ACC220_Simply_Accounting_Assignment_Winter_2008Final -...

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ACC220 Simply Accounting Assignment Winter 2008 DUE: Second Class of Week of March 3 Matrix Inc.’s articles of incorporation authorized the company to issue 1 million common shares, no par value, and 200,000 $1.00, preferred shares. They incorporated on October 1, 2004 and chose December 31, 2004 as their first year end. To finance their venture, on October 1, 2004, Matrix Inc. issued 150,000 common shares for $15 per share. On the same day, they issued 20,000, $1.00 cumulative preferred shares for cash at $20.00 per share. On October 2, the company borrowed $120,000 at 7.5% interest from The Royal Bank to finance the purchase of equipment with a cost of $220,000. The balance was paid for in cash. The equipment has a 12 year life and a $25,000 residual value. The note is for 6 years with interest paid annually each October 2. The equipment is amortized using a declining balance rate of 30%. On October 3, they purchased a patent for $85,000 with the expectation that the patent would provide benefit to the company for 7 years. Legal costs associated with acquiring the patent were $3,000. On October 4 , the employee who had been responsible for Matrix’s accounting records was hospitalized and will not be returning to work in the foreseeable future. You have been asked to take over their position. It is your responsibility to review the accounting records for accuracy and completeness, and to make any corrections that may be required. On October 5, 5 Matrix completed the purchase of a company for $1,110,000 cash. The company’s assets consisted of a warehouse with a book value of $600,000 and a fair value of $900,000, accounts receivable of $200,000, and inventory with a fair value of $300,000. Current liabilities (A/P) are $400,000.The warehouse is expected to have a useful like of 30 years with no residual value, and is amortized using the straight line method. 5 Issued 2,000, $1.00 cumulative preferred shares in exchange for a truck. The shares are trading at $19.50 per share. The truck is expected to have a 200,000 km life, a residual value of $2,000, and is amortized using units of production. 5
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This note was uploaded on 10/18/2010 for the course ACF ACC220 taught by Professor Fiona during the Spring '08 term at Seneca.

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ACC220_Simply_Accounting_Assignment_Winter_2008Final -...

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