Alexander Company had $1.2 million in notes payable as of December 31, 2012. $900,000 of the notes were refinanced on their due date of February 2, 2013 through the issuance of common stock. The remaining $300,000 was paid using current assets. The $900,000 amount is presented as long-term debt since it was refinanced, while the $300,000 is shown as a current liability since it was paid shortly after the balance sheet date.
This slide set is a work in progress and is embedded in my Principles of Finance course, which is also a work in progress, that I teach to computer scientists and engineers
http://awesomefinance.weebly.com/
This slide set is a work in progress and is embedded in my Principles of Finance course, which is also a work in progress, that I teach to computer scientists and engineers
http://awesomefinance.weebly.com/
The WDCEP’s Annual Meeting & Development Showcase (AMDS) has been the premier gathering of DC’s top business and community leaders to celebrate the District’s vibrant economy.
The half-day program begins with the Development Showcase featuring exhibitors representing almost every major commercial, retail, and housing development in the District. The Development Showcase is followed by a luncheon meeting that has attracted up to 1,000 attendees in past years.
A simple example of how to break out contract revenues, expenses and labor mandays to allow for better cash flow budgeting, scheduling and hiring decisions
The WDCEP’s Annual Meeting & Development Showcase (AMDS) has been the premier gathering of DC’s top business and community leaders to celebrate the District’s vibrant economy.
The half-day program begins with the Development Showcase featuring exhibitors representing almost every major commercial, retail, and housing development in the District. The Development Showcase is followed by a luncheon meeting that has attracted up to 1,000 attendees in past years.
A simple example of how to break out contract revenues, expenses and labor mandays to allow for better cash flow budgeting, scheduling and hiring decisions
Sample of a Comparable Balance Sheet Spence Resources In.docxWilheminaRossi174
Sample of a Comparable Balance Sheet
Spence Resources Inc.
Balance Sheet
December 31
2020 2019 2018
Assets
Current assets
Cash ..................................................... $ 72,520 $ 98,434 $ 103,040
Accounts receivable, net .................... 261,520 176,316 137,760
Inventory .............................................. 312,200 231,000 148,400
Prepaid expenses ................................ 27,160 26,520 11,200
Total current assets ............................ 673,400 532,270 400,400
Plant assets, net ..................................... 777,000 714,000 642,600
Total assets .............................................. $1,450,400 $1,246,270 $1,043,000
Liabilities
Accounts payable ................................... $ 360,920 $ 210,700 $ 137,900
Long-term notes payable ....................... 273,000 287,000 231,000
Total liabilities ........................................ 633,920 $ 497,700 $ 368,900
Equity
Common shares
45,500 shares issued and outstanding
455,000
455,000
455,000
Retained earnings .................................. 361,480 293,570 219,100
Total equity ............................................. 816,480 748,570 674,100
Total liabilities and equity ........................ $1,450,400 $1,246,270 $1,043,000
2020
2019
Favourable or
Unfavourable
a. Return on common shareholders’ equity1 .... 12.2% 12.4% Unfavourable
b. Price-earnings2 ............................................... 14.35 14.43 Unfavourable
c. Dividend yield3 ................................................ 2.0% 1.07% Favourable
Calculations:
1. Return on common shareholders’ equity:
2020: $95,210* × 100 = 12.2%
($816,480 + $748,570)/2
2019: $88,120** × 100 = 12.4%
($748,570 + $674,100)/2
*calculated as follows: 361,480 – 293,570 = 67,910 change in retained earnings from
2019 to 2020 plus dividends declared (45,500 X 0.60 = 27,300) equals profit of $95,210.
** calculated as follows: 293,570 – 219,100 = 74,470 change in retained earnings from
2018 to 2019 plus dividends declared (45,500 X 0.30 = 13,650) equals profit of $88,120.
2. Price earnings ratio, December 31:
2020: $30/$2.09* = 14.35
2019: $28/$1.94** = 14.43
*$95,210/45,500 shares = $2.09 EPS
**$88,120/45,500 shares = $1.94 EPS
3. Dividend yield:
2020: ($.60/$30) x 100 = 2.0%
2019: ($.30/$28) x 100 = 1.07%
Yemp Yoga Western Sports
Current ratio 4.09 4.75
Debt ratio 20.36% 18.06%
Gross profit ratio 67.24% 54.74%
- Western Sport Clothing has a superior current ratio indicating that it is better able
to meet its short-term obligations than Hemp Yoga Clothing.
-
- Hemp has a lower Current ratio, so not as good as Western, but certainly over the .
This slide set is a work in progress and is embedded in my Principles of Finance course that I teach to computer scientists and engineers.
http://financefortechies.weebly.com/
ACCT 221 Final Exam Sum13 1 Final Examination Princ.docxannetnash8266
ACCT 221 Final Exam Sum13 1
Final Examination
Principles of Accounting lI
ACCT 221
Summer 2013
Administrative Notes:
You may use a calculator, your textbook, WileyPLUS resources, and
anything posted in our WebTycho classroom.
The exam must be completed and submitted within 4 hours of the time you
open the private message that contains your exam.
Type all answers on the Answer Sheet, which is also attached to
the Private Message.
Attach your completed Answer Sheet in your assignment folder in
WebTycho.
Late submissions will be penalized 10% per hour and any portion of an hour.
ACCT 221 Final Exam Sum13 2
Multiple Choice: 2 points each
1. On January 1, 2013, Daniels Corporation issued $5,000,000, 10-year, 8% bonds
at 103. Interest is payable semiannually on January 1 and July 1. The journal
entry to record this transaction on January 1, 2013 is
a. Cash ............................................................................ 5,000,000
Bonds Payable ..................................................... 5,000,000
b. Cash ............................................................................ 5,150,000
Bonds Payable ..................................................... 5,150,000
c. Premium on Bonds Payable ........................................ 150,000
Cash ............................................................................ 5,000,000
Bonds Payable ..................................................... 5,150,000
d. Cash ............................................................................ 5,150,000
Bonds Payable ..................................................... 5,000,000
Premium on Bonds Payable ................................ 150,000
2. Levin Company issued 500 shares of no-par common stock for $5,500. Which of
the following journal entries would be made if the stock has a stated value of
$2 per share?
a. Cash 5,500
Common Stock 5,500
b. Cash 5,500
Common Stock 1,000
Paid-in Capital in Excess of Par 4,500
c. Cash 5,500
Common Stock 1,000
Paid-in Capital in Excess of Stated Value 4,500
d. Common Stock 5,500
Cash 5,500
ACCT 221 Final Exam Sum13 3
3. Motes industries owns 45% of Newton Company. For the current year, Newton
reports net income of $250,000 and declares and pays a $60,000 cash
dividend. Which of the following correctly presents the journal entries to
record Motes’ equity in Newton’s net income and the receipt of dividends
from Newton?
a. Dec. 31 Stock Investments .......................... 112,500
Revenue from Stock Investments 112,500
Dec. 31 Cash ................................................ 27,000
Stock Investments .................... 27,000
b. Dec. 31 Stock Investments ........................... 112,500
Revenue from Stock In.
1. EXERCISE 13-3 (10–12 minutes)
ALEXANDER COMPANY
Partial Balance Sheet
December 31, 2012
Current liabilities:
Notes payable (Note 1) ..................................................... $300,000
Long-term debt:
Notes payable refinanced in February 2013 (Note 1) ..... 900,000
Note 1.
Short-term debt refinanced. As of December 31, 2012, the company had notes
payable totaling $1,200,000 due on February 2, 2013. These notes were
refinanced on their due date to the extent of $900,000 received from the
issuance of common stock on January 21, 2013. The balance of $300,000
was liquidated using current assets.
OR
Current liabilities:
Notes payable (Note 1) ..................................................... $300,000
Long-term debt:
Short-term debt expected to be refinanced (Note 1) ...... 900,000
(Same footnote as above.)
EXERCISE 13-5 (25–30 minutes)
(a) 2012
To accrue the expense and liability for vacations
Salaries and Wages Expense .......................... 8,640
Salaries and Wages Payable .................. 8,640 (1)
To accrue the expense and liability for sick pay
Salaries and Wages Expense .......................... 5,184
Salaries and Wages Payable .................. 5,184 (2)
1 Chapter 13 Solutions
2. To record sick leave paid
Salaries and Wages Payable ........................... 3,456 (3)
Cash ......................................................... 3,456
2013
To accrue the expense and liability for vacations
Salaries and Wages Expense .......................... 9,360
Salaries and Wages Payable .................. 9,360 (4)
To accrue the expense and liability for sick pay
Salaries and Wages Expense .......................... 5,616
Salaries and Wages Payable .................. 5,616 (5)
To record vacation time paid
Salaries and Wages Expense .......................... 648
Salaries and Wages Payable ........................... 7,776 (6)
Cash ......................................................... 8,424 (7)
To record sick leave paid
Salaries and Wages Expense .......................... 144
Salaries and Wages Payable ........................... 4,536 (8)
Cash ......................................................... 4,680 (9)
(1) 9 employees X $12.00/hr. X 8 hrs./day X 10 days = $8,640
(2) 9 employees X $12.00/hr. X 8 hrs./day X 6 days = $5,184
(3) 9 employees X $12.00/hr. X 8 hrs./day X 4 days = $3,456
(4) 9 employees X $13.00/hr. X 8 hrs./day X 10 days = $9,360
(5) 9 employees X $13.00/hr. X 8 hrs./day X 6 days = $5,616
(6) 9 employees X $12.00/hr. X 8 hrs./day X 9 days = $7,776
(7) 9 employees X $13.00/hr. X 8 hrs./day X 9 days = $8,424
(8) 9 employees X $12.00/hr. X 8 hrs./day X (6–4) days = $1,728
9 employees X $13.00/hr. X 8 hrs./day X (5–2) days = +2,808 = $4,536
(9) 9 employees X $13.00/hr. X 8 hrs./day X 5 days = $4,680
Note: Vacation days and sick days are paid at the employee’s current
wage. Also, if employees earn vacation pay at different pay rates, a
2 Chapter 13 Solutions
3. consistent pattern of recognition (e.g., first-in, first-out) could be
employed which liabilities have been paid.
(b) Accrued liability at year-end:
2012 2013
Vacation Sick Pay Vacation Sick Pay
Wages Wages Wages Wages
Payable Payable Payable Payable
Jan. 1 balance $ 0 $ 0 $ 8,640 $1,728
+ accrued 8,640 5,184 9,360 5,616
– paid ( 0) (3,456) (7,776) (4,536)
Dec. 31 balance $8,640(1) $1,728(2) $10,224(3) $2,808(4)
(1) 9 employees X $12.00/hr. X 8 hrs./day X 10 days = $ 8,640
(2) 9 employees X $12.00/hr. X 8 hrs./day X (6–4) days = $ 1,728
(3) 9 employees X $12.00/hr. X 8 hrs./day X (10–9) days = $ 864
9 employees X $13.00/hr. X 8 hrs./day X 10 days = +9,360
$10,224
(4) 9 employees X $13.00/hr. X 8 hrs./day X (2 + 6 – 5)
days = $ 2,808
EXERCISE 13-10 (10–15 minutes)
(a) Cash (150 X $4,000) .........................................................
600,000
Sales Revenue ........................................................ 600,000
Warranty Expense ........................................................... 17,000
Inventory ................................................................. 17,000
Warranty Expense ($45,000* – $17,000) ......................... 28,000
Warranty Liability ................................................... 28,000
*(150 X $300)
3 Chapter 13 Solutions
4. (b) Cash..................................................................................
600,000
Sales Revenue ........................................................ 600,000
Warranty Expense ........................................................... 17,000
Inventory ................................................................. 17,000
EXERCISE 13-12 (15–20 minutes)
Inventory of Premiums (8,800 X $.90) ............................. 7,920
Cash......................................................................... 7,920
Cash (120,000 X $3.30) .................................................... 396,000
Sales Revenue ........................................................ 396,000
Premium Expense ............................................................ 3,960
Inventory of Premiums [(44,000 ÷ 10) X $.90] ....... 3,960
Premium Expense ............................................................ 2,520*
Premium Liability .................................................... 2,520
*[(120,000 X 60%) – 44,000] ÷ 10 X $.90 = 2,520
EXERCISE 13-13 (20–30 minutes)
(1) The FASB requires that, when some amount within the range of
expected loss appears at the time to be a better estimate than
any other amount within the range, that amount is accrued.
When no amount within the range is a better estimate than any
other amount, the dollar amount at the low end of the range is
accrued and the dollar amount at the high end of the range is
disclosed. In this case, therefore, Maverick Inc. would report a
liability of $800,000 at December 31, 2012.
(2) The loss should be accrued for $6,000,000. The potential
insurance recovery is a gain contingency—it is not recorded
until received. According to FASB ASC 410-30-35-8, claims for
recoveries may be recorded if the recovery is deemed probable.
4 Chapter 13 Solutions
5. (3) This is a gain contingency because the amount to be received
will be in excess of the book value of the plant. Gain
contingencies are not recorded and are disclosed only when the
probabilities are high that a gain contingency will become reality.
PROBLEM 13-2
1. Dec. 5 Cash .................................................................................
500
Due to Customer .................................................... 500
2. Dec. 1-31 Cash .................................................................................
798,000
Sales Revenue
($798,000 ÷ 1.05) .................................................. 760,000
Sales Taxes Payable
($760,000 X .05)....................................................38,000
3. Dec. 10 Trucks ($120,000 X 1.05) .................................................
126,000
Cash ........................................................................
126,000
4. Dec. 31 Land Improvements ........................................................
84,000
Asset Retirement Obligation .................................84,000
PROBLEM 13-7
(a) (1) Cash .................................................................................
4,440,000
Sales Revenue (600 X $7,400).................................. 4,440,000
(2) Warranty Expense ([$600 X $390] / 2) ............................
117,000
Inventory ($170 X 600 X 1/2) .................................... 51,000
Salaries and Wages Payable
($220 X 600 X 1/2) ................................................... 66,000
(3) Warranty Expense ...........................................................
117,000
Warranty Liability
(600 machines X $390) – $117,000...................... 117,000
(4) Warranty Liability ............................................................
117,000
5 Chapter 13 Solutions
6. Inventory ................................................................... 51,000
Salaries and Wages Payable ................................... 66,000
(b) (1) Cash 4,440,000
Sales Revenue .......................................................... 4,440,000
(2) Warranty Expense ...........................................................
117,000
Inventory ................................................................... 51,000
Salaries and Wages Payable ................................... 66,000
(3) Under the cash-basis method, the total warranty expense is
recorded through entries 2 and 4 which recognize warranty costs
as incurred. Warranty expense for 2013 is $117,000 under the
cash basis.
(4) Warranty Expense ...........................................................
117,000
Inventory ................................................................... 51,000
Salaries and Wages Payable ................................... 66,000
(c) Cash-basis method:
No liability for future costs to be incurred under outstanding
warranties is recorded or normally disclosed under the cash
basis method.
Expense warranty accrual method:
As of 12/31/12 the balance sheet would disclose a current liability
in the amount of $117,000 for Warranty Liability.
(d) In the case of Alvarado Company, the expense warranty accrual method
reflects properly the income resulting from operations in 2012 and 2013
because the warranty costs are matched with the revenues resulting
from the sale, which required such costs to be incurred. Under the
cash-basis method, the warranty costs appearing on the 2013 income
statement are charged against unrelated revenues; 2012 net income is
overstated and 2013 net income is understated.
6 Chapter 13 Solutions
7. PROBLEM 13-8
Inventory of Premiums .................................................... 60,000
Cash......................................................................... 60,000
(To record purchase of 40,000 puppets at
$1.50 each)
Cash .................................................................................. 1,800,000
Sales Revenue ........................................................ 1,800,000
(To record sales of 480,000 boxes at
$3.75 each)
Premium Expense ............................................................ 34,500
Inventory of Premiums ........................................... 34,500
[To record redemption of 115,000 coupons.
Computation: (115,000 ÷ 5) X $1.50 = $34,500]
Premium Expense ............................................................ 23,100
Premium Liability .................................................... 23,100
[To record estimated liability for premium
claims outstanding at December 31, 2013.]
Computation: Total coupons issued in 2013 ................. 480,000
Total estimated redemptions (40%) ................................ 192,000
Coupons redeemed in 2013 ............................................ 115,000
Estimated future redemptions ........................................ 77,000
Cost of estimated claims outstanding (77,000 ÷ 5) X $1.50 = $23,100
7 Chapter 13 Solutions
8. PROBLEM 13-10
(a) Because the cause for litigation occurred before the date of the
financial statements and because an unfavorable outcome is
probable and reasonably estimable, Windsor Airlines should
report a loss and a liability in the December 31, 2012, financial
statements. The loss and liability might be recorded as follows:
Lawsuit Loss
($9,000,000 X 60%) ........................................................
5,400,000
Lawsuit Liability...................................................... 5,400,000
Note to the Financial Statements
Due to an accident which occurred during 2012, the Company is
a defendant in personal injury suits totaling $9,000,000. The
Company is charging the year of the casualty with $5,400,000 in
estimated losses, which represents the amount that the company
legal counsel estimates will finally be awarded.
(b) Windsor Airlines need not establish a liability for risk of loss
from lack of insurance coverage itself. GAAP does not require or
allow the establishment of a liability for expected future injury to
others or damage to the property of others even if the amount of
the losses is reasonably estimable. The cause for a loss must
occur on or before the balance sheet date for a loss contingency
to be recorded. However, the fact that Windsor is self-insured
should be disclosed in a note.
8 Chapter 13 Solutions