HOMEWORK – Spring 2020 – ACT 3391
A.
B.
C.
Complete assignments using some type of computer software program, e.g., Microsoft Word
For ANY problem involving a calculation, CLEARLY SHOW HOW you performed the calculation.
For ANY problem involving an entry, CLEARLY identify EACH account that you debited and EACH account that you
credited as either a(an):
1) Asset (includes contra-assets)
You can abbreviate with an A
2) Liability (includes contra-liabilities)
You can abbreviate with an L
3) Equity (includes contra-equities)
You can abbreviate with an EQ
4) Revenue (includes contra-revenues AND gains)
You can abbreviate with an R
5) Expense (includes losses)
You can abbreviate with an EX
For example, if you make the following entry:
Cash
$100
Sales revenue
$100
Thus, your final answer would look like this:
A
Cash
$100
R
Sales revenue
$100
Place an “A” to the left of “Cash”
Place an “R” to the left of “Sales Revenue”
UNACCEPTABLE ENTRY FORMATS. Format your entries like the example above. DO NOT give me entries that look like
the following:
A
Cash
$100
R
Sales revenue
$100
or
A
Cash
$100
R
Sales revenue
$100
or
A
Cash
$100
R
Sales revenue
$100
or
A
Cash
$100
R
Sales revenue
$100
1.
(5 points) Zena Company’s financial records showed the following selected items for 2015:
Advertising receipts
Interest paid on borrowings
$450,000
$120,000
Land rental revenues
Wage expense
$560,000
$290,000
Zena follows the accrual basis of accounting. The following balances were taken from Zena’s balance sheets:
12-31-14
12-31-15
Advertising receivables
28,000
31,000
Prepaid advertising costs
40,000
36,000
Wages payable
30,000
32,000
Interest payable
62,000
61,000
Unearned land rental revenue
45,000
50,000
a.
b.
c.
d.
What were advertising-related revenues for 2015?
What was interest expense for 2015?
How much cash was paid out for wages and salaries during 2015?
How much cash was collected for land rentals during 2015?
2. (4 points) Prepare AJEs that should be made on 12-31-15, the end of the accounting year, for each of the following situations. If
no AJE is required, indicate “none.” Assume the company only makes AJEs at the end of the accounting year. In addition, identify
the impact, if any, on the financial statements if you failed to make the appropriate AJE. Indicate NE for no impact, U for
understatement, and O for overstatement. Use the following format to indicate the impact of failing to make the required entry for
each situation.
Assets
Liabilities
Expenses
Revenues
Net Income
Owners’ Equity
XX
XX
XX
XX
XX
XX
1
a.
b.
c.
d.
3.
On July 1, 2015, the company rented a machine for 12 months and paid $24,000 in advance. The journal entry to record the
payment included a debit to a permanent account.
On March 1, 2015, the company collected $1,200 of rent for 12 months in advance. The journal entry to record the receipt
included a credit to a temporary account.
On September 30, 2015, the company collected $10,000 as rent for 2 months in advance. The journal entry to record the receipt
included a credit to a permanent account.
On June 1, 2015, the company rented equipment for 4 months and paid $4,000 in advance. The journal entry to record the
payment included a debit to a temporary account.
(8 points) X Company’s financial records showed the following during 2015:
Payments made for office supplies
Office rental revenues
$ 57,000
$436,000
Insurance premiums receipts
Wages & salaries paid
$500,000
$135,000
X follows the accrual basis of accounting. The following were taken from X’s balance sheets:
Office rental receivables
Insurance premiums receivables
Prepaid office supplies
Prepaid insurance expense
Wages & salaries payable
Office supplies payable
Unearned insurance premiums
Unearned office rental revenue
12-31-15
$39,000
40,000
17,000
9,000
18,000
8,000
22,000
3,000
12-31-14
$30,000
48,000
10,000
15,000
23,000
4,000
25,000
5,000
a.
b.
c.
d.
What was office supplies expense during 2015?
What was wages & salaries expense during 2015?
What were insurance premiums revenues during 2015?
What were office rental receipts during 2015?
4.
(1 point) Write the best accounting word/phrase that describes the following. Write ONLY ONE word/phrase next to each
item. DO NOT ABBREVIATE.
Net income minus preferred dividends divided by the weighted average of
shares outstanding.
The income statement category for a disposal of a component of a business.
5.
(8 points) Changes in all of E’s balance sheet accounts during the current year, EXCEPT the change in E’s retained earnings
account follow. Compute E’s net income (or net loss) for the year assuming the only two entries E made to her retained earnings
account during the year were for a cash dividend declared and paid of $50,000 and her net income (or net loss) for the year.
(This is NOT a statement of cash flows problem – do NOT format it like a statement of cash flows problem.)
Cash decreased
Accounts receivable decreased
Fixed assets increased
Accumulated depreciation increased
Accounts payable decreased
Unearned revenue decreased
Notes payable increased
Common stock increased
Additional paid-in-capital increased
6.
$250,000
$ 65,000
$165,000
$ 90,000
$120,000
$ 15,000
$ 80,000
$ 5,000
$100,000
(5 points) Pederson, Inc. has the following data for the year ended December 31, 2017:
Net sales …………………………………………………………………………………………..
Loss from discontinued operations ……………………………………………………….
Cost of goods sold ……………………………………………………………………………..
Interest expense …………………………………………………………………………………
2
$987,000
24,000
240,000
11,000
Selling, general, and administrative expenses ………………………………………..
325,000
Assume Pederson’s tax rate was 20% on all items. Also assume Pederson had 42,000 shares of common stock outstanding throughout
the year. Prepare an income statement in good form for the year 2017. Round your EPS figure to the nearest penny.
7. (2 points) Penning Corporation reported the following:
Net income
Dividends on common stock
Dividends on preferred stock
Weighted average common shares outstanding
$945,000
$50,000
$90,000
200,000
What should Penning report as its earnings per share? Round your answer to the nearest penny.
8.
(4 points) The following items may be reflected in a company’s statement of cash flows. For each item, indicate which, if any,
of the 3 sections of the statement of cash flows the item would be reflected in. Assume the statement is prepared using the
indirect method.
1.
Issuing stock in exchange for $500,000.
2.
Using cash to purchase a fixed asset.
3.
Using cash to buy back our own company stock.
4.
Selling a fixed asset for more than book value.
5.
Borrowing money.
6.
Using cash to pay a dividend to stockholders.
7.
Using cash to purchase 100 shares of stock in another company.
9.
(10 points) Diane’s balance sheets as of December 31, 2016 and 2017 are presented below:
2016
2017
Cash
Accounts receivable
Prepaid expenses
Property, plant, and equipment – at cost
Accumulated depreciation
TOTAL ASSETS
$ 75,000
75,000
10,000
120,000
( 40,000)
$240,000
$240,000
65,000
24,000
192,000
( 58,000)
$463,000
Accrued wages payable
Unearned revenues
Dividends payable
Long-term debt
Common stock
Additional paid-in-capital
Retained earnings
TOTAL LIABILITIES & SE
$ 10,000
14,000
0
46,000
24,000
46,000
100,000
$240,000
$ 15,000
10,500
87,500
65,000
25,000
60,000
200,000
$463,000
SELECTED OTHER INFORMATION:
1. During 2017, Diane reported net income of $450,000.
2. During 2017, Diane both borrowed on a long-term basis and paid back some long-term debt. During 2017, Diane borrowed
$50,000.
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3.
4.
5.
6.
During 2017. Diane both bought and sold some property, plant, and equipment (PP&E). A machine Diane sold during 2017
originally cost her $20,000. Diane sold the PP&E for $7,000. At the time of the sale, the PP&E had accumulated
depreciation of $12,000.
During 2017, Diane issued additional common stock.
During 2017, Diane declared four quarterly dividends. 2017 was the first year in which Diane declared dividends.
During 2017, Diane did NOT enter into any non-cash investing or financing activities.
Prepare Diane’s Statement of Cash Flows (in good form) for the year ended December 31, 2017. Diane uses the indirect method.
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