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AC 5230 Problem Set 1 Five Problems

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AC 5230 Problem Set 1 Five Problems

AC 5230 Problem Set 1 Five Problems

AC5230

AC 5230 Problem Set 1 Five Problems

Instructions:

Create a single Excel document with one worksheet/tab for each problem. Each problem is worth 20 points.

Problem 1

The following accounts appeared on the trial balance of Gaudette Company at December 31, 2008. All accounts have normal balances.

Notes Payable $64,000 Accounts Receivable $172,800
Accumulated Depreciation – Bldg. $261,000 Prepaid Expenses $18,750
Supplies on Hand $12,600 Customers’ Deposits $1,250
Accrued Salaries and Wages $11,400 Common Stock*** $375,000
*Investments in Debt Securities $93,800
Cash $56,750 Inventories (average cost) $526,750
Bonds Payable Due 1/1/12 $400,000 Land at Cost $155,000
Allowance for Doubtful Accts. $2,600 Trading Securities**** $24,400
Franchise $64,300 Accrued Interest on Notes Payable $650
Notes Receivable $46,000 Buildings at Cost $642,000
Income Taxes Payable $52,000 Accounts Payable $136,650
Preferred Stock** $250,000 Additional Paid-in Capital $54,600
Appropriated Retained Earnings $98,000
Unappropriated Retained Earnings ???

*The company intends to hold the securities until maturity, which is in ten years.

**8% cumulative; $10 par value; 25,000 shares authorized and outstanding.

***$1 par value; 400,000 shares authorized; 375,000 shares issued and outstanding.

****The company intends to sell the trading securities in the next year.

Directions (20 Points): Prepare a classified balance sheet for Gaudette Company on December 31, 2008 on a separate Excel spreadsheet as directed on the Problem Set 1 directions.

Problem 2

The following balance sheet was prepared by the bookkeeper for Perry Company as of December 31, 2008.

Perry Company

Balance Sheet as of December 31, 2008

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 32,000

$393,500 $393,500

The following additional information is provided:

1. Cash includes the cash surrender value of a life insurance policy $9,400, 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—credit balances $4,000;

(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 $19,000 and available-for-sale $48,300, and franchises $9,000.

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.

Directions (20 points)

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

Problem 3

Presented below is financial information of the Lilley Corporation for 2008

Beginning Retained Earnings, 1/1/08 $950,000
Gain on the Sale of Investments (normal recurring) $110,000
Sales for the Year $30,000,000
Loss Due to Flood Damage (unusual & infrequent) $125,000*
Cost of Goods Sold $21,000,000
Loss on Disposal of Retail Division $450,000*
Interest Revenue $70,000
Loss on Operations of Retail Division $460,000*
Selling and Administrative Expenses 5,500,000
Dividends Declared on Common Stock $230,000
Write-Off of Goodwill $520,000
Dividends Declared on Preferred Stock $80,000
Federal Income Tax on Operations for 2008 1,600,000

*net of tax

Lilley Corporation decided to discontinue its retail operations and to retain its manufacturing operations. On August 15, Lilley sold the retail operations to Schoen Company. During 2008, there were 250,000 shares of common stock outstanding all year.

Directions (20 Points): Prepare a multiple-step income statement for the year 2008 on a separate Excel spreadsheet as directed in the Problem Set 1 directions.

Problem 4

December 31

2009 2008
Cash $90,000 $27,000
Accounts Receivable $92,000 $80,000
Allowance for Doubtful Accounts ($4,500) ($3,100)
Inventory $155,000 $175,000
Prepaid Expenses $7,500 $6,800
Land $90,000 $60,000
Buildings $287,000 $244,000
Accumulated Depreciation ($32,000) ($13,000)
Patents $20,000 $35,000
$705,000 $611,700
Accounts Payable $90,000 $84,000
Accrued Liabilities $54,000 $63,000
Bonds Payable $125,000 $60,000
Common Stock $100,000 $100,000
Retained Earnings – Appropriated $80,000 $10,000
Retained Earnings – Unappropriated $271,000 $302,700
Treasury Stock, At Cost ($15,000) ($8,000)
$705,000 $611,700

For 2009 Year

Net Income $58,300
Depreciation Expense $19,000
Amortization of Patents $5,000
Cash Dividends Declared and Paid $20,000
Gain Or Loss On Sale of Patents None

Directions (20 Points):

Given the above information, prepare a statement of cash flows for Doug Corporation for the year 2009 on a separate Excel spreadsheet as directed on the Problem Set 1 directions.

Problem 5

The net changes in the balance sheet accounts of Lenon, Inc. for the year 2008 are shown below:

Account Debit Credit

Cash $ 125,600

Accounts receivable $ 64,000

Allowance for doubtful accounts 14,000

Inventory 217,200

Prepaid expenses 20,000

Long-term investments 144,000

Land 300,000

Buildings 600,000

Machinery 100,000

Office equipment 28,000

Accumulated depreciation:

Buildings 24,000

Machinery 20,000

Office equipment 12,000

Accounts payable 183,200

Accrued liabilities 72,000

Dividends payable 128,000

Premium on bonds 32,000

Bonds payable 800,000

Preferred stock ($50 par) 60,000

Common stock ($10 par) 156,000

Additional paid-in capital—common 223,200

Retained earnings 87,200

$1,705,200 $1,705,200

Additional information:

1. Net income for the year was $140,000.

2. Cash dividends of $128,000 were declared December 15, 2008, payable January 15, 2009. A 5% stock dividend was issued March 31, 2008, when the market value was $22 per share.

3. The long-term investments were sold for $140,000.

4. A building and land which cost $480,000 and had a book value of $300,000 were sold for $400,000. The cost of the land, included in the cost and book value above, was $20,000.

5. The following entry was made to record an exchange of an old machine for a new one:

Machinery ………………………………………………………………………………… 160,000

Accumulated Depreciation—Machinery……………………………….. 40,000

…………………………………………………………………………………. Machinery 60,000

…………………………………………………………………………………………… Cash 140,000

6. A fully depreciated copier machine which cost $28,000 was written off.

7. Preferred stock of $60,000 par value was redeemed for $80,000.

8. The company sold 12,000 shares of its common stock ($10 par) on June 15, 2008 for $25 a share. There were 87,600 shares outstanding on December 31, 2008.

9. Bonds were sold at 104 on December 31, 2008.

Directions (20 points)

Prepare a statement of cash flows. Ignore tax effects.