WEEK 3 EXERCISES
Brief Exercise 5-2 Koch Corporation’s
Exercise 5-1 Deep Blue Something, Inc
Exercise 5-4 Denis Savard Inc
Exercise 5-7 Yasunari Kawabata Company
Exercise 5-12 Scott Butler Corporation
Exercise 24-2 For each of the subjoined after
Exercise 24-3 Carlton Company
Exercise 24-4 As mortgage analyst for Utrillo Bank
Brief Exercise 5-2
Koch Corporation’s manageed experiment estimate contained the subjoined asset recitals at December 31, 2014: Cash $7,000; Land $40,000; Patents $12,500; Accounts Receivable $90,000; Prepaid Insurance $5,200; Inventory $30,000; Satisfaction for Obscure Accounts $4,000; Equity Investments (trading) $11,000.
Prepare the running adaptedty individuality of the estimate fencing. (List Running Property in direct of liquidity.)
Brief Exercise 5-6
Patrick Corporation’s manageed experiment estimate contained the subjoined asset recitals at December 31, 2014: Prepaid Rent $12,000; Goodwill $50,000; Franchise Fees Receivable $2,000; Franchises $47,000; Patents $33,000; Trademarks $10,000.
Prepare the inappreciable adaptedty individuality of the estimate fencing
Exercise 5-1
Presented under are a estimate of estimate fencing recitals of Deep Blue Something, Inc. For each of the recitals under, evidence the adapted estimate fencing appoint.
|
| Balance Fencing Accounts |
| Balance Fencing Classification |
(a) |
| Investment in Preferred Stock. | ||
(b) |
| Treasury Stock. |
| |
(c) |
| Common Stock. |
| |
(d) |
| Dividends Payable. |
| |
(e) |
| Accumulated Depreciation-Equipment. |
| |
(f)(1) |
| Construction in Course (Constructed for another concern). |
| |
(f)(2) |
| Construction in Course (Constructed for the use of Deep Blue Something, Inc.). | ||
(g) |
| Petty Cash. | ||
(h) |
| Interest Payable. |
| |
(i) |
| Deficit. |
| |
(j) |
| Equity Investments (trading). |
| |
(k) |
| Income Taxes Payable. |
| |
(l) |
| Unearned Subscription Revenue. |
| |
(m) |
| Work in Process. |
| |
(n) |
| Salaries and Wages Payable. |
| |
|
|
|
|
|
|
|
|
|
|
Exercise 5-4
Assume that Denis Savard Inc. has the subjoined recitals at the end of the running year.
1. |
| Common Stock |
| 14. |
| Accumulated Depreciation-Buildings. |
2. |
| Discount on Bonds Payable. |
| 15. |
| Cash Restricted for Place Expansion. |
3. |
| Treasury Hoard (at consume). |
| 16. |
| Land Held for Future Place Site. |
4. |
| Notes Payable (short-term). |
| 17. |
| Allowance for Obscure Accounts. |
5. |
| Raw Materials |
| 18. |
| Retained Earnings. |
6. |
| Preferred Hoard (Equity) Investments (long-term). |
| 19. |
| Paid-in Capital in Extravagance of Par-Common Stock. |
7. |
| Unearned Rent Revenue. |
| 20. |
| Unearned Subscriptions Revenue. |
8. |
| Work in Process. |
| 21. |
| Receivables-Officers (due in one year). |
9. |
| Copyrights. |
| 22. |
| Inventory (artistic commodities). |
10. |
| Buildings. |
| 23. |
| Accounts Receivable. |
11. |
| Notes Receivable (short-term). |
| 24. |
| Bonds Payable (due in 4 years). |
12. |
| Cash. |
| 25. |
| Noncontrolling Interest. |
13. |
| Salaries and Wages Payable. |
|
|
|
|
Prepare a classified estimate fencing in amiable constitute. (List Running Property in direct of liquidity. For Land, Treasury Stock, Notes Payable, Preferred Hoard Investments, Notes Receivable, Receivables-Officers, Inventory, Bonds Payable, and Restricted Cash, invade the recital call singly and do not produce the picturesquely instruction produced in the interrogation.)
Exercise 5-7
Presented under are selected recitals of Yasunari Kawabata Troop at December 31, 2014.
Inventory (artistic commodities) |
| $ 52,000 |
| Cost of Commodities Sold |
| $2,100,000 |
Unearned Service Revenue |
| 90,000 |
| Notes Receivable |
| 40,000 |
Equipment |
| 253,000 |
| Accounts Receivable |
| 161,000 |
Inventory (achievement in course) |
| 34,000 |
| Inventory (raw materials) |
| 207,000 |
Cash |
| 37,000 |
| Supplies Expense |
| 60,000 |
Equity Investments (short-term) |
| 31,000 |
| Allowance for Obscure Accounts |
| 12,000 |
Customer Advances |
| 36,000 |
| Licenses |
| 18,000 |
Restricted Cash for Place Expansion |
| 50,000 |
| Additional Paid-in Capital |
| 88,000 |
|
|
|
| Treasury Stock |
| 22,000 |
The subjoined subjoined instruction is helpful
1. Inventories are treasured at lower-of-cost-or-market using LIFO.
2. Equipment is chronicled at consume. Accumulated slander, computed on a straight-length foundation, is $50,600.
3. The short-term investments accept a untarnished treasure of $29,000. (Assume they are trading securities.)
4. The notes receivable are due April 30, 2016, delay concern receivable whole April 30. The notes permit concern at 6%. (Hint: Accrued concern due on December 31, 2014.)
5. The satisfaction for obscure recitals applies to the recitals receivable. Accounts receivable of $50,000 are pledged as parallel on a bank mortgage.
6. Licenses are chronicled net of accumulated amortization of $14,000.
7. Treasury hoard is chronicled at consume..
Prepare the running adaptedty individuality of Yasunari Kawabata Company’s December 31, 2014, estimate fencing, delay misspend disclosures. (List Running Property in direct of liquidity. Invade recital call singly and do not produce the picturesquely instruction produced in the interrogation.)
Exercise 5-12
Presented under is the experiment estimate of Scott Butler Corporation at December 31, 2014.
|
| Debit |
| Credit |
Cash |
| $ 197,000 |
|
|
Sales |
|
|
| $ 8,100,000 |
Debt Investments (trading) (cost, $145,000) |
| 153,000 |
|
|
Cost of Commodities Sold |
| 4,800,000 |
|
|
Debt Investments (long-term) |
| 299,000 |
|
|
Equity Investments (long-term) |
| 277,000 |
|
|
Notes Payable (short-term) |
|
|
| 90,000 |
Accounts Payable |
|
|
| 455,000 |
Selling Expenses |
| 2,000,000 |
|
|
Investment Revenue |
|
|
| 63,000 |
Land |
| 260,000 |
|
|
Buildings |
| 1,040,000 |
|
|
Dividends Payable |
|
|
| 136,000 |
Accrued Liabilities |
|
|
| 96,000 |
Accounts Receivable |
| 435,000 |
|
|
Accumulated Depreciation-Buildings |
|
|
| 152,000 |
Allowance for Obscure Accounts |
|
|
| 25,000 |
Administrative Expenses |
| 900,000 |
|
|
Interest Expense |
| 211,000 |
|
|
Inventory |
| 597,000 |
|
|
Gain (extraordinary) |
|
|
| 80,000 |
Notes Payable (long-term) |
|
|
| 900,000 |
Equipment |
| 600,000 |
|
|
Bonds Payable |
|
|
| 1,000,000 |
Accumulated Depreciation-Equipment |
|
|
| 60,000 |
Franchises |
| 160,000 |
|
|
Common Hoard ($5 par) |
|
|
| 1,000,000 |
Treasury Stock |
| 191,000 |
|
|
Patents |
| 195,000 |
|
|
Retained Earnings |
|
|
| 78,000 |
Paid-in Capital in Extravagance of Par |
|
|
| 80,000 |
Totals |
| $12,315,000 |
| $12,315,000 |
Prepare a estimate fencing at December 31, 2014, for Scott Butler Corporation. (Ignore proceeds taxes). (List Running Property in direct of liquidity. List Property, Place and Equipment in direct of Land, Building and Equipment. Invade recital call singly and do not produce the picturesquely instruction produced in the interrogation.)
Exercise 24-2
For each of the subjoined after (post-balance-sheet) events, evidence whether a troop should (a) manage the financial statements, (b) reveal in notes to the financial statements, or (c) neither manage nor reveal.
Sr. No. |
| Subsequent (Post-Balance-Sheet) Events |
|
|
1. |
| Settlement of federal tax predicament at a consume considerably in extravagance of the equality expected at year-end. |
| |
2. |
| Introduction of a new work length. |
| |
3. |
| Loss of constellation place due to courage. |
| |
4. |
| Sale of a expressive duty of the troop’s adaptedty. |
| |
5. |
| Retirement of the troop chairman. |
| |
6. |
| Prolonged employee stamp. |
| |
7. |
| Loss of a expressive customer. |
| |
8. |
| Issuance of a expressive estimate of shares of contemptible hoard. |
| |
9. |
| Material privation on a year-end receivable accordingly of a customer’s noncommunication. |
| |
10. |
| Hiring of a new chairman. |
| |
11. |
| Settlement of previous year’s litigation over the troop (no privation was accrued). |
| |
12. |
| Merger delay another troop of resembling magnitude. |
|
Exercise 24-3
Carlton Troop is implicated in indecent disjoined industries. The subjoined instruction is helpful for each of the indecent industries.
Operating Segment |
| Total Revenue |
| Operating Emolument (Loss) |
|
| Identifiable Assets |
W |
| $60,000 |
| $15,000 |
|
| $167,000 |
X |
| 10,000 |
| 3,000 |
|
| 83,000 |
Y |
| 23,000 |
| (2,000) |
| 21,000 | |
Z |
| 9,000 |
| 1,000 |
|
| 19,000 |
|
| $102,000 |
| $17,000 |
|
| $290,000 |
Determine which of the easy segments are reportable grounded on the:
|
|
|
| Reportable Segments |
(a) |
| Revenue cupel. |
| |
(b) |
| Operating emolument (loss) cupel. |
| |
(c) |
| Identifiable adaptedty cupel. |
|
Exercise 24-4
As mortgage analyst for Utrillo Bank, you accept been presented the subjoined instruction.
|
| Toulouse Co. |
| Lautrec Co. | ||
Assets |
|
|
|
|
|
|
Cash |
| $120,000 |
|
| $320,000 |
|
Receivables |
| 220,000 |
|
| 302,000 |
|
Inventories |
| 570,000 |
|
| 518,000 |
|
Total running adaptedty |
| 910,000 |
|
| 1,140,000 |
|
Other adaptedty |
| 500,000 |
|
| 612,000 |
|
Total adaptedty |
| $1,410,000 |
|
| $1,752,000 |
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
Current liabilities |
| $305,000 |
|
| $350,000 |
|
Long-term liabilities |
| 400,000 |
|
| 500,000 |
|
Capital hoard and retained earnings |
| 705,000 |
|
| 902,000 |
|
Total liabilities and hoardholders’ equity |
| $1,410,000 |
|
| $1,752,000 |
|
Annual sales |
| $930,000 |
|
| $1,500,000 |
|
Rate of coarse emolument on sales |
| 30 | % |
| 40 | % |
Each of these companies has requested a mortgage of $50,000 for 6 months delay no parallel offered. Accordingly your bank has reached its quota for mortgages of this mark, singly one of these requests is to be supposing.
Compute the different ratios for each troop. (Round apology to 2 decimal places, e.g. 2.25.)
|
| Toulouse Co. |
| Lautrec Co. | ||
Current ratio |
| : 1 |
| : 1 | ||
Acid-cupel ratio |
| : 1 |
| : 1 | ||
Accounts receivable turnover |
| times |
| times | ||
Inventory turnover |
| times |
| times | ||
Cash to running liabilities |
| : 1 |
| : 1 | ||
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