Advanced Financial Accounting - II - Preston University

More documents

Recommendations

Info

tJrulan ll.ilutr«llg^^=£^ Kohat - Islamabad Lahore - 'Peshawar- - FaisaJaba'dCourse Code:Course Title:Program:Quarter:Advanced Financial Accounting-IIExecutive MBA/MBA (Evening)Summer 2010This is a three-hour examination and consists of problems only.You may attempt not more than live problems.Q. 1 Below is a payroll sheet for Jedi Import Company for the month of September 2007. The company is allowed a1% unemployment compensation rate by the state; the federal unemployment tax rate is 0.8% and the maximumfor both is $7,000. Assume a 10% federal income tax rate for all employees and a 7.65% F.I.C.A. tax onemployee and employer on a maximum of $90,000. In addition, 1.45% is charged both employer and employeefor an employee's wage in excess of $90,000 per employee.Earnings September Income TaxName to Aug. 31 Earnings Withholding F.I.C.AB.D Williams $ 6,800 $ 800D. Prowse 6,300 700 - iK.Baker 7,600 1,100F.OZ 13,600 1,900 }A.Daniels 105,000 15,000B.Mayhew 112,000 16,000StateFederalU.CINSTRUCTIONS: .i. Complete the payroll sheet and make the necessary entry to record the payment of the payroll.ii. Make the entry to record the payroll tax expenses of Jedi Import Company.iii. Make the entry to record the payment of the payroll liabilities created. Assume that the company pays allpayroll liabilities at the end of each month.Q-2The following amortization and interest schedule reflects the insurance of 10-years bonds by Terrel BrandonCorporation on January 1,2000, and the subsequent interest payments and charges. The company's year-end isDecember 31, and financial statements are prepared once yearly.INSTRUCTIONS:Amortization ScheduleAmountBookYear Cash Interest Unamortized Value1/1/2000 $5,651 $ 94,3492000 $11,000 $11,322 5,329 94,6712001 11,000 11,361 4,968 95,0322002 11,000 11,404 4,564 95,4362003 11,000 11,452 4,112 95,8882004 11,000 11,507. 3,605 96,3952005 11,000 11,567 3,038 96,9622006 11,000 11,635 2,403 97,5972007 11,000 11,712 1,691 98,3092008 11,000 11,797 894 99,1062009 11,000 11,894 100,000i. Indicate whether the bonds were issued at a premium or a discount and how you can determine this factfrom the schedule.it. Indicate whether the amortization schedule is based on the straight-lint! method or the effective interestmethod and how you can determine which method is used.in. Determine the stated interest rate and the effective interest rate.Page I of 5
iv. On the basis of the schedule above, prepare the journal entry to record the issuance of the bonds on January j 11,2000.v. On the basis of the schedule above, prepare the journal entry or entries to reflect the bond transactions and ,.accruals for 2000. (Interest is paid January 1.).vi. On the basis of the schedule above, prepare the journal entry or entries to reflect the bond transactions andaccruals for 2007. Brandon Corporation does not use reversing entries.Andrew Jones Company had the following stockholders' equity as of January 1,2007:Common stock, $5par value, 20,000 shares issued $ 100,000Paid-in- capital in excess of par 300,000Retained earnings | 320,000Total stockholders' equity 1 ' $720,000During 2007, the following transactions occurred:Feb. 1 Jones repurchased 2,000 shares of treasury stock at a price of $ 18 per share.Mar. 1 800 shares of treasury stock repurchased above were reissued at $17 per share.Mar. 18 500 shares of treasury stock repurchased above were reissued at $14 per share. \Apr. 22 600 shares of treasury stock repurchased above were reissued at $20 per share..INSTRUCTIONS:i. Prepare the journal entries to record the treasury stock transactions in 2007, assuming Jones uses the costmethod.ii. Prepare the stockholders' equity section as of April 30, 2007. Net income for the first 4 months of 2007 was$110,000.Diane Leto, controller at Dewey Yaeger Pharmaceutical Industries, a public company, is cunenfiy preparing the.calculation for basic and diluted earnings per share and the related disclosure for Yaeger's external financialstatements. Below is selected financial information for the fiscal year ended June 30, 2008.DEWEY YAEGER PHARMACEUTICAL 1NDUSTIRESSELECTED STATEMNT OFFINANCIAL POSITION 1NFORAMTIONJUNE 30,2008Long-term debt ;Notes payable, 10% $ 1,000,0007% converting bonds payable 5,000,00010% bonds payable . 6,000,000Total long-term debt $12,000,000Shareholders' equityPreferred stock, 8.5% cumulative, $50 par value,100,000 shares authorized, 25,000 shares issuedand outstanding $ 1,250,000Common stock, $1 par, 10,000,000 shares authorized,1,000,000 shares issued and outstanding 1,000,000Additional paid-in capital 4,000,000Retained earnings 6,000,000Total shareholder's equity $12,250,000The following transactions have also occurred at Yaeger.i. Options were granted in 2006 to purchase 100,000 shares at $15 per share. Although no options wereexercised during 2008, the average price per common share during fiscal year 2008 was $20 per share.ii. Each bond was issued at face value. The 7% convertible debenture will convent into common stock at 50shares per $1,000 bond..It is exercisable after 5 years and was issued in 2007.iii. The 8.5 % preferred slock was issued in 2006.IV. There are no preferred dividends in arrears; however, preferred dividends were not declared in fiscal year2008.Page 2 of 5
Page 3 and 4: ISU Company adopted a stock option
Page 5 and 6: |lf toluo ilnlwr.il.PRESTONUNIVERSI
Page 7: The comparative balance sheets for
Page 11 and 12: Cleveland Company had available at
Page 13 and 14: This is a three-hour examination an
Page 15 and 16: AnnualLease Interest 10%) Reduction
Page 17: SANDBURG COPORATIONSTATEMENT OP FIN

Advanced Financial Accounting - II - Preston University

Create successful ePaper yourself

Delete template?

Save as template?