Individual Post Course Assignment | Accounting

Individual Post Course Assignment
Course: Accounting EMBA 2019 / 2020
Date: March 2020
Total Points: 240
Name:
Part 1 – INDIVIDUAL QUESTIONS
1. Journalizing transactions (10 points)
The following events occurred for Morgan Company:
a. Received investment of $52,000 cash by organizers and distributed stock to them.b . Purchased $18,000 of land; paid $3,000 in cash and signed a mortgage note for
the balance.
c
. Purchased $4,000 of equipment, paying $500 in cash and signing a note for the
rest.d. Borrowed $10,000 cash from a bank.e. Loaned $700 to an employee who signed a note.
Prepare journal entries.
Event Particulars Debit ($) Credit ($)
A Cash $52,000
Contributed Capital $52,000
(Cash received and distributed as
stock)
B Land $18,000
Cash $3,000
Mortgage Payable $15,000
(Purchased land for cash and
credit)
C Equipment $4,000
Cash $500
Note Payable $3,500
(Equipment Purchased on cash and
credit)
1

D Cash $10,000
Loan Payable $10,000
(Loan taken in business)
E Loan receivable $700
Cash $700
(Loan given to employee)
2. Identifying Revenues. (13 points)
The following transactions occur in June 2019:
a. A popular food magazine company receives a total of $14,980 from subscribers.
The subscriptions begin in the next fiscal year. Answer from the magazine
company’s standpoint.b. On June 1, 2019, a bank lends $2,400 to a company; the note principal and $384
($2,400 x 16 percent) annual interest are due in one year. Answer from the bank’s
standpoint.c. Honda, Inc., sells a truck with a list, or “sticker,” price of $27,089 for $21,559 cash.d. Taryt department store orders 1,000 boy’s shirts for $12 each for future delivery
from T-shirt World Corporation. The terms require payment in full within 30 days of
delivery. Answer from T-shirt World’s standpoint.e. T-shirt World Corporation completes production of the shirts described in (
d) and
delivers the order. Answer from T-shirt World’s standpoint.f. T-shirt World Corporation receives payment from Taryt’s for the order described in
(
d). Answer from T-shirt World’s standpoint.g. A customer purchases a ticket from United Airlines for $322 cash to travel the
following January. Answer from United Airlines’ standpoint.h. BMW issues $20 million in new common stock.i. University of Miami receives $18,300,000 cash for 60,000 twelve-game season
football tickets.j. University of Miami plays the first football game referred to in (
i).k. Precision Builders signs a contract with a customer for the construction of a new
$500,000 warehouse. At the signing, Precision receives a check for $150,000 as a
deposit on the future construction. Answer from Precision’s standpoint.l. A customer orders and receives 72 MP3 players from Best Buy; the customer
promises to pay $9,000 within three months. Answer from Best Buy’s standpoint.m.Delights, a retail store, sells a $45 lamp to a customer who charges the sale on his
store credit card. Answer from Delights’ standpoint.
For each of the transactions, if revenue is to be recognized in June, indicate the
revenue account title and amount. If revenue is not to be recognized in June, explain
why.
a Not recognised as the revenue is not related to the current year and relates to a future
period
b Not recognised as the revenue is not related to the current year and relates to a future
2

period
c Yes. Sales Revenue a/c
d No. As the service has not been completed yet
e Yes. Sales Revenue a/c
f Yes. Sales Revenue a/c
g Not recognised as the revenue is not related to the current year and relates to a future
period
h Yes. Common stock a/c
i Not recognised as the revenue is not related to the current year and relates to a future
period
j Yes. Ticket revenue a/c
k No. As the service has not been completed yet
l Yes. Sales Revenue a/c
m Yes. Sales Revenue a/c
3. Recording Adjusting Entries (10 points)
Lamar Marina repairs, stores, and cleans boats for customers. It is completing the accounting
process for the year just ended, November 30, 2019. The transactions during 2019 have been
journalized and posted. The following data with respect to adjusting entries are available:
a. Lamar borrowed $325,000 at a 12 percent annual interest rate on April 1, 2019, to expand its
boat
storage facility. The loan requires Lamar’s to pay the interest quarterly until the note is repaid in
three years. Lamar paid quarterly interest on July 1 and October 1.
b. The Young family paid Lamar $3,240 on November 1, 2019, to store its sailboat for the winter
until May 1, 2020. Lamar credited the full amount to Unearned Storage Revenue on November 1.
c. Lamar used boat-lifting equipment that cost $250,000; $25,000 was the estimated depreciation
for 2019.
d. Boat repair supplies on hand at December 1, 2018, totaled $17,500. Repair supplies purchased
and debited to Supplies during the year amounted to $44,000. The year-end count showed $10,400
of the supplies on hand.
e. Wages earned by employees during November 2019, unpaid and unrecorded at November 30,
2019, amounted to $3,950. The next payroll date will be December 5, 2019.
1. Identify each of these transactions as a deferred revenue, deferred expense, accrued revenue, or
accrued expense.
2. Prepare the adjusting entries that should be recorded for Lamar at November 30, 2019.
3

Event
a Deferred Expense
b Deferred Revenue
c Deferred Expense
d Accrued Expense
e Accrued Expense
Event Particulars Debit Credi
t
A Interest Expense 6500
Interest Payable 6500
(Interest accrued for October and
November)
b Unearned Revenue 540
Service Revenue 540
(Revenue recorded for November)
c Depreciation 2500
0
Accumulated Depreciation 2500
0
(Depreciation added to accumulated
depreciation)
d Supplies Expense 5110
0
Supplies 5110
0
(Supplies used during the year)
e Wages expense 3950
Wages Payable 3950
(Wages earned but not paid during
the year)
4

4. Inferring Stock Issuances and Cash Dividends from Changes in
Stockholders’ Equity (6 points)
The Corner Co. is a large retailer that processes food. Corner reported the following January 31
balances in its stockholders’ equity accounts (dollars in millions):
Current Year Prior Year
Common stock $ 925 $ 919
Paid-in capital 3,366 3,231
Retained earnings 8,489 5,480
During the current year, Corner reported net income of $3,249.
1. How much did Corner declare in dividends for the year?
2. Assume that the only other transaction that affected stockholders’ equity during the current year
was a single stock issuance. Recreate the journal entry reflecting the stock issuance.
1 Particulars Amou
nt
Amou
nt
Net Income during the year 3249
Change in retained earnings
during the year
3009
Dividends Declared during the
year
240
2 Cash 141
Common Stock 6
Paid-in-capital 135
(Additional Stock issued
during the year)
5

5. Preparing a Simple Statement of Cash Flows Using the Indirect
Method (16 points)
Nancy & Donald Corp. is preparing its annual financial statements as of December 31,
2019. Listed below are Balance Sheets for 2019 and 2018 as well as the Income
Statement for 2019. Cash Flow statement is missing.
Balance Sheets 2018 2019 Income Statement 2019
$ in millions $ in millions
Assets Net revenues 610
Cash 25 55 COGS 280
Accounts receivable 160 130 Depreciation expense 50
Prepaid Expense 10 30 Earnings before interest
Inventory 220 285 and taxes (EBIT) 280
Total Current Assets 415 500 Interest expense 20
Profit before tax 260
Net PP&E 485 600 Taxes paid 60
Total Assets 900 1100 Net income 200
Liabilities and equity Dividends declared and paid 100
Accounts payable 50 80
Notes payable 70 85
Other short term debt 40 55
Total Current Liabilities 160 220
Long-term debt 105 125
Shareholders’ equity
Common stock 240 260
Retained earnings 395 495
Total Shareholder's Equity 635 755
Total liabilities and equity 900 1100
A. Prepare (show the “waterfall”) the 2019 statement of cash flows for Nancy &
Donald Corp. (10 points)
B. What is the amount of cash flow from Operations for 2019 ? (2 points)
C. What is the amount of Free Cash Flow for 2019 ? (2 points)
D. What is the change in cash for 2019 ? (2 points)
6