Ac2001

SPRING 2014 BONUS PROBLEM #4

Maximum 3 points

Please answer the questions below using the directions provided:

Bonus Problem due in-class ONLY. See your class schedule for date due (papers will not be accepted after class)

Answers must be typed in space provided

To make your answer easy to grade, please use the answer sheet provided at the start of the bonus problem.

Hand in the answer sheet only.

Sign your name to state that you did your own work.
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ANSWER SHEET FOR BONUS #4 (to hand in)

(TYPED)
NAME: ____________________________ ID # _______________________
CLASS TIME : ________
SIGNATURE: ____________________
1.

Debit to
For

_______________ (Account Title)

$_______________ (Amount)

2.

Debit to
For

_______________ (Account Title)

$_______________ (Amount)

3.

Debit to
For

_______________ (Account Title)

$_______________ (Amount)

4.

$_______________ (Amount)

5.

$_______________ (Amount)

6.

$_______________ (Amount)

7.

$_______________ (Amount)

8.

_______________ (Method)

9.

$_______________ (Amount)

10.

_______________ (MC answer)

11.

$_______________ (Amount)

12.

$_______________ (Amount)

13.

$_______________ (Amount)

14.

$_______________ (Amount)

15.

$_______________ (Amount)

16.

$_______________ (Amount)

17.

$_______________ (Amount)

18.

$_______________ (Amount)

19.

$_______________ (Amount)

20.

$_______________ (Amount)

1.

On October 1, 2014, five months' rent income totaling $5,000 was received on an office rental. The advance collection
was originally recorded by a credit to Unearned Rental Revenue. The required adjusting entry at December 31, 2014
would require a
Debit to _______________ (Account Title)
For
$_______________ (Amount)

2.

The unadjusted trial balance amount for the Supplies Expense account on December 31, 2014, was $950. Actual supplies
on hand on that date were $180. The required adjusting entry on December 31, 2014 would require a
Debit to _______________ (Account Title)
For
$_______________ (Amount)

3.

WEST Sales had net credit sales in June of $80,000. On June 30, 2014 (before and adjustments) Accounts receivable are
$15,000 and Allowance for Doubtful Accounts has a $100 credit balance. If WEST Sales estimates bad debt losses as 8%
of gross accounts receivable, the adjusting entry on June 30 would require a
Debit to _______________ (Account Title)
For
$_______________ (Amount)

4.

If TWEET Corporation sells 40,000 shares of its new $1 par value common stock to investors for $14 per share, the
required journal entry would require a credit to Additional Paid-In Capital:
For
$_______________ (Amount)

5.

Emma Industries purchased specialized equipment on July 1, 2012, that cost $85,000, has a residual value of $5,000, and
a useful life of four years. The book value of the asset on December 31, 2014 (After the 2014 adjusting entry is made)
under the sum-of-the-years'-digits method is: $__________.

USE THE FOLLOWING INFORMATION FOR QUESTIONS 6 and 7:

Miriam Inc., has an inventory for pens on January 1 and purchases of this item during 2014 as follows:
Jan. 1
Beginning inventory.........................
600 units @ $3.00
Mar. 5
Purchase...........................................
700 units @ $4.00
Sept. 3
Purchase...........................................
900 units @ $5.00
Nov. 4
Purchase...........................................
500 units @ $7.00
During 2014 Miriam sold 1,300 pens at $16.00 each. Assume Miriam uses a Periodic Inventory System.
6.

Using FIFO, compute the cost of goods sold on December 31, 2014. $_________.

7.

Using LIFO, compute the cost of the ending inventory on December 31, 2014. $_________.

8.

During a period of rising prices, the cost flow assumption that will generally result in the highest amount of income taxes
paid is: (State correct Inventory Cost Flow Method)
____________________

9.

Freds Shops, Inc. ledger includes the following accounts at December 31, 2014:
Treasury Stock, Common (3,800 shares)
$ 5,000
Bonds Payable
300,000
Preferred Stock $10 par)
60,000
Common Stock ($1 par)
300,000
Paid-in Capital in Excess of Par Value, Preferred
8,000
Paid-in Capital in Excess of Par Value, Common
30,000
Retained Earnings
19,000
The balance sheet prepared at December 31, 2014, would report total owners equity of:
$____________.

10. How would this years total retained earnings be affected by a common stock (not cash) dividend that had been declared
but not yet distributed this year?
A. Decrease
B. No effect
C. cannot tell based on this information
D. Increase
(Enter your multiple choice answer A, B, C, D for question 10)
QUESTIONS 11- AND 12 ARE BASED ON THE FOLLOWING INFORMATION:
The stockholders' equity accounts (normal balances) of the Sun Corp. as of December 31, 2014, appeared as follows:
Common stock, $1 par (100,000 shares authorized, 64,000 shares issued)
Preferred Stock, 10%, $5 Par (40,000 shares authorized, 10,000 shares issued)
Paid-in capital--excess over par value, common
Retained earnings
Treasury Stock (5,000 shares of common stock)

$64,000
50,000
70,000
36,000
9,000

11.

A stockholders' equity section prepared at December 31, 2014, would report total stockholders' equity of:
$___________.

12.

At December 31, 2014, the book value per share of the common stock is
(round to nearest cent) Assume no preferred dividends are in arrears.
$____________.

USE THE FOLLOWING INFORMATION FOR QUESTIONS 13 16.

Selected balance sheet account balances are:

TARA COMPANY
December 31
2014__
$ 200,000
75,000
135,000
7,000
120,000
160,000
42,000

Cash
Accounts Payable
Accounts Receivable
Salaries Payable
Land
Merchandise Inventory
Prepaid Rent
Income statement items for the year are:
Sales
Cost of Goods Sold
Salary Expense
Depreciation Expense
Rent Expense

$800,000
400,000
80,000
40,000
105,000

13.

Cash payments to suppliers for merchandise inventory during 2014 is

$ _____________.

14.

Cash collections from customers during 2014 is

$ _____________.

15.

Cash payments to employees for salary during 2014 is

$_____________.

16.

Cash payments for rent during 2014 is

$_____________.

2013___
$ 300,000
90,000
140,000
4,000
140,000
150,000
45,000

USE THE FOLLOWING INFORMATION FOR QUESTIONS 17 20.

Assume that the following information is relevant for one of the bond issues of Steve Company:
Face value
$1,000,000
Bond term
20 years
Stated interest rate
10% (paid semiannually)
Market interest rate
8%
Issue date
July 1, 2014
Interest payment dates
June 30 and December 31
Present Value Factors:
Present value of 1 for 20 periods
Present value of 1 for 40 periods

4%
0.456
0.208

5%
0.377
0.142

8%
0.215
0.046

10%
0.149
0.022

Present value of annuity for 20 periods

Present value of annuity for 40 periods

13.590
19.793

12.462
17.159

9.818
11.925

8.514
9.779

17.

On July 1, 2014, the amount the bonds should sell for is

$___________

18.

The total amount of bond interest to be paid in cash over the life of the bonds is:
$_____________.

19.

The amount of interest expense for 2014 using the effective interest method of amortization is
$__________. (show exact amount including cents)
(Use only the present value factors shown above to make calculations.)

20.

The amount of bond interest paid in cash for 2014 is

$___________.