Advance Accounting Balance Sheet And Journal Entry Homework Help
- August 8, 2017
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- Category: Accounting QA
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1.Below are the account balances of the State-Rite Cleaning Company as of December 31 , 1985.
Accounts Payable | $11,600 | Miscellaneous Expense | $ 3,000 |
Cleaning Income | 39,500 | Notes Payable | 2,800 |
Capita l ( beginning) | 14,300 | Rent Expense | 12,600 |
Cash | 9,300 | Salaries Expense | 9,200 |
Drawing | 4,800 | Supplies Expense | 2,400 |
Equipment | 19,200 | Suppl ies | 5,300 |
Equipment Repairs Expense | 2,400 |
Prepare
(a) an income statement
(b) a capital statement
(c) a balance sheet.
2. The balances of the accounts of Dr. C. Moss, Psychologist, are as follows
Accounts Payable | $ 2,800 |
Accounts Receivable | 3,600 |
Building | 12,000 |
Capital, January I. 19X5 | 19,000 |
Cash | 12,200 |
Drawing | 6,000 |
Equipment | 15,000 |
Fees Income | 38,000 |
Furniture Mortgage Payable | 3,000 I0,000 |
Miscellaneous Expense | 2,000 |
Notes Payable | 2,000 |
Salaries Expense | 8,000 |
Supplies | 6,000 |
Supplies Expense | 4,000 |
Using the forms provided below, prepare
(a) an income statement
(b) a capital statement
(c) a classified balance sheet.
3. Eubank Company, as lessee, enters into a lease agreement on July 1, 2014, for equipment. The following data are relevant to the lease agreement
1. The term of the noncancelable lease is 4 years, with no renewal option. Payments of $782,757 are due on July 1 of each year.
2. The fair value of the equipment on July 1, 2014 is $2,800,000. The equipment has an economic life of 6 years with no salvage value.
3. Eubank depreciates similar machinery it owns on the sum-of-the-years digits basis.
4. The lessee pays all executory costs.
5. Eubank incremental borrowing rate is 10% per year. The lessee is aware that the lessor used an implicit rate of 8% in computing the lease payments (present value factor for 4 periods at 8%, 3.57710; at 10%, 3.48685.
Instructions
(a) Indicate the type of lease Eubank Company has entered into and what accounting treatment is applicable.
(b) Prepare the journal entries on Eubank books that relate to the lease agreement for the following dates: (Round all amounts to the nearest dollar. Include a partial amortization schedule.)
1. July 1, 2014.
2. December 31, 2014.
3. July 1, 2015.
4. December 31, 2015
4. Recording a Business Combination
The following financial statement information was prepared for Blue Corporation and Sparse Company at December 31, 2012
Balance Sheets December 31, 2012 | ||||
Blue Corporation | Sparse Company | |||
Cash | $ 140,000 | $ 70,000 | ||
Accounts Receivable | 170,000 | 110,000 | ||
Inventory | 250,000 | 180,000 | ||
Land | 80,000 | 100,000 | ||
Buildings & Equipment | $ 680,000 | $ 450,000 | ||
Less: Accumulated Depreciation | (320,000) | 360,000 | (230,000) | 220,000 |
Goodwill | 70,000 | 20,000 | ||
Total Assets | $1,070,000 | $700,000 | ||
Accounts Payable | $ 70,000 | $195,000 | ||
Bonds Payable | 320,000 | 100,000 | ||
Bond Premium | 10,000 | |||
Common Stock | 120,000 | 150,000 | ||
Additional Paid-In Capital | 170,000 | 60,000 | ||
Retained Earnings | 390,000 | 185,000 | ||
Total Liabilities & Equities | $1,070,000 | $700,000 |
Blue and Sparse agreed to combine as of January 1, 2013. To effect the merger, Blue paid finder’s fees of $30,000 and legal fees of $24,000. Blue also paid $15,000 of audit fees related to the issuance of stock, stock registration fees of $8,000, and stock listing application fees of $6,000.
At January 1, 2013, book values of Sparse Company’s assets and liabilities approximated market value except for inventory with a market value of $200,000, buildings and equipment with a market value of $350,000, and bonds payable with a market value of $105,000. All assets and liabilities were immediately recorded on Blue’s books.
Required
Give all journal entries that Blue recorded assuming Blue issued 40,000 shares of $8 par value common stock to acquire all of Sparse’s assets and liabilities in a business combination. Blue common stock was trading at $14 per share on January 1, 2013.
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5. Journal Entries
On January 1, 2013, PURE Products Corporation issued 12,000 shares of its $10 par value stock to acquire the net assets of Light Steel Company. Underlying book value and fair value information for the balance sheet items of Light Steel at the time of acquisition follow
Balance Sheet Item | Book Value | Fair Value |
Cash | $ 60,000 | $ 60,000 |
Accounts Receivable | 100,000 | 100,000 |
Inventory (LIFO basis) | 60,000 | 115,000 |
Land | 50,000 | 70,000 |
Buildings & Equipment | 400,000 | 350,000 |
Less: Accumulated Depreciation | (150,000) | — |
Total Assets | $ 520,000 | $695,000 |
Accounts Payable | $ 10,000 | $ 10,000 |
Bonds Payable | 200,000 | 180,000 |
Common Stock ($5 par value) | 150,000 | |
Additional Paid-In Capital | 70,000 | |
Retained Earnings | 90,000 | |
Total Liabilities & Equities | $ 520,000 |
Light Steel shares were selling at $18 and PURE Products shares were selling at $50 just before the merger announcement. Additional cash payments made by PURE Products in completing the acquisition were
Finder’s fee paid to firm that located Light Steel | $10,000 |
Audit fee for stock issued by PURE Products | 3,000 |
Stock registration fee for new shares of PURE Products | 5,000 |
Legal fees paid to assist in transfer of net assets | 9,000 |
Cost of SEC registration of PURE Products shares | 1,000 |
Required
Prepare all journal entries to record the business combination on PURE Products’ books.
Product Code: ACC229
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