ACTG 322 INTERMEDIATE ACCOUNTING II
Fall 2007
Tad Miller
M W 8:10 -10:00 & 12:10 -2:00
room 03-206
756-2831
office hours M W 10:10 -11:00 & TR 3:00 -4:00
office - MODOC T92 room 104
EXPANDED COURSE OUTLINE
1.Catalog Description BUS 322 Intermediate Accounting II (4)
Comprehensive coverage of financial reporting. 322 covers revenue recognition, income taxes,
pensions, liabilities, equities, accounting changes and cash flows. 4 lectures.
2.Text
Intermediate Accounting, twelfth ed. Kieso, Wygandt & Warfield
Course content includes:
(1) Intangible assets
(2) Stockholders equity
(3) Statement of Cash Flows
(4) Dilutive securities (EPS)
(5) Earnings per share
(6) Investments
(7) Revenue recognition
3.Required Prerequisite Preparation
BUS 321 with minimum grade of C-
4.Expected Outcomes The successful student will:
(1) Acquire an understanding of the basic concepts and principles underlying financial accounting
measurement and reporting practices.
(2) Develop the critical thinking skills needed to analyze and comprehend the nature and consequences
of economic events which are the subject matter of accounting.
(3) Gain an appreciation for the behavioral and economic consequences of accounting and reporting
alternatives, including ethical considerations.
(4) Cultivate the communication skills essential to the financial reporting process.
Two mid-term exams and a final exam will be equally weighted. Projects and Quizzes will be
weighted according to the amount of material covered.
Quizzes and exams must be taken with your assigned section on the scheduled day. Missed quizzes or
exams cannot be made up. If you must miss a quiz or exam you must notify TAD MILLER prior to the
exam. If the reason is acceptable to me then I will re-weight your other quiz and exam scores.
Accounting Cycle Project Due
Mid-term chapters 12 & 15
Statement of Cash Flows Due
Mid-term chapters 23, 16 & 17
Final exam 8-10 section
12-2 section
Total Pts
Friday
Wednesday
Friday
Monday
Wednesday
Friday
Sep
Oct
Oct
Nov
Dec
Dec
28
3
12
5
5
7
25
150
25
150
150
.
500
pts
7:00 am
10:00
pts
In order to understand a lecture, you must complete the assigned reading materials, exercises and problems.
(Q) indicates a question, (B) a basic exercise, (E) an exercise and (P) a problem on the tentative schedule.
The Basic Exercises, Exercises and Problems that I intend to go over in my lecture appear in boldface.
Tentative Schedule
day
date chapter
M 9 17
12
W 9 19
F
12A
15
9 28
M 10
1
Reveiw of what we know from 321
assign accounting cycle project - due Friday, sep. 28th
Intangible Assets Q 1 3 16
E3
Q 8 9 BE 2 5 7 12 E 4 6 7 10 11 14
Q 5 12 BE 6 8 E 12 15
P5
Q 15 16 17 BE 7
E 11(3) 14 P 5
Q 20 21
BE 10 E 16 17
Software Costs
Q 26 27
BE 14 E 18 19
Stockholders equity & div. preference from appendix
Q 1 3 4 13 14 15
E8
Issuance
Q 9 10 B 1 2 4 5 6 9 E 1 2 3 4 5
T-stock cost method
Q 12 17
B78
E67 P25
accounting cycle project - due
15
Preferred Stock (also appendix)
dividends and stock splits
W 10
3
M 10
8
23
23
section 2 Worksheet
statement preparation
F 10 12
16
16
16B
M 10 22
w 10 31
BE 1 2 3
E3456
CH 5
E 14 15 16
CH 23 E 9 11/12 13/14 15/16
17
Q2345678 B2 E123456
warrants
Q9
B45
E79
stock options
Q 10 11 13
B 6 E 10 11 12 28 29
Section 2 - Earnings per Share
Q 15 16
B79
weighted ave no. of shares
B9
E 13 14 15 16 17 18 19
convertible securities
Q 17 18 19 20 21 23
B 11 12
E 20 21 22 23
options and warrants
B 13 14
E 24 26
Basic & diluted
P 6
App B
we will use Appendix B as a classroom example for EPS
Convertible securities
Investments - in debt
Debt
Invest in Equity (not Equity Method)
W 10 24
M 10 29
Q 3 4 5 17
E1
Q 9 10 11 12 15
BE 4 5 6 7 9 11
Q1
Statement of Cash Flows project - due
16A
W 10 17
E 11
B 10 12 13 14 E 12 13 14
Assign Statement of Cash Flows group project - due Friday 10/12/07
section 1
Statement of cash flows
special problems
M 10 15
Q 21 27
Q 22 23 24
Mid Term - Chapters 12 & 15
classification of activities
indirect or direct method
W 10 10
representative problems
Purchased vs internally created
goodwill
impairment
R&D costs
M 9 24
W 9 26
chapter or topic
Equity Method
17A
Derivative Instruments - calls / puts
Fair Value Hedge
Cash Flow Hedge
catch up
Q 1 4-11 B 1-4 E 1 2 3 4 5 P 1 2 4 7
Q 12-16 B 5 6 9 E 6 7 8 9 10 11 14
P 6 9 10
Q 16-20 B 7 E 12 13 16 17
E 19
P 13 14 15
Q 27
E 23
P 16 18
Q 30 31 E 22
P 17
M 11
5
W 11
7
M 11 12
W 11 14
Mid Term Exam - Chapters 23 - 16 -17
18
Revenue Recognition
Q2
sales returns
Q5
BE 1 E 1
percentage completion / completed contract Q 7 11 12 BE 2 3 6 E 4 7 10
P234567
Veterans' Day
installment sales / cost recovery
Q 16-21 BE 7 8 9 E 11 13 14
P89
M 11 19
18A
w 11 21
thanksgiving
M 11 26
W 11 28
Catch Up
Final Exam
8:10-10:00 sectipn
12:10-2:00 section
Franchises
Q 25 36 BE 11
Wednesday Dec 5th 7:10 - 10:00 am
Friday
Dec 7th 10:10 - 1:00
E 21
Comprehensive Accounting Problem
Wholesale Computer Distributor, Inc.
BUS 322 - Intermediate Accounting
fall 2007 - Tad Miller
Instructions
Be sure to save a copy of your files on your hard drive or a floppy disk.

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



Include a cover sheet with your final project
Skip a line between journal entries
Each T-account needs to have a title and account number
Postings to T-accounts need a date next to the dollar amount
Accounts in Trial Balance and T-accounts should be arranged by account number
There is only one General Journal and one set of T-accounts. All entries need to be recorded in the
same General Journal and posted to the same set of T-accounts.
 T-accounts should have subtotals just prior to Adjusting Journal Entries, and totals after all Adjusting
Journal Entries have been posted.
 No late assignments.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Prepare journal entries to record each of the following transactions. You do not need to write
explanations below the journal entries.
Create T-accounts for each account in the chart of accounts and post each of the journal entries to an
existing T-account.
Subtotal the T-accounts just prior to preparing the unadjusted trial balance.
Prepare an unadjusted trial balance
Prepare adjusting journal entries. Besides the information provided for adjusting journal entries,
review the transactions and review your unadjusted trial balance for any other adjusting journal
entries you may need to prepare.
Post each of the adjusting journal entries to the same T-accounts you previously created.
Total the T-accounts just prior to preparing the adjusted trial balance.
Prepare an adjusted trial balance
Prepare the following financial statements, in good form
o Multistep income statement you do not need to distinguish between selling expense and
general & administrative expenses
o Statement of retained earnings
o Classified balance sheet
Prepare a post closing trial balance
Chart of Accounts to start
1002
Checking
1011
Accounts Receivable Cuesta Computer
1012
Accounts Receivable Mustang Computer
1013
Accounts Receivable SLO CPU
1121
Inventory -Xtreme game systems
1122
Inventory HP office systems
1123
Inventory Gateway home systems
1500
Investment in land
1600
Supplies
1800
Land
1810
Building
1811
accumulated depreciation
1820
Equipment
1821
accumulated depreciation
2001
Accounts Payable Xtreme
2002
Accounts Payable HP
2003
Accounts Payable Gateway
2100
Payroll Liabilities
2101
Wages and Salaries Payable
2103
IRS income tax withheld payable
2104
IRS FICA payable
2105
payable to Franchise Tax Board
2200
Sales Tax Payable
2501
Note Payable
2502
Mortgage Payable
2510
Bonds Payable
2511
discount on Bonds Payable
3010
Capital Stock
3021
Additional Paid in Capital
3099
Retained Earnings
4011
Sales Xtreme game systems
4012
Sales HP office systems
4013
Sales Gateway home systems
4030
Sales Discounts
5000
Cost of Goods Sold
5301
Purchase discounts
6150
Depreciation Expense
6240
Miscellaneous
6560
Wage & Salary Expenses
6770
Supplies expense
7010
Interest Income
8010
Interest Expenses
8011
Mortgage Interest
8012
Note Interest
8013
Bond Interest
8020
Loss on sale of land
Suppliers
Xtreme -game systems
HP -office systems
Gateway -home systems
Customers
Cuesta Computer
Mustang Computer
SLO CPU
walk-in customers
price
$ 3,000.00
2,000.00
900.00
cost
2,400.00
1,700.00
720.00
terms
1% 15, net 30
1%/20, net/30
2%/10, net/30
terms 2%/10 net 30
terms 2%/10 net 30
terms 2%/10 net 30
cash only - no discount
Dec 25
Issued 10,000 shares of $1 par value common stock for $15 per share.
Dec 30
Made a $50,000 down payment and signed a $600,000 mortgage to purchase land and
building, which will be used as the distribution center. The land comprised of three (3) lots
which appraised at $132,000 each ($396,000 total) and the building appraised for $264,000.
The building occupies one (1) lot, one (1) lot will serve as parking and WCD intends to sell
the third lot.
The loan is a ten (10) year, 8.0% mortgage requiring monthly payments consisting of
principle and interest.
Dec 30
Issued a 100 bonds with $1,000 face value and 6% coupon rate. The bonds mature in ten (10)
years and pay interest semi-annually. The bonds sell at a price to yield an 8% effective interest
rate.
Dec 30
Borrowed $100,000 from First Bank to purchase shelving for the warehouse. The shelving
cost $100,000 and is expected to last five (5) years. The note is a three (3) year, 9% note that
requires principle and interest payments on the last day or each month.
Dec 30
Purchase inventory
150 systems from Gateway at $720 per system
100 systems from HP at $1,700 per system
40 systems from Xtreme at $2,400 per system
terms 2%/10, net/30
terms 1%/20, net/30
terms 1% 15, net 30
Jan 1
Paid $1,000 for supplies.
Jan 5
Sold Cuesta Computer sixty (60) Gateway sytstems and forty (40) HP systems, on account.
Although, Cuesta Computer is a retailer and should not have to pay sales tax, in order to make
our problem more realistic, assume Cuesta pays 7.5% sales tax.
Jan 6
Paid Gateway bill in full (in the discount period)
Jan 10
Sold SLO CPU twenty-five (25) Xtreme systems. Although, SLO CPU is a retailer and should
not have to pay sales tax, in order to make our problem more realistic, assume SLO CPU pays
7.5% sales tax.
Jan 14
Received payment in full from Cuesta Computer (in the discount period).
Jan 14
Sold Mustang Computer fifty (50) Gateway sytstems and fifty (50) HP systems. Although,
Mustang Computer is a retailer and should not have to pay sales tax, in order to make our
problem more realistic, assume Mustang Computer pays 7.5% sales tax.
Jan 14
Paid HP bill in full (in the discount period)
Jan 15
Purchase inventory
75 systems from Gateway at $720 per system
50 systems from HP at $1,700 per system
25 systems from Xtreme at $2,400 per system
terms 2%/10, net/30
terms 1%/20, net/30
terms 1%/15, net 30
Jan 16
Paid salaries totaling $5,000 for the first half of the month. In order to make this entry you
must know that 15% was withheld for federal income tax, 5% was withheld for state income
tax, 7.65% (6.2% social security and 1.45% medicare) was withheld for FICA. Don't forget
that the employer is also responsible for matching the employee's contribution to FICA.
Jan 17
Paid the $xxxxx owed the State Board of Equalization for the sales tax on sales through Jan.
15th.
Jan 17
Paid the $xxxxx the Franchise Tax Board the amounts withheld for state income tax and the
IRS the amounts owed for income tax and FICA.
Jan 20
Sold Cuesta Computer forty (40) Gateway systems and forty (40) HP systems, on account.
Although, Cuesta Computer is a retailer and should not have to pay sales tax, in order to make
our problem more realistic, assume Cuesta pays 7.5% sales tax.
Jan 22
Sold SLO CPU twenty-five (25) Xtreme systems. Although, SLO CPU is a retailer and should
not have to pay sales tax, in order to make our problem more realistic, assume SLO CPU pays
7.5% sales tax.
Jan 23
Jan 24
Jan 25
Received payment in full from Mustang Computers (in discount period).
Paid Gateway bill in full (in the discount period)
Received payment in full from SLO CPU. The first invoice was out of discount period and the
second invoice was in the discount period.
Jan 27
Sold the extra parcel of land, which was held as an investment, for $125,000.
Jan 28
Paid Xtreme bill in full (first invoice out of the discount period)
Paid Xtreme bill in full (second invoice in the discount period)
Jan 29
Paid HP bill in full (in the discount period)
Jan 29
Received payment in full from Cuesta Computer (in the discount period).
Jan 30
Sold Mustang Computer fifty (50) Gateway systems and ten (10) HP systems. Although,
Mustang Computer is a retailer and should not have to pay sales tax, in order to make our
problem more realistic, assume Mustang Computer pays 7.5% sales tax.
Additional information
Depreciation on:
building - 20 years;
Monthly payment on: mortgage payment 10 years at 8%;
Interest payment on $100,000, 6% bond issued to yield 8%
Supplies worth $175 are on hand at the end of the month
Accrue salaries for the second half of the month (same amount)
shelving - 5 years
note 3 year at 9%
Statement of Cash Flows Project
due Friday,October 12, 2007
NATIONAL BRANDS CORPORATION
Comparative Balance Sheets
December 31, 2007 and 2006 ($ in thousands)
Assets:
2007
Cash
$ 29
Accounts receivable
32
Short-term investments
12
Inventory
46
Prepaid insurance
3
Land
80
Buildings and equipment
81
Less accumulated depreciation(16)
$ 267
2006
$ 20
30
0
50
6
60
75
(20)
$ 221
Liabilities
2007
Accounts payable $ 26
Salaries payable
3
Income tax payable
6
Notes payable
20
Bonds payable
35
less discount on bond (1)
2006
$ 20
1
8
0
50
(3)
Shareholders Equity
Common stock
130
Paid-in capital in excess29
Retained earnings
19
$ 267
100
20
25
$ 221
National Brands Corporation
Income Statement
for the Year Ended December 31, 2007 ($ in thousands)
Revenues:
Sales revenue
Dividend income
Gain on sale of land
Expenses:
Cost of goods sold
Salaries expense
Depreciation expense
Bond interest expense
Insurance expense
Loss oil sale of equipment
Income tax expense
Net income
$100
3
8
60
13
3
5
7
2
9
$ 12
Additional information from the accounting records:
a.
b.
c.
d.
A portion of company land, purchased in a previous year for $10,000. was sold for $18,000.
Equipment that originally cost $14,000, and which was one-half depreciated, was sold for $5,000 cash.
A short-term investment was made by purchasing $12,000 of Mazuma Corp.'s common stock.
Property was purchased for $30,000 cash for use as a parking lot.
e. On December 30, 2007, new equipment was acquired by issuing a 12%, five-year, $20,000 note payable
to the seller.
f. On January 1, 2007, $15,000 of bonds were retired at maturity.
g. The increase in the common stock account is attributable two events. First, the issuance of a 10% stock
dividend (1,000 shares). Second, the issuance of 2,000 shares of common stock for cash. The stock
dividend occurred first. Assume the stock had a $10 par value and was selling for $13 per share.
h. Cash dividends of $5,000 were paid to shareholders.