Please show all calculations!

Exercise 1:

Early in the year Bill Barnes and several friends organized a corporation called Barnes Communications, Inc. The corporation was authorized to issue 50,000 shares of $100 par value, 10% cumulative preferred stock and 400,000 shares of $2 par value common stock. The following transactions (among others) occurred during the year:

Jan. 6    Issued for cash 20,000 shares of common stock at $14 per share. The shares were issued to Barnes and 10 other investors.

Jan. 7    Issued an additional 500 shares of common stock to Barnes in exchange for his services in organizing the corporation. The stockholders agreed that these services were worth $7,000.

Jan. 12 Issued 2,500 shares of preferred stock for cash of $250,000.

June 4 Acquired land as a building site in exchange for 15,000 shares of common stock. In view of the appraised value of the land and the progress of the company, the directors agreed that the common stock was be valued for purposes of this transaction at $15 per share.

Nov. 15 The first annual dividend of $10 per share was declared on the preferred stock to be paid December 20.

Dec. 20 Paid the cash dividend declared on November 15.

Dec. 31 After the financial statements were prepared, the net income for the year was $147,200.

a. Prepare journal entries to record the above transactions.

b. Prepare the stockholders’ equity section of the Barnes Communications, Inc. balance sheet at December 31, 2016.

Exercise 2:

On April 1, 2015, Mattson Industries purchased new equipment at a cost of $325,000. The useful life of this equipment was estimated at 5 years, with a residual value of $25,000.

Compute the annual depreciation expense for each year until this equipment becomes fully depreciated under each depreciation method listed below.

a. Straight-line, with depreciation for fractional years rounded to the nearest whole month.

b. 200 percent declining-balance.

c. Assume that the equipment is sold at the end of December 2017, for $176,250 cash. Prepare the journal entry to record the sale of the equipment under the straight-line method.

Exercise 3:

During the fiscal year ended December 31, 2017, Swanson Corporation engaged in the following transactions involving notes payable:

Aug. 6     Borrowed $12,000 from Maple Grove Bank, signing a 45-day, 12%

             note payable.

Sept. 16 Purchased office equipment from Seawald Equipment. The invoice amount was $18,000, and Seawald agreed to accept, as full payment a 10 percent, three-month note for the invoice amount.

Sept. 20 Paid Maple Grove Bank the note plus accrued interest.

Nov. 1 Borrowed $250,000 from Mike Swanson, a major corporate stockholder. The corporation issued Swanson a $250,000, 15 percent, 90-day note payable.

Dec. 1 Purchased merchandise inventory in the amount of $5,000 from Gathman Corporation. Gathman accepted a 90-day, 14 percent note as full settlement of the purchase. Swanson Corporation uses a perpetual inventory system.

Dec. 16 The $18,000 note payable to Seawald Equipment matures today. Swanson paid the accrued interest on this note and issued a new 30-day, 16 percent note payable in the amount of $18,000 to replace the note that matured.

a. Prepare journal entries to record each of the above transactions. Use a 360-day year in making the interest calculations.

b. Prepare the adjusting entry needed at December 31 to accrue interest.

c. Provide a possible explanation why the new 30-day note payable to Seawald Equipment pays 16 percent interest instead of the 10 percent rate charged on the September 16 note.

Exercise 4

On January 1, 2017, Park Rapids Lumber Company issued $80 million in 20-year, 10% bonds payable. Interest is payable semiannually on June 30th and December 31st. Bond discounts and premiums are amortized straight-line at each interest payment date.

a. Record the journal entry when the bonds were issued on January 1, 2017, make the necessary the journal entry to record the payment of bond interest on June 30, 2017, under each of the following assumptions:

1. The bonds were issued at 98. Round your answers to the nearest dollar.

2. The bonds were issued at 101. Round your answers to the nearest dollar.

b. Compute the net bond liability at December 31, 2017, under assumptions 1 and 2 above. Round to the nearest dollar.

c. Under which of the above assumptions, 1 or 2 would the investor’s effective rate of interest be higher? Explain.

Exercise 5

Speed World Cycles sells high-performance motorcycles and Motocross racers. One of Speed World’s most popular models is the Kazomma 900 dirt bike. During the current year, Speed World purchased eight of these cycles at the following costs:

Purchase Date                               Units Purchased      Unit Cost   Total Cost

July 1                                                                 2                  $4,950          $9,900

July 22                                                              3                    5,000           15,000

August 3                                                  3                        5,100           15,300

                                                                  ------                         ------------

                                                                      8                                             $40,200

On July 28, Speed World sold four Kazomma 900 dirt bikes to the Vince Wilson racing team. The remaining four bikes remained in inventory at September 30, the end of Speed World’s fiscal year.

Assume that Speed World uses a perpetual inventory system.

a. Compute the cost of goods sold relating to the sale on July 28 and the ending inventory of Kazomma 900 dirt bikes at September 30, using the following cost flow assumptions:

1. Average cost

2. FIFO

3. LIFO

Show the number of units and the unit costs of each layer comprising the cost of goods sold and ending inventory.

b. Using the cost figures computed in part a. answer the following questions:

1. Which of the three cost flow assumptions will result in Speed World Cycles reporting the highest net income for the current year? Would this always be the case? Explain.

2. Which of the three cost flow assumptions will minimize the income taxes owed by Speed World Cycles for the year? Would you expect this usually to be the case? Explain.

3. May Speed World Cycles use the cost flow assumption that results in the highest net income for the current year in its financial statements, but use the cost flow assumption that minimizes taxable income for the current year in its income tax return? Explain.

Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories. The company has two manufacturing departments—Molding and Fabrication. It started, completed, and sold only two jobs during March—Job P and Job Q. The following additional information is available for the company as a whole and for Jobs P and Q (all data and questions relate to the month of March):

Sweeten Company had no underapplied or overapplied manufacturing overhead costs during the month.

Required:

For questions 1-9, assume that Sweeten Company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments and Job P included 20 units and Job Q included 30 units. For questions 10-15, assume that the company uses a plantwide predetermined overhead rate with machine-hours as the allocation base.

14. Assume that Sweeten Company used cost-plus pricing (and a markup percentage of 80% of total manufacturing cost) to establish selling prices for all of its jobs. What selling price would the company have established for Jobs P and Q? What are the selling prices for both jobs when stated on a per unit basis? (Do not round intermediate calculations. Round your final answers to nearest whole dollar.)

15. What was Sweeten Company’s cost of goods sold for March? (Do not round intermediate calculations.)

E-business infrastructures have quality specifications and cost-effectiveness/efficiency specifications. Often, certain quality specifications and certain cost-effectiveness/efficiency specifications are mutually exclusive. Select two e-business quality specifications and explain how they may conflict with two e-business cost-effectiveness/efficiency specifications.

See Income Statement:

If the project costs $2,000,000, lasts for 6 years and the cost of capital is 15%, compute the NPV and IRR for the project.

Ferry Services Incorporated (FSI) is a public company that has three divisions. The first division provides coastal ferry services on the West and East coasts of Canada. The second division designs and builds ferries for their own use as well as for external customers. The third division operates and manages ferry terminal buildings.
In 2011, FSI anticipates a taxable loss of $20 million due to a major hurricane that sunk one of their ferry ships and caused extensive damage to one of their terminal buildings. For the past three years they have had taxable income of 2008 - $5 million; 2009 - $10 million; and 2010 - $8 million.
FSI has a number of long-term bank loans with Canadian Big Bank. In 2011, they obtained additional financing to recover from the costs associated with the hurricane. The bank requires annual audited financial statements. The new loan has a financial covenant requiring that FSI maintain a certain current ratio, as well as dividend distribution is restricted until the loan is paid off.
You have recently been hired to develop new accounting policies for FSI’s Dec 31 year-end. You have been asked by the Board to discuss alternatives and provide recommendations on the appropriate accounting policies for events that have occurred during 2011. Where possible you have been asked to quantify the impact of the accounting policies. The incremental borrowing rate for FSI is 8%. The tax rates for the last few years were: 2008 (40%), 2009 (38%), and 2010 (38%). The tax rate for 2011 is 40%.
1) A major hurricane hit the Eastern Coast in the fall of 2011. This hurricane was tracking to miss the Eastern Seaboard but had a sudden change in direction. FSI was caught off guard and one of their ferries as well as a ferry terminal was in the direct path of the hurricane. Unfortunately, FSI found out that their insurance did not cover hurricane damage. To cover the costs associated with the damages FSI obtained a new five year bank loan of $25 million with quarterly interest payments. Their cost of borrowing was 8% a year. To obtain the loan FSI had to pay $1 million of transaction costs.
2) The ferry was one of their older ferries with a carrying amount of $2 million dollars. The costs to recover the ferry are approximately $3 million and it is anticipated they will receive $0.5 million worth of salvaged material. The ferry will need to be replaced and construction was initiated in December 2011. The estimated construction costs are $20 million since the ferry will be state of the art with a new weather warning software system. Construction is expected to be completed in the spring of 2013. Until that time a ferry was brought out of retirement. The ferry had been retired due to extensive renovations required to meet environmental legislation. These renovations cost FSI $2 million in 2011.
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3) The damage to the terminal was $7 million. FSI leases all of their terminals from Leasing Incorporated (LI). This lease has a remaining lease term of 2 years. Due to the terms of the lease agreement FSI is required to pay a large penalty of $5 million dollars for repairs to the terminal. This cost far exceeds the remaining benefits of the lease agreement.
4) A lawsuit was launched in December 2011 against FSI due to the tragedy of the sinking of the ferry. FSI decided that they want to settle quickly out of court to avoid negative publicity. They have offered $5 million to the families. Their lawyers have not responded to this offer.
5) Passengers can purchase their ferry tickets on-line through Tickets.com. To encourage use of the ferry FSI provides passengers free parking if they purchase an annual pass. Otherwise passengers pay a daily rate to park their vehicle.
6) Some of the ferries contain asbestos. Changes in government legislation in 2011 require FSI to remove the asbestos in 2016. The anticipated cost of removal is $5 million.
7) FSI leases their ferry terminals from Leasing Incorporated. In 2011, FSI obtained the rights to operate a ferry on a new route. They entered into a lease agreement for a newly constructed terminal and the land. The lease term is for 60 years with a 20 year bargain renewal term.
8) In 2011, FSI issued $10,000,000 of 8% convertible bonds at the option of FSI into common shares. These bonds mature in five years and are convertible at that time by FSI into common shares at a rate of 50 shares for each $1,000 bond.

1. Given the function M(t) = 2t3 - 3t2 - 36t, find the critical values and determine, using both the second derivative test and a sign chart, the nature of these values.
2. A projectile is launched with a velocity of 22 m/s at 50° to the ground. Determine its horizontal and vertical velocities.
3. Two trains start from the same point at the same time, one going east at a rate of 40 km/h and the other going south at 60 km/h, as shown in the diagram at right. Find the rate at which they are separating after 1 h of travel.
4. A professional basketball team plays in a stadium that holds 23,000 spectators. With ticket prices at $60, the average attendance had been 18,000. When ticket prices were lowered to $55, the average attendance rose to 20,000. Based on this pattern, how should ticket prices be set to maximize ticket revenue?
5. Corey is asked to find the maximum value of a function. Not having a complete understanding of the process, Corey decides to find the derivative of the function, set it equal to zero, and solve. The resulting value, Corey reasons, will yield the maximum point. Explain fully why Corey's method is flawed.
6. A 5,000 m_ rectangular area of a field is to be enclosed by a fence, with a moveable inner fence built across the narrow part of the field, as shown.The perimeter fence costs $10/m and the inner fence costs $4/m. Determine the dimensions of the field to minimize the cost.
7. The following table displays the number of HIV diagnoses per year in a particular country.
Year 1997 1998 1999 2000 2001 2002 2003 2004 2005
Diagnoses 2512 2343 2230 2113 2178 2495 2496 2538 2518
a. Using Curve Expert or another curve modelling program, determine an equation that can be used to model this data.
b. Using this model, estimate the number of diagnoses in 1996 and in 2006.
c. At what rate would the number of diagnoses be changing in 2006?
d. Halfway through 2006, the number of new HIV diagnoses was found to be 1232. Assuming this rate stays fairly constant for the remainder of the year, does this new information change the modelling equation? If so, how would this change your answer to part (c)? If you were an advocate for furthering HIV and AIDS research and treatment programs, would you be encouraged or discouraged by these results?

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Problem 7-5A Determine depreciation under three methods (LO7-4)

[The following information applies to the questions displayed below.]

University Car Wash built a deluxe car wash across the street from campus. The new machines cost $270,000 including installation. The company estimates that the equipment will have a residual value of $24,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows:

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Section BreakProblem 7-5A Determine depreciation under three methods (LO7-4)

7.

value:
3.00 points

Required information

Problem 7-5A Part 1

Required:

1. Prepare a depreciation schedule for six years using the straight-line method. (Do not round your intermediate calculations.)
  

References

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WorksheetDifficulty: 3 Hard

Problem 7-5A Part 1Learning Objective: 07-04 Calculate depreciation of property, plant, and equipment.

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8.

value:
4.00 points

Required information

Problem 7-5A Part 2

2. Prepare a depreciation schedule for six years using the double-declining-balance method. (Do not round your intermediate calculations.)
  

References

eBook & Resources

WorksheetDifficulty: 3 Hard

Problem 7-5A Part 2Learning Objective: 07-04 Calculate depreciation of property, plant, and equipment.

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9.

value:
3.00 points

Required information

Problem 7-5A Part 3

3. Prepare a depreciation schedule for six years using the activity-based method. (Round your "Depreciation Rate" to 2 decimal places and use this amount in all subsequent calculations.)
  

References

eBook & Resources

WorksheetDifficulty: 3 Hard

Problem 7-5A Part 3Learning Objective: 07-04 Calculate depreciation of property, plant, and equipment.

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