ACCOUNTING 601
EXAM II
I.
14 points
Agler Corporation's balance sheet reported the following:
Common stock 5,000 shares issued, 4,800 shares outstanding, par $30 per
Share……………………………………………………………………………………………..$150,000
Paid-in capital in excess of par common stock……………………………………. 80,000
Paid-in capital treasury stock………………………………………………………………. 1,000
Total Paid-In-Capital
$231,000
Retained earnings…………………………………………………………………………….. 100,000
$331,000
Less: Treasury stock (200 shares @ $60) at cost……………………………12,000
Total Stockholders’ Equity
$319,000
REQUIRED Complete the following transactions under the cost method of accounting
for treasury stock.
(a) The journal entry for the sale of 150 shares of treasury stock @ $50 per
share would be(encircle the one number corresponding to the correct
journal entry).
Dr.
Cr.
1. Cash
Loss on Sale of Treasury Stock
Treasury Stock
7,500
1,500
2. Cash
9,000
Gain on Sale of Treasury Stock
Treasury Stock
9,000
3. Cash
Paid-In-Capital Treasury Stock
Retained Earnings
Treasury Stock
7,500
1,000
500
4. Cash
Paid-In-Capital Treasury Stock
Retained Earnings
Treasury Stock
7,500
750
750
1,500
7,500
9,000
9,000
5. None of These
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(b) The journal entry for the sale of the remaining 50 shares of treasury stock @
$55 per share would be(encircle the one number corresponding to the correct
journal entry).
Dr.
Cr.
1. Cash
Loss on Sale of Treasury Stock
Treasury Stock
2,750
250
2. Cash
3,000
Gain on Sale of Treasury Stock
Treasury Stock
3,000
3. Cash
Paid-In-Capital Treasury Stock
Retained Earnings
Treasury Stock
2,750
125
125
4. Cash
Retained Earnings
Treasury Stock
2,750
250
250
2,750
3,000
3,000
5. None of These
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II. 12 points
The following is available for Upland Company at December 31, 2014, regarding
investments:
December 31, 2014
Fair
Cost
Value
Cat Corp.
$260,000
$200,000
Lyme 1, Inc.
245,000
265,000
$505,000
$465,000
REQUIRED:
(a) The adjusting entry (if any) for 2014 if the securities are classified as trading.
Dr.
Cr.
(b) The adjusting entry (if any) for 2014 if the securities are classified as availablefor-sale.
Dr.
Cr.
3
III. 18 points
On January 15, 2014, X-On Corporation purchased 10,000 shares of X-Off Company’s
common stock at $30 per share plus commission of $2,000.
REQUIRED: Prepare the journal entries to record the following:
(a) The purchase of the X-Off stock.
Dr.
Cr.
(b) On July 20, 2014 X-On sold 3,000 shares of X-Off stock at a market price of
$35 per share less brokerage commissions, taxes and fees of $3,000.
(c) The year-end value of the X-Off stock is $36 per share.
Dr.
Cr.
Dr.
Cr.
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IV. 16 points
During 2014, Bill Corp. started a construction job with a total contract price of
$20,000,000. The job was completed on December 15, 2015. Additional data are
as follows:
2014
2015
Actual costs incurred
$5,000,000 $6,000,000
Estimated remaining costs
5,000,000
—
Billed to customer
4,800,000
9,200,000
Received from customer
4,000,000
9,600,000
REQUIRED:
(a)$_____________________________Under the percentage-of-completion method,
what amount should Bill have recognized as gross profit for 2014?
Unless all supporting schedules and computations for every answer are
presented in good traceable order, there will be NO credit
(b)$____________________________Under the percentage-of-completion method,
what amount should Bill recognize as gross profit for 2015?
Unless all supporting schedules and computations for every answer are
presented in good traceable order, there will be NO credit
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V. 16 points
During 2014, Bill Corp. started a construction job with a total contract price of
$20,000,000. The job was completed on December 15, 2015. Additional data are
as follows:
2014
2015
Actual costs incurred
$5,000,000 $6,000,000
Estimated remaining costs
5,000,000
—
Billed to customer
4,800,000
9,200,000
Received from customer
4,000,000
9,600,000
REQUIRED:
(b)$_________________________________Under the completed-contract method,
what amount should Bill recognize as revenue for 2015?
(b)$___________________________________Under the completed-contract method,
what amount should Bill recognize as gross profit for 2015?
Unless all supporting schedules and computations for every answer are
presented in good traceable order, there will be NO credit
6
VI.
24 points
The comparative balance sheet for Astro Company for the current year and the preceding
year are presented below:
This (Current)
Year
Assets
Cash---------------------------------------$ 52,100
Accounts receivable (net)------------------- 91,350
Inventories--------------------------------104,500
Prepaid expenses-------------------------------- 3,600
Land--------------------------------------50,000
Equipment---------------------------------580,000
Accumulated depreciation------------------- (212,600)
Patents-------------------------------------35,000
Total Assets
$703,950
=======
Last (Preceding)
Year
$ 42,500
61,150
109,500
2,700
50,000
500,000
(175,400)
40,000
$630,450
=======
Liabilities and Stockholder’s Equity
Accounts payable-------------------------$ 61,150
$ 75,000
Dividends payable------------------------12,000
10,000
Salaries payable---------------------------6,650
7,550
Mortgage note payable, due 20x9---------- 50,000
0
Bonds payable----------------------------0
75,000
Common stock------------------400,000
325,000
Retained earnings--------------------------174,150
137,900
Total Liabilities and Stockholder’s Equity $703,950
$630,450
======
=======
An examination of the income statement and the accounting records revealed the
following additional information applicable to the current year:
(a) Net income…………………?.
(b) Depreciation expense reported on the income statement ………………..?.
(c) Patent amortization reported on the income statement $5,000.
(d) A mortgage note for $50,000 was issued for cash.
(e) Equipment was purchased for $80,000 cash.
(f) The common stock was issued for cash.
(g) Bonds payable were retired for cash.
(h) Cash dividends declared, $60,000.
(i) Cash dividends paid, $58,000.
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REQUIRED: Using the form provided below, prepare a statement of cash flow using
the indirect method.
Unless all supporting schedules and computations for Net Income and
Depreciation are presented in good traceable order, there will be NO credit
Cash Flows From Operating Activities:
Net Income(loss)
Items Affecting Net Income But Not Cash:
Add:
Add:
Add:
Deduct:
Current Assets & Current Liabilities:
Add: Increase in
Add: Increase in
Add: Decrease in
Add: Decrease in
Deduct: Increase in
Deduct: Increase in
Deduct: Decrease in
Deduct: Decrease in__________________________
Net Cash (Flow or Used)From Operating Activities----------------Cash Flows From Investing Activities:
Add: Sale of
Add: Sale of
Deduct: Purchase of
Deduct: _Purchase of_______________________________________________
Net Cash (Flow or Used) From Investing Activities----------------------------Cash Flows from Financing Activities:
Add: Issuance of
Add: Issuance of
Add: Issuance of
Deduct: Retirement of
Deduct: Payment of
Deduct:_Payment of_______________________________________
Net Cash (Flow or Used) From Financing Activities----------------------------Net Increase (Decrease) In Cash______________
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Useful Only in the Current Asset-Current Liability Section
Current Assets*
Current Liabilities**
Increase
Deduct: the increase
from net income
Add: the increase to
net income
Decrease
Add: the decrease
to net income
Deduct: the decrease
from net income
* Except:
Notes Receivable
** Except
Notes Payable
Dividends Payable
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