ACC 422 WEEK 2 - 5 WILEY PLUS EXERCISES - A+ WORKWeek 2Question 1(Determine Cash Balance)Presented below are a number of independent situations.

For each individual situation, determine the amount that should be reported as cash.

1. Checking account balance $925,000; certificate of deposit $1,400,000; cash advance to

subsidiary of $980,000; utility deposit paid to gas company $180.

2. Checking account balance $500,000; an overdraft in special checking account at same bank as

normal checking account of $17,000; cash held in a bond sinking fund $200,000; petty cash

fund $300; coins and currency on hand $1,350.

3. Checking account balance $590,000; postdated check from customer $11,000; cash restricted

due to maintaining compensating balance requirement of $100,000; certified check from

customer $9,800; postage stamps on hand $620.

4. Checking account balance at bank $42,000; money market balance at mutual fund (has

checking privileges) $48,000; NSF check received from customer $800.

5. Checking account balance $700,000; cash restricted for future plant expansion $500,000; short-

term Treasury bills $180,000; cash advance received from customer $900 (not included in

checking account balance); cash advance of $7,000 to company executive, payable on

demand; refundable deposit of $26,000 paid to federal government to guarantee performance

on construction contract.

 

Cash held in a bond sinking fund is restricted. Assuming that the bonds are noncurrent, the

restricted cash is also reported as noncurrent.

 

EXERCISE 7-2 (Continued)Week 3Question 1 E9-1 (Lower of Cost or Market)The inventory of Oheto Company on December 31, 2011, consists of the following items.

Part No. Quantity Cost per UnitCost to

Replace per Unit

110 600 $95 $100

111 1,000 60 52

112 500 80 76

113 200 170 180

120 400 205 208

a121 1,600 16 14

122 300  240 235

a Part No. 121 is obsolete and has a realizable value of $0.50 each as a scrap.

(a) $334,300(b) $340,500 

Question 2E9-12(Gross Profit Method)Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes.

Presented below is information for the month of May.

Inventory, May 1$160,000

 

WEEK 4Question 1E11-4

Correct.

 

(Depreciation Computations–Five Methods)Wenner Furnace Corp. purchased machinery for $279,000 on May 1, 2010. It is estimated that it will have a useful life of 10 years, salvage value of $15,000, production of 240,000 units, and working hours of 25,000. During 2011 Wenner Corp. uses the machinery for 2,650 hours, and the machinery produces 25,500 units.

From the information given, compute the depreciation charge for 2011 under each of the following methods.

(a) Straight-line.$

(b)Units-of-output. (Round depreciation cost per unit to 2 decimal places, i.e. 12.25 and and final answer to 0 decimal places, i.e. 25,240.)$

(c) Working hours.$

(d) Sum-of-the-years'-digits.$

(e) Declining-balance (use 20% as the annual rate).$

 

Question 2P11-6(Depletion, Timber, and Extraordinary Loss)WEEK 5Question 1

E13-13Correct.

(Contingencies)Presented below are three independent situations. Answer the question at the end of each situation.

1. During 2010, Maverick Inc. became involved in a tax dispute with the IRS. Maverick's attorneys have indicated that they believe it is probable that Maverick will lose this dispute. They also believe that Maverick will have to pay the IRS between $800,000 and $1,400,000. After the 2010 financial statements were issued, the case was settled with the IRS for $1,200,000. What amount, if any, should be reported as a liability for this contingency as of December 31, 2010?

$

1. On October 1, 2010, Holmgren Chemical was identified as a potentially responsible party by the Environmental Protection Agency. Holmgren's management along with its counsel have concluded that it is probable that Holmgren will be responsible for damages, and a reasonable estimate of these damages is $6,000,000. Holmgren's insurance policy of $9,000,000 has a deductible clause of $500,000. How should Holmgren Chemical report this information in its financial statements at December 31, 2010?

Loss – 

Insurance recovery – 

1. Shinobi Inc. had a manufacturing plant in Darfur, which was destroyed in the civil war. It is not certain who will compensate Shinobi for this destruction, but Shinobi has been assured by governmental officials that it will receive a definite amount for this plant. The amount of the compensation will be less than the fair value of the plant, but more than its book value. How should the contingency be reported in the financial statements of Shinobi Inc.?

Question 2P13-9

Correct.

(Premium Entries and Financial Statement Presentation)Sycamore Candy Company offers a CD single as a premium for every five candy bar wrappers presented by customers together with $2.50. The candy bars are sold by the company to distributors for 30 cents each. The purchase price of each CD to the company is $2.25; in addition it costs 50 cents to mail each CD. The results of the premium plan for the years 2010 and 2011 are as follows. (All purchases and sales are for cash.)

2010 2011

CDs purchased 250,000 330,000

Candy bars sold2,895,40

02,743,60

0

Wrappers redeemed1,200,00

01,500,00

0

2010 wrappers expected to be redeemed in 2011

290,000

2011 wrappers expected to be redeemed in 2012

350,000

 

Prepare the journal entries that should be made in 2010 and 2011 to record the transactions related to the premium plan of the Sycamore Candy Company. (For multiple debit/credit entries, list amounts from largest to smallest, e.g. 10, 8, 6.)Description/Account Debit Credit2010

         

(To record the purchase of CD's.)

          

(To record the sale of candy bars.)

         

(To record the redemption of wrappers, the receipt of cash & the mailing of CD's.)

         

(To record the estimated liability for premium claims outstanding