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2111 Final Ex

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10 views4 pages

2111 Final Ex

Uploaded by

九.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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BigBang Company purchased a new stamping machine on January 1, 2012, at a cost of $60,000.

The machine has a useful life of 3 years and a residual value of $6,000.

Required:

1. Prepare the journal entry to account for the purchase of the machine.

2. Calculate the depreciation expense, accumulated depreciation balance at the end of each year,
and net book value at the end of each year in year 2012 and 2013 using the straight line
depreciation method.

3. Calculate the depreciation expense, accumulated depreciation balance at the end of each year,
and net book value at the end of each year in year 2012, 2013, and 2014 using the double declining
balance method.

4. Suppose the machine is sold for $ 20,000 cash on April 30, 2014. Prepare the journal entry to
record this sale. (Assume straight-line method is used).

The following transactions were selected from among those completed by Bennett Retailers in
November and December:

Nov 20 Sold 20 items of merchandise to Customer B at an invoice price of $5,500 (total);


terms 3/10, n/30.
25 Sold two items of merchandise to Customer C, who charged the $400 (total) sales
price on her Visa credit card. Visa charges Bennett Retailers a 2 percent credit card
fee.
28 Sold 10 identical items of merchandise to Customer D at an invoice price of $9,000
(total); terms 3/10, n/30.
29 Customer D returned one of the items purchased on the 28th; the item was defective
and credit was given to the customer.
Dec 6 Customer D paid the account balance in full.

15 Customer B paid in full for the invoice of November 20.

Compute net sales for the two months ended December 31.
Wayne Enterprises, Inc.’s fiscal year ends on December 31. It reported the following
shareholders’ equity for the fiscal year end December 31, 2021:

Ordinary share, $1 par. ....................................................................................$ 200,000

Paid-in capital in excess of par........................................................................1,800,000

Note: Short explanations for journal entries are NOT required.

Required:

(1) On December 10, 2021, with the approval of the shareholders' meeting, the declaration
of cash dividends for the year 2021 in the amount of $ 15,000 was announced. On
January 10, 2022, the company paid cash dividends to shareholders. Prepare journal
entries for related transactions in 2021 and 2022. (2 marks)

(2) On March 1, 2022, with the approval of the shareholders' meeting, 300,000 shares of
common stock were issued. The par value of each share is $1, and the issue price per
share is $10. Prepare the journal entry. (2 marks)

(3) Mr. Bruce Wayne is a director of the company. He owned 20,000 ordinary shares by the
fiscal year end of 2021. Preemptive rights are set forth in the corporate charter of Wayne
Enterprises, and Bruce wants to maintain his voting power. On March 1, 2022, how
many new shares should he purchase? (1 mark)

(4) On June 30, 2022, 30,000 shares of the company's stock were repurchased at $12 per
share using cash deposits. Prepare the journal entry. (2 marks)

(5) On August 2, 2022, 20,000 treasury shares that were repurchased on June 30 were
resold as ordinary shares at $15 per share. Based on information in (4), prepare the
journal entry. (3 marks)
Belmont Company adopts the accrual basis of accounting and has the following comparative
balance sheet data available.

Prepare the statement of cash flows for the year ending December 31, 2014.

12/31/2014 12/31/2013
Cash $30,000 $80,000
Accounts Receivable, net 160,000 100,000
Inventory 100,000 70,000
Prepaid Rent 20,000 10,000
Total Current Assets $310,000 $260,000
Equipment $400,000 $200,000
Accumulated Depreciation (60,000) (50,000)
Total Assets $650,000 $410,000

Accounts Payable $50,000 $40,000


Salaries Payable 40,000 40,000
Notes Payable 0 50,000
Ordinary Shares, $10 par 300,000 100,000
Additional Paid-in Capital 50,000 0
Retained Earnings 210,000 180,000
Total Liabilities & Shareholders' Equity $650,000 $410,000
Additional information:

(1) Belmont Company reports net income of $100,000 and Depreciation Expense of $20,000
for the year ending December 31, 2014.
(2) Dividends declared and paid in 2014, $70,000.
(3) Equipment with a cost of $20,000, with Accumulated Depreciation of $10,000 was sold
for $3,000 during 2014.
(4) New equipment was purchased for cash in 2014.
(5) New shares were issued for cash during the year.
The following selected financial data pertain to four different companies on 31st Dec 2020:

COMPANIES
1 2 3 4
Balance Sheet Data
(% of total assets)
Cash 7.3 % 21.6 % 6.1 % 11.3 %
Accounts receivable 28.2 % 39.7 % 3.2 % 22.9 %
Inventory 21.6 % 0.6 % 1.8 % 22.5 %
Property and equipment 32.1 % 18.0 % 74.6 % 25.1 %
Income Statement Data
(% of total sales)
Cost of goods sold 84.7 % 0.0 % 0.0 % 50.0 %
Profit before taxes 1.7 % 3.2 % 2.4 % 6.9 %
Selected Ratios
Current ratio 1.5 1.2 0.8 1.9
Inventory turnover ratio 27.4 N/A * N/A * 2
*N/A = Not applicable.

The above financial information pertains to the following companies:

a. Travel agency
b. Hotel
c. Meat processing company
d. Drug company

Required:
(6) Out of companies 1 – 4, which one is the travel agency? Which one is the meat
processing company? (4 pts)
(7) Assume the hotel has total assets of $40 million, and its current assets only include cash,
accounts receivable and inventory. How much current liability does the hotel have (in $)?
How much working capital does the hotel have (in $)? (4 pts)
(8) Assume the drug company has total assets of $90 million, and its cost of goods sold is
$40 million. What’s the beginning inventory for the drug company in the year 2020? (2
pts)

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