GSLC Forum Information

Course ID : ACCT6083
Course Name : Advanced Accounting
Teaching Week : 13 – Session 2 GSLC
Date of Class : Monday, 21 December 2020
Date of Latest Respond : Monday, 28 December 2020
Book Reference : Debra C. Jeter, Paul K. Chaney. (2015). Advanced Accounting.
th
6 Edition. Wiley. New Jersey.

Dear class, berikut latihan soal yang bisa kalian kerjakan untuk sesi GSLC di minggu ke-13 ini
sebagai wrap-up seluruh materi pelajaran kita setelah UTS. Mulai dari Chapter 9, 8, 10, 12,
dan 13 untuk materi ujian akhir semester. Selamat mengerjakan!

Exercise 1. Chapter 9 - Intercompany Bond Holdings and Miscellaneous Topics

Prezo Company purchased 80% of Satz Company’s common stock for $880,000 on January 2,
2009. Condensed financial information for Prezo Company and Satz Company is given below.

Adelia Yulma Budiarto, S.A, MSc. – ACCT6083

On July 1, 2009, Prezo Company purchased 60% of Satz Company’s bonds for $225,000. The
bonds mature on December 31, 2012. Interest of 10% per annum is paid on June 30 and
December 31 each year. Both companies use the straight-line method to amortize bond dis-
counts and premiums.

Required:
a. Compute the gain or loss on the constructive retirement of the bonds allocated to
each of the affiliated companies.
b. Prepare a consolidated financial statements workpaper on December 31, 2009.
c. Prepare in good form a schedule showing the calculation of consolidated net income
for the year ended December 31, 2009.

Exercise 2. Chapter 8 - Changes in Ownership Interest

The accounts of Pyle Company and its subsidiary, Stern Company, are summarized below as
of December 31, 2011:

Adelia Yulma Budiarto, S.A, MSc. – ACCT6083

Pyle Company made the following open-market purchase and sale of Stern Company com-
mon stock:
January 2, 2009, purchased 51,000 shares (85% of Stern), cost $510,000, $10/share;
January 1, 2011, sold 40,000 shares (two-thirds of Stern), proceeds, $480,000,
$12/share.

The book value of Stern Company’s net assets on January 2, 2009, $600,000, approximated
the fair value of those net assets, including retained earnings of $120,000. Subsequent
changes in book value of the net assets are entirely attributable to earnings of Stern Company.
Stern Company earns its income evenly throughout the year.

Required:
a. Prepare the journal entries needed on Pyle Company’s books to record the
transactions regarding the investment in Stern Company account assuming the equity
method is used to account for the investment.
b. Prepare a consolidated financial statements workpaper for Pyle Company and its
subsidiary on December 31, 2011.

Exercise 3. Chapter 10 - Insolvency: Liquidation and Reorganization

A receiver was appointed by the court to manage the affairs of Davis Manufacturing Company
on March 31, 2012. On this date, the following balance sheet applied:

Adelia Yulma Budiarto, S.A, MSc. – ACCT6083

Additional information:
1. The cash account includes a $500 travel advance that has been spent.
2. Of the total accounts receivable, $75,000 is believed to be collectible. The remaining
accounts are doubtful, but it is believed that about one-third of these will be realized
eventually. The accounts receivable are pledged as security on a $10,000 note
payable.
3. Notes receivable of $50,000 have been pledged as security on a note payable of
$45,000. This portion of the notes receivable has an estimated realizable value of
$35,000. The remaining notes receivable, including the accrued interest, are expected
to be fully collected. The $45,000 note payable has accrued interest due of $1,000.
4. The finished-goods inventory is expected to sell at 20% above its cost, with expenses
involved in its disposition approximating 10% of selling price. The work in process
inventory can be completed at an additional cost of $55,000, of which $40,000
represents materials used from the present raw materials inventory. The completed
work in process should then sell for $145,000; the remaining raw materials should sell
for one-half their cost. Supplies are expected to realize $1,300.
5. The investment in stock consists of 2,000 shares of Monelli Vineyards. The stock has a
current market value of $50 per share and is pledged as security on a note payable of
$41,000. Interest accrued on the note payable amounts to $1,750.
6. The land and buildings have been appraised at $165,000 and $260,000, respectively.
They are pledged as collateral on the mortgage note payable.
7. The equipment is expected to realize $100,000.
8. Prepaid expenses are nonrealizable.

Required:
a. Prepare a statement of affairs.
b. Prepare a deficiency account detailing estimated gains and losses.
c. Calculate the dividend rate per dollar of unsecured liabilities.

Exercise 4. Chapter 12 - Accounting for Foreign Currency Transactions and Hedging

Centennial Exchange of St. Louis, Missouri, imports and exports grains. The company has a
September 30 fiscal year-end. The periodic inventory system and the weighted-average cost
flow method are used by the company to account for inventory cost. The company negotiated
the following transactions during 2008 (assume forward contracts exist for the krone and
forint).

Sept 1 Sold 1,000,000 bushels of wheat to a Norwegian company for 16,500,000

krone. The account is to be settled on October 30.

Adelia Yulma Budiarto, S.A, MSc. – ACCT6083

 Sept 1 The management of Centennial was concerned that the krone would decline in
value. They therefore entered into a forward contract to sell 16,500,000 Krone
on October 30 for $.1442 per krone.
Sept 5 Sold 1,000,000 bushels of wheat to a Tokyo company for $5,300,000. The
account is to be settled on November 5.
Sept 15 Purchased grain from an exporting company that operates in Hungary. The
contract provides for the payment of 20,000,000 forint on October 15.
Sept 15 Entered into a forward contract to buy 20,000,000 forint on October 15 for
$.006490 per Forint.
Sept 18 Sold 500 tons of soybean meal to Able & Born, Ltd., a Toronto company, for
48,000 Canadian dollars. The account is to be settled on December 17.
Oct 15 Completed the forward contract to buy 20,000,000 forint and then submitted
payment to pay for the grain purchased on September 15.
Oct 30 Received 16,500,000 Krones from the Norwegian customer and settled forward
contract.
Nov 5 Received payment in full for the wheat sold on September 5 to the Tokyo
company.
Dec 17 Received payment from Able & Born, Ltd. for the September 18 sale.

Direct exchange quotations for specific dates are presented below:

On September 30, the forward rate for krone (with an October 30 settlement) was $.1450 and
the forward rate for forints (with an October 15 settlement) was $.00640.

Required:
Prepare journal entries, including year-end adjustments, to record the above transactions.

Adelia Yulma Budiarto, S.A, MSc. – ACCT6083

Exercise 5. Chapter 13 - Translation of Financial Statements of Foreign Affiliates
On January 2, 2008, P Company, a U.S.-based company, acquired for 2,000,000 francs an 80%
interest in SFr Company, a Swiss company. On January 2, 2008, SFr Company reported a
retained earnings balance of 480,000 francs. SFr’s books are maintained in francs and are in
conformity with U.S. generally accepted accounting principles. Trial balances of the two
companies as of December 31, 2009, are presented here:

Other information related to the subsidiary follows:

1. Beginning inventory of 830,000 francs was acquired when the exchange rate was
$.165.
2. Purchases made uniformly throughout 2009 were 2,520,000 francs.
3. The franc is identified as the subsidiary’s functional currency.
4. The subsidiary’s beginning (1/1/09) retained earnings and cumulative translation
adjustment (credit) in dollars were $75,948 and $36,462, respectively.
5. All plant assets were acquired before the parent obtained a controlling interest in the
subsidiary.
6. Sales are made and all expenses are incurred uniformly throughout the year.

Adelia Yulma Budiarto, S.A, MSc. – ACCT6083

 7. The ending inventory was acquired during the last quarter.
8. The subsidiary declared and paid dividends of 375,000 francs on September 2.
9. The following direct exchange rate quotations were available:

Required:
a. Prepare a translated balance sheet and combined statement of income and retained
earnings for the subsidiary.
b. Prepare a schedule to verify the translation adjustment.

Adelia Yulma Budiarto, S.A, MSc. – ACCT6083