On October 1, Steve’s Carpet Service borrows $350,000 from First National Bank on a
3-month, $350,000, 8% note. The entry by Steve’s Carpet Service to record payment of
the note and accrued interest on January 1 is
Answer:
Transactions are entered in the ledger accounts and then transferred to journals.
Answer:
1> Green Corporation purchased 3,000 shares of Flynn Company’s common stock for
$12 per share as a long-term available-for-sale investment on June 30, 2015. Flynn
declared and paid a cash dividend of $1.00 per share on its common stock on
September 30, and had a closing fair value of $18 per share on December 31. Assuming
this investment is appropriately accounted for using the fair value method, it will
increase Green’s 2015 income before taxes by
$.
2> Hogan Inc. purchased 40% of the outstanding common stock of Wyatt Industries on
January 1, 2015 for $180,000. Wyatt reported net income of $70,000 for 2015 and
declared and paid cash dividends on common stock of $30,000. The amount of Hogan’s
investment in Wyatt on December 31, 2015 should be
$.
3> Baker Company purchased 30% of the outstanding common stock of Grey Corp. on
January 1, 2015. Grey reported net income of $90,000 for 2015 and declared and paid
cash dividends on common stock of $25,000. Baker should report revenue from its
investment in Grey for 2015 of
$.
4> Berlin Inc. accounts for its investment in Nolan Corporation using the fair value
method. Berlin bought 3,000 shares (5%) of Nolan’s outstanding common stock for $28
per share on January 1, 2015. Nolan earned $3 per share for 2015, declared and paid
cash dividends of $1 per common share, and had a closing fair value of $24 per share
on December 31. The reported balance sheet value of Berlin’s investment in Nolan at
December 31, 2015 is
$.
Answer:
Using the indirect method, an increase in accounts payable during a period is deducted
from net income in calculating cash provided by operations.
Answer:
Alvarado Company purchased a new machine for $400,000. It is estimated that the
machine will have a $40,000 salvage value at the end of its 5-year useful service life.
The double-declining-balance method of depreciation will be used.
Instructions
Prepare a depreciation schedule which shows the annual depreciation expense on the
machine for its 5-year life.
Answer:
Lamb Company deposited $15,000 annually for 6 years in an account paying 5%
interest compounded annually. What is the balance of the account at the end of the 6th
year?
Answer: