ACCT 300A Exam 2

What would you pay for a $195,000 debenture bond that matures in 15 years and pays $9,750 a year in interest if you wanted to earn a yield of: 3%?

$195,000 x 0.64186 = $125,163+ $9,750 x 11.93794 = 116,395$241,558

Bramble Corp. has cash in bank of $19500, restricted cash in a separate account of $2750, and a bank overdraft in an account at another bank of $900. Bramble should report cash of

$19500

sheffield uses the periodic invtry system. For the current month, the beg invtry consisted of 7400 units that cost $10 each. During the month, the company made 2 purchase : 2900 units at $11 each and 12000 units at $11.50. Sheffield also sold 12800 units during the month. Using FIFO method, what is the ending invtry?

(7400 + 2900 + 12000) - 12800 = 9500 9500 x 11.50 = 109250

On July 22, Steven sold $24300 of inventory items on credit with the terms 1/15, net 30. Payment on $15700 sales was received on August 1 and the remaining payment was received on August 12. Assuming Steven uses the gross method of accounting for sales discounts, which one of the following entries was made on August 1 to record the cash received?

(dr)cash 15543 (dr)sales discount 157 (cr)Receivable 15700 **15700 x 1% = 157

What is the present value of $7,130 due 7 periods hence, discounted at 6%?

(refer to table) $7,130 × 0.66506= $4,742

What is the future value of $7,130 at the end of 5 periods at 8% compounded interest?

(refer to table) $7,130 × 1.46933= $10,476

What is the present value of $7,130 to be received at the end of each of 20 periods, discounted at 5% compound interest?

(refer to table) $7,130 × 12.46221= $88,856

What is the future value of 17 periodic payments of $7,130 each made at the end of each period and compounded at 10%?

(refer to table) $7,130 × 40.54470= $289,084

The controller for Clint Concord Co. is attempting to determine the amount of cash to be reported on its December 31, 2020, balance sheet. The following information is provided 1.Commercial savings account of $619,900 and a commercial checking account balance of $896,200 are held at First National Bank of Yojimbo. 2.Money market fund account held at Volonte Co. (a mutual fund organization) permits Concord to write checks on this balance, $5,001,100. 3.Travel advances of $189,100 for executive travel for the first quarter of next year (employee to reimburse through salary reduction). 4.A separate cash fund in the amount of $1,497,100 is restricted for the retirement of long-term debt. 5.Petty cash fund of $2,030. 6.An I.O.U. from Marianne Koch, a company customer, in the amount of $169,200. 7.A bank overdraft of $122,700 has occurred at one of the banks the company uses to deposit its cash receipts. At the present time, the company has no deposits at this bank. 8.The company has two certificates of deposit, each totaling $694,600. These CDs have a maturity of 120 days. 9.Concord has received a check that is dated January 12, 2021, in the amount of $132,790. 10.Concord has agreed to maintain a cash balance of $546,800 at all times at First National Bank of Yojimbo to ensure future credit availability. 11.Concord has purchased $2,211,200 of commercial paper of Sergio Leone Co. which is due in 60 days. 12.Currency and coin on hand amounted to $7,096. (a) Compute the amount of cash and cash equivalents to be reported on Concord Co.'s balance sheet at December 31, 2020. The amount of Cash and Cash Equivalents reported on December 31, 2020

1. 619900+896200+5001100+2030+2211200+7096=8737526

A trial balance before adjustments included the following: (cr) sales 1620000 (dr) sales returns and allowances 56200 (dr) A/R 168000 (cr) allowance for doubtful accts 2470 If the estimate of uncollectible accounts is made by taking 12% of gross account receivables, the amount of the adjustment is:

168000 x 12% - 2470 (allowance for doubtful accounts) = 17690

bramble corp. sells on product and uses a perpetual invtry system. The Beg. Invtry consisted of 81 units that cost $18 per unit. During the current month, the company purchased 483 units at $21 each. Sales during the month totaled 357 unites for $44 each. What is the number of units in the ending invtry?

81 + 483 - 357 = 207 units

Sage Corporation engaged in the following cash transactions during 2020. Sale of land and building $192,800 Purchase of treasury stock 48,400 Purchase of land 45,800 Payment of cash dividend 85,100 Purchase of equipment 58,600 Issuance of common stock 153,500 Retirement of bonds 109,200 Compute the net cash provided (used) by investing activities.

Cash Flows From Investing Act: Sale of Land & Building--192800 Purchase (land) -- (45800) Purchase (equipment) -- (58600) NET CASH = 88400

Waterway Corporation engaged in the following cash transactions during 2020. Sale of land and building $186,490 Purchase of treasury stock 42,100 Purchase of land 46,400 Payment of cash dividend 87,800 Purchase of equipment 58,200 Issuance of common stock 149,900 Retirement of bonds 102,400 Compute the net cash used (provided) by financing activities.

Cash Flows from Financing Act: Purchase (Treasury stock)--(42100) Payment (Cash dividend)--(87800) Issuance (common stock)--149900 Retirement of Bonds-- (102400) NET CASH = 82400

Sandhill Company reports the following financial information before adjustments. Dr.--Cr. (dr)Accounts Receivable $155,400 (cr)Allowance for Doubtful Accounts$3,890 (cr)Sales Revenue (all on credit)800,700 (dr)Sales Returns and Allowances50,330 Prepare the journal entry to record bad debt expense assuming Sandhill Company estimates bad debts at (a) 4% of accounts receivable and (b) 4% of accounts receivable but Allowance for Doubtful Accounts had a $1,470 debit balance.

Dr--Cr (a) Allow. 4% x 155400=6216 6216-3890=2326 >Bad Dr Ex--2326 Allow.--2326 (b)Allow. 4% x 155400=6216 6216+1470=7686 >Bad Dr Ex--7686 Allow.--7686

At the end of 2020, Coronado Company has accounts receivable of $736,000 and an allowance for doubtful accounts of $36,800. On January 16, 2021, Coronado Company determined that its receivable from Ramirez Company of $5,520 will not be collected, and management authorized its write-off. Prepare the journal entry for Coronado Company to write off the Ramirez receivable.

Dr--Cr >Allow.--5520 A/R--5520

Which of the following is included in the normal journal entry to record the collection of accounts receivable previously written off when using the allowance method?

Dr. Allowance for Doubtful Accts Cr. Bad Dr Exp.

Bonita Family Importers sold goods to Tung Decorators for $35,400 on November 1, 2020, accepting Tung's $35,400, 6-month, 6% note.Prepare Bonita's November 1 entry, December 31 annual adjusting entry, and May 1 entry for the collection of the note and interest.

Dr.--Cr. >N/R--35400 Sales Rev--35400 >Interest Receivable--354 Interest Rev--354 >Cash--36462 N/R--35400 Interest Rec--354 Interest Rev--708 **interest rev = (35,400 x 6% x 2/12) = 354 **interest rev- (35400 x 6% x 4/12)= 708 Cash = 35400 + 354 + 708 = 36462

in a period of rising prices, the invtry method which tends to give the highest reported net income is?

FIFO

Oriole Company recently signed a lease for a new office building, for a lease period of 11 years. Under the lease agreement, a security deposit of $12,650 is made, with the deposit to be returned at the expiration of the lease, with interest compounded at 5% per year. What amount will the company receive at the time the lease expires?

Future value of $12,650 @ 5% for 11 years ($12,650 x 1.71034) = $21,636

Waterway Corporation, having recently issued a $20,141,900, 15-year bond issue, is committed to make annual sinking fund deposits of $622,900. The deposits are made on the last day of each year and yield a return of 10% Determine the amount of deficiency

Future value of an ordinary annuity of $622,900 at 10% for 15 years ($622,900 x 31.77248) = $19,791,078 Deficiency ($20,141,900 - $19,791,078) = $350,822

In your audit of William Brown Company, you find that a physical inventory on December 31, 2020, showed merchandise with a cost of $448,200 was on hand at that date. You also discover the following items were all excluded from the $448,200. 1.Merchandise of $60,140 which is held by Brown on consignment. The consignor is the Max Suzuki Company. 2.Merchandise costing $36,890 which was shipped by Brown f.o.b. destination to a customer on December 31, 2020. The customer was expected to receive the merchandise on January 6, 2021. 3.Merchandise costing $46,730 which was shipped by Brown f.o.b. shipping point to a customer on December 29, 2020. The customer was scheduled to receive the merchandise on January 2, 2021. 4.Merchandise costing $85,330 shipped by a vendor f.o.b. destination on December 30, 2020, and received by Brown on January 4, 2021. 5.Merchandise costing $55,340 shipped by a vendor f.o.b. shipping point on December 31, 2020, and received by Brown on January 5, 2021. Based on the above information, calculate the amount that should appear on Brown's balance sheet at December 31, 2020, for inventory. Inventory as on December 31, 2020:

Inventory per physical count $448,200 Goods in transit to customer, f.o.b. destination36,890 Goods in transit from vendor, f.o.b. seller55,340 Inventory to be reported on balance sheet$540,430 The consigned goods of $60,140 are not owned by William Brown and were properly excluded.The goods in transit to a customer of $46,730, shipped f.o.b. shipping point, are properly excluded from the inventory because the title to the goods passed when they left the seller (Brown) and therefore a sale and related cost of goods sold should be recorded in 2020.The goods in transit from a vendor of $85,330, shipped f.o.b. destination, are properly excluded from the inventory because the title to the goods does not pass to Brown until the buyer (Brown) receives them.

Which of the methods used above will yield the lowest figure for ending inventory for the balance sheet?

LIFO

Which of the methods used above will yield the lowest figure for gross profit for the income statement?

LIFO

Waterway Corporation, having recently issued a $20,141,900, 15-year bond issue, is committed to make annual sinking fund deposits of $622,900. The deposits are made on the last day of each year and yield a return of 10%. Will the fund at the end of 15 years be sufficient to retire the bonds?

No, The fund will not be sufficient. Future value of an ordinary annuity of $622,900 at 10% for 15 years ($622,900 x 31.77248) = $19,791,078

Daniel Finley wishes to become a millionaire. His money market fund has a balance of $109,333 and has a guaranteed interest rate of 10%. How many years must Daniel leave that balance in the fund in order to get his desired $979,000?

The number of interest periods is calculated by first dividing the future value of $979,000 by $109,333, which is 8.95430—the value $1.00 would accumulate to at 10% for the unknown number of interest periods. The factor 8.95430 or its approximate is then located in the Future Value of 1 Table by reading down the 10% column to the 23-period line; thus, 23 is the unknown number of years Mike must wait to become a millionaire.

Assume that Nancy Williams desires to accumulate $979,000 in 15 years using her money market fund balance of $187,154. At what interest rate must Nancy's investment compound annually?

The unknown interest rate is calculated by first dividing the future value of $979,000 by the present investment of $187,154, which is 5.23099—the amount $1.00 would accumulate to in 15 years at an unknown interest rate. The factor or its approximate is then located in the Future Value of 1 Table by reading across the 15-period line to the 12% column; thus, 12% is the interest rate Sally must earn on her investment to accumulate $979,000.

which of the following is considered cash?

money market checking accounts

Carla Corporation engaged in the following cash transactions during 2020. Sale of land and building$190,800 Purchase of treasury stock43,900 Purchase of land43,800 Payment of cash dividend93,700 Purchase of equipment56,200 Issuance of common stock156,600 Retirement of bonds105,200 Determine Carla's free cash flow, assuming that it reported net cash provided by operating activities of $408,390

net cash provided by operating act--408390 purchase of equip--(56200) purchase of land--(43800) dividends--(93700) FREE CASH FLOW = 214690