ACT3391Spring2011TraditionalHomeworkChs3&4solution1to7

ACT3391Spring2011TraditionalHomeworkChs3&4solution1to7...

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HOMEWORK Spring 2011 ACT3391 1. (5 points) Pederson Service Company’s balance sheet as of 12-31-09 is presented below: a) Borrowed an additional $1,500,000 on a long-term basis. Cash (asset) $1,500,000 Long-term debt (liability) $1,500,000 b) Purchased on account $250,000 of office furniture (property, plant, and equipment). Property, plant, and equipment (asset) $250,000 Accounts payable (liability) $250,000 c) Performed $800,000 of services for customers on an account basis. Accounts receivable (asset) $800,000 Revenue (revenue) $800,000 d) Performed $200,000 of services for customers on a cash basis. Cash (asset) $200,000 Revenue (revenue) $200,000 e) Incurred and paid wage expenses of $333,000. Wage expenses (expense) $333,000 Cash (asset) $333,000 f) Paid off its outstanding accrued property taxes payable. Accrued property taxes payable (liability) $300,000 Cash (asset) $300,000 g) Used up the prepaid insurance. Insurance expense (expense) $50,000 Prepaid insurance (asset) $50,000 h) Collected $950,000 of accounts receivable. Cash (asset) $950,000 Accounts receivable (asset) $950,000 i) Recorded $42,000 of depreciation expense. Depreciation expense (expense) $42,000 Accumulated depreciation (contra-asset) $42,000 j) Incurred and paid $40,000 of interest expense. Interest expense (expense) $40,000 Cash (asset) $40,000 Pederson Company Income Statement For the year ended December 31, 2010 Services revenues $1,000,000 Wages expenses 333,000 Insurance expenses 50,000 Depreciation expense 42,000 Interest expense 40,000 Income before taxes 535,000 Income taxes 0 1
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Net income $ 535,000 Pederson Company Balance Sheet As of December 31, 2010 Current assets Cash $2,377,000 Accounts receivable $ 200,000 Non-current assets Property, plant, and equipment – at cost $1,150,000 Accumulated depreciation $ 142,000 TOTAL ASSETS $3,585,000 Current liabilities Accounts payable $ 450,000 Non-current liabilities Long-term debt $2,200,000 Stockholders’ equity Common stock and additional paid-in-capital $ 100,000 Retained earnings $ 835,000 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $3,585,000 2. (1 point) Included in Engle’s 12-31-09 trial balance was a NP for $750,000. The note was a 9-month, 5% note dated 09-30-09. Interest on the note will be paid when the note matures. Prepare Engle’s 12-31-09 AJE to record accrued interest
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This note was uploaded on 03/08/2011 for the course ACCT 3391 taught by Professor Turpin during the Spring '10 term at Troy.

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ACT3391Spring2011TraditionalHomeworkChs3&4solution1to7...

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