F03final

F03final - NAME 7 " ' TA ECONIOA F1NAL"...

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Unformatted text preview: NAME 7 " ' TA ECONIOA F1NAL" FALL or‘os d 106. The following information is given for Fun and Balloons prior to adjustments on December 31, I?! 20x4. Fun and Balloons prepares adjusting entries annually on December 31.. a) Salaries of $6,000 are p 31, 20x4, is a Tuesday. b) On October 1, 20x4, Fun and Balloons collecte months. c) Accrued service revenue on December 31 amounts to $2,400. d) On June 1, 20x4, Fun and Balloons purchased a $3,600, two-year insurance policy. e) The supplies account had a January 1, 20x4, balance of $2,400. Purchases of supplies during-20x4 amountedto $3,500. Supplies on hand December 31, 20x4, amount to $800. aid every Friday for a five-day workweek ending on Friday. December d $5,000 to be earned evenly over the next five Prepare adjusting entries needed on Decemblaeneral Journal Salary Expense 2,400 — Salary Payable — Unearned Service Revenue — Service Revenue Accounts Receivable - Service Revenue — Supplies Expense Supplies ‘ . Lawson Martinez Edwards Total Total net $140,000 Sharing of first $40,000 of net income based on capital balances: Lawson ([$20,000/ $100,000] >< $40,000). $ 8,000 Martinez ([$30-,000 / $100,000] X $40,000).. $12,000 Edwards ([$50,000 / $100,000] >< $40,000). $20,000 Total .................................................... .. 40,000 Net income remaining for allocation ............. .. $100,000 Sharing of next $40,000 based on service: Lawson ($40,000 x 20,000 Edwards ($40,000 x 20,000 Total .................................................... .. 40,000 Net income remaining for allocation ............. .. 60,000 Remainder shared equally: Lawson ($60,000 >< 20,000 Martinez ($60,000 >< 20,000 Edwards ($60,000 >< 20,000 Total .................................................... .. 60,000 Net income remaining for allocation ............. .. ~0— Net income allocated to the partners................. £48,000 s32 000 mas 0,000 $140,000 The adjusted trial balance for McDoogles Company at December 31, 2000 is presented below: Debit Credit Cash 5,250 Accounts receivable 75,000 Allowance for uncollectible accounts 5,000 Prepaid rent 2,500 Inventory 12,500 Equipment 150,000 Accumulated depreciation - equipment 62,500 Accounts payable 10,000 Notes payable — due in three months 15,000 Salaries payable 2,000 Interest payable 500 Capital stock 100,000 Retained earnings 25,000 Sales revenue 200,000 Costs of goods sold 90,000 Salaries expense 60,000 Rent expense 7,500 Depreciation expense 15,000 Interest expense 1,000 Bad debt expense 1,250 Totals 420,000 420,000 105. Prepare the closing entries for McDoogles Company for the year ended December 31, 2000. Answer: (3.) Sales revenue 200,000 Income summary 200,000 (b.) Income summary 174,750 Cost of goods sold 90,000 Salaries expense 60,000 Rent expense 7,500 Depreciation expense 15,000 Interest expense 1,000 Bad debt expense 1,250 (o) Income summary 25,250 Retained earnings 25,250 103. Prepare an income statement for McDoogles Company for the year ended December 31, 2000. McDoogles Company Income Statement For the Year Ended December 31, 2000 Sales revenue $200,000 Cost of goods sold 90,000 Gross profit 110,000 Other expenses: Salaries expense $60,000 Rent expense 7,500 Depreciation expense 15,000 Interest expense 1,000 Bad debt expense 1 1,250 Total other expenses Net income $ Moe 1414:. Na UIUI ac 131. Prepare a classified balance sheet for McDoogles Company as of December 31, 2000. McDoogles Company Balance Sheet As of December 31, 2000 Assets Current assets: Cash 3; 5,250 Accounts receivable $75,000 Less: Allowance for uncolleetible accounts 5,000 70,000 Inventory ' 12,500 Prepaid rent Am Total current assets 90,250 Property and equipment: Equipment 150,000 Less: accumulated depreciation 62,500 87,500 Total assets $177,750 Liabilities and Shareholders' Equity Current liabilities: Accounts payable 5; 10,000 Notes payable 15,000 Salaries payable 2,000 Interest payable 500 Total current liabilities 27,500 Shareholders‘ equity: Capital stock $100,000 Retained earnings 50 250 Total shareholders‘ equity 150,250 Total liabilities and shareholders' equity $177,750 On January 1, 2003, Hobart Mfg. Co. purchasod a drill press at a cost of $36,000. The drill press is expected to last 10 years and have a residual value of $6,000. During its ten-year life, the equipment is expected to produce 500,000 units of product. In ‘ 2003 and 2004, 25,000 and 84,000 units, respectively, were produced. 87. Required: Compute depreciation expense for 2003 and 2004 and the book value of the drill press at December 31, 2003 and 2004, assuming the straight—line method is used. Cost $36,000 7 Depr. Accum. Dec. 31 Residual value 6,000 M git Expense _D_gp_r__ Book Value Dapreciablc base ' $30,000 2003 $36,000 $3,000 $3,000 $33,000 Estimated life (years) + 10 ‘ 2004 36,000 3,000 6,000 30,000 Annual depreciation $ M 4. Hero Co.’s inventory at December 31, 20X3, 1t; fi/fl p 51,? i was $1,500,000, based on a physical count priced at y. cost, and before any necessary adjustment for the following: - Merchandise costing $90,000, shipped F.O.B. + new (I shipping point from a vendor on December 30, 20x3, was received and recorded on January 5, 20X4. _ - Goods in the shipping area were excluded from inventory although shipment was not made until January 4, 20x4. The goods, billed to the ' {23 000 customer F.O.B. shipping point on December l" 30, 20x3, had a cost of $120,000. - ' in its if 711/12 ‘1": I“ What amount should Herc report as inventory ( {Au—Jig“ December 31, 20x3 balance sheet? 9 Inventory records for Cyclops Herbicide revealed the following: March 1, 2003, inventory - 1,000 gallons @ $7.20 = $7,200 Purchases: ' Sales: Mar. 10 600 gals @ $7.25 Mar.5 400 gals Mar. 16 800 gals @ $7.30 Mar. 14 700 gals Mar. 23 600 gals @ $7.35 Mar. 20 500 gals Mar. 26 800 gals 82. Ending inventory assuming LIFO in a periodic inventory system would be: Beginning inventory in gallons 1,000 Gallons purchased (600 + 800 + 600) 2,000 Gallons sold (400 + 700 + 500 + 800) 12,400) Ending inventory gallons 600 Endng inventory is assumed to consist of 600 gallons from beginning inventory: 600 it $7.20 = $4,320 EXPLAIN : ’1 wig-w ERA I 401K PLAN ) '"'-~..‘_ 1 an I . r} 5. A joint venture is a(an) a. Association iimited to no more than two persons in business for profit. b. Enterprise of numerous oo-owners in a nonprofit undertaking. - 0. Corporate enterprise for a single undertaking of 5 limited duration. Association of persons engaged as co—owners in a single undertaking for profit. Present and fitture value tables of 1 at 9% are presented below. Present Value .91743 .84168 .77218 .70843 .64993 .59627 GURU-3N" Future Value 1.09000 1.18810 1.29503 1.41 158 . 1.53362 1.67710 ' PV of 0rd. Annuity .91743 1.7591 1 2.53129 3.23972 3.88965 4.45892 FV of 0rd. Annuity 1.0000 2.0900 3.2781 4.5731 5.9847 7.5233 72. How much must be invested now at 9% interest to accumulate to $5,000 in five years? 3, Ajax Company purchased a five-year certificate of deposit for their building fund in the amount of 1‘ $220,000. How much should the certificate of deposit be worth at the end of five years if interest is PV = $5,600 x .54993* : same *n=5;i:9% compounded at an annual rate of 9%? FV = $220,000 'x 1.53 352* : £38,326 *n=5;i=9% Smucker’s Inc. sold the rights to use one of their patented processes that will result in cash receipts of $2,500 at the end of each of the next four years and a balloon receipt of $4,000 at the end of the fifth year. The total present value of these payments if interest is at 9% is: PVA = $2,500 x 3.23972 (n = 4) = PV = $4,000 x .64993 (n = 5) = 27. Rye Co. purchased a machine with a four- year estimated useful life and an estimated 10% salvage value for $80,000 on January 1, 20x2. In its income statement, what would Ftye report as the depreciation expense for 20x4 using the double- deetining—balance method? $8,099 2,600 21% . fl fl 3A,: MM “5’90 ...
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F03final - NAME 7 &amp;quot; ' TA ECONIOA F1NAL&amp;quot;...

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