AssignmentWednesday.docx

1、AssignmentWednesdayAssignmentWeek 1. Conceptual framework of financial accountingE2-4 (Assumptions, Principles, and Constraints) Presented below are the assumptions, principles, and constraints used in this chapter.1. Economic entity assumption2. Going concern assumption3. Monetary unit assumption4.

2、 Periodicity assumption5. Historical cost principle6. Fair value principle7. Expense recognition principle8. Full disclosure principle9. Cost-benefit relationship10. Materiality11. Industry practices12. ConservatismInstructionsIdentify by number the accounting assumption, principle, or constraint th

3、at describes each situation onthe next page. Do not use a number more than once.(a) Allocates expenses to revenues in the proper period.(b) Indicates that fair value changes subsequent to purchase are not recorded in the accounts. (Do not use revenue recognition principle.)(c) Ensures that all relev

4、ant financial information is reported.(d) Rationale why plant assets are not reported at liquidation value. (Do not use historical cost principle.)(e) Anticipates all losses, but reports no gains.(f) Indicates that personal and business record keeping should be separately maintained.(g) Separates fi

5、nancial information into time periods for reporting purposes.(h) Permits the use of fair value valuation in certain industries. (Do not use fair value principle.)(i) Requires that information significant enough to affect the decision of reasonably informed users should be disclosed. (Do not use full

6、 disclosure principle.)(j) Assumes that the dollar is the “measuring stick” used to report on financial performance.E3-6 (Adjusting Entries) Stephen King, D.D.S., opened a dental practice on January 1, 2010. During the first month of operations the following transactions occurred.1. Performed servic

7、es for patients who had dental plan insurance. At January 31, $750 of such services was earned but not yet billed to the insurance companies.2. Utility expenses incurred but not paid prior to January 31 totaled $520.3. Purchased dental equipment on January 1 for $80,000, paying $20,000 in cash and s

8、igning a $60,000,3-year note payable. The equipment depreciates $400 per month. Interest is $500 per month.4. Purchased a one-year malpractice insurance policy on January 1 for $15,000.5. Purchased $1,600 of dental supplies. On January 31, determined that $400 of supplies were on hand.InstructionsPr

9、epare the adjusting entries on January 31. (Omit explanations.) Account titles are: Accumulated DepreciationDental Equipment; Depreciation Expense; Service Revenue; Accounts Receivable; Insurance Expense; Interest Expense; Interest Payable; Prepaid Insurance; Supplies; Supplies Expense; Utilities Ex

10、pense; and Utilities Payable.Week 2-3 Financial statementsE4-4 (Multiple-step and Single-step) Two accountants for the firm of Allen and Wright are arguing about the merits of presenting an income statement in a multiple-step versus a single-step format. The discussion involves the following 2010 in

11、formation related to Webster Company ($000 omitted).Administrative expenseOfficers salariesDepreciation of office furniture and equipmentCost of goods soldRental revenueSelling expenseTransportation-outSales commissionsDepreciation of sales equipmentSalesIncome taxInterest expense$ 4,9003,96063,5701

12、7,2302,6907,9806,48096,5007,5801,860Instructions(a) Prepare an income statement for the year 2010 using the multiple-step form. Common shares outstanding for 2010 total 40,550 (000 omitted).(b) Prepare an income statement for the year 2010 using the single-step form.(c) Which one do you prefer? Disc

13、uss.P5-3 (Balance Sheet Adjustment and Preparation) The adjusted trial balance of Eastwood Company and other related information for the year 2010 are presented on the next page.Additional information:1. The LIFO method of inventory value is used.2. The cost and fair value of the long-term investmen

14、ts that consist of stocks and bonds is the same.3. The amount of the Construction Work in Progress account represents the costs expended to date on a building in the process of construction. (The company rents factory space at the present time.) The land on which the building is being constructed co

15、st $85,000, as shown in the trial balance.4. The patents were purchased by the company at a cost of $40,000 and are being amortized on a straight-line basis.5. Of the unamortized discount on bonds payable, $2,000 will be amortized in 2011.6. The notes payable represent bank loans that are secured by

16、 long-term investments carried at $120,000. These bank loans are due in 2011.7. The bonds payable bear interest at 8% payable every December 31, and are due January 1, 2021.8. 600,000 shares of common stock of a par value of $1 were authorized, of which 500,000 shares were issued and outstanding.Ins

17、tructionsPrepare a balance sheet as of December 31, 2010, so that all important information is fully disclosed.Week 4 Cash and receivablesE7-5 (Record Sales Gross and Net) On June 3, Bolton Company sold to Arquette Company merchandise having a sale price of $2,000 with terms of 2/10, n/60, f.o.b. sh

18、ipping point. An invoice totaling $90, terms n/30, was received by Arquette on June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check for the balance due from Arquette Company.Instructions(a) Prepare journal entries on the Bolton Company books to reco

19、rd all the events noted above under each of the following bases.(1) Sales and receivables are entered at gross selling price.(2) Sales and receivables are entered at net of cash discounts.(b) Prepare the journal entry under basis 2, assuming that Arquette Company did not remit payment until July 29.

20、P7-2 (Bad-Debt Reporting) Presented below are a series of unrelated situations.1. Halen Companys unadjusted trial balance at December 31, 2010, included the following accounts.Allowance for doubtful accountsNet salesDebit$4,000Credit$1,200,000Halen Company estimates its bad debt expense to be 1.5% o

21、f net sales. Determine its bad debt expense for 2010.2. An analysis and aging of Stuart Corp. accounts receivable at December 31, 2010, disclosed the following.Amounts estimated to be uncollectibleAccounts receivableAllowance for doubtful accounts (per books)$ 180,0001,750,000125,000What is the net

22、realizable value of Stuarts receivables at December 31, 2010?3. Shore Co. provides for doubtful accounts based on 3% of credit sales. The following data areavailable for 2010.Credit sales during 2010Allowance for doubtful accounts 1/1/2010Collection of accounts written off in prior years(customer cr

23、edit was reestablished)Customer accounts written off as uncollectible during 2010$2,400,00017,0008,00030,000What is the balance in the Allowance for Doubtful Accounts at December 31, 2010?4. At the end of its first year of operations, December 31, 2010, Darden Inc. reported the following information

24、.Accounts receivable, net of allowance for doubtful accountsCustomer accounts written off as uncollectible during 2010Bad debt expense for 2010$950,00024,00084,000What should be the balance in accounts receivable at December 31, 2010, before subtracting theallowance for doubtful accounts?5. The foll

25、owing accounts were taken from Bullock Inc.s trial balance at December 31, 2010.Net credit salesAllowance for doubtful accountsAccounts receivableDebit$ 14,000310,000Credit$750,000If doubtful accounts are 3% of accounts receivable, determine the bad debt expense to be reported for 2010.InstructionsA

26、nswer the questions relating to each of the five independent situations as requested.Week 5-6 InventoriesE8-17 (FIFO and LIFOPeriodic and Perpetual) The following is a record of Cannondale Companys transactions for Boston Teapots for the month of May 2010.Instructions(a) Assuming that perpetual inve

27、ntories are not maintained and that a physical count at the end of the month shows 510 units on hand, what is the cost of the ending inventory using (1) FIFO and (2) LIFO?(b) Assuming that perpetual records are maintained and they tie into the general ledger, calculate the ending inventory using (1)

28、 FIFO and (2) LIFO.E9-4 (Lower-of-Cost-or-MarketJournal Entries) Dover Company began operations in 2010 and determinedits ending inventory at cost and at lower-of-cost-or-market at December 31, 2010, and December31, 2011. This information is presented below.12/31/1012/31/11Cost$346,000410,000Lower-o

29、f-Cost-or-Market$322,000390,000Instructions(a) Prepare the journal entries required at December 31, 2010, and December 31, 2011, assuming that the inventory is recorded at lower-of-cost-or-market, and a perpetual inventory system (direct method) is used.(b) Prepare journal entries required at Decemb

30、er 31, 2010, and December 31, 2011, assuming that the inventory is recorded at cost and an allowance account is adjusted at each year-end under a perpetual system.(c) Which of the two methods above provides the higher net income in each year?Week 9-10 Property, Plant, and EquipmentP10-8 (Nonmonetary

31、 Exchanges) Holyfield Corporation wishes to exchange a machine used in its operations. Holyfield has received the following offers from other companies in the industry.1. Dorsett Company offered to exchange a similar machine plus $23,000. (The exchange has commercial substance for both parties.)2. W

32、inston Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.)3. Liston Company offered to exchange a similar machine, but wanted $3,000 in addition to Holyfields machine. (The exchange has commercial substance for both parties.)In addition, Holyfiel