ACCT221 exam

| July 29, 2018

#1 A comparative balance sheet for
Bud Fox Corporation is presented below:
BUD FOX
CORPORATION
Comparative Balance Sheet
2014 2013
.gif”>.gif”>Assets
Cash $
36,000 $ 31,000
Accounts receivable (net) 70,000 60,000
Prepaid insurance 25,000 17,000
Land 18,000 40,000
Equipment 70,000 60,000
Accumulated depreciation (20,000) (13,000)
Total Assets $199,000 $195,000

Liabilities and Stockholders’ Equity
Accounts payable $ 11,000 $
6,000
Bonds payable 27,000 19,000
Common stock 140,000 115,000
Retained earnings 21,000 55,000

Total liabilities and stockholders’ equity $199,000 $195,000

Additional information:
1.
Net loss for 2014 is $20,000.
2.
Cash dividends of $14,000 were declared and
paid in 2014.
3.
Land was sold for cash at a loss of $4,000. This was the only land
transaction duringthe year.
4.
Equipment with a cost of $15,000 and accumulated depreciation of $10,000
wassold for $5,000 cash.
5.
$22,000 of bonds were retired during the year
at carrying (book) value.
6.
Equipment was
acquired for common stock. The fair value of the stock at the time of the
exchange was $25,000.
Instructions
Prepare a statement of cash flows for the
year ended 2014,using the
indirectmethod.

#2 Patience
Phillips’ Company budgeted the following information for 2014:
May June July
Budgeted purchases $104,000 $110,000 $102,000
·
Cost of goods sold is 40% of sales. Accounts payable is used only
for inventory acquisitions.
·
Haigler purchases and pays for merchandise 60% in the month of
acquisition and 40% in the following month.
·
Selling and administrative expenses are
budgeted at $40,000 for May and areexpected to increase 5% per month. They are paid during the month
of acquisition. In addition, budgeted
depreciation is $10,000 per month.
·
Income taxes are $38,400 for July and are
paid in the month incurred.
Instructions
Compute the amount of budgeted cash disbursements for July.
#3Gabriel Shear
Company manufactures sweaters. The budgeted units to be producedand sold are below:
Expected Production Expected Sales
August 6,200 5,800
September 5,600 7,800
It takes 24 yards of yarn to produce a sweater. The company’s policy is
to maintain yarnat the end of
each month equal to 5% of next month’s production needs and to maintain a finished goods inventory at the end of each month
equal to 20% of next month’santicipated
production needs. The cost of yarn is $0.20 a yard. At August 1, 7,440 yardsof yarn were on hand.
Instructions
Compute the budgeted cost of purchases for August.

#4 Dean Keaton Company is considering two alternatives to finance
its purchase of a new $4,000,000 office
building:
(a) Issue 400,000 shares of common stock at $10
per share
(b) Issue 8%, 10-year bonds at par ($4,000,000).
Income before interest and taxes is expected to be $3,000,000. The
company has a30% tax rate and has 600,000 shares
of common stock outstanding prior to the new financing.
Instructions
Calculate
each of the following for each alternative:
(1)Net income.
(2)Earnings per share.
#5 On June 30, 2012, Robert Cross, Inc. sold $3,000,000 (face value) of
bonds. Thebonds are
dated June 30, 2014, pay interest semiannually on December 31 and June30, and will mature on June 30, 2017. The
following schedule was prepared by theaccountant for Robert Cross, Inc. for 2014.
Semi-Annual Interest to Interest Unamortized Bond
Interest Period be Paid Expense Amortization Amount Carrying Value
$75,000$2,925,000
1 $120,000 $132,500 $12,500 62,500 2,987,500
Instructions
On the basis of the above
information, answer the following questions. (Round your answer to the nearest
dollar or percent.)
1.
What is the stated interest rate for this bond issue?
2.
What is the market interest rate for this bond issue?
3.
What was the selling price of the bonds as a percentage of the face
value?4, Prepare the journal entry to
record the sale of the bond issue on June 30, 2014.
5. Prepare the journal entry to record the payment of interest and
amortization onDecember 31, 2014.

#6A comparative balance sheet for
Billy Ray Valentine Corporation is presented below:
VALENTINE CORPORATION
Comparative Balance Sheet
2014 2013
.gif”>.gif”>Assets
Cash $ 36,000 $
31,000
Accounts receivable (net) 70,000 60,000
Prepaid insurance 25,000 17,000
Land 18,000 40,000
Equipment 70,000 60,000
Accumulated depreciation (20,000) (13,000)
Total Assets $199,000 $195,000
Liabilities and Stockholders’ Equity
Accounts payable $ 11,000 $
6,000
Bonds payable 27,000 19,000
Common stock 140,000 115,000
Retained earnings 21,000 55,000
Total liabilities and stockholders’ equity $199.000 $195,000
Additional information:
1.
Net loss for 2014 is $20,000.
2.
Cash dividends of $14,000 were declared and paid in 2014.
3.
Land was sold for
cash at a loss of $4,000. This was the only land transaction during the year.
4.
Equipment with a cost of $15,000 and accumulated depreciation of $10,000
wassold for $5,000
cash.
5.
$22,000 of bonds were retired during the year at carrying (book) value.
6.
Equipment was
acquired for common stock. The fair value of the stock at the time of the exchange was $25,000.
Instructions
Prepare a statement of cash flows for the
year ended 2014, usingthe indirect method.

#7The current
sections of Marko Ramius lnc.’s balance sheets at December 31, 2013and 2014, are presented here.
Marko Ramius’s
net income for 2014 was $203,000. Depreciation expense was

$25,000.
Current assets

2014

2013

Cash

$115,000

$99,000

Accounts receivable

105,000

89,000

Inventory

154,000

172,000

Prepaid expense

27,000

21,000

Total current assets

$401,000

$381,000

Current liabilities

Accrued expenses payable

$ 15,000

$ 5,000

Accounts payable

85,000

93,000

Total current liabilities

$100,000

$ 98,000

Instructions
Prepare thenet cash
provided by operating activities section (ONLY!)of thecompany’s statement of cash flows for the
year ended December 31, 2014, usingtheindirect method.
#8David Webb Corporation issued $2 million, 10-year, 6% bonds on
January 1, 2014.
Instructions
Prepare the entry to record the sale of these bonds, assuming they were
issued at:
(a) 98.
(b) 103.

#9Juliet Burke Corporation entered into the
following transactions:
1.
On January 1, 2014 Pear Car Rental leased a
car to Juliet Burke Corporation for oneyear. Terms of theoperating leasecall for monthly payments of
$650.
2.
On January 1, 2014, Juliet Burke Corporation
entered into an agreement to lease 20machines from Pear Corporation. The terms of
the lease agreement require an initialpayment of $500,000 and then
three annual rental payments of $600,000 beginningon December 31, 2014. The present
value of the three rental payments is$1,492,108. The lease is acapital lease.
Instructions
Prepare the appropriate journal
entries to be made by Juliet Burke Corporation inJanuary related to the lease transactions.
#10James Ford Company has budgeted the following unit sales:
2015 Units
January 10,000
February 8,000
March 9,000
April 11,000
May 15,000
The finished
goods units on hand on December 31, 2014, was 1,000 units. Each unitrequires 2
pounds of raw materials that are estimated to cost an average of $3 perpound. It is the company’s policy
to maintain a finished goods inventory at the end of each month equal to 10% of next month’s anticipated sales. They also
have a policy ofmaintaining a raw materials inventory at the end of
each month equal to 20% of the pounds needed
for the following month’s production. There were 3,920 pounds of rawmaterials
on hand at December 31, 2014.
Instructions
For thefirst quarter
of 2015,prepare:
(1) a production budget
(2) a direct materials budget.

BONUS (1 Opts)
Please provide a one-line description of EACH of the people named on
this exam. Thisbonus problem is AON (“All or
None” meaning you must get all 10 names correct to receive the bonus). The entire class may collaberate for this problem.
NONE of thenames are “real people”, i.e. they are all
characters.

Get a 20 % discount on an order above $ 40
Use the following coupon code:
LOBSTER
Positive SSL