common stock for $1 each. Each share of stock represents a unit of ownership. Tony and Suzie will act as co-presidents of the company. The following business activities occur during July.

Jul. 1

Sell $10,000 of common stock to Suzie.

1

Sell $10,000 of common stock to Tony.

1

Purchase a one-year insurance policy for $4,800 ($400 per month) to cover injuries to participants during outdoor clinics.

2 Pay legal fees of $1,500 associated with incorporation.

4 Purchase office supplies of $1,800 on account.

7

Pay for advertising of $300 to a local newspaper for an upcoming mountain biking clinic to be held on July 15. Attendees will be charged $50 on the day of the clinic.

8 Purchase 10 mountain bikes, paying $12,000 cash.

15

On the day of the clinic, Great Adventures receives cash of $2,000 from 40 bikers. Tony conducts the mountain biking clinic.

22

Because of the success of the first mountain biking clinic, Tony holds another mountain biking clinic and the company receives $2,300.

24

Pay for advertising of $700 to a local radio station for a kayaking clinic to be held on August 10. Attendees can pay $100 in advance or $150 on the day of the clinic.

30

Great Adventures receives cash of $4,000 in advance from 40 kayakers for the upcoming kayak clinic.

 

Additional Requirements

Level of Detail: Only answer needed

46. A data set on money spent on lottery tickets during the past year by 200 households has a lowest...

A data set on money spent on lottery tickets during the past year by 200 households has a lowest value of $1 and a highest value of $1167. Suppose we want to group these data into six classes of equal widths. a. Assuming that we take the lower limit of the first class as $1 and the width of each class equal to $200, write the class limits for all six classes. b. What are the class boundaries and class midpoints? 2.17 A data set on monthly expenditures (rounded to the nearest dollar) incurred on fast food by a sample of 500 households has a minimum value of $3 and a maximum value of $147. Suppose we want to group these data into six classes of equal widths. a. Assuming that we take the lower limit of the first class as $1 and the upper limit of the sixth class as $150, write the class limits for all six classes. b. Determine the class boundaries and class widths. c. Find the class midpoints

47. Entry for factory labor costs The weekly time tickets indicate the following distribution of...

Entry for factory labor costs

48. Use the adjusted trial balance for Stockton Company below to answer the questions that follow.

answer the questions that follow.

Use the adjusted trial balance for Stockton Company below to answer the questions that follow. Determine total assets. a. $24, 030 b. $16, 830 c. $22, 930 d. $25, 130

The weekly time tickets indicate the following distribution of labor hours for three direct labor employees:

49. 11.A debit may signify a(n) a.decrease in asset accounts b.decrease in liability accounts c.increase

11.A debit may signify a(n)

a.decrease in asset accounts

b.decrease in liability accounts

c.increase in the capital stock account

d.decrease in the dividend account

12.Which of the following types of accounts have a normal credit balance?

a.assets and liabilities

b.liabilities and expenses

c.revenues and liabilities

d.capital stock and dividends

13.Which of the following groups of accounts have a normal debit balance?

a.revenues, liabilities, stockholders’ equity

b.stockholders’ equity, assets

c.liabilities, expenses

d.assets, expenses

14.Which one of the statements below is not a purpose for the journal?

a.to show increases and decreases in accounts

b.to show a chronological order by date

c.to show a complete transaction in one place

d.to help locate errors

15.A credit signifies a decrease in

a.dividends

b.liabilities

c.capital stock

d.revenue

16.A credit may signify a

a.decrease in assets

b.decrease in liabilities

c.decrease in capital stock

d.decrease in revenue

17.A debit signifies a decrease in

a.assets

b.expenses

c.dividends

d.revenues

18.Which of the following applications of the rules of debit and credit is true?

a.decrease Prepaid Insurance with a credit and the normal balance is a credit

b.increase Accounts Payable with a credit and the normal balance is a debit

c.increase Supplies Expense with a debit and the normal balance is a debit

d.decrease Cash with a debit and the normal balance is a credit

19.Which of the following describes the classification and normal balance of the fees earned account?

a.asset, credit

b.liability, credit

c.stockholders' equity, debit

d.revenue, credit

20.The classification and normal balance of the accounts payable account is

a.an asset with a credit balance

b.a liability with a credit balance

c.stockholders' equity with a credit balance

d.revenue with a credit balance

50. The following transactions relate to the General Fund of the City of Buffalo Falls for the year

The following transactions relate to the General Fund of the City of Buffalo Falls for the year ended December 31, 2012:

1. 
   
   
   
   1. Beginning balances were: Cash, $150,000; Taxes Receivable, $200,000; Accounts Payable, $50,000; and Fund Balance, $300,000.
   
   
   2. The budget was passed. Estimated revenues amounted to $2,000,000 and appropriations totaled $1,980,000. All expenditures are classified as General Government.
   
   
   3. Property taxes were levied in the amount of $1,200,000. All of the taxes are expected to be collected before February 2013.
   
   
   
   

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Accounting for the General and Special Revenue Funds 115

1. 
   
   
   
   1. Cash receipts totaled $1,200,000 for property taxes and $740,000 from other revenue.
   
   
   2. Contracts were issued for contracted services in the amount of $900,000.
   
   
   3. Contracted services were performed relating to $765,000 of the contracts with invoices amounting to $759,000.
   
   
   4. Other expenditures amounted to $950,000.
   
   
   5. Accounts payable were paid in the amount of $1,700,000.
   
   
   6. The books were closed.
   
   
   
   

Required:

1. 
   
   
   
   1. 
      
      
      
      1. Prepare journal entries for the above transactions.
      
      
      2. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the General Fund.
      
      
      3. Prepare a Balance Sheet for the General Fund assuming there are no restricted or assigned net resources and outstanding encumbrances are committed by contractual obligation