#7 A though E

7. Sawyer Furniture Company concluded its first year of operations in which it made sales of $900,000, all on installment. Collections during the year from down payments and installments totaled $300,000. Purchases for the year totaled $620,000; the cost of merchandise on hand at the end of the year was $80,000. Instructions Wising the installment-sales method, make summary entries to record: (a) the installment sales and cash collections; (b) the cost of installment sales; e the Deferred (unrealized) gross profit; the realized gross profit include closing entry in your journal entries. le At the end of the year, merchandise costing $360,000 was repossessed when its fair market value was $300,000, make necessary entries for the repossession. 8. Dalton Construction Co. contracted to build a bridge for $10,000,000. Construction began in 2012 and was completed in 2013. Data relating to the construction are: 2013 $2,750 2012 $3,300,000 2,700,000 Costs incurred during each year Estimated costs to complete Dalton uses the percentage-of-completion method. How much profit or loss should be reported for years 2012 and 2013. Show your computation. Instructions Acquired Equipment for $11,000,000 on January 1, 2008, with a down payment of SLA0.000 going market interest rate at the time of acquisition was 10%, the salvage value is $200.000and the useful life is 10 years. The balance was paid on 5 equal annual installments 4. The company uses double declining balance method of depreciation. including all the payments, interest recognition, and depreciation on December 31, 2008, 200s, 200 and 2011 Required: Prepare entries to record the acquisition of the equipment and other necessary entries 5. When you undertook the preparation of the financial statements for Telfer Company at At Retail $ 98,500 10,000 8,000 394,000 310,000 5,500 10,000 January 31, 2013, the following data were available: At Cost $70,800 Inventory, February 1, 2012 Net Markdowns Net Markups Purchases Sales Purchases returns and allowances Sales returns and allowances 219,500 4,300 Instructions Compute the ending inventory at cost as of January 31, 2013, using the retail method which approximates (A) lower of cost or market (B) Retail Average Cost and (C) Retail LIFO. And (D) Assuming the price index at the end of the year is 105% and dollar value lifo was adopted at the beginning of January, 2013, Your solution should be in good form with amounts clearly labeled. & Prepare joumal entries to record the following transactions relating to long-term bonds of Kty, Inc. (Show computations.) On June 1, 2011, Kirby, Inc. issued $3,000,000, 6%, 10-year bonds at a yield of 8%. Interest is payable semiannually on February 1 and August 1 with the bonds maturing on February 1, 2021. Requred Make necessary entries for the sale of the bonds with accrued interest, and all other necessary entries during the year ending December 31, 2011. The company uses effective interest method of amortization. h) Post your closing entries into the existing accounts in the ledger and open any account that is not already existing. i) Prepare post-closing trial balance. 2. The equipment that has a cost of $125,000 and an accumulated depreciation of $70,000 was traded in for Machinery that has a fair market value of $114,000. The fair market value of the old equipment was set at $132,000. The appraisal value of the old machine is $80,000 while the appraisal value of the new machine is $120,000. The transaction does not have commercial substance. Make necessary entries for the trade in of the asset. 3. Early in 2012, Dobbs Corporation engaged Kiner, Inc. to design and construct a complete modernization of Dobbs's manufacturing facility. Construction was begun on Jan 1, 2012 and was completed on December 31, 2012. Dobbs made the following payments to Kiner, Inc. during 2012: Date Jan 1, 2012 July 1, 2012 October 31, 2012 December 31, 2012 Payment $2,800,000 4,200,000 6,000,000 2,000,000 In order to help finance the construction, Dobbs issued the following on Jan 1, 2012: $3,000,000 of 10- year, 8% bonds payable, with interest payable annually on Dec. 31. Information about other loans are as follows: a On March 1, 2012, issued 2,000,000 12% 10-year note payable. b. Issued $1,000,000, 14% note payable dated January 1, 2008 and due January 1, 2018, with interest payable annually on January 1. c ssued $600,000 6% Long term note payable on April 1, 2012. Instructions Compute the amounts of each of the following (show computations): 1. Weighted-average accumulated expenditures qualifying for capitalization of interest cost. 2 Avoidable interest incurred during 2012. 3. Total amount of interest cost to be capitalized during 2012. 4 Total amount of interest to be expensed during 2012. S. Make necessary journal entries for the capitalization of interest and for the recognition of interest to be expensed during 2012 and assume and all the interests were paid. One-month insurance expired and needs to be adjusted. 30 Replenish the petty cash fund. The following information was available to perform the replenishment of the petty cash fund: Receipts for the following expenses were found in the box: Travel expense 150, Beverage expense $50; Postage and Delivery 570 Telephone expense $30; and Utilities Expense $80. In addition to the receipts found in the box, there were coins and currencies that were unspent in the amount of $130 30 30 Increase the petty cash fund to $800. Make adjustment for one-month depreciation of equipment that was contributed to the company. The life of the equipment was 10 years, and it has a salvage value of $50,000. The company uses straight line method of depreciation. 30 30 Make Adjustment for one-month depreciation of Furniture and Fixtures that were acquired on December 1. The furniture and fixtures had a residual value of $20,000 and a useful life of 10 years. The company uses double declining balance method for determining depreciation expense for Furniture and Fixtures. 31. The company traded in the furniture and fixtures for different furniture and fixtures that had a fair market value of $210,000. The fair market value of the old furniture and fixtures was $195,000. The transaction does not have economic (commercial) substance. 31 Make provision for bad debts at one percent of gross sales to-date. Wrote off the balance in Mr. Never Pay's account. 31 31 Mr. Never Pay learned that his account has been written off and he decided to pay $6,000 of the amount written off. Paid salaries $20,000. ounale the December transactions using a perpetual inventory system. Record all your purchases and sales "gross". Pest the December transactions into the general ledger using a "T" shape account form. d Prepare a trial balance on the basis of all the balances in your general ledger. Prepare an Income statement. Pepare a Retained Earnings Statement TPrepare a Balance Sheet Prepare closing entries Date Transaction December Ahmed Rashidi invested $1,000,000 cash, $300,000 equipment on which there was notes payable of $50,000, and also contributed supplies in the amount of $6,000. Purchased merchandise on account from Kwanza, $200,000, term 2/10; n/30; FOB shipping point. Ahmed Rashidi company paid the transportation charge of $3,000. Sold goods on account to Mr. Never Pay, $20,000. The cost of the goods was $3,000. Established Petty Cash Fund of $500. Paid 36-month insurance startng from December 1, $3,600. 1. Purchased Furniture and Fixtures for $200,000 cash. 1. Returned $20,000 of the merchandise purchased from Kwanza. Paid the amount due to Kwanza. Sold merchandise to Eric Robinson for $120,000 (cost is $20,000), term 3/15; n/30. Eric Robinson returned $30,000 goods because of defectiveness; the cost of the goods returned was $5,000. Received a 120-day 10% note from Eric Robinson for the outstanding balance due from him. Purchased merchandise from Demetrius El for $90,000, term 2/10; n/30, FOB destination. Demetrius EL paid the shipping charge of $2,000. 16 Paid the amount due to Demetrius El. Discounted the note received from Eric Robinson at 9%. 25 26 Received $8,000 from ABC for service to be performed. 27 Part of the services owed to ABC was performed in the amount of $2,000. Accrued service revenue of $120,000. Accrued Salaries of $12,000 to be paid to employees. 30 7. Sawyer Furniture Company concluded its first year of operations in which it made sales of $900,000, all on installment. Collections during the year from down payments and installments totaled $300,000. Purchases for the year totaled $620,000; the cost of merchandise on hand at the end of the year was $80,000. Instructions Wising the installment-sales method, make summary entries to record: (a) the installment sales and cash collections; (b) the cost of installment sales; e the Deferred (unrealized) gross profit; the realized gross profit include closing entry in your journal entries. le At the end of the year, merchandise costing $360,000 was repossessed when its fair market value was $300,000, make necessary entries for the repossession. 8. Dalton Construction Co. contracted to build a bridge for $10,000,000. Construction began in 2012 and was completed in 2013. Data relating to the construction are: 2013 $2,750 2012 $3,300,000 2,700,000 Costs incurred during each year Estimated costs to complete Dalton uses the percentage-of-completion method. How much profit or loss should be reported for years 2012 and 2013. Show your computation. Instructions Acquired Equipment for $11,000,000 on January 1, 2008, with a down payment of SLA0.000 going market interest rate at the time of acquisition was 10%, the salvage value is $200.000and the useful life is 10 years. The balance was paid on 5 equal annual installments 4. The company uses double declining balance method of depreciation. including all the payments, interest recognition, and depreciation on December 31, 2008, 200s, 200 and 2011 Required: Prepare entries to record the acquisition of the equipment and other necessary entries 5. When you undertook the preparation of the financial statements for Telfer Company at At Retail $ 98,500 10,000 8,000 394,000 310,000 5,500 10,000 January 31, 2013, the following data were available: At Cost $70,800 Inventory, February 1, 2012 Net Markdowns Net Markups Purchases Sales Purchases returns and allowances Sales returns and allowances 219,500 4,300 Instructions Compute the ending inventory at cost as of January 31, 2013, using the retail method which approximates (A) lower of cost or market (B) Retail Average Cost and (C) Retail LIFO. And (D) Assuming the price index at the end of the year is 105% and dollar value lifo was adopted at the beginning of January, 2013, Your solution should be in good form with amounts clearly labeled. & Prepare joumal entries to record the following transactions relating to long-term bonds of Kty, Inc. (Show computations.) On June 1, 2011, Kirby, Inc. issued $3,000,000, 6%, 10-year bonds at a yield of 8%. Interest is payable semiannually on February 1 and August 1 with the bonds maturing on February 1, 2021. Requred Make necessary entries for the sale of the bonds with accrued interest, and all other necessary entries during the year ending December 31, 2011. The company uses effective interest method of amortization. h) Post your closing entries into the existing accounts in the ledger and open any account that is not already existing. i) Prepare post-closing trial balance. 2. The equipment that has a cost of $125,000 and an accumulated depreciation of $70,000 was traded in for Machinery that has a fair market value of $114,000. The fair market value of the old equipment was set at $132,000. The appraisal value of the old machine is $80,000 while the appraisal value of the new machine is $120,000. The transaction does not have commercial substance. Make necessary entries for the trade in of the asset. 3. Early in 2012, Dobbs Corporation engaged Kiner, Inc. to design and construct a complete modernization of Dobbs's manufacturing facility. Construction was begun on Jan 1, 2012 and was completed on December 31, 2012. Dobbs made the following payments to Kiner, Inc. during 2012: Date Jan 1, 2012 July 1, 2012 October 31, 2012 December 31, 2012 Payment $2,800,000 4,200,000 6,000,000 2,000,000 In order to help finance the construction, Dobbs issued the following on Jan 1, 2012: $3,000,000 of 10- year, 8% bonds payable, with interest payable annually on Dec. 31. Information about other loans are as follows: a On March 1, 2012, issued 2,000,000 12% 10-year note payable. b. Issued $1,000,000, 14% note payable dated January 1, 2008 and due January 1, 2018, with interest payable annually on January 1. c ssued $600,000 6% Long term note payable on April 1, 2012. Instructions Compute the amounts of each of the following (show computations): 1. Weighted-average accumulated expenditures qualifying for capitalization of interest cost. 2 Avoidable interest incurred during 2012. 3. Total amount of interest cost to be capitalized during 2012. 4 Total amount of interest to be expensed during 2012. S. Make necessary journal entries for the capitalization of interest and for the recognition of interest to be expensed during 2012 and assume and all the interests were paid. One-month insurance expired and needs to be adjusted. 30 Replenish the petty cash fund. The following information was available to perform the replenishment of the petty cash fund: Receipts for the following expenses were found in the box: Travel expense 150, Beverage expense $50; Postage and Delivery 570 Telephone expense $30; and Utilities Expense $80. In addition to the receipts found in the box, there were coins and currencies that were unspent in the amount of $130 30 30 Increase the petty cash fund to $800. Make adjustment for one-month depreciation of equipment that was contributed to the company. The life of the equipment was 10 years, and it has a salvage value of $50,000. The company uses straight line method of depreciation. 30 30 Make Adjustment for one-month depreciation of Furniture and Fixtures that were acquired on December 1. The furniture and fixtures had a residual value of $20,000 and a useful life of 10 years. The company uses double declining balance method for determining depreciation expense for Furniture and Fixtures. 31. The company traded in the furniture and fixtures for different furniture and fixtures that had a fair market value of $210,000. The fair market value of the old furniture and fixtures was $195,000. The transaction does not have economic (commercial) substance. 31 Make provision for bad debts at one percent of gross sales to-date. Wrote off the balance in Mr. Never Pay's account. 31 31 Mr. Never Pay learned that his account has been written off and he decided to pay $6,000 of the amount written off. Paid salaries $20,000. ounale the December transactions using a perpetual inventory system. Record all your purchases and sales "gross". Pest the December transactions into the general ledger using a "T" shape account form. d Prepare a trial balance on the basis of all the balances in your general ledger. Prepare an Income statement. Pepare a Retained Earnings Statement TPrepare a Balance Sheet Prepare closing entries Date Transaction December Ahmed Rashidi invested $1,000,000 cash, $300,000 equipment on which there was notes payable of $50,000, and also contributed supplies in the amount of $6,000. Purchased merchandise on account from Kwanza, $200,000, term 2/10; n/30; FOB shipping point. Ahmed Rashidi company paid the transportation charge of $3,000. Sold goods on account to Mr. Never Pay, $20,000. The cost of the goods was $3,000. Established Petty Cash Fund of $500. Paid 36-month insurance startng from December 1, $3,600. 1. Purchased Furniture and Fixtures for $200,000 cash. 1. Returned $20,000 of the merchandise purchased from Kwanza. Paid the amount due to Kwanza. Sold merchandise to Eric Robinson for $120,000 (cost is $20,000), term 3/15; n/30. Eric Robinson returned $30,000 goods because of defectiveness; the cost of the goods returned was $5,000. Received a 120-day 10% note from Eric Robinson for the outstanding balance due from him. Purchased merchandise from Demetrius El for $90,000, term 2/10; n/30, FOB destination. Demetrius EL paid the shipping charge of $2,000. 16 Paid the amount due to Demetrius El. Discounted the note received from Eric Robinson at 9%. 25 26 Received $8,000 from ABC for service to be performed. 27 Part of the services owed to ABC was performed in the amount of $2,000. Accrued service revenue of $120,000. Accrued Salaries of $12,000 to be paid to employees. 30