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Chapter 03 Solution - Exercise 3-1 1 c 2 f 3-a 4 b...

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Exercise 3-1 1. c Equipment 10. a Inventories 2. f Accounts payable 11. d _ Patent 3. -a _ Allowance for uncollectible accounts 12. c Land, in use 4. b _ Land, held for investment 13. f _ Accrued liabilities 5. g _ Note payable, due in 5 years 14. a Prepaid rent 6. f Unearned rent revenue 15. h _ Common stock 7. f Note payable, due in 6 months 16. c Building, in use 8. i Income less dividends, accumulated 17. a Cash 9. b Investment in XYZ Corp., long-term 18. f _Taxes payable
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Exercise 3-5 CASA DE FIESTA CORPORATION Balance Sheet At December 31, 2006 Assets Current assets: VEB Cash ........................................................................ 30,000 Accounts receivable, net of allowance for uncollectible accounts of 5,000 ........................... 65,000 Inventories ............................................................... 55,000 Total current assets ............................................ 150,000 Investments: Bond sinking fund ................................................... 20,000 Note receivable ........................................................ 10,000 Total investments ............................................... 30,000 Property, plant, and equipment: Machinery ............................................................... 190,000 Less: Accumulated depreciation .............................. (70,000 ) Net property, plant, and equipment .................... 120,000 Intangibles: Franchise ................................................................. 30,000 Total assets ...................................................... 330,000 Liabilities and Shareholders' Equity Current liabilities: VEB Accounts payable .................................................... 60,000 Interest payable ....................................................... 5,000 Note payable ........................................................... 50,000 Total current liabilities ....................................... 115,000 Long-term liabilities: Bonds payable ......................................................... 110,000 Shareholders’ equity: Common stock, no par value; 100,000 shares authorized; 50,000 shares issued and outstanding 70,000 Retained earnings .................................................... 35,000 Total shareholders’ equity .................................. 105,000 Total liabilities and shareholders’ equity ......... 330,000
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Exercise 3-8 ARAGONS CORPORATION Balance Sheet (Partial) At December 31, 2006 Assets Current assets: UYU Marketable securities ......................................... 40,000 Prepaid rent ........................................................ 12,000 Investments: Bond sinking fund .............................................. 60,000 Marketable securities ......................................... 40,000 Other assets: Prepaid rent (1) ................................................... 12,000 Liabilities and Shareholders' Equity Current liabilities: UYU Interest payable .................................................. 15,000 Current maturities of long-term debt ................. 20,000 Long-term liabilities: Note payable ...................................................... 200,000 (1) Note: In practice, companies often report all prepaid expenses as current assets.
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Exercise 3-10 1. Inventory costing method A 2. Information on related party transactions B 3. Composition of property, plant, and equipment B 4. Depreciation method A 5. Subsequent event information B 6. Basis of revenue recognition on long-term contracts A 7. Important merger occurring after year-end B 8. Composition of receivables B
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Exercise 3-11 d 1.
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