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AGEC331_1.15.09
Course: AGEC 425, Spring 2011School: Purdue
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331 AGEC 1.15.09 Next Tuesday: seating chart will be made MUST HAVE Copymat binder before then APRIL 7TH RSS EXAM make sure there are no conflicts About RSS (Ready Set Sell) Must pick product/service to sell Cannot be Cutco, Kirby, car etc Must be Business to Business selling List of Topics on p.5 in Brown Section of Binder Must be able to interview a sales representative for that product/service youve chosen...
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331 AGEC 1.15.09 Next Tuesday: seating chart will be made MUST HAVE Copymat binder before then APRIL 7TH RSS EXAM make sure there are no conflicts About RSS (Ready Set Sell) Must pick product/service to sell Cannot be Cutco, Kirby, car etc Must be Business to Business selling List of Topics on p.5 in Brown Section of Binder Must be able to interview a sales representative for that product/service youve chosen Will a profile typical customer Product Info Need as much detail as possible Need to know enough to present product Need two choices for product/service in case one isnt applicable/relevant/good enough Must answer all questions for both options Selling to another business!! Farmers are a business !! Quiz Tuesday!! Quiz Tuesday!! Quiz Tuesday!! Quiz Tuesday!! Quiz Tuesday!! Quiz Tuesday!! Over p.4-7, know material
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Purdue - MGMT - 351
M351 Notes, Class 4: Bonds, pages 688 - 703 A. Forms of bonds: secured or not, term, serial, callable, convertible, commodity, zero coupon (deep discount or zero interest), registered, bearer, income, and revenue. B. Bond terminology: 1. Stated or coupon
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Formulas and Diagrams for Future Values and Present Values Future value of a single cash flow: ( + ) 1 inPresent Value of a single cash flow:1 (1+ i )n(1+i)n 1 Future Value of an Annuity: iPresent Value of an Annuity:11 (1+ i )n in = number of peri
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NameSection Homework Quiz21.You have the following information for ABC Companys five-year, zero coupon note payable: note issued on September 1, 2010, effective interest rate is 6% with annual compounding assumed, the maturity amount of the note is $80
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Homework Quiz1 1. Described below are three transactions of Larson Company for 2010: On May 10, the company purchased goods from Fry Company for $50,000, terms 2/10, n/30. Purchases and accounts payable are recorded at net amounts. The invoice was paid on
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NameSection Homework Quiz31.ABC Company owes $500,000 plus $80,000 accrued interest to Megacapital. ABCs debt is an 8% note which matures in 2018. ABC is in arrears as its operations became unprofitable three years ago and remain so. On December 31, 20
Purdue - MGMT - 351
M351 Notes, Class 2: Current Liabilities, pp. 636-651 A. Liability definition: probable future outflow arising from a present obligation resulting from past transactions 1. Current Liability definition: a liability that will likely require an outflow with
Purdue - MGMT - 351
EXERCISE 21-1 (a) This is a capital lease to Adams since the lease term (5 years) is greater than 75% of the economic life (6 years) of the leased asset. The lease term is 831/3% (5 6) of the assets economic life. (b) Computation of present value of minim
Purdue - MGMT - 351
EXERCISE 21-6(a) $38,514 x 5.7122* = $220,000 *Present value of an annuity due of 1 for 8 periods at 11%. (b) 1/1/11. Lease Receivable . Cost of Goods Sold . 220,000 . 170,000 220,000 170,000 Sales Inventory1/1/11. Cash 38,514 . Lease Receivable 38,514
Purdue - MGMT - 351
Example Homework QuizDay 2 1. Glaus Corp. signed a three-month, zero-interest-bearing note on November 1, 2010 for the purchase of $150,000 of inventory. The face value of the note was $152,205. Assuming Glaus used a Discount on Note Payable account to in
Purdue - MGMT - 351
EXERCISE 13-1 (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) (o) (p) Current liability. Current liability. Current liability or long-term liability depending on term of warranty. Current liability. Footnote disclosure (assume not probable and/or
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Forms of Borrowing Contracts1.Zero coupon note. As an example assume a $100,000, 6%, 5-year zero coupon note with annual compounding. proceeds $100,000Proceeds = ($100,000)(PVsa, n=5, i=6%) = ($100,000 x .7473) = $74,730 Effects on the accounts at borr
Purdue - MGMT - 351
PURDUE UNIVERSITY SCHOOL OF MANAGEMENTIntermediate Accounting IIManagement 351Spring 2010 Instructor Professor Robert Eskew Phone: 494-4469Office: 226 Krannert Center Hours: By appointmentAdministrative resource person: Ms. Sue Stone, Krannert 502, p
Purdue - MGMT - 351
EXERCISE 14-12 Reacquisition price ($1,000,000 x 101%). Less: Net carrying amount of bonds redeemed: Par value. Unamortized discount. Unamortized bond issue costs. Loss on redemption Calculation of unamortized discount Original amount of discount: $1,000,
Purdue - MGMT - 351
M351 Notes, Class 7: Leases, pages 1014-1135 A. What has to be true for point #2 on page 1118 to produce an advantage for the lessee? B. There are two kinds of leases: capital and operating C. Lease capitalization criteria (meet any one and a non-cancelab
Purdue - MGMT - 351
M351 Notes, Class 3: Current Liabilities and Contingencies, pp. 651-668 A. Gain Contingency: only tax loss carryforwards are recognized; other gain contingencies on page 651. B. Loss Contingency: an event that may produce a future payable/payment has occu
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Name Solution 1. Homework Quiz5SectionABC Company (the lessee) entered into a 10-year capital lease with XYZ Products (lessor). Annual rental payments are $50,000 with the first payment due at June 1, 2010. ABCs incremental borrowing rate is 11% and ABC
Purdue - MGMT - 351
PROBLEM 21-7(a)December 31, 2010 Leased Equipment Under Capital Leases. Lease Liability. 166,794 (To record leased asset and related obligations at the present value of 5 future annual payments of $40,000 discounted at 10%, $40,000 x 4.16986)166,794De
Purdue - MGMT - 351
EXERCISE 20-16 The excess of the cumulative net gain or loss over the corridor amount is amortized by dividing the excess by the average remaining service period of employees. The average remaining service period is computed as follows:Expected future ye
Purdue - MGMT - 351
EXERCISE 15-1 (a) Jan. 10 Cash (80,000 x $6). Common Stock (80,000 x $3). Paid-in Capital in Excess of Par. Organization Expense. Common Stock (5,000 x $3). Paid-in Capital in Excess of Par. Cash (30,000 x $8). Common Stock (30,000 x $3). Paid-in Capital
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EXERCISE 20-1 (a) Computation of pension expense: Service cost. Interest cost ($500,000 x .10). Expected return on plan assets. Prior service cost amortization. Pension expense for 2010. Pension Expense. Cash. Pension Asset /Liability. Other Comprehensive
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EXERCISE 20-9 (a) Note to financial statements disclosing components of 2010 pension expense: Note X: Net pension expense for 2010 is composed of the following components of pension cost: Service cost. Interest cost. Expected return on plan assets. Prior
Purdue - MGMT - 351
NameSection Homework Quiz61.Pension information for Woods, Inc. for the year 2011 is: Service cost Interest on projected benefit obligation Interest on vested benefits Amortization of prior service cost due to increase in benefits Expected return on pl
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EXERCISE 16-16 (a) Event Dates Outstanding Shares Outstanding Restatement 1.2 x 3.0 1.2 x 3.0 3.0 3.0 Fraction of Year 1/12 1/12 2/12 1/12 4/12 3/12 Weighted Shares 144,000 180,000 360,000 155,000 620,000 480,000 1,939,000Beginning balance Jan. 1Feb. 1 4
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EXERCISE 16-14 (a) 1/1/10 Unearned Compensation. Common Stock ($10 x 10,000). Paid-in Capital in Excess of Par. 12/31/11Compensation Expense ($500,000 5). Unearned Compensation. 500,000 100,000 400,000 100,000 100,000(b)7/25/14Common Stock. Paid-in Cap
Purdue - MGMT - 351
EXERCISE 16-4 (a) Cash . Bonds Payable. Premium on Bonds Payable. (To record issuance of $10,000,000 of 8% convertible debentures for $10,600,000. The bonds mature in twenty years, and each $1,000 bond is convertible into five shares of $30 par value comm
Purdue - MGMT - 351
EXERCISE 15-12 (a) 6/1 Retained Earnings. Dividends Payable. 6/14 6/30 No entry on date of record. Dividends Payable. Cash.(b)6,000,000 6,000,0006,000,000 6,000,000If this were a liquidating dividend, the debit entry on the date of declaration would b
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EXERCISE 15-8 (a) $1,000,000 x 6% = $60,000; $60,000 x 3 = $180,000. The cumulative dividend is disclosed in a note to the stockholders equity section; it is not reported as a liability. Preferred Stock (3,000 x $100). Common Stock (3,000 x 7 x $10). Paid
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Example Problem On Taxes Solution Income before Tax is $200,000. Tax rate is 40%. Financial Report To Shareholders $20,000 5,000 30,000 11,000 24,000 9,000 10,000 Tax Return $35,000 4,000 8,000 17,000 -3,000Depreciation Warranty expense Installment sales
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EXERCISE 19-4 (a) Pretax financial income for 2010. $ 80,000 Excess depreciation per tax return. (16,000) Excess rent collected over rent earned. 27,000 Nondeductible fines. 11,000 Taxable income. $102,000 Taxable income. $102,000 Enacted tax rate. 30% In
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EXERCISE 17-1 (a) 1 (b) 2 (c) 1 (d) 2 (e) 3 (f) 2EXERCISE 17-2 (a) January 1, 2010 Held-to-Maturity Securities. Cash. (b) December 31, 2010 Cash .30,000 Interest Revenue. (c) December 31, 2011 Cash .30,000 Interest Revenue. 30,000 30,000 300,000 300,000
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PROBLEM 17-7(a)February 1 Available-for-Sale Securities. Interest Revenue (4/12 x .10 x $300,000). Cash. 310,000 April 1 300,000 10,000Cash . 15,000 Interest Revenue ($300,000 x .10 x 6/12). 15,000 July 1 Available-for-Sale Securities. Interest Revenue
Purdue - MGMT - 351
Homework Quiz9 Name SectionRecall that: Cash + Other Assets = L + PIC + BRE + R X + G L D1. 2. 3. 4. 5. 6. 7. 8. 9.What was 2007 Net Income? What was the dollar amount of 2007 Dividends? (2 points) What was 2007 Treasury Stock purchases in shares? In d
Purdue - MGMT - 351
Homework Quiz8 Name SectionRecall that: Cash + Other Assets = L + PIC + BRE + R X + G L D Transaction 1. 2. 3. 4. On 1/19/10 ABC Companys corporate charter authorized 500,000 shares of $10 par value stock of which 300,000 shares had been issued (sold) an
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Homework Quiz7 Name 1. SectionPension Worksheet. Using the information below, complete the pension worksheet for 2010 on the next page.Amounts at December 31, 2009 a. Accumulated OCI (Loss) $91,000 (Prior service cost recognized in 2009) b. PBO Balance
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NameSection Homework Quiz6 ReplaceRecall that: Cash + Other Assets = L + PIC + BRE + R X + G L DTransaction 1. 2. 3. 4.ABC Company sold (issued) 10,000 shares of its $12 par value common stock for $31.50 per share. ABC Company purchased from sharehold
Purdue - MGMT - 351
M351 Notes, Class 13: Stockholders Equity, pages 740-756 A. Stockholders share proportionally: 1. 2. 3. 4. in profits and losses in management (right to vote for the board) in assets in liquidation in new issues of stock of the same class (preemptive righ
Purdue - MGMT - 351
M351 Notes, Class 11: Pensions and OPEB, pages 1067-1079 A. Pensions are to be recognized in the companys balance sheet and in the notes to its financial statements. B. In the companys balance sheet the net funded status (a net pension asset or a net pens
Purdue - MGMT - 351
Homework Quiz11 Name SectionABC Company had 552,000 issued and outstanding shares of $10 par common stock at 1/1/10. ABC also had 10,000 shares of $100 par, 6% convertible preferred stock issued and outstanding at 1/1/10. Each $100 par preferred share is
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M351 Notes, Class 21, Taxes Day 1, pp. 990-1005 A. Terminology: the following phrases all mean the same amount on the financial statement prepared for ownerspretax financial income, income before taxes, income for financial reporting, income for book purp
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Homework Quiz10 Name SectionABC Company had 490,000 issued and outstanding shares of $10 par common stock at 1/1/10. ABC also had 10,000 shares of $100 par, 6% preferred stock issued and outstanding at 1/1/10. During 2010 ABC did the following: a. Issued
Purdue - MGMT - 351
M351 Notes, Class 18: Dilutive Securities and EPS, pages 827-834 A. Restricted stock compensation transfers shares of stock to employees. The restricted shares cannot be sold, transferred, or pledged until the award vests (usually 3 to 5 years). During th
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M351 Notes, Class 15: Stockholders Equity, pages 765-774 A. The balance sheet version of the statement of stockholders equity appears on page 765 in Illustration 15-13. Another version of a statement of stockholders equity appears on page 766 in Illustrat
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M351 Notes, Class 17: Dilutive Securities and EPS, pages 811-827 A. Per share amounts are presented as needed for (see Illustration 16-7 on page 812): Income from continuing operations, net of tax Gain or loss from discontinued operations Income before ex
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M351 Notes, Class 16: Dilutive Securities and EPS, pages 794-811 A. At issuance Convertible Bonds are recorded as a straight debt instrument with all of the proceeds in debt accounts. For example, assume that ABC Company issues 2,000 bonds with a face val
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M351 Notes, Class 14: Stockholders Equity, pages 756-765 A. In order to pay cash dividends a company must have sufficient retained earnings and cash. B. There are four kinds of dividends: 1. 2. 3. 4. cash property liquidating stock (usually common)Divide
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M351 Notes, Class 20, Equity Method, Impairments, Category Transfers, pp. 870-883 A. Accounting using the equity method: When a company purchases shares of another companys common stock, the investment is recorded at cost. For example, assume an investor
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M351 Notes, Class 19, Investment in Debt Securities, pp. 856-870 A. Debt securities (issued by other companies, or governmental entities; does not include A/R and loans receivable as those instruments do not meet the definition of securities) are to be pl
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EXERCISE 19-8 (a) 2010 Income Tax Expense. Deferred Tax Asset ($20,000 x 40%). Deferred Tax Liability ($30,000 x 40%). Income Tax Payable ($830,000 x 40%). 2011 Income Tax Expense. Deferred Tax Asset ($10,000 x 40%). Deferred Tax Liability ($40,000 x 40%)
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Homework Quiz12 Name SectionABC Companys pretax accounting income is $500,000 and its tax rate is 40%. The following items cause taxable income to be different from pretax accounting income: a. Depreciation expense on the tax return is $120,000 and is $9
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M351 Notes, Class 22, Taxes Day 1, pp. 1006-1011 A. Loss carrybackwhen a company has a net operating loss on its tax return, it may carry back the loss to the two previous years and offset profits in those two previous years and receive refunds for taxes
Purdue - MGMT - 351
M351 Notes, Class 22, Taxes Day 1, pp. 1006-1011 A. Loss carrybackwhen a company has a net operating loss on its tax return, it may carry back the loss to the two previous years and offset profits in those two previous years and receive refunds for taxes
Purdue - MGMT - 351
Name Final Exam Tentative Solution Management 351 Spring 2010Section:1. This exam consists of 20 multiple choice items and 4 problems (with several parts each). The exam is 15 pages plus this cover page. Please check to see that your exam document is co
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Statement of Cash Flows Example Problem Sales Cost of Goods Sold Depreciation Expense Gain on sale machinery Net income Accounts Receivable Inventory Accounts Payable Machinery Accumulated Depreciation 2011 10,000 (6,000) (900) 480 3,580 12/31/11 1,000 1,
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M351 Notes, Class 25: Changes & Errors, pages 1197-1214 A. Correction of errors: Restate (go back and change [write over] presented statement amounts to change incorrect statement amounts to correct amounts. Also make a journal entry, if necessary, to cha
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Homework Quiz14 Name SectionABC Company acquired put into service a depreciable asset at the beginning of 2006. The asset had a cost of $600,000, residual value of $50,000, and expected life of 8 years. At the beginning of 2009 ABC estimated that the rem
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M351 Notes, Class 24: Changes & Errors, pages 1180-1197 A. Changes in accounting principle: Report retrospectively: go back and change (write over) presented statement amounts as if the company had always been on the new accounting principle). See Illustr
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Notes for Class 23 A. Presentation of Deferred Taxes on the Balance Sheet 1. Individual Deferred Tax Assets and Liabilities are reported as current or noncurrent based on the classification of the related asset or liability (for example, the Deferred Tax
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Error Example #1Sales Less: Depreciation Exp. Income before taxes Less: Tax Expense Net Income BRE Add: Net Income ERE Cash PP&E Less: Accum, Depreciation Total Assets Current Liabilities Long term debt Common Stock ERE Total Liabilities & Equity 2007 20
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Homework Quiz15 Name Section AmountABC Company has the following information for the year ended 2009. Item Accounts payable increase Accounts receivable increase Common stock increase Depreciation expense Income taxes payable increase (current) Inventory
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M351 Notes, Class 26: Statement of Cash Flows, pages 1242-1258 A. The Statement of Cash Flows has three elements: Cash Flows From Operations Cash Flows From Investment Cash Flows From Financing B. There are two methods of preparing Cash Flow From Operatio
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Lecture 2: Quantitative ReviewQuantitative Review: Returns on securities and portfolios Stats: means, variances, covariances, correlations, regressions BKM chapter 5Readings:Review: Asset classes, securities (differ w.r.t. return/risk) Invest directl