138231938-Exercise-Advanced-Accounting-Solutions - 1 Johnson Corporation(a U.S company began operations on December 1 2010 when the owner contributed

138231938-Exercise-Advanced-Accounting-Solutions - 1...

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1) Johnson Corporation (a U.S. company) began operations on December 1, 2010, when the owner contributed $100,000 of his own money to establish the business. Johnson then had the following import and export transactions with unaffiliated Mexican companies: December 12, 2011 Bought inventory for 150,000 pesos on account. Invoice denominated in pesos. December 15, 2011 Sold 60% of inventory acquired on 12/12/11 for 120,000 pesos on account. Invoice denominated in pesos. January 1, 2012 Acquired and paid the 150,000 pesos owed to the Mexican supplier January 15, 2012 Collected the 120,000 pesos from the Mexican customer and immediately converted them into U.S. dollars The following exchange rates apply: Date Rate December 12 $.11 = 1 peso December 15 $.12 = 1 peso December 31 $.13 = 1 peso January 1 $.14 = 1 peso January 15 $.15 = 1 peso Required : 1. What were Sales in the income statement for the year ended December 31, 2011? 2. What was the COGS associated with these sales? 3. What is the Accounts Payable balance in the balance sheet at December 31, 2011? 4. What is the Inventory balance in the balance sheet at December 31, 2011? 1. Sales = December 15 sale of 120,000 pesos at $.12 / peso = $14,400 2. COGS = 60% of inventory balance purchased 12/12/11 = 150,000 pesos × $.11 = $16,500 × 60% = $9,900 3. Accounts Payable balance = 150,000 pesos × $.13 = $19,500 4. Inventory balance = 150,000 pesos x $.11 = $16,500 × 40% remaining after sale = $6,600 Objective: LO5 Difficulty: Difficult 2) Black Corporation (a U.S. company) began operations on January 1, 2011, when common stock was issued for $2,500,000. In the first two months of operations, Black had the following transactions: January 15, 2011 Bought inventory for 1000,000 Mexican pesos on account January 26, 2011 Sold 70% of inventory acquired on 1/15/11 for 440,000 Saudi riyals on account January 27, 2011 Paid $10,000 in other operating expenses February 2, 2011 Sold additional inventory that cost $10,000 for $30,000 cash to a U.S. company. February 15, 2011Acquired and paid the 1,000,000 pesos owed to the Mexican supplier
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February 21, 2011Paid $15,000 in other operating expenses February 28, 2011Collected the 440,000 riyals from the Saudi customer and immediately converted them into U.S. dollars The following exchange rates apply: Date Rate Rate January 15 $.11 = 1 peso $.23 = 1 riyal January 26 $.12 = 1 peso $.24 = 1 riyal January 31 $.13 = 1 peso $.25 = 1 riyal February 15 $.14 = 1 peso $.26 = 1 riyal February 28 $.15 = 1 peso $.27 = 1 riyal Required : Complete the summary income statement and balance sheet for the month ended January 31, 2011 and February 28, 2011, assuming there were no other transactions. January 31 February 28 INCOME STATEMENT Sales COGS Gross Margin Other Operating Expenses Exchange Gain / (Loss) Net Income BALANCE SHEET Cash Accounts Receivable Inventory Total Assets Accounts Payable Common Stock
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Retained Earnings Total Liab and Equity Answer: January 31 February 28 INCOME STATEMENT Sales 105,600 30,000 COGS (77,000) (10,000) Gross Margin 28,600 20,000 Other Operating Expenses (10,000) (15,000) Exchange Gain / (Loss) (15,600) (1,200) Net Income 3,000 3,800 BALANCE SHEET Cash 2,490,000 2,483,800 Accounts Receivable 110,000 -0- Inventory 33,000 23,000 Total Assets 2,633,000 2,506,800 Accounts Payable 130,000 -0- Common Stock 2,500,000 2,500,000 Retained Earnings 3,000 6,800 Total Liab and Equity 2,633,000 2,506,800 Objective: LO5 Difficulty: Difficult 3) Plymouth Corporation (a U.S. company) began operations on September 1, 2011, when the owner
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borrowed $250,000 to establish the business. Plymouth then had the following import and export
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