On May 4, 2010, Docker, Inc., purchased 600 shares of its own common stock in the market at a price of $18.80 per share (A+)

On May 4, 2010, Docker, Inc., purchased 600 shares of its own common stock in the market at a price of $18.80 per share. On September 19, 2010, 350 of these shares were sold in the open market at a price of $20.50 per share. There were 35,000 shares of Docker common stock outstanding prior to the May 4 purchase of treasury stock. A $.25 per share cash dividend on the common stock was declared and paid on June 15, 2010.

(a) Prepare the journal entry on Docker\’s financial statements of the purchase of the treasury stock on May 4.

(b) Prepare the journal entry on Docker\’s financial statements of the declaration and payment of the cash dividend on June 15

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Homestead Oil Corp. was incorporated on January 1, 2010, and issued the following stock for cash (A+)

Homestead Oil Corp. was incorporated on January 1, 2010, and issued the following stock for cash:

760,000 shares of no-par common stock were authorized; 150,000 shares were issued on January 1, 2010, at $19.00 per share. 210,000 shares of $120 par value, 9.00% cumulative, preferred stock were authorized, and 74,000 shares were issued on January 1, 2010, at $140 per share. Net income for the years ended December 31, 2010 and 2011, was $1,310,000 and $2,470,000, respectively. No dividends were declared or paid during 2010. However, on December 28, 2011, the board of directors of Homestead declared dividends of $1,440,000, payable on February 12, 2012, to holders of record as of January 19, 2012.

(a) Prepare the journal entry for the issuance of common stock and preferred stock on January 1, 2010

(b) Prepare the journal entry for the declaration of dividends on December 28, 2011.

(c) Prepare the journal entry for the payment of dividends on February 12, 2012.

(d) Of the total amount of dividends declared during 2011, how much will be received by preferred shareholders?

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Assume instead that the proceeds were $3,540,000 (A+)

(a) Assume instead that the proceeds were $3,540,000. Record the journal entry to show the payment of semiannual interest and the related discount amortization on June 30, 2010, assuming that the discount of $60,000 is amortized on a straight-line basis.

Use the following transactions.

a. Income tax expense of $783 for the current period is accrued. Of the accrual, $268 represents deferred income taxes.

b. Bonds payable with a face amount of $5,600 are issued at a price of 99.

c. Of the proceeds from the bonds in part b, $4,150 is used to purchase land for future expansion.

d. Because of warranty claims, finished goods inventory costing $134 is sent to customers to replace defective products.

e. A three-month, 10% note payable with a face amount of $27,000 was signed. The bank made the loan on a discount basis.

f. The next installment of a long-term serial bond requiring an annual principal repayment of $35,000 will become due within the current year.

(b) Record the journal entries to show each transaction/adjustment.

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On January 1, 2010, Drennen, Inc., issued $3.6 million face amount of 10-year, 14% stated rate bonds (A+)

On January 1, 2010, Drennen, Inc., issued $3.6 million face amount of 10-year, 14% stated rate bonds when market interest rates were 12%. The bonds pay semiannual interest each June 30 and December 31 and mature on December 31, 2019.

Required:

(a) Using the present value tables calculate the proceeds (issue price) of Drennen, Inc.\’s, bonds on January 1, 2010, assuming that the bonds were sold to provide a market rate of return to the investor

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On November 1, 2010, Gordon Co. collected $9,540 in cash from its tenant as an advance rent payment on its store location (A+)

On November 1, 2010, Gordon Co. collected $9,540 in cash from its tenant as an advance rent payment on its store location. The six-month lease period ends on April 30, 2011, at which time the contract may be renewed.

(a) Record the journal entry to show the effect of the six months rent collected in advance on November 1, 2010 for Gordon Co.

(b) Record the journal entry to show the effect of the adjustment that will be made at the end of every month to show the amount of rent \”earned\” during the month for Gordon Co.

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Prepare an answer sheet with the following column headings (A+)

Prepare an answer sheet with the following column headings. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on assets, liabilities, and net income by entering for each account affected the account name and amount and indicating whether it is an addition (+) or a subtraction (-) or NE for no effect. Transaction a has been done as an illustration. Net income is notaffected by every transaction. In some cases, only one column may be affected because all of the specific accounts affected by the transaction are included in that category.

a. Recorded $200 of depreciation expense.

b. Sold land that had originally cost $13,700 for $11,100 in cash.

c. Recorded a $68,000 payment for the cost of developing and registering a patent.

d. Recognized periodic amortization for the patent (in part c) using the maximum statutory useful life.

e. Capitalized $3,000 of cash expenditures made to extend the useful life of production equipment.

f. Expensed $1,800 of cash expenditures incurred for routine maintenance of production equipment.

g. Sold a used machine for $9,000 in cash. The machine originally cost $26,000 and had been depreciated for the first two years of its five-year useful life using the double-declining-balance method.

h. Purchased a business for $333,000 in cash. The fair market values of the net assets acquired were as follows: Land, $39,400; Buildings, $195,000; Equipment, $91,000; and Long-Term Debt, $69,200.

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Using a present value table your calculator (A+)

Using a present value table your calculator, or a computer program present value function, calculate the present value for the following:

(a) A car down payment of $50,000 that will be required in 7 years, assuming an interest rate of 10%. (Do not round PV factors

(b) A lottery prize of $6 million to be paid at the rate of $300,000 per year for 20 years, assuming an interest rate of 6%. (Do not round PV factors.

(c) The same annual amount as in part b, but assuming an interest rate of 8%. (Do not round PV factors. Round your answer to the nearest dollar amount

(d) A capital lease obligation that calls for the payment of $8,000 per year for 10 years, assuming a discount rate of 14%. (Do not round PV factors.

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Kleener Co. acquired a new delivery truck at the beginning of its current fiscal year (A+)

Kleener Co. acquired a new delivery truck at the beginning of its current fiscal year. The truck cost $27,000 and has an estimated useful life of four years and an estimated salvage value of $4,100.

Requirement:

(a) Calculate depreciation expense for each year of the truck\’s life using Straight-line depreciation.

(b) Calculate depreciation expense for each year of the truck\’s life using Double-declining-balance depreciation

(c) Calculate the truck\’s net book value at the end of its third year of use under each depreciation method

(d) Assume that Kleener Co. had no more use for the truck after the end of the third year and that at the beginning of the fourth year it had an offer from a buyer who was willing to pay $6,390 for the truck. Should the depreciation method used by Kleener Co. affect the decision to sell the truck?

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The inventory records of Kuffel Co. reflected the following information for the year ended December 31, 2010 (A+)

The inventory records of Kuffel Co. reflected the following information for the year ended December 31, 2010:

Date Transaction Number of Units UnitCost TotalCost

1/1 Beginning inventory 150 $35 $5,250

2/22 Purchase 70 35 2,450

3/7 Sale (100) – -

4/15 Purchase 90 36 3,240

6/11 Purchase 140 39 5,460

9/28 Sale (100) – -

10/13 Purchase 50 39 1,950

12/4 Sale (100) – -

Required:

(a) Assume that Kuffel Co. uses a periodic inventory system. Calculate cost of goods sold and ending inventory under FIFO and LIFO

(b) Assume that Kuffel Co. uses a perpetual inventory system. Calculate cost of goods sold and ending inventory under FIFO and LIFO

(c) LIFO results are different for (a) and (b) as timing of the application of LIFO rules is relevant.

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2. Refer to the information given below (A+)

Refer to the information given below.

a. The August 31 balance shown on the bank statement is $9,819.

b. There is a deposit in transit of $1,263 at August 31.

c. Outstanding checks at August 31 totaled $1,883.

d. Interest credited to the account during August but not recorded on the company\’s books amounted to $108.

e. A bank charge of $36 for checks was made to the account during August. Although the company was expecting a charge, its amount was not known until the bank statement arrived.

f. In the process of reviewing the canceled checks, it was determined that a check issued to a supplier in payment of accounts payable of $636 had been recorded as a disbursement of $377.

g. The August 31 balance in the general ledger Cash account, before reconciliation, is $9,386.

Required:

(a) Prepare the adjusting journal entry (or entries) that should reflect the reconciling items. (Omit the \”$\” sign in your response.)

(b) What is the amount of cash to be included in the August 31 balance sheet for the bank account reconciled?

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