B02 Final Exam Review Question and Answer.pdf

B02 Final Exam Review Question and Answer.pdf - MGAB02...

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MGAB02 Final Exam – Review Questions Page 1 of 17 Question 1 Barton Corporation was created on January 1, 2012. Barton is authorized by its articles of incorporation to issue 100,000 shares of $10 cumulated preferred shares and an unlimited number of common shares. The following transactions relating to shareholders’ equity occurred during the first two years of the company’s operations. Jan. 2/2012 Issued 200,000 common shares at $12 per share Jan. 2 Issued 100,000 common shares in exchange for a building valued at $820,000 and merchandise inventory valued at $380,000. Jan. 3 Paid a cash reimbursement to the company’s founders for $100,000 of organization costs; these costs are to be amortized over ten years. Jan. 3 Issued 12,000 preferred shares for cash at $110 per share. Dec. 31 The Income Summary account for 2012 had a $125,000 credit balance and was to be closed. Jun 4/2013 Issued 100,000 common shares for cash at $15 per share. Dec. 10 Declared total cash dividends of $540 000. Dec. 31 The Income Summary account for 2013 had a $1,000,000 credit balance and was to be closed. Required: 1. Record all necessary journal entries for Barton Corporation in 2012 and 2013. 2. Prepare the statement of retained earnings for the years ended December 31, 2012 and 2013. 3. Prepare the partial balance sheet presentation for all relevant assets, liabilities and shareholder’s equity at December 31, 2012 and at December 31, 2013.
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MGAB02 Final Exam – Review Questions Page 2 of 17 Question 1- Solution Date General Journal Dr Cr 2012 Jan. 2 Cash 2,400,000 Common Shares (200,000 x $12) 2,400,000 Jan. 2 Building 820,000 Merchandise Inventory 380,000 Common Shares 1,200,000 Jan. 3 Organization Costs 100,000 Cash 100,000 Jan. 3 Cash 1,320,000 Preferred Shares (12,000 x $110) 1,320,000 Dec. 31 Amortization Expense (100,000/10 years) 10,000 Organization Costs 10,000 Dec. 31 Income Summary 125,000 Retained Earnings 125,000 2013 June 4 Cash 1,500,000 Common Shares 1,500,000 Dec. 10 Dividends (or Retained Earnings) 540,000 Preferred Div Pay ($10x12000x2 years) 240,000 Common Div Pay (540 000 - 240 000) 300,000 Dec. 31 Amortization Expense (100 000/10 years) 10,000 Organization Costs 10,000 Dec. 31 Income Summary 1,000,000 Retained Earnings 1,000,000 Dec. 31 Retained Earnings 540,000 Dividends (if not closed to RE above) 540,000
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MGAB02 Final Exam – Review Questions Page 3 of 17 Barton Corporation Statement of Retained Earnings for Years Ending December 31 2013 2012 Retained Earnings, January 1 $125 000 $ 0 Add: Net Income 1 000 000 125 000 Less: Dividends (540 000) 0 Retained Earnings, December 31 $585,000 $125,000 Barton Corporation Partial Balance Sheet at December 31 2013 2012 Assets Organization Costs $80,000 $90,000 Building (@ cost) $820,000 $820,000 Liabilities Preferred Dividend Payable $240,000 $ 0 Common Dividends Payable 300,000 0 Shareholder’s Equity Contributed Capital: $10 Cumulative Preferred Shares, 100 000 authorized; 12,000 issued and outstanding $1,320,000 $1,320,000 Common Shares, unlimited shares authorized; 400 000 issued and outstanding in 2013; 300 000 issued and outstanding in 2012 5,100,000 3,600,000 Total Contributed Capital 6,420,000 $4,920,000 Retained Earnings (from the above statement): 585,000 125,000 Total Shareholder’s Equity $7,005,000 $5,045,000
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MGAB02 Final Exam – Review Questions Page 4 of 17 Question 2 After the books have been closed, the ledger of Kenton Corporation at December 31, 2014, contains the following shareholders’ equity accounts: Preferred Shares (10,000 shares issued) $ 1,100,000 Common Shares (400,000 shares issued) $ 1,850,000
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  • Fall '17
  • Balance Sheet, 1986, Generally Accepted Accounting Principles, 1979

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