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Thursday, 5 November 2015

COMPLETE COURSE ACCT557 COMPLETE COURSE

ACCT 557 COMPLETE COURSE ACCT557 COMPLETE COURSE
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ACCT 557 Week 1 Homework
You are the Senior Accountant for the Patty Corporation which has several divisions. They each keep their own accounting books and have chosen the appropriate method of revenue recognition based on their operations.
Problem 2:
Curiosity Company
Curiosity Company provided the following financial information for its installment-sales for the current year.


ACCT 557 Week 2 Homework

Problem 1:
California Surplus Inc. qualifies to use the installment-sales method for tax purposes and sold an investment on an installment basis. The total gain of $75000 was reported for financial reporting purposes in the period of sale. The installment period is 3 years; one-third of the sale price is collected in 2012 and the rest in 2013. The tax rate was 35% in 2012, and 30% in 2013 and 30% in 2014. The accounting and tax data is shown below.
Problem 2:
The Ambrosia Corporation's lead accountant shows the following info:
On Jan 1, 2012, Ambrosia purchased a bottling machine for $800000
A) Straight-line basis depreciation for 5 years for tax purposes (Use the half year convention for tax purposes, as discussed in Applendix 11A).
B) Use 8 year useful life for financial reporting
C) Tax- exempt municipal bonds yielded interest of $150000 in 2013.
D) Pretax financial income is $2300000 in 2012 and $2400000 in 2013.
E) The company recognized an extraordinary gain of $150000 in 2013
(which is fully taxable).
F) Taxable income is expected in future years with an expected tax rate of 35%.
Required:
1)
Compute taxable income and income taxes payable for 2013.
2)
Prepare the journal entries for income tax expense, income taxes payable, and
deferred taxes for 2013.
3)
Prepare the deferred income taxes presentation for Dec 31, 2013 balance sheet.

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ACCT 557 Week 3 Homework

Instructor:
Intermediate Accounting, 14thEdition by Kieso, Weygandt, and Warfield
On January 1, 2012, Harrington Company has the following defined benefit pension plan balances.
Projected benefits obligation
Fair value of plan assets
The interest (settlement) rate applicable to the plan is
9%
On January 1, 2013, the company amends its pension
agreement so that service costs of
$620 000
are created. Other data related to the pension plan are as follows:
Service costs
Prior service costs amortization
Contributions (funding) to the plan
Benefits paid
Actual return on plan assets
Expected rate of return on assets
Instructions:
(a) Prepare a pension worksheet for the pension plan for 2012 and 2013.

P20-2 Allison Co. has the following postretirement benefit plan balances on January 1, 2012.
Accumulated Postreitrement benefit obligation
Fair value of plan assets
The interest (settlement) rate applicable to the plan is
8%
On January 1, 2013, the company amends the plan
so that prior service costs of
$185 000
were created. Other data related to the pension plan are as follows:
Service costs
Prior service costs amortization
Contributions (funding) to the plan
Benefits paid
Actual return on plan assets
Expected rate of return on assets
Instructions:
(a)    Prepare a worksheet for the postreitrement plan for 2012 & 2013.

ACCT 557 Week 4 Homework

Problem 1
a)
Sales-Type Leases
1)
Lease Receivable
Present value of annuity due of $1 for 10 periods disc. At 10%
Annual lease payment
Present value of estimated residual value
($30,000 x 10 years x 10%)
Lease Receivable @ inception
2)
Annual Lease Payment
Present value of annuity due of $1 for 10 periods at 10%
Sales Price
3)
Lease receivable at inception
Present value of residual value
Cost of Sales

Problem 2
a)
Sales-Type Leases Lessee
The lease is a capital lease because the lease term exceeds 75% of the asset's economic life and the
present value of the minimum payments exceeds 90% of the fair value of the leased asset.
Initial Obligation under capital leases:
Minimum lease payments ($60,000) x PV of an annuity due
for 10 periods at 10% (6.75902)

 

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Problems:
The Diamond Glitter Company is in the process of preparing its financial statements for 2012. Assume that no entries for depreciation have been recorded in 2012. The following information related to depreciation of fixed assets is provided to you.
1. The company purchased equipment on January 2, 2009, for $165000. At that time, the equipment had an estimated useful life of 7 years with a $25000 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2012, as a result of additional information, the company determined that the equipment has a remaining useful life of 3 years with a $15000 salvage value.
2. During 2012, the company changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $625000. It had a useful life of 10 years and a salvage value of $50000. The following computations present depreciation on both bases for 2010 and 2011.
3. The company purchased a machine on July 1, 2010, at a cost of $450000. The machine has a salvage value of $25000 and a useful life of 10 years. The company's bookkeeper recorded straight-line depreciation in 2010 and 2011 but failed to consider the salvage value. Ignore Tax effect.
4. The company has failed to accrue sales commissions payable at the end of each of the last 2 years, as follows.
December 31, 2011
$ 5,400
December 31, 2012
$ 4,600

5. In reviewing the December 31, 2011, inventory, the company discovered errors in its inventory-taking procedures that have caused inventories for the last 3 years to be incorrect, as follows. The company has already made an entry that established the incorrect December 31, 2012, inventory amount.
December 31, 2010
Understated
$ 32,000
December 31, 2011
Understated
$ 51,000
December 31, 2012
Overstated
$ 9,500
6. At December 31, 2012, the company decided to change to the straight -line method depreciation method on its retail display equipment from double-declining-balance. The equipment had an original cost of $250000 when purchased on January 1, 2011. It has a salvage value of 0 and a 8-year useful life. Depreciation expense recorded prior to 2012 under the double-declining-balance method was $62500. The company has already recorded 2012 depreciation expense of $46875 using the double-declining-balance method.
7. Before the current year, the company accounted for its income from long-term construction contracts on the completed-contract basis. Early this year, the company changed to the percentage-of-completion basis for accounting purposes but continues to use the completed-contract method for tax purposes. Income for the current year has been recorded using the new method. Prior year tax effects must be considered. The following information is available.
Pretax Income
Percentage-of-Completion
Completed-Contract
Prior to 2012
$320,000
$180,000
2012
$140,000
$120,000

Required:
Prepare the journal entries necessary at December 31, 2012, to record the corrections and changes made to date related to the information provided. The books are still open for 2012. The income tax rate is 35%. The company has not yet recorded its 2012 income tax expense and payable amounts so current-year tax effects may be ignored.
Problems:
The Diamond Glitter Company is in the process of preparing its financial statements for 2012. Assume that no entries for depreciation have been recorded in 2012. The following information related to depreciation of fixed assets is provided to you.
1. The company purchased equipment on January 2, 2009, for $165000. At that time, the equipment had an estimated useful life of 7 years with a $25000 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2012, as a result of additional information, the company determined that the equipment has a remaining useful life of 3 years with a $15000 salvage value.
2. During 2012, the company changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $625000. It had a useful life of 10 years and a salvage value of $50000. The following computations present depreciation on both bases for 2010 and 2011.
3. The company purchased a machine on July 1, 2010, at a cost of $450000. The machine has a salvage value of $25000 and a useful life of 10 years. The company's bookkeeper recorded straight-line depreciation in 2010 and 2011 but failed to consider the salvage value. Ignore Tax effect.
4. The company has failed to accrue sales commissions payable at the end of each of the last 2 years, as follows.
December 31, 2011
$ 5,400
December 31, 2012
$ 4,600

5. In reviewing the December 31, 2011, inventory, the company discovered errors in its inventory-taking procedures that have caused inventories for the last 3 years to be incorrect, as follows. The company has already made an entry that established the incorrect December 31, 2012, inventory amount.
December 31, 2010
Understated
$ 32,000
December 31, 2011
Understated
$ 51,000
December 31, 2012
Overstated
$ 9,500
6. At December 31, 2012, the company decided to change to the straight -line method depreciation method on its retail display equipment from double-declining-balance. The equipment had an original cost of $250000 when purchased on January 1, 2011. It has a salvage value of 0 and a 8-year useful life. Depreciation expense recorded prior to 2012 under the double-declining-balance method was $62500. The company has already recorded 2012 depreciation expense of $46875 using the double-declining-balance method.
7. Before the current year, the company accounted for its income from long-term construction contracts on the completed-contract basis. Early this year, the company changed to the percentage-of-completion basis for accounting purposes but continues to use the completed-contract method for tax purposes. Income for the current year has been recorded using the new method. Prior year tax effects must be considered. The following information is available.
Pretax Income
Percentage-of-Completion
Completed-Contract
Prior to 2012
$320,000
$180,000
2012
$140,000
$120,000

Required:
Prepare the journal entries necessary at December 31, 2012, to record the corrections and changes made to date related to the information provided. The books are still open for 2012. The income tax rate is 35%. The company has not yet recorded its 2012 income tax expense and payable amounts so current-year tax effects may be ignored.

 

ACCT 557 Week 6 Homework

Problems:
Financial data of Fancy Footwork Company for 2013 and 2012 are presented below.

Additional information:
During the year, $9000 of common stock was issued in exchange for plant assets. No plant assets were sold in 2012. Cash dividends were $32500.
Required:
A) Prepare a statement of cash flows using the indirect method
B) Prepare a statement of cash flows using the direct method. (Do not prepare a reconciliation schedule.)

 

ACCT 557 Week 7 Homework

Problem 1:
Plastics Inc is a company that operates in four different divisions. The following information relating to each segment is available for 2013.
Problem 2:
The following information pertains to Walrus Inc.
Cash
$60,000
Accounts receivable
170,000
Inventory
100,000
Plant assets (net)
582,000
Total assets
$912,000
Accounts payable
$110,000
Accrued taxes and expenses payable
42,000
Long-term debt
120,000
Common stock ($10 par)
260,000
Paid-in capital in excess of par
50,000
Retained earnings
3301,000
Total equities
$9,000
Net sales (all on credit)
$2,000,000
Cost of goods sold
1,400,000
Net income
120,000
Required:
Compute the following
(ignore Avg for balance sheet accounts)
(a)
Current ratio
(b)
Inventory turnover
(c)
Receivables turnover
(d)
Book value per share
(e)
Earnings per share
(f)
Debt to total assets
(g)
Profit margin on sales
(h)
Return on common stock equity

 

ACCT 557 Quiz 3

1. (TCO C) Presented below is pension information related to Woods, Inc. for the year 2013.

Service cost $76,000
Interest on projected benefit obligation $47,000
Interest on vested benefits $24,000
Amortization of prior service cost due to increase in benefits $12,000
Expected return on plan assets $18,000

The amount of pension expense to be reported for 2013 is
2. (TCO C) A pension liability is reported when
3. (TCO C) Which of the below listed items is NOT required for post-retirement benefit disclosures based on professional pronouncements?
4. (TCO C) Kathy's Kittens, Inc. has provided the following information for their post-retirement benefits plan for 2013.

Service cost $475,000
Discount rate 8%
APBO, January 1, 2013 $3,800,000
EPBO, January 1, 2013 $4,100,000
Average remaining service to full eligibility 20 years
Average remaining service to expected retirement 25 years

The amount of post-retirement expense for 2013 is
5. (TCO C) On January 1, 2013, Laura's Living Company has the following defined benefit pension plan balances.
Projected benefit obligation
$5,700,000
Fair value of plan assets
7,200,000
The interest (settlement) rate applicable to the plan is 10%. On January 1, 2014, the company amends its pension agreement so that service costs of $350,000 are created. Other data related to the pension plan are as follows.
2013
2014
Service costs
$150,000
$165,000
Prior service costs amortization
$0
$63,000
Contributions (funding) to the plan
$168,000
$194,000
Benefits paid
$190,000
$220,000
Actual return on plan assets
$576,000
$498,000
Expected rate of return on assets
8%
7%
Required:
(a) Prepare a pension worksheet for the pension plan for 2013 and 2014.
(b) For 2014, prepare the journal entry to record pension-related amounts.
6. (TCO C) Kasper, Inc. sponsors a defined-benefit pension plan. The following data relates to the operation of the plan for the year 2013.

Service cost $260,000
Contributions to the plan $250,000
Actual return on plan assets $240,000
Projected benefit obligation (beginning of year) $2,700,000
Fair value of plan assets (beginning of year) $2,900,000
The expected return on plan assets and the settlement rate were both 9%. The amount of pension expense reported for 2013 is
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ACCT 557 Quiz 4

1. (TCO D) Capitalization of lease requires which of the following?
2. (TCO D) Advantage(s) of leasing versus buying equipment is (are)
3. (TCO D) Pirate, Inc. leased equipment from Shoreline Enterprises under a four-year lease requiring equal annual payments of $425,000, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. Pirate, Inc.’s incremental borrowing rate is 10% and the rate implicit in the lease (which is known by Pisa, Inc.) is 8%. Assuming that this lease is properly classified as a capital lease, what is the amount of interest expense recorded by Pirate, Inc. in the first year of the asset’s life?

PV Annuity Due PV Ordinary Annuity
8%, 4 periods 3.5771 3.31213
10%, 4 periods 3.48685 3.16986
4. (TCO D) On January 2, 2013, Bentley Co. leases equipment from Harry's Leasing Company with five equal annual payments of $30,000 each, payable beginning December 31, 2013. Bentley Co. agrees to guarantee the $60,000 residual value of the asset at the end of the lease term. Bentley’s incremental borrowing rate is 10%; however, it knows that Harry’s implicit interest rate is 8%. What journal entry would Harry's Leasing Company make at January 2, 2013 assuming this is a direct–financing lease?
PV Annuity Due PV Ordinary Annuity PV Single Sum
8%, 5 periods 4.31213 3.99271 0.68058
10%, 5 periods 4.16986 3.79079 0.62092
5. (TCO D) Lease A does not contain a bargain purchase option, but the lease term is equal to 90% of the estimated economic life of the leased property. Lease B does not transfer ownership of the property to the lessee by the end of the lease term, but the lease term is equal to 75% of the estimated economic life of the leased property. How should the lessee classify these leases?
6. (TCO D) Carl Leasing, Inc. agrees to lease medical equipment to Sally, Inc. on January 1, 2012. They agree on the following terms.

1) The normal selling price of the medical equipment is $260,000 and the cost of the asset to Carl Leasing, Inc. was $135,000.
2) Sally, Inc. will pay all maintenance, insurance, and tax costs directly and annual payments of $35,000 on January 1 each year.
3) The lease begins on January 1, 2012, and payments will be in equal annual installments.
4) The lease is noncancelable with no renewal option. The lease term is 10 years (the same as the estimated economic life).
5) At the end of the lease, the medical equipment will revert to Carl Leasing, Inc. and have an unguaranteed residual value of $20,000. Their implicit interest rate is 10%.
6) Carl Leasing, Inc. incurred costs of $6,500 in negotiating and closing the lease. There are no uncertainties regarding additional costs yet to be incurred and the collectability of the lease payments is reasonably predictable.

Required:
a) Determine what type of lease this would be for the lessee and calculate the initial obligation.
b) Prepare all the journal entries for Sally, Inc. for 2012. Assume a calendar year fiscal year.

ACCT 557 Quiz 5

1. (TCO E) Which of the following is accounted for as a change in accounting principle?
2. (TCO E) A company decides to switch from double-declining balance method to that straight-line method of recording depreciation. What type of change/correction is this?
3. (TCO E) On December 31, 2013, Gifts Galore, Inc. appropriately changed its inventory valuation method from weighted-average cost to FIFO method for financial statement and income tax purposes. The change will result in a $1,500,000 increase in the beginning inventory at January 1, 2013. Assume a 30% income tax rate. The cumulative effect of this accounting change on beginning retained earnings is
4. (TCO E) As of January 1, 2011, Survival Industries, Inc. purchased a boat at a cost of $360,000.
When purchased, the company was using the double-declining depreciation method.
Key info on the asset at time of purchase is the following.
Estimated useful life is 6 years.
Residual Value is $0.
At the beginning of 2014, the CFO decided to change to straight-line depreciation method.
Compute the depreciation expense for 2014.
5. (TCO E) Mystical Corporation found the following errors in their year-end financial statements.
As of Dec. 2012 As of Dec. 2013
Ending Inventory $32,000 understated $46,000 overstated
Depreciation Exp. $7,000 understated
On December 31, 2013, a fully depreciated machine was sold for $35,000 but the sale was not recorded until January 15, 2014 when the cash was received. In 2012, a three-year insurance premium was prepaid for $45,000 of which the entire amount was expensed in the first year.
There were no other errors or corrections. Ignore any tax considerations.
What is the total net effect of errors on Mystical's 2013 Retained Earnings?
6. (TCO E) The four types of accounting changes, including error correction, are
change in accounting principle;
change in accounting estimate;
change in reporting entity; and
error correction.

ACCT 557 Quiz 6

1. (TCO F) The company uses the indirect method for the statement of cash flow. How would an increase in the inventory balance be reported?
2. (TCO F) Which of the following is not true?
3. (TCO F) Glitter Girl, Inc. recognized net income of $150,000 including $26,000 in depreciation expense.
Additional changes from the balance sheet are as follows.
Accounts Receivable $3,500 decrease
Prepaid Expenses $15,000 decrease
Inventory $35,500 increase
Accrued Liabilities $12,000 decrease
Accounts Payable $20,000 increase
Compute the net cash from operating activities based on the above information.
4. (TCO F) Pig Builder's, Inc. shows the following as of December 31, 2012. - Acquired 50% of Wolf Corp's common stock for $160,000 cash, which was borrowed from Granny's Bank. - Issued 5,000 shares of its preferred stock for land having a fair value of $320,000 - Issued 500 of its 11% debenture bonds, due 2017, for $392,000 cash - Paid $120,000 toward bank loan. - Purchased a patent for $220,000 cash - Sold available for sales securities for $796,000 - Recognized $88,000 net increase in returnable long term customer deposits
Pig's net cash provided by investing activities for 2012 is
5. (TCO F) Big Dog Builder's, Inc. shows the following as of December 31, 2012. - Acquired 50% of Kitty Corp's common stock for $225,000 cash which was borrowed from Mouse's Bank. - Sold available for sales securities for $852,000 - Issued 1,000 of its 12% debenture bonds, due 2017, for $350,000 cash - Paid $160,000 toward bank loan. - Recognized $66,000 net increase in returnable long term customer deposits - Issued 2,000 shares of its preferred stock for land having a fair value of $500,000 - Purchased a patent for $140,000 cash
Big Dog's net cash provided by financing activities for 2012 is
6. (TCO F) Cash flows from operating activities (indirect and direct methods).
Presented below is the income statement of Smiling Tiger, Inc

ACCT 557 All Quizzes

ACCT 557 Quiz 1
ACCT 557 Quiz 2
ACCT 557 Quiz 3
ACCT 557 Quiz 4
ACCT 557 Quiz 5
ACCT 557 Quiz 6
ACCT 557 COMPLETE COURSE ACCT557 COMPLETE COURSE
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