ACCT 221, Section C 803
Midterm Exam
February 8 and 9, 2013
Here is your midterm exam. A completed exam must be posted in the
assignments folder no later than 11:59 PM on Saturday, February 9 (Central
European time). That gives you a window
of 48 hours in which to complete the exam.
Late assignments will not be accepted, nor will after-the-fact excuses. Plan ahead and do not put this off to the last
minute.
You are to answer all five of the
following questions, each of which WILL count for 20% of the exam grade. If any answers require a complicated
calculation, include a clear explanation and / or calculation showing how you
arrived at the answer. Answers that are
not supported by your work will be marked down.
All five questions deal with issues
we have studied, so I hope you will not have too much difficulty with them.
Chapter 13 material: Common Stock Transactions and Stockholdersâ
Equity
On March 1, 2010, Blank Company began operation with
a corporate charter authorizing 50,000 shares of $4 par value common stock.
Over the company completed the following transactions:
March
1 Sold 15,000 shares of its common stock for $100,000.
Paid
expenses incurred to obtain the charter and starting up and organizing the
corporation $10,000.
April
10 Sold
6,500 shares of common stock for $65,000
15 Purchased
2,500 shares of Common Stock for $25,000.
May
31 The
board of directors declared a $0.20 per share cash dividend to be paid on June
15 to shareholders of record on June 10.
1)
Record the above transactions in T accounts.
2)
Prepare the stockholdersâ equity section of
Blank Companyâs balance sheet
at May 31, 2010. Net Income earned during the first three
months was $15,000.
3)
What effect, if any will Blank Companyâs cash
dividend declaration on May
31 have on its net income, retained earnings
and cash flows?
Chapter 14 material: Corporate Income
Statement
Information about of
Newcomb Corporationâs income statement in 2009 follows:
Administrative
expenses, $190,000
Cost of goods sold
$420,000
Interest expense $20,000
Net Sales $890,000
Selling
and administrative expenses, $190,000.
1)
Prepare
Newcomb Corporationâs income statement for 2009, including earnings per share. Assume a weighted average of 100,000 shares
of Common Stock outstanding for 2009.
Chapter 15 Material: Recording a Bond Issue and Interest
Nora
Corporation issued 8.5%, five year bonds with a face value of $8,000,000 on
March 1, 2010, at 96. The semiannual
interest payment dates are September 1 and March 1. Using the straight line
method and ignoring year end accruals, , prepare journal entries for:
1)
The
issue of the bonds,
2)
The
first interest payment on September 1 and
3)
The
interest payment on March 1 2011.
Chapter
16 material:
Long term Investments – adjusted to market and equity methods.
On January 1, 2010, Cavalier Corporation purchased 8
percent of the voting stock of Onion Corporation for $500,000 and 45 percent of
the voting stock of Dross Corporation for $4,000,000. During the year, Onion Corporation had net
income of $200,000 and paid dividends of $80,000. Dross Corporation had net income of $600,000
and paid dividends of $400,000. The
market value did not change for either company during the year.
Which
investment should be accounted for using the adjusted to market method?
Which
investment should be accounted for using the equity method?
At what amount should each investment be carried on
the balance sheet at the end of the year? Explain your answers and show any
calculations necessary to arrive at your answers.
Chapter 17 Material: Cash flows from
operating activities, indirect method
For the year ended June 30, 2010, net income for
Soak Company was $7,400. Depreciation
expense was $2,000. During the year,
Accounts Receivable increased by $4,400, Inventories increased by $7,000,
Prepaid Rent decreased by $1,400, Accounts Payable increased by $14,000,
Salaries Payable increased by 41,000and Income taxes Payable decreased by $600.
Prepare a schedule of cash flows from operating
activities using the indirect method.
End of Exam