11 Jan Show supporting computations

Week 1 discussion

DQ1 Case Discussion

This week’s case centers around our increasing dependency on international trade. As a result, there is a movement toward one set of international accounting standards that would increase trade globally and add to the transparency of financial reporting.

Please answer and discuss the questions asked in our Financial Reporting Case IFRS 1–5 located on page 35 of the textbook.

DQ2 Accounting Information System

Based on your exposure to the accounting information system at your work place and your readings of Chapter 3 of the textbook, please describe the input, processing, and output of an accounting information system. Please illustrate your description with suitable examples.

Week 2 discussion

DQ1 Case Discussion

Please read CA 4-6 on page 191. Please answer and discuss the questions as required.

DQ2 The Income Statement

The income statement is an integral part of all financial statements presentations. There are two ways of creating the income statement: the single-step and the multiple-step methods. Based on your study of Chapter 4 and your research of professional literature, please discuss how a sinigle-step income statement is different from a multi-step income statement. What are the components of income in a multi-step income statement, how they are reported, what is intraperiod tax allocation, and what do you understand by comprehensive income?

Week 3 discussion

DQ1 Case Discussion

Read the Financial Reporting case on pages 254 and 255 of the text and answer the questions. Take one question at a time and answer it. Let the remainder of the class answer another question and then comment on the answers given, expressing why the answer was either correct or not correct and why.

DQ2 Financial Statements Purpose and Interrelationship

What is the purpose of the income statement and balance sheet? How are income statements, balance sheets, and retained earnings statements related? How do you classify assets and liabilities into various groups for reporting in a balance sheet? What is the purpose of a cash flow statement?

Week 4 discussion

DQ1 Time Value of Money

We all know that a dollar today is worth more than a dollar tomorrow. This is because in a situation of rising prices the purchasing power of a dollar goes on decreasing as the time passes by. We therefore need to know how much a dollar that we are going to receive in future is actually worth today. This is known as present value of money. Let’s start our discussion with the difference between present value and future value of money. Explain compounding and discounting of interest with suitable examples.

DQ2 Cash and Receivables

Cash and receivables form a very important part of the current assets of any company. Based on your study of Chapter 7 and your research on the Internet, define cash and cash equivalent and restricted cash. What are receivables? How do accounts receivable and notes receivable differ?

Week 5 discussion

DQ1 Inventory Accounting and Reporting

Based on your readings from the text book and your research, discuss how the inventory of a merchandising company differs from that of a manufacturing company. What are the two inventory Control Systems. Why is one better than the other? Explain with examples.

DQ2 Cost Flow Assumptions

Companies need to determine the cost of goods sold and the value of ending inventory to be reported in the balance sheet. Based on your readings of the text book and other material, discuss the four important cost flow assumptions companies use to arrive at the cost of goods sold and the value of inventory on hand. Illustrate each cost flow assumption with examples.

Week 6 discussion

DQ1 Codification Research Case

Please read the Codification Research Case on page 551 of the textbook and following the instructions. Please answer questions a, b, c, d, and e.

DQ2 Exchange of Nonmonetary Assets

Usually an asset is acquired by paying cash or credit; the accounting treatment as we know is very straight forward and we put this asset on the balance sheet at cost acquired. But when one company trades its asset for an asset of another company, the accounting treatment is quite different. Can you describe how to record an asset that is acquired by a company from another company in exchange of its own asset?

Week 7 discussion

DQ1 Depreciation Methods

Based on your readings of the textbook, Becker material, and your research, please discus the meaning of depreciation, amortization, and depletion. Given the importance of depreciation and the various depreciation methods available to use, what method should a company choose to compute depreciation on its assets?

DQ2 Case Discussion: CA11-1

Please read case CA11-1 on page 596 of the textbook and answer the questions a,b, and c following the case.

Week 1 assignment

Chapter 1: CA1-3

Chapter 2: E2-5

Chapter 3: E3-1 and E3-10

After completion of the homework, put the completed assignment in the Dropbox provided for the homework for this week. A solutions file for the Week 1 Assignments will be provided at the end of the week.

Submit your assignment to the Dropbox, located at the top of this page. For instructions on how to use the Dropbox, read these step-by-step instructions.

See the Syllabus section “Due Dates for Assignments & Exams” for due date information.

Week 2 assignment

Chapter 4: E4-7, E4-13 & P4-1

After completion of the homework, put the completed assignment in the Dropbox provided for the homework for this week. A solutions file for the Week 2 Assignments will be provided at the end of the week.

Submit your assignment to the Dropbox, located at the top of this page. For instructions on how to use the Dropbox, read these step-by-step instructions.

See the Syllabus section “Due Dates for Assignments & Exams” for due date information

Week 3 assignment

Chapter 5: E 5-2, E 5-4, E 5-12, E 5-13, P 5-2

After completion of the homework, put the completed assignment in the Dropbox provided for the homework for this week. A solutions file for the Week 3 Assignments will be provided at the end of the week.

Submit your assignment to the Dropbox, located at the top of this page. For instructions on how to use the Dropbox, read these step-by-step instructions.

See the Syllabus section “Due Dates for Assignments & Exams” for due date information.

Week 4 assignment

The following are assignments to be worked on as homework.

Chapter 6: E6-5 and E6-12

Chapter 7: E7-2, E7-5, and E7-7

After completion of the homework, put the completed assignment in the Dropbox provided for the homework for this week. A solutions file for the Week 4 Assignments will be provided at the end of the week.

Submit your assignment to the Dropbox, located at the top of this page. For instructions on how to use the Dropbox, read these step-by-step instructions.

See the Syllabus section “Due Dates for Assignments & Exams” for due date information.

Week 5 assignment

The following are assignments to be worked on as homework.

Chapter 8: E8-3 and P8-4

Chapter 9: E9-1 and P9-12

After completion of the homework, put the completed assignment in the Dropbox provided for the homework for this week. A solutions file for the Week 5 Assignments will be provided at the end of the week..

Submit your assignment to the Dropbox, located at the top of this page. For instructions on how to use the Dropbox, read these step-by-step instructions.

See the Syllabus section “Due Dates for Assignments & Exams” for due date information.

Week 6 assignment

The following are assignments to be worked on as homework.

Chapter 10: E10-1, E10-3, E10-7, and P10-8

After completion of the homework, put the completed assignment in the Dropbox provided for the homework for this week. A solutions file for the Week 6 Assignments will be provided at the end of the week.

Submit your assignment to the Dropbox, located at the top of this page. For instructions on how to use the Dropbox, read these step-by-step instructions.

See the Syllabus section “Due Dates for Assignments & Exams” for due date information.

Week 7 assignment

Assignments to be worked on as homework.

Chapter 11: E11-4, E11-9, E11-11, E11-17

After completion of the homework, put the completed assignment in the Dropbox provided for the homework for this week. A solutions file for the Week 7 Assignments will be provided at the end of the week.

Submit your assignment to the Dropbox, located at the top of this page. For instructions on how to use the Dropbox, read these step-by-step instructions.

See the Syllabus section “Due Dates for Assignments & Exams” for due date information.

Week 7 course project

The objective is to test student skills in using the given financial data to prepare a comprehensive balance sheet and multi-step income statement in good form .The given financial data will be comprised of all the various subgroupings that are reported in a multi-step income statement and balance sheet (operating revenues and expenses, other revenues and expenses and irregular items, current assets, investment, fixed assets, intangibles, current liabilities, long-term liabilities, and the equity sections).

Guideline

Read the given financial data of New York Traders Inc.

Determine which accounts belong to the balance sheet and which accounts belong to the income statement.

Determine to which subgroup of balance sheet or income statement each account belongs.

Compute the correct account balances that should be reported in balance sheet and correct amounts of revenues and expenses that should be reported in income statement.

Arrange the accounts in proper order and functionality.

Prepare a comprehensive balance sheet in good form.

Prepare a multi-step income statement in good form.

Put the Course Project in the Dropbox for the project in Week 7.

Week 8 final exam

1. (TCO A) Listed below are some information, characteristics, and accounting principles and assumptions. Match the term with the appropriate phrase that states its application.

(Points : 30)

Potential Matches:

1 : Implies that a company can divide its economic activities into artificial time periods

2 : Affairs of the business distinguished from those of its owners

3 : Presentation of error-free information with representational faithfulness= Presentation of error-free information with representational faithfulness

4 : Notes as part of necessary information to a fair presentation

5 : Economic activity can be identified with a particular unit of accountability

6 : Earnings process completed and realized or realizable

7 : Money is the common denominator of economic activity and provides an appropriate basis for accounting measurement and analysis

8 : Valuing assets at amounts originally paid for them

9 : Application of the same accounting principles as in the preceding year

10 : Business enterprise assumed to have a long life

Answer

: Consistency characteristic

: Historical cost principle

: Going concern principle

: Periodicity assumption

: Reliability characteristic

: Economic entity assumption

: Monetary unit assumption

: Revenue recognition principle

: Full disclosure principle

: Economic entity assumption

Question 2. 2. (TCO B) Adjusting Entries: Unearned rent at 1/1/1X was $10,300 and at 12/31/1X was $10,000. The records indicate cash receipts from rental sources during 201X amounted to $50,000, all of which was credited to the Unearned Rent Account. You are to prepare the missing adjusting entry. For each journal entry write Dr. for debit and Cr. for credit. (Points : 10)

Question 3. 3.

(TCO B) Adjusting Entries: Data relating to the balances of various accounts affected by adjusting or closing entries appear below. (The entries which caused the changes in the balances are not given.) You are asked to supply the missing journal entries which would logically account for the changes in the account balances. Interest receivable at 1/1/1X was $5,000. During 201X cash received from debtors for interest on outstanding notes receivable amounted to $8,000. The 201X income statement showed interest revenue in the amount of $10,900. You are to provide the missing adjusting entry that must have been made, assuming reversing entries are not made. For each journal entry write Dr. for debit and Cr. for credit. (Points : 10)

Question 4. 4. (TCO B) Adjusting Entries: Accumulated depreciation-equipment at 1/1/1X was $230,000. At 12/31/1X the balance of the account was $480,000. During 201X, one piece of equipment was sold. The equipment had an original cost of $40,000 and was 3/4 depreciated when sold. You are to prepare the missing adjusting entry. For each journal entry write Dr. for debit and Cr. for credit. (Points : 10)

Question 5. 5. (TCO B) Adjusting Entries: Allowance for doubtful accounts on 1/1/1X was $70,000. The balance in the allowance account on 12/31/1X after making the annual adjusting entry was $70,000 and during 201X bad debts written off amounted to $40,000. You are to provide the missing adjusting entry. For each journal entry write Dr. for debit and Cr. for credit. (Points : 10)

Question 6. 6. (TCO B) Adjusting Entries: Prepaid rent at 1/1/1X was $30,000. During 201X rent payments of $110,000 were made and charged to “rent expense.” The 201X income statement shows as a general expense the item “rent expense” in the amount of $130,000. You are to prepare the missing adjusting entry that must have been made, assuming reversing entries are not made. For each journal entry write Dr. for debit and Cr. for credit. (Points : 10)

Question 7. 7. (TCO B) Adjusting Entries: Retained earnings at 1/1/1X were $100,000 and at 12/31/1X it was $350,000. During 201X, cash dividends of $40,000 were paid and a stock dividend of $40,000 was issued. Both dividends were properly charged to retained earnings. You are to provide the missing closing entry. For each journal entry write Dr. for debit and Cr. for credit. (Points : 10)

Question 8. 8.

(TCO C) Presented below is information related to Square Company.

Retained earnings, December 31, 20X2

$2,750,000

Sales

2,000,000

Selling and administrative expenses

240,000

Hurricane loss (pre-tax) on plant (extraordinary item)

250,000

Cash dividends declared on common stock

33,600

Cost of goods sold

960,000

Gain resulting from computation error on depreciation charge in 20X1 (pre-tax)

2,000,000

Other revenue

80,000

Other expenses

50,000

Instructions: Prepare in good form a multiple-step income statement for the year 2011. Assume a 30% tax rate and that 100,000 shares of common stock were outstanding during the year (Points : 40)

Question 9. 9. (TCO D) The following balance sheet was prepared by the bookkeeper for Stripes Company as of December 31, 201X Stripes Company Balance Sheet as of December 31, 201X is as follows.

Cash

$ 80,000

Accounts payable

$ 75,000

Accounts receivable (net)

52,200

Long-term liabilities

100,000

Inventories

57,000

Stockholders’ equity

218,500

Investments

76,300

Equipment (net)

96,000

Patents

$393,500

$393,500

The following additional information is provided:

(1) Cash includes the cash surrender value of a life insurance policy $12,000 and a bank overdraft of $2,500 has been deducted.

(2) The net accounts receivable balance includes:

(a) accounts receivable debit balances $60,000;

(b) accounts receivable 0; and

(c) allowance for doubtful accounts $3,800.

(3) Inventories do not include goods costing $3,000 shipped out on consignment. Receivables of $3,000 were recorded on these goods.

(4) Investments include investments in common stock, trading $13,000, available-for-sale $48,300, and franchises $15,000.

(5) Equipment costing $5,000 with accumulated depreciation $4,000 is no longer used and is held for sale. Accumulated depreciation on the other equipment is $40,000.

(6) An unrecorded liability was not recorded on the balance sheet of $2,000. Instructions .

Instructions:

Prepare a balance sheet in good form (stockholders’ equity details can be omitted). (Points : 40)

Question 10. 10. (TCO E) Jack Sawyer is presently leasing a copier from John Office Equipment Company. The lease requires 11 annual payments of $2,500 at the end of each year and provides the leaser (John) with an 8% return on its investment. You may use the following 8% interest factors.

9 Periods

10 Periods

11 Periods

Future Value of 1

1.99900

2.15892

2.33164

Present Value of 1

.50025

.46319

.42888

Future Value of

12.48756

14.48656

Ordinary Annuity of 1

Present Value of

6.24689

6.71008

7.13896

Ordinary Annuity of 1

Present Value of

6.74664

7.24689

7.71008

Annuity Due of 1

(a) Assuming the computer has an 11-year life and will have no salvage value at the expiration of the lease, what was the original cost of the copier to John?

(b) What amount would each payment be if the 11 annual payments are to be made at the beginning of each period? (Points : 25)

Question 11. 11. (TCO F) David deposits all receipts and makes all payments by check. The following information is available from the cash records.

MARCH 31

BANK RECONCILIATION

Balance per bank

$26,746

Add: Deposits in transit

2,100

Deduct: Outstanding checks

(3,800)

Balance per books

$25,046

Month of April Results

Per Bank

Per Book

Balance April 30

$27,995

$24,355

April deposits

8,864

14,889

April checks

12,200

16,080

April note collected

3,000

-0-

(not included in April deposits)

April bank service charge

35

-0-

April NSF check of a customer

900

-0-

returned by the bank

(recorded by bank as a charge)

Instructions

Calculate the amount of the April 30

(1) deposits in transit; and

(2) outstanding checks.

Show all your work for potential partial credit. (Points : 25)

Question 12. 12. (TCO G) Tan Company was formed on December 1, 2010. The following information is available from Tan’s inventory record for Product Lotion.

Units

Unit Cost

Total Cost

January 1, 2011 (beginning inventory)

1,600

$18.00

Purchases:

January 1, 2011

2,600

$20.00

$52,000

January 5, 2011

2,400

$21.00

January 25, 2011

1,000

$22.00

February 16, 2011

1,800

$23.00

March 15, 2011

1,600

$18.00

A physical inventory on March 31, 2011, shows 2,400 units on hand.

Instructions:

Prepare schedules to compute the ending inventory at March 31, 2011, under each of the following inventory methods.

(a) FIFO

(b) LIFO

(c) Weighted-average

Show supporting computations in good form. (Points : 40)

Question 13. 13. (TCO H) On January 2, Year 1, Logan Co. purchased a manufacturing machine for $864,000. The machine has an 8­year estimated life and a $144,000 estimated salvage value. Logan expects to manufacture 1,800,000 units over the life of the machine. During Year 2, Logan manufactured 300,000 units.

Instructions:

Calculate the Year 2 depreciation expense using (1) straight line depreciation and (2) double-declining balance depreciation. (Points : 40)