Chapter 3 Recommended endofchapter problems.docx

Chapter 3 Recommended endofchapter problems.docx

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Chapter3Recommendedendofchapterproblems

Ch3:

RecommendedEnd-of-ChapterProblems

E3-1

Balancesheet;missingelements

 LO3 LO4 LO8

ThefollowingDecember31,2011,fiscalyear-endaccountbalanceinformationisavailablefortheStonebridgeCorporation:

   Theonlyassetnotlistedisshort-terminvestments.Theonlyliabilitiesnotlistedarea$30,000notepayabledueintwoyearsandrelatedaccruedinterestof$1,000dueinfourmonths.Thecurrentratioatyear-endis1.5:

1.

Required:

DeterminethefollowingatDecember31,2011:

1.

Totalcurrentassets

2.

Short-terminvestments

3.

Retainedearnings

E3-5

Balancesheetpreparation

 LO2 through LO4

ThefollowingisaDecember31,2011,post-closingtrialbalancefortheValleyPumpCorporation.

p.147

Additionalinformation:

1.

The$120,000balanceinthelandaccountconsistsof$100,000forthecostoflandwheretheplantandofficebuildingsarelocated.Theremaining$20,000representsthecostoflandbeingheldforspeculation.

2.

The$44,000inthemarketablesecuritiesaccountrepresentsaninvestmentinthecommonstockofanothercorporation.Valleyintendstosellone-halfofthestockwithinthenextyear.

3.

Thenotespayableaccountconsistsofa$100,000notedueinsixmonthsanda$150,000notedueinthreeannualinstallmentsof$50,000each,withthefirstpaymentdueinAugustof2012.

Required:

PrepareaclassifiedbalancesheetfortheValleyPumpCorporationatDecember31,2011.

E3-6

Balancesheet;currentversusnoncurrentclassification

 LO2 through LO4

PresentedbelowisapartialtrialbalancefortheKansasInstrumentsCorporationatDecember31,2011.

Additionalinformation:

1.

Thenotereceivable,alongwithanyaccruedinterest,isdueonNovember22,2012.

2.

Thenotepayableisduein2015.Interestispayableannually.

3.

Themarketablesecuritiesconsistoftreasurybills,allofwhichmatureinthenextyear.

4.

Unearnedrevenuewillbeearnedequallyoverthenexttwoyears.

Required:

Determinethecompany'sworkingcapital（currentassetsminuscurrentliabilities）atDecember31,2011.

E3-8

Balancesheet;currentversusnoncurrentclassification

 LO2 through LO4

ConeCorporationisintheprocessofpreparingitsDecember31,2011,balancesheet.Therearesomequestionsastotheproperclassificationofthefollowingitems:

a.

$50,000incashsetasideinasavingsaccounttopaybondspayable.Thebondsmaturein2015.

b.

Prepaidrentof$24,000,coveringtheperiodJanuary1,2012,throughDecember31,2013.

c.

Notepayableof$200,000.Thenoteispayableinannualinstallmentsof$20,000each,withthefirstinstallmentpayableonMarch1,2012.

d.

Accruedinterestpayableof$12,000relatedtothenotepayable.

e.

Investmentinmarketablesecuritiesofothercorporations,$80,000.Coneintendstosellone-halfofthesecuritiesin2012.

Required:

Prepareapartialclassifiedbalancesheettoshowhoweachoftheaboveitemsshouldbereported.

E3-9

Balancesheetpreparation;cashversusaccrualaccounting;Chapters2and3

 LO2 through LO4

ThefollowingisthebalancesheetofKorverSupplyCompanyatDecember31,2010.

ThenotepayableisdatedJune30,2010andisdueonJune30,2012.Interestat6%ispayableannuallyonJune30.Depreciationonthefurnitureandfixturesfortheyearis$20,000.Thefurnitureandfixturesoriginallycost$300,000.

Required:

PrepareaclassifiedbalancesheetatDecember21,2011（ignoreincometaxes）.

P3-2

Balancesheetpreparation;missingelements

 LO2 through LO4

ThedatalistedbelowaretakenfromabalancesheetofTridentCorporation.Someamounts,indicatedbyquestionmarks,havebeenintentionallyomitted.

Required:

1.

Determinethemissingamounts.

2.

PrepareTrident'sclassifiedbalancesheet.

P3-3

Balancesheetpreparation

 LO2 through LO4

p.155

ThefollowingisaDecember31,2011,post-closingtrialbalanceforAlmwayCorporation.

Additionalinformation:

1.

Theinvestmentaccountincludesaninvestmentincommonstockofanothercorporationof$30,000whichmanagementintendstoholdforatleastthreeyears.Thebalanceoftheseinvestmentsareintendedtobesoldinthecomingyear.

2.

Thelandaccountincludeslandwhichcost$25,000thatthecompanyhasnotusedandiscurrentlylistedforsale.

3.

Thecashaccountincludes$15,000setasideinafundtopaybondspayablethatmaturein2014and$23,000setasideinathree-monthTreasurybill.

4.

Thenotespayableaccountconsistsofthefollowing:

a.

a$30,000notedueinsixmonths.

b.

a$50,000notedueinsixyears.

c.

a$50,000notedueinfiveannualinstallmentsof$10,000each,withthenextinstallmentdueFebruary15,2012.

5.

The$60,000balanceinaccountsreceivableisnetofanallowanceforuncollectibleaccountsof$8,000.

6.

Thecommonstockaccountrepresents100,000sharesofnoparvaluecommonstockissuedandoutstanding.Thecorporationhas500,000sharesauthorized.

Required:

PrepareaclassifiedbalancesheetfortheAlmwayCorporationatDecember31,2011.

P3-4

Balancesheetpreparation

 LO2 through LO4

ThefollowingisaDecember31,2011,post-closingtrialbalancefortheWeismullerPublishingCompany.

p.156

Additionalinformation:

1.

Prepaidexpensesinclude$120,000paidonDecember31,2011,foratwo-yearleaseonthebuildingthathousesboththeadministrativeofficesandthemanufacturingfacility.

2.

Investmentsinclude$30,000inTreasurybillspurchasedonNovember30,2011.ThebillsmatureonJanuary30,2012.Theremaining$110,000includesinvestmentsinmarketableequitysecuritiesthatthecompanyintendstosellinthenextyear.

3.

Unearnedrevenuerepresentscustomerprepaymentsformagazinesubscriptions.Subscriptionsareforperiodsofoneyearorless.

4.

Thenotespayableaccountconsistsofthefollowing:

a.

a$40,000notedueinsixmonths.

b.

a$100,000notedueinsixyears.

c.

a$60,000notedueinthreeannualinstallmentsof$20,000each,withthenextinstallmentdueAugust31,2012.

5.

Thecommonstockaccountrepresents400,000sharesofnoparvaluecommonstockissuedandoutstanding.Thecorporationhas800,000sharesauthorized.

Required:

PrepareaclassifiedbalancedsheetfortheWeismullerPublishingCompanyatDecember31,2011.

P3-5

Balancesheetpreparation

 LO2 through LO4

ThefollowingisaJune30,2011,post-closingtrialbalanceforExcellCompany.

Additionalinformation:

1.

Theshort-terminvestmentsaccountincludes$18,000inU.S.treasurybillspurchasedinMay.ThebillsmatureinJuly.

2.

Theaccountsreceivableaccountconsistsofthefollowing:

3.

Thenotespayableaccountconsistsoftwonotesof$50,000each.OnenoteisdueonSeptember30,2011,andtheotherisdueonNovember30,2012.

4.

Themortgagepayableispayableinsemiannualinstallmentsof$5,000eachplusinterest.ThenextpaymentisdueonOctober31,2011.Interesthasbeenproperlyaccruedandisincludedinaccruedexpenses.

5.

Fivehundredthousandsharesofnoparcommonstockareauthorized,ofwhich200,000shareshavebeenissuedandareoutstanding.

6.

Thelandaccountincludes$50,000representingthecostofthelandonwhichthecompany'sofficebuildingresides.Theremaining$25,000isthecostoflandthatthecompanyisholdingforinvestmentpurposes.

Required:

PrepareaclassifiedbalancesheetfortheExcellCompanyatJune30,2011.

P3-8

Balancesheet;errors;missingamounts

 LO2 through LO4

ThefollowingincompletebalancesheetfortheSandersonManufacturingCompanywaspreparedbythecompany'scontroller.AsaccountingmanagerforSanderson,youareattemptingtoreconstructandrevisethebalancesheet.

p.159

Additionalinformation（$in000s）:

1.

Certainrecordsthatincludedtheaccountbalancesforthepatentandshareholders'equityitemswerelost.However,thecontrollertoldyouthatacomplete,preliminarybalancesheetpreparedbeforetherecordswerelostshowedadebttoequityratioof1.2.Thatis,totalliabilitiesare120%oftotalshareholders'equity.Retainedearningsatthebeginningoftheyearwas$4,000.Netincomefor2011was$1,560and$560incashdividendsweredeclaredandpaidtoshareholders.

2.

Managementintendstoselltheinvestmentsinthenextsixmonths.

3.

Interestonboththenoteandthebondsispayableannually.

4.

Thenotepayableisdueinannualinstallmentsof$1,000each.

5.

Unearnedrevenuewillbeearnedequallyoverthenexttwofiscalyears.

6.

Thecommonstockrepresents400,000sharesofnoparstockauthorized,250,000sharesissuedandoutstanding.

Required:

Prepareacomplete,corrected,classifiedbalancesheet.

CPAExamQuestions

ThefollowingquestionsareusedintheKaplanCPAReviewCoursetostudybalancesheetpresentation,financialdisclosures,andliquidityratioswhilepreparingfortheCPAexamination.Determinetheresponsethatbestcompletesthestatementsorquestions.

1.

InMerf'sApril30,2011,balancesheet,anotereceivablewasreportedasanoncurrentassetandtherelatedaccruedinterestforeightmonthswasreportedasacurrentasset.WhichofthefollowingdescriptionswouldfitMerf'sreceivableclassification?

a.

Bothprincipalandinterestamountsa