Bus322 s01 Cerf midterm1 - .l c 1” Cm POLYTECI-INIC STATE...

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Unformatted text preview: .l. c 1” Cm POLYTECI-INIC STATE UNIVERSITY ‘ Spring 2001 Professor Doug Cerf Midterm #1 Chapters 15, l6, 17 (part) ' 100 points BUS 322 - INTERMEDIATE ACCOUNTING II Nam-n“... mu ame-_ Please put the last four digits of your socia security number on every page. Put your name M on the first page. IN PREPARING YOUR EXAM FOLLOW THESE GUIDELINES: 1) You may use a one sided reference sheet on the exam. It must be original work; it may not be photocoPied. Please turn in the sheet of notes when you turn in the exam. If you elect not to use a sheet of notes please tell mea at the bggjgning of the exam. 2) Write as clearly and neatly as possible. The presentation of your answer will E Mo of the basis for evaluation. Answers supported by problem solving techniques will be viewed favorably, however, problem solving techniques are not required. Explanations of your logic, where appropriate, will increase the probability of getting partial credit. 3) I GIVE AS MUCH PARTIAL CREDIT AS I CAN SO SHOW YOUR WORK. 4) Budget your time. A list of the problems is included at the bottom of this page. Consider starting with the questions that are worth the most points and/or the questions on the topics you are most comfortable. 5) ALL TWO-PAGE PROBLEMS CAN BE VIEWED LIKE AN OPEN BOOK. 6) Write all of your answers on this exam. Round all numbers to the nearest dollar. Topic 1. Stock Transactions 2. Treasm'y Stock 3. Retained Earnings/Dividends 4. Quasi Reorganization 5. Bonds with warrants 322 Midterm #1 Spring 2001 ' Professor Doui Cerf SS# (last 4 digits) (c) Received su " ' for 20 O s s of 0 mo 1 __ e. Subscribers paid on; third of the subscri tio ' with the remainder due in two egual installments in 30 and 60 days. The installments are due in the followin car 2002 . ' wt 30 deals go .5sz 200 Z. 01 M “230.000 SMfr L157; ”5—7“ EL”: 9* 3:” w“ A” 1/3: m k ' 33 3 0 6rd ol'TC’M — w I E l l th [080900 (200.Cm%[email protected] I CS gubéwgb two 000 . ) - . . Cs—Slbswed lam-um: hosq 000 , ' (’qu (5-9) bra/lard flee (14101:; LGZO, 000 606W 2%; L c, 20.000 (1900.000 9k 18* 48%) CJ-Subjcubtd Beavloles LQDZQOOC) 6‘“ . 05:30 LLS’VJ - 6r” Cash 1.920.000 C200‘°°°*’“ EWC. #320,000 C CQ‘. 1.0061000 (d) ) Prepare the contributed capital section of the Clean Air Cars Company‘s balance sheet at December 31, 2001. 09W. CAN 9 p ‘ l Sch r Ca9+?) flamed Slack ., Zoooooo P166 P , P S ”—1005 ooo 0”” W" (2223:; Pica P~C.5, 3 Lhasaooo; /‘ my! thbvml amt ' 3pm 000 ’3 Bus 322 Midterm wital“. Spring 2001 Professor Doug Cerf 1“ May]: ‘2' Wm“ WCEOOOOHS‘, 2000:) if) CQS‘A BSOlOOO ‘/ 2251000 in ‘1‘O‘OOU :. g 3.170% (TI) '(tSC ' [mime . _ plCEPCBS) ‘ 235:000 / _ (€000 Fl( ‘7 ' ‘ - 1r ' {m 2715’ w "CS no war new December31: (546% {.000 SWW’ 0‘9 1:3} @ SS (1'. S. 7:000“ .. Ple—SP‘CS’Y 2062000 ’3' Twatcg Stead 2 ZSIQOO ’9' We P~ Ts 50‘. 000 ,4 757: 000 Part 2: Prepare journal entries to record the above treasury stock transactions assuming use of the cost method (weighted average). You do not have to do the February 2 and April 15 dates because they are the same as part 1. ‘ May l:$m“+m 133; 2590((130 fis‘é 60 / y I S “9'11 {'71 T.S. [5 (00 Cash L \Q 200 /3 (‘8. r0: ooo PICEPCRS.) H.200 December31: TS. Page 5 TS life wa.doc 322 Midterm if] __ Spring 2001 Professor Doug Cerf u SS# (last 4 digits)“ - d) Declared and distributed a 2 for 1 stock split" 7k” we“? ‘- Mi- 7 “[000 shuffle [Opar - H1541? {wall CHM“ zzfooo €9pr Part 2. Prepare the stockholder’s e uit section for Cody and Ryan Co. Indicate the number of shares of common stock. M (0 C ' SMCK DOC“ pfigpfl CS, 72(000/ RE ' ' '. / Apmna’rcd 43000 / Unaprga‘i’tJ [OVLOOO ({SQOOO- 451000 —2é€ooo- 32.000 +6230“) +o+al Sf'OCKk0M94 Scuff—j 234,000 \b Page 7 Retained earnings entriesdoc 322 Midterm #i 5. Spring 2001 Professor Doug Cerf SS# (last 4 digits) _. c. Prepare the stockholders eguig section of the balance sheet (not the whole balance sheet) for Diesel Truck Company on December 31, 2001 if they earned income of $90,000 and paid dividends of $10,000 during 2001. This statement is two lines plus a total. 62ml Tmt Comm [Zia/o:- SWKHW 54mg? flab/w $601000. ’\ Page 9 Quasi reorganizationdoc //"’— l s 322 Midterm #1 Spring 2001 Professor Dou erf “ SS# (last 4 digits) PROBLEM #3 RETAINED EARNINGS: (20 points) The retained earnings balance for] ' any was a credit balance of 3150,00 at the end of 2001. Net income ort e 2002 ear is 62 000 There were 10,000 s areso ,f I - on stock outstan a e eginning of the year. The shares were mall issued at 315 Selected transaction affecting stockholders equity during 2002 are as follows (prepare thejournal entry for each): Timeline (optional): ‘ 9; $0000 we Vices-(r Part 1. Prepare the journal entries for the following transactions. a) Cash dividends declared $28,000. 85 22. 000 DUrIthAC '%8312!€ ‘7.000 2 IF .I‘ ‘z‘ z i b) A 10% stock dividend was declared and distributed on common stock. Market price of stock / was $32. Use one entry for this transaction._ {OrOOO )k» [0% r I (000 Bit 32 r 32: 00° / Shara” R E 32.0% - MW 0. 3. [0.000 / c) Janie Company made a retained earnings appropriation of $45,000 to meet future expansion plans for their natural gas powered delivery trucks. E5 - 45000 x K5 app/uprted HCOOO/ 9r Déilwlérmi‘f Page 6 Retained earnings cnlricsdoc / 0 Bus 322 Midterm #1 Spring 2001 Professor Doug Cerf SS#(last4 digits)! ' . I! PROBLEM # 2:TREASURY STOCK: (25 points) " t «as " . . . " The stockholders‘ equity accounts of Green Mountain Energy Corporation were as follows on January 1, 1999: Common Stock-(Ear value $1?) authorized 500 0 ' issued and outstanding 2§g,ggg sham 6' 3 3,750,000 30 7,500,000 Paid in Capital in excess of par Retained earnings .0 ,. 2,250,000 Total stockholders' eguity §13a500!000 Timeline optional: ' l S) 94:22; WM w moo s'r W mt - C S, 2 c t pv: \5' , (MT-S.) 2‘50 coo—fe- lo 4:? (redid 3’ During 1999, Green Mountain Energy was engaged in the following stock transactions: a. Februm 2: Acquired 5,000 shares of the outstanding common stock at $45 per share. 7f. b. April 15: Acquired 10,000 shares of the outstanding common stock at SSS/share. c. May 1: Sold 7,000 shares that were held in the treasury at $50 per share. d. December 3]: Formally retired the 5,000 shares of the treasury stock. Part 1: Prepare journal entries to record the above treasury stock transactions assuming use of the cost method with a FIFO flow. Sioomb 4E5“: 225'? 000 5752000 : mama) February 2: fl Tiffani-('3 StocK . . “Is“.ooo Paid inCapI'i’fii CTTS.) {$0,000 Cash 2 2 §. 000 April 15: (0.000% $3”: $57). 000 -- 157). 000 r ‘iOOAcIu Trauma/3 S+oc IC 19le m (qp‘h l (11$) 400,000 Carin _ 550. 000 Page 4 TS fifo wadoc 322 Midterm #1 Spring 2001 Professor Dou rf SS# (last 4 digits) & PROBLEM #1 Stockholder’s Equity (25 points) Clean Air Cars Company began the 2001 calendar year with the following balances in the contributed capital accounts: Preferred Stock, $100 par value; authorized, 1 million shares; issued and outst - 1 4,3,. 3 000 shares partr- ue; authorized, Common Stoek-,- T v and outstandin; 1,500,000 shares 2,000,000 Contributed ca-ital in excess of Mar-referred Contributed caitaI in excess of ar-common 10,500,000 During 2001, the following stock transactions occurred (prepare the journal entry for each): (a) Issued 100,000 shares of common stock at $1 8/share. Incurred stock issue costs of $120,000. ,- \- 900,000. - 120,000 :1 rim Car/n 100.000 5% 13 . VZdW’» par-AMGPHM) Cash r LGSQOOO * I. ' Comm” Sb“ 1% . {$222000 l 3’00 000 . ' - “ o-f I! 1 l , I Pa'dffl CQP 4’" “(5:31:00 _ 5'0, 00 o I 750i 000 PM 6'9 4 )120, 0007 I E 26; 0)) Issued WW Clea“ Air Cars massed 92.2 share of common stock with each five shares of re erre- . e market prices of the common an t e preferred 'at the time of issuance were $15 and $120 per share, respectively. Be careful to assign the appropriate priceto the appropriate type of stock. ”‘V‘HO V9 20,000 Q)“ i r : 7,000,000 5 lg , ‘ 0 . “My,“ One b, s4. (“1/ ( é H‘QO’QMFQW . % RX! R ”0,9 m s as fag” d7 , 5: PV 5 too Pu I'M-5d or r - (5' 70(9 [07, mV 830/9 10,000 shaver 4,000 sled!“ [7% f . w.- Loo purl” 631'” «“0 P" “in?” m”: ”7 ’2} 1042,0190 £108,000 Cam 2 . 4-60r 000’ (L pg 2, 000.000 PlCEPr [75 000,000 C 3 20,000 PIC E Pest 40,000 322 Midterm #0 1 Spring 2001 Professor Dou erf * SS# (last 4 digits) PROBLEM # 4: QUASI REORGANIZATION: (15 points) For the last several years Diesel Truck Co. has suffered losses. The company's controller believes that a quasi-reorganization will allow the company to get on its feet, secure additional credit, operate profitably, and pay dividends in the near fiiture. Diesel Truck Co. has been paying dividends in the past and would like to begin again, The balance sheet prepared before the quasi- reorganization shows the following: ‘ $5,000 Current Liabilities $144,000 33,000 _— 0 Invento 156,00 Lon -_ Term Liabilities 30! ,000 - 5,000 _— , 0 300 00 Common Stock ar $100 360,000 Goodwill 75 00 ,7, ___ m Stockholders and creditor's have approved the following quasi-reorganization arrangement effective January 1, 2001: il (l) The receivables, inventories and We reduced by $28,000, $6,000 and SW respectively. _ (2) The goodwill is written ortéi 44:qu lac mm) . (3) Current and long term creditors agree to reduce all amou ts owed to $1 l”1,000 and $200,000 res nectivel . a. How does Diesel Truck benefit from writing down assets as part of a quasi reorganization? 5L —l+ C-V'm‘ievr a {WWW ((C”€léflfhrthin0 o++h€ 055'ng oj‘ a VeJUl-l- O‘F' 26/016 ~Hne RF: balame. b. Prepare the journal entries made at the time of the quasi—reorganization. Make a separate entry for each item 1 through 3 and any other entries that are necessary to complete the quasi- reorganization. 5 I24, 0 (I) e Kerr'u'lolef '728,000 ”“9"“ . Glooo Plan—tel'E vapl lOO, (2) RE 04.000 (23 Curran»? La'alw'lr‘h'ej “H.000 COPE) 1'8an L‘ubl’llWOOQ Page 8 /L\/ Quasi rcorganizarionhoc l0 ...
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