Question 1 [10 points]
Dylex Corporation borrowed $60,000 on December 1, 2014, for 60 days at 6% interest by signing a note. 
Question 1 (10 points] Dylex Corporation borrowed $60,000 on December 1, 2014, for 60 days at 6% interest by signing a note. a) Determine the date the note matures, and calculate how much interest expense is generated by this note, both for 2014 and 2015. Dates must be entered in the format dd/mmm (ie. 15/Jan). Round all values to two decimal places. On what day will this note mature? How much interest expense is created by this note in 2014? How much interest expense created by this note in 2015? b) Prepare Dylex Corporation's journal entries on December 1, 2014, December 31, 2014, and the maturity date. Enter an appropriate description when entering the transactions in the journal. Dates must be entered in the format dd/mmm (ie. January 15 would be 15/Jan). General Journal Page GJ2 Date Account/Explanation F Debit Credit + Question 2 [46 points) The balance sheet for XYZ Corporation reported the following components of equity on December 31, 2014: Common shares, unlimited shares authorized, 19,000 shares issued and outstanding $460,300 Retained earnings 269,000 Total equity $729,300 In 2015, XYZ Corporation had the following transactions affecting shareholders and the equity accounts: January 7 The directors declared a $3 per share cash dividend payable on February 28 to the February 7 shareholders of record. February 28 Paid the dividend declared on January 7. July 14 Sold 746 common shares at $50 per share. Question 2 [46 points] The balance sheet for XYZ Corporation reported the following components of equity on December 31, 2014: Common shares, unlimited shares authorized, 19,000 shares issued and outstanding $460,300 Retained earnings 269,000 Total equity $729,300 In 2015, XYZ Corporation had the following transactions affecting shareholders and the equity accounts: January 7 The directors declared a $3 per share cash dividend payable on February 28 to the February 7 shareholders of record. February 28 Paid the dividend declared on January 7. July 14 Sold 746 common shares at $50 per share. August 19 Sold 1,259 common shares at $32 per share. September 7 The directors declared a $3 per share cash dividend payable on October 24 to the October 7 shareholders of record. October 24 Paid the dividend declared on September 7. December 31 Closed the $433,700 credit balance in the Income Summary account. December 31 Closed the Cash Dividends account. a) Prepare journal entries to record the transactions and closings for 2015. Enter an appropriate description when entering the transactions in the journal. Dates must be entered in the format dd/mmm (ie. January 15 would be 15/Jan). For each journal entry, indicate how each account affects the balance sheet (Assets, Liabilities, Equity). Use + for increase and - for decrease. For example, if an account decreases equity, choose '-Equity'. General Journal Page Gj1 Effect On Date Account/Explanation F Debit Credit Balance Sheet + - + 1 + - b) Prepare a statement of changes in equity for the year ended December 31, 2015. Please make sure your final answer(s) are accurate to the nearest whole number. (select one) Statement of Changes in Equity (select one) Common Retained Total Shares Earnings Equity Question 3 [30 points) 2015 Callaho Inc.'s balance sheet and income statement are as follows: Callaho Inc. Callaho Inc. Comparative Balance Sheet Information Income Statement December 31 For the Year Ended December 31, 2015 Assets 2014 Sales $1,357,000 Cash $123,000 $78,000 Cost of goods sold 809,000 Accounts receivable 58,000 51,000 Gross profit 548,000 Merchandise inventory 403,000 354,000 Operating expenses: Equipment 219,000 197,000 Depreciation expense.... 39,000 Accumulated depreciation (107,000) (68,000) Other expenses 333.000 Total assets $696,000 $612,000 Total operating expenses 372,000 Liabilities and Equity Income from operations, 176,000 Accounts payable $44,000 $65,000 Income taxes 25,000 Income taxes payable 16,000 15,000 Net income $151.000 Share capital 510,000 470,000 Retained earnings 126,000 62.000 Total liabilities and equity $696,000 $612,000 Additional information regarding Callaho Inc.'s activities during 2015: a. Equipment is purchased for $22,000 cash. b. 20,000 common shares are issued for cash at $2 per share. Prepare a statement of cash flows for 2015. Use the indirect method to report cash inflows and outflows for the operating activities section. (select one) Question 3 [30 points] Callaho Inc.'s balance sheet and income statement are as follows: Callaho Inc. Callaho Inc. Comparative Balance Sheet Information Income Statement December 31 For the Year Ended December 31, 2015 Assets 2015 2014 Sales. $1,357,000 Cash $123,000 $78,000 Cost of goods sold 809,000 Accounts receivable 58,000 51,000 Gross profit 548,000 Merchandise inventory. 403,000 354,000 Operating expenses: Equipment 219,000 197,000 Depreciation expense_... 39,000 Accumulated depreciation (107,000) (68,000) Other expenses 333,000 Total assets $696,000 $612,000 Total operating expenses 372,000 Liabilities and Equity Income from operations. 176,000 Accounts payable $44,000 $65,000 Income taxes 25,000 Income taxes payable 16,000 15,000 Net income. $151,000 Share capital 510,000 470,000 Retained earnings- 126,000 62,000 Total liabilities and equity... $696,000 $612,000 Additional information regarding Callaho Inc.'s activities during 2015: a. Equipment is purchased for $22,000 cash. b. 20,000 common shares are issued for cash at $2 per share. Prepare a statement of cash flows for 2015. Use the indirect method to report cash inflows and outflows for the operating activities section. (select one) Statement of Cash Flows (select one) Question 4 [5 points] Question 4 [5 points) ABC Inc. showed the following debt ratios over a 5-year period. 2014 2013 2012 2011 2010 Debt Ratio 65% 67% 76% 85% 89% Segura Corporation showed the following debt ratios over the same 5-year period. 2014 2013 2012 2011 2010 Debt Ratio 63% 55% 52% 45% 44% a) Based on the information provided, which company is showing a trend of increasing risk? Company = (select one) b) Which company is increasing its equity financing? Company = (select one) c) Which company is increasing its debt financing? Company = (select one) d) Which company is strengthening its balance sheet? (Note: A company is said to be strengthening its balance sheet when it is decreasing total debt.) Company = (select one) e) Which company faces the greatest risk in 2014? Company = (select one) Question 5 [10 points) On January 1, 2014, Travis McAllister, Sandra Castell, and Susan Huang formed a partnership by investing $140,000, $110,000, and $100,000 respectively. During the remainder of the year, Travis McAllister withdrew cash of $9,000, Sandra Castell withdrew $24,000 and Susan Huang withdrew $42,000. In addition, the following schedule shows how net loss is allocated. Travis McAllister Sandra Castell Susan Huang Total (45,500) Net loss Salaries 24,000 18,000 27,000 d) Which company is strengthening its balance sheet? (Note: A company is said to be strengthening its balance sheet when it is decreasing total debt.) Company = (select one) e) Which company faces the greatest risk in 2014? Company = (select one) Question 5 [10 points] On January 1, 2014, Travis McAllister, Sandra Castell, and Susan Huang formed a partnership by investing $140,000, $110,000, and $100,000 respectively. During the remainder of the year, Travis McAllister withdrew cash of $9,000, Sandra Castell withdrew $24,000 and Susan Huang withdrew $42,000. In addition, the following schedule shows how net loss is allocated. Travis McAllister Sandra Castell Susan Huang Total (45,500) 24,000 7.000 31,000 18,000 5,500 23,500 27,000 5.000 32,000 Net loss Salaries Interest: Total salary and interest Remainder to be allocated Remainder allocated between partners Balance of net loss to be allocated: Total to be allocated to each partner: (44,000) (44,000) (44,000) (86,500) (132,000) 132.000 0 (45,500) (13,000) (20,500) (12,000) Fill out the Statement of Changes in Equity below. Do not leave any entries blank, enter O if no value is required. Ingersoll Antiques Statement of Changes in Equity For Year Ended December 31, 2014 Travis McAllister Sandra Castell Susan Huang Total Capital, January 1 Add: Investments by partners Total Less: Withdrawals by partners Net loss Capital, December 31
