AFM 491- Final Exam Guide - Comprehensive Notes for the exam ( 25 pages long!)
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The following are Skysong Corp.âs comparative balance sheetaccounts at December 31, 2017 and 2016, with a column showing theincrease (decrease) from 2016 to 2017.
COMPARATIVE BALANCE SHEETS | |||||||||
2017 | 2016 | Increase | |||||||
Cash | $808,400 | $703,500 | $104,900 | ||||||
Accounts receivable | 1,117,000 | 1,168,800 | (51,800 | ) | |||||
Inventory | 1,861,000 | 1,731,000 | 130,000 | ||||||
Property, plant, and equipment | 3,286,500 | 2,949,500 | 337,000 | ||||||
Accumulated depreciation | (1,153,400 | ) | (1,039,600 | ) | (113,800 | ) | |||
Investment in Myers Co. | 312,100 | 272,900 | 39,200 | ||||||
Loan receivable | 247,900 | â | 247,900 | ||||||
Total assets | $6,479,500 | $5,786,100 | $693,400 | ||||||
Accounts payable | $1,007,300 | $954,200 | $53,100 | ||||||
Income taxes payable | 29,700 | 49,700 | (20,000 | ) | |||||
Dividends payable | 79,200 | 99,500 | (20,300 | ) | |||||
Lease liabililty | 396,700 | â | 396,700 | ||||||
Common stock, $1 par | 500,000 | 500,000 | â | ||||||
Paid-in capital in excess of parâcommon stock | 1,485,200 | 1,485,200 | â | ||||||
Retained earnings | 2,981,400 | 2,697,500 | 283,900 | ||||||
Total liabilities and stockholdersâequity | $6,479,500 | $5,786,100 | $693,400 |
Additional information:
1. | On December 31, 2016, Skysong acquired 25% of Myers Co.âscommon stock for $272,900. On that date, the carrying value ofMyersâs assets and liabilities, which approximated their fairvalues, was $1,091,600. Myers reported income of $156,800 for theyear ended December 31, 2017. No dividend was paid on Myersâscommon stock during the year. | |
2. | During 2017, Skysong loaned $296,700 to TLC Co., an unrelatedcompany. TLC made the first semiannual principal repayment of$48,800, plus interest at 10%, on December 31, 2017. | |
3. | On January 2, 2017, Skysong sold equipment costing $59,700,with a carrying amount of $37,600, for $40,300 cash. | |
4. | On December 31, 2017, Skysong entered into a capital lease foran office building. The present value of the annual rental paymentsis $396,700, which equals the fair value of the building. Skysongmade the first rental payment of $59,600 when due on January 2,2018. | |
5. | Net income for 2017 was $363,100. | |
6. | Skysong declared and paid the following cash dividends for 2017and 2016. |
2017 | 2016 | |||
Declared | December 15, 2017 | December 15, 2016 | ||
Paid | February 28, 2018 | February 28, 2017 | ||
Amount | $79,200 | $99,500 |
Prepare a statement of cash flows for Skysong Corp. for the yearended December 31, 2017, using the indirect method.
Flush Mate Co. wholesales bathroom fixtures. During the current fiscal year, Flush Mate Co. received the following notes:
Date | Face Amount | Interest Rate | Term | |
---|---|---|---|---|
1. | Mar. 6 | $84,500 | 6% | 45 days |
2. | Apr. 23 | 21,700 | 9% | 60 days |
3. | July 20 | 43,900 | 5% | 120 days |
4. | Sept. 6 | 51,500 | 6% | 90 days |
5. | Nov. 29 | 30,600 | 5% | 60 days |
6. | Dec. 30 | 71,300 | 6% | 30 days |
Required: | |
1. | Determine for each note (a) the due date and (b) the amount of interest due at maturity, identifying each note by number. Assume a 360-day year when calculating interest.(Note: Round each interest computation to the whole dollar.) |
2. | Journalize the entry to record the dishonor A note receivable is dishonored when the maker of the note fails to pay the note on the due date. of Note (3) on its due date. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year when calculating interest. Round your answer to the nearest whole dollar. |
3. | Journalize the adjusting entry to record the accrued interest on Notes (5) and (6) on December 31. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year when calculating interest. Round your answer to the nearest whole dollar. |
4. | Journalize the entries to record the receipt of the amounts due on Notes (5) and (6) in January. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year when calculating interest. Round your answer to the nearest whole dollar. |
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Chart of Accounts
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Flush Mate Co. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Starting Question
Shaded cells have feedback.
1. Determine for each note (a) the due date and (b) the amount of interest due at maturity, identifying each note by number. Assume a 360-day year when calculating interest. (Note: Round each interest computation to the whole dollar.)
Note | Due Date | Interest Due at Maturity |
---|---|---|
1. | selector 1Apr. 20 June 22 Apr. 21 Apr. 20 June 9 Apr. 30 | |
2. | selector 2June 22 July 22 June 23 June 22 July 25 June 30 | |
3. | selector 3Nov. 17 Dec. 5 Nov. 20 July 1 Nov. 17 July 31 | |
4. | selector 4Dec. 5 Dec. 4 Dec. 5 Oct. 31 Dec. 6 Dec. 1 | |
5. | selector 5Jan. 28 Sep. 29 Jan. 29 Jan. 28 Nov. 28 Nov. 17 | |
6. | selector 6Jan. 29 Nov. 28 Jan. 30 Jan. 29 Nov. 17 Jan. 28 |
Points:
12 / 12
Feedback
Check My Work
Count the number of days in each month until the total number of days is reached for the term of the note and this will be the due date. Interest is not charged on the first day of the note.
Explanation
none
X
Journal
Shaded cells have feedback.
2. Journalize the entry to record the dishonor
A note receivable is dishonored when the maker of the note fails to pay the note on the due date.
of Note (3) on its due date. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year when calculating interest. Round your answer to the nearest whole dollar.How does grading work?
The grader is designed to give you the best score possible, even when you skip lines or enter them out of order. It does this by taking every line you have entered and comparing it to every line in the answer. When it finds the line that gives you the best score, it considers that a match.
PAGE 1
JOURNAL
ACCOUNTING EQUATION
Score: 37/37
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
---|---|---|---|---|---|---|---|---|
1 | â | â | â | â | ||||
2 | â | â | â | |||||
3 | â | â | â |
Solution
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
---|---|---|---|---|---|---|---|---|
1 | ||||||||
2 | ||||||||
3 |
Points:
7 / 7
3. Journalize the adjusting entry to record the accrued interest on Notes (5) and (6) on December 31. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year when calculating interest. Round your answer to the nearest whole dollar.
How does grading work?
The grader is designed to give you the best score possible, even when you skip lines or enter them out of order. It does this by taking every line you have entered and comparing it to every line in the answer. When it finds the line that gives you the best score, it considers that a match.
PAGE 1
JOURNAL
ACCOUNTING EQUATION
Score: 21/25
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
---|---|---|---|---|---|---|---|---|
1 | â | â | â | |||||
2 | â | â |
Solution
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
---|---|---|---|---|---|---|---|---|
1 | ||||||||
2 |
Points:
4.2 / 5
4. Journalize the entries to record the receipt of the amounts due on Notes (5) and (6) in January. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year when calculating interest. Round your answer to the nearest whole dollar.
All transactions on this page must be entered (except for post ref(s)) before you will receive Check My Work feedback.
PAGE 1
JOURNAL
ACCOUNTING EQUATION
Score: 2/99
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
---|---|---|---|---|---|---|---|---|
1 | ||||||||
2 | ||||||||
3 | ||||||||
4 | ||||||||
5 | ||||||||
6 | ||||||||
7 | ||||||||
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Solution
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
---|---|---|---|---|---|---|---|---|
1 | ||||||||
2 | ||||||||
3 | ||||||||
4 | ||||||||
5 | ||||||||
6 | ||||||||
7 | ||||||||
8 |
Points:
0.36 / 18
Feedback
Check My Work
2.
Typically, the maker of a dishonored note fails to pay the note on the due date. A company that holds a dishonored note transfers the face amount of the note plus any interest due back to an accounts receivable account. Interest revenue is not dependent on receiving the interest at this point.
3.
(Note 5) Calculate the number of days of interest that accrues between November 29 and December 31. Remember interest is not charged on the first day of the note. Use this to calculate:
(a) Interest rate x face amount = annual interest.
(b) Annual interest x (number of days to end of year ÷ 360 days) = interest on note to the end of the year
Two accounts related to interest are used for the transaction.
(Note 6) Calculate the number of days of interest that accrues between December 30 and December 31. Remember interest is not charged on the first day of the note. Use this to calculate:
(a) Interest rate x face amount = annual interest.
(b) Annual interest x (number of days to end of year ÷ 360 days) = interest on note to the end of the year
Two accounts related to interest are used for the transaction.
4.
Cash received will include the maturity value of the note.
Explanation
1
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Need help with part 3 and 4 please.
Introduction |
Jones Widget Company (JWC) incorporated at the beginning of2014. Below is the post closing trial balance as of 12/31/2014. |
Account Title | Balance | ||
Cash | 10,900 | ||
AccountsReceivable | 8,950 | ||
Allowance for DoubtfulAccounts | 1,095 | ||
Inventory | 11,560 | ||
Prepaid Rent | 3,000 | ||
Equipment | 39,000 | ||
AccumulatedDepreciation | 3,800 | ||
Accounts Payable | 0 | ||
Sales Tax payable | 600 | ||
FICA Taxes Payable | 1,000 | ||
Federal Income Tax(FIT) Payable | 600 | ||
Wages Payable | 1,350 | ||
Unemployment taxespayable | 1,000 | ||
Unearned Revenue | 3,750 | ||
Interest Payable | 360 | ||
Notes Payable | 16,000 | ||
Common Stock | 20,300 | ||
Add'l PIC | 16,210 | ||
RE - December 31,2014 | 12,545 | ||
Treasury Stock | 5,200 | ||
Additional Information: |
⢠| JWC establishes a policy that it will sell inventory at $150 perunit. Sales taxes are 6%. JWC will use the FIFO method and recordCOGS on a perpetual basis. |
⢠| Employee wages are $3,800 per month. Employees are paid on the16th for the first half of the month and on the first of thefollowing month for the second half of each month. The income taxeswithheld are $300 each paycheck, and the FICA taxes are $250 perpaycheck. The withholding and the employerâs matching contributionare paid monthly on the second day of the month. In addition,unemployment taxes of $65 are accrued with each payroll. The taxesare paid on March 31. |
⢠| The Beginning inventory of $11,560 consists of 170 units. |
⢠| ThePrepaid Rent balance is for January 2015. |
⢠| The equipment was purchased on July 1, 2014. It is beingdepreciated using the straight line method. |
⢠| Unearned Revenue is for 25 units ordered and paid for in advanceby two customers in late December. One order will be filled inJanuary, the remainder in early February. |
⢠| The Notes payable represents a $16,000 bank loan received onOctober 1, 2013 at 9% annual interest. |
⢠| The parvalue on the common stock is $2. |
⢠| Thetreasury stock account has 400 shares. |
⢠| Record alltransactions to the nearest dollar. |
Below are transactions for January2015 |
Jan 1 | PaidDecember 31 payroll previously accrued. |
Jan 2 | A $104,0006% six year bond is issued. The effective yield is 7%. |
6% | 7% | ||
Present Value of $1factors | .7050 | .6663 | |
Present Value of anAnnuity of $1 factors | 4.9173 | 4.7665 | |
Jan 2 | A truck is purchased for $17,000 cash. It is estimated the truckwill be used for 50,000 miles and will have no salvage value.(Record the purchase to the account "Vehicles"). |
Jan 2 | Payroll taxes payable (FIT & FICA) recorded in December areremitted to the IRS. |
Jan 5 | A $1,050customer account is written off as uncollectible. |
Jan 6 | Sales on account of 165 units of inventory occur during January.Include sales tax of 6%. |
Jan 10 | Sales taxes of $600 which had been collected and recorded inDecember are paid to the state. |
Jan 11 | Anadditional 60 units of inventory are purchased on account for$3,900. |
Jan 12 | The equipment purchased in 2014 for $39,000 is sold for $37,000.No additional depreciation is recorded for January. |
Jan 14 | Having sold the equipment, JWC pays off the note in full. Theamount paid is $16,414 which includes an additional $54 interestthrough Jan 14. |
Jan 15 | A portion of the advance order from December (20 units) isdelivered. There is no sales tax on this order. |
Jan 16 | Record and pay payroll for January 1-15. Record the employerâsmatching share of FICA taxes And the unemployment taxes also. |
Jan 20 | 200 sharesof the treasury stock are sold for $3,800. |
Jan 21 | Collections from sales on account totaled $9,900. |
Jan 27 | Sold theother 200 shares of the treasury stock for $2,000. |
Jan 28 | JWC declares and distributes a 10% Stock dividend. The marketprice of the stock at the time is $5 per share. (Hint on thestatement of retained earnings, this amount will should be shown asa dividend). |
Jan 31 | (Adjusting 1) Record depreciation on the truck. During January,the truck is driven 2,500 miles. |
Jan 31 | (Adjusting 2) It is estimated that 3% of the ending accountsreceivable balance will be uncollectible. |
Jan 31 | (Adjusting3) Record January rent expired. |
Jan 31 | (Adjusting 4) Accrue January 31 payroll, which will be payableon February 1. Record the employerâs matching share of FICA taxesalso. |
Jan 31 | (Adjusting 5) Record ONE MONTHâS interest expense andamortization of premium or discount on the bond. Round to thenearest dollar. |
1-a. | Prepare all January journal entries and adjusting entries
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