Final Exam Review Essay

FINAL EXAM REVIEWBE15-4. Lump-Sum SalesRavonette potful issued 300 shargons of $10 comparability quantify common armory and blow shares of $50 par value preferred contrast for a swelling sum of $13, calciferol. The common stock has a market price of $20 per share, and the preferred stock has a market price of $90 per share. pass water journal entry. P15-2. Treasury Stock ProblemClemson Company had the following stockholders equity as of January 1, 2012. common stock, $5 par value, 20,000 shares issued $100,000 Paid-in capital in profusion of parcommon stock 300,000 Retained earnings 320,000Total stockholders equity $720,000Feb. 1 Clemson repurchased 2,000 shares of exchequer stock at a price of $19 per share. Mar. 1 800 shares of treasury stock repurchased above were reissued at $17 per share. Mar. 18 500 shares of treasury stock repurchased above were reissued at $14 per share. Apr. 22 600 shares of treasury stock repurchased above were reissued at $20 per share. Stock Di vidend Problem (Page 17 in Moodle Ch. 15 Notes) CS, $5 par, 40,000 shares issued and outstanding $ 200,000 Paid-in capital in excess of par 835,000Retained earnings 2,160,000Shares of the companys stock are selling at this time at $22. 1. A 10% stock dividend is declared and issued.2. A 50% stock dividend is declared and issued.3. A 2-for-1 stock split is declared and issued.E3.9. Adjusting EntriesSupplies Accounts dueBeg. Bal. 800 10/31 470 10/17 2,100 10/31 1,650 Salaries and Wages cost Salaries and Wages Payable10/15 800 10/31 60010/31 600 Unearned benefit Revenue Supplies Expense10/31 400 10/20 650 10/31 470 Service Revenue 10/17 2,100 10/31 1,650 10/31 400Instructions Reconstruct 3 transaction entries and 4 adjusting entries.P4.3. (Irregular Items)Maher Inc. reported income from continuing operations before taxes during 2012 of $790,000. excess transactions occurring in 2012 but not considered in the $790,000 are as follows. 1. The corporation experienc ed an uninsured flood loss (extraordinary) in the total of $90,000 during the year. The tax rate on this item is 46%. 2. At the antecedent of 2010, the corporation purchased a machine for $54,000 (salvage value of $9,000) that had a useful biography of 6 old age. The bookkeeper used straight-line depreciation for 2010, 2011, and 2012 but failed to deduct the salvage value in computing the depreciation base. 3. Sale of securities held as a agency of its portfolio resulted in a loss of $57,000 (pretax).4. When itspresident died, the corporation realized $150,000 from an insurance policy policy. The cash surrender value of this policy had been carried on the books as an gradeiture in the amount of $46,000 (the gain is nontaxable). 5. The corporation disposed of its recreational year at a loss of $115,000 before taxes. Assume that this transaction meets the criteria for lay off operations. 6. The corporation decided to change its mode of farm animal pricing from fair(a ) cost to the FIFO method. The effect of this change on prior years is to increase 2010 income by $60,000 and decrease 2011 income by $20,000 before taxes. The FIFO method has been used for 2012. The tax rate on these items is 40%.Instructions desexualize an income statement for the year 2012 starting with income from continuing operations before taxes. work out earnings per share as it should be shown on the face of the income statement. Common shares outstanding for the year are 120,000 shares. (Assume a tax rate of 30% on all items, unless indicated otherwise.) Time Value of Money ProblemsBE6.5.Sally Medavoy give invest $8,000 a year for 20 years in a blood that will earn 12% annual interest. If the first payment into the memory occurs today, what amount will be in the blood line in 20 years? If the first payment occurs at year-end, what amount will be in the fund in 20 years?BE6.7.John Fillmores womb-to-tomb dream is to own his own fishing boat to use in his retreat. John has recently come into an heritage of $400,000. He estimates that the boat he wants will cost $300,000 when he retires in 5 years. How much of his inheritance must he invest at an annual rate of 12% (compounded annually) to buy the boat at retirement?BE6.8.Refer to the data in BE6.7. expect quarterly compounding of amounts invested at 12%, how much of John Fillmores inheritance must be invested to have enough at retirement to buy the boat?BE6.12.Maria Alvarez is investing $300,000 in a fund that earns 8% interestcompounded annually. What equal amounts can Maria withdraw at the end of each of the next 20 years?BE6.14.Amy Monroe wants to create a fund today that will enable her to withdraw $25,000 per year for 8 years, with the first withdrawal to take place 5 years from today. If the fund earns 8% interest, how much must Amy invest today?Bad Debt Expense EntriesBE7.4. Wilton, Inc. had net sales in 2012 of $1,400,000. At declination 31, 2012, before adjusting entries, the balance s in selected accounts were Accounts Receivable $250,000 debit, and Allowance for Doubtful Accounts $2,400 credit. If Wilton estimates that 2% of its net sales will prove to be uncollectible, prepare the December 31, 2012, journal entry to set down bad debt expense. BE7.5. Use the information presented in BE7.4 for Wilton, Inc. (a) Instead of estimating the uncollectibles at 2% of net sales, assume that 10% of accounts receivable will prove to be uncollectible. Prepare the entry to record bad debt expense. (b) Instead of estimating uncollectibles at 2% of net sales, assume Wilton prepares an aging schedule that estimates total uncollectible accounts at $24,600. Prepare the entry to record bad debt expense.Non-Interest Bearing Note ReceivableBE7.7.Dold Acrobats lent $16,529 to Donaldson, Inc., accepting Donaldsons 2-year, $20,000, zero-interest-bearing note on 1/1/2012. The implied interest rate is 10%. Prepare Dolds journal entries for the sign transaction, recognition of inter est each year, and the collection of $20,000 at maturity.Inventory Errors (From Moodle Notes Ch. 8)1. ware purchased on account in 2010 was not recorded until 2011, when the companys bookkeeper received an invoice for $5,430. The shipment had arrived and was counted in physical line of descent at the end of 2010.a) What entry was NOT make in 2010?b) What adjusting entry was do at 12/31/10?c) What is the correcting entry in 2011?2. Goods be $22,000 were shipped f.o.b. shipping point by a supplier on December 28, 2011. The company received the invoice and recorded it on December 29 however, the goods were not included in the physical count of inventory since they were in transit. a) What entry was correctly made in 2011?b) What incorrect adjusting entry was made on 12/31/11?c) What is the correcting entry in 2012?BE9.2. take down of Cost or MarketFloyd Corporation has the following four items in its ending inventory. Item Cost Replacement Cost Net tangible Value (NRV) NRV less N ormal Profit Margin Jokers $2,000 $2,050 $2,100 $1,600Penguins 5,000 5,100 4,950 4,100Riddlers 4,400 4,550 4,625 3,700Scarecrows 3,200 2,990 3,830 3,070Determine inventory value and record loss using allowance method.BE9.7.Gross Profit orderFosbre Inc.s April 30 inventory was destroyed by fire. January 1 inventory was $150,000, and purchases for January through April totaled $500,000. Sales for the same period were $700,000. Fosbres regular plebeian profit percentage is 35% on sales. Using the gross profit method, estimate Fosbres April 30 inventory that was destroyed by fire.