Posted: October 20th, 2022

ACC – 312 Multiple accounting Problems with Solutions

1) On February 2, 2011 MBH, Inc acquired 30% of the voting common stock of Construction Corporation as a long term investment. Data from Construction Corporation financial statements for the year ended December 31, 2011 include the following:Net Income $150,000Dividends $75,000Require; prepare any necessary journal entries for MBH at December 31, 2011, under the equity method of accounting for investment.2) The following selected transaction relate to liabilities of Chicago Glass Corporation for 2011. Chicago fiscal year ends on December 31.On January 15, Chicago received $7,000 from Henry Construction toward the purchase of $66,000 of plate glass to be delivered on February 6.On February 3, Chicago received $ 6,700 of refundable deposit relating to containers used to transport glass components.On February 6, Chicago delivered the plate glass to Henry construction and received the balance of the purchase.First quarter credit sales totaled $700,000. The state sales tax rate is 4% and the local sales tax rate is 2%Required; prepare journal entries for the above transactions.3) On January 1, 2011, Mania Enterprises issued 12% bonds dated January 1, 2011, with a face amount of $20 million. The bonds mature in 2020 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31.RequiredDetermine the price of the bond at January 1, 2011Prepare the journal entry to record the bond issuance by Mania on January 1, 2011.Prepare the journal entry to record interest on June 30, 2011, using the effective interest method.Prepare the journal entry to record interest on December 31, 2011, using the effective interest method.4) Diablo Company leased a machine from Juniper Corporation on January 1, 2011; the machine has a fair value of $20,000,000. The lease agreement call for four equal payments at the end of each year the useful life of the machine was expected to be four years with no residual value. The appropriate interest rate for this lease is 10%.Additional InformationPV of an ordinary annuity @10% for 4 periods 3.16987PV of an annuity @ 10% for 4 periods 3.4869RequiredDetermine the amount of each lease paymentPrepare the journal entry for Diablo Company at the inception of the lease.Prepare the journal entry for the first lease payment.Prepare the journal entry for the second lease payment.5) Typical Corp. reported a federal tax liability of $6,000,000 for the year ended December 31, 2010, when the tax rate was 40%. The deferred tax liability was related to a temporary difference of $15,000,000 caused by an installment sale on 2010. The temporary difference is expected to reverse in 2012. When the income deferred from taxation will become taxable. There are not other temporary differences. Assume a new tax law in 2011 and the tax rate, which remain a 40% through December 31, 2011, will become 48% for the tax year beginning after December 31, 2011. Pretax accounting income for the year 2011 is %30,000,000RequiredPrepare a compound journal entry to record Typical’s income tax expense for the year 2011. Show well labeled computations.6) Burrito Corporation has a defined benefit pension plan. Burrito received the following information for the current calendar year.Projected Benefit ObligationBalance January 1 $90,000,000Service Cost $25,000,000Interest cost $15,000,000Benefits paid (12,000,000)Balance December 31 $178,000,000Plan AssetsBalance January 1 $90,000,000Actual return on plan assets $11,000,000Contribution $23,000,000Benefits paid (12,000,000)Balance December 31 $112,000,000The expected long term return on plan assets is 10% there were no other relevant data for the year.RequiredDetermine Burritos pension expense for the yearPrepare the journal entries to record the pension expense and funding for the year7) the share holders equity of Tru Corporation includes $600,000of $1 par common stock and $1,200,000 of 6% cumulative preferred stock. The board of directors of Tru declared cash dividends of $150,000 in 2011 after paying $60,000 cash dividends on in each of 2010 and 2009.What is the amount of dividends common shareholders will receive on 2011?8) On December 31, 2010, Jackson company had 100,00 shares of common stocks outstanding and 30,000 shares of 7% $50 par, cumulative preferred stock outstanding. On February 28,2011 Jackson purchased 24,000 shares of common stock on the open market as treasury stock $35 per share. Jackson sold 6,000 treasury shares on September 30,201, for $37 per share. Net income for 20 11 was $180,905. Also outstanding during the year were fully vested incentive stock options giving key personnel the option to buy 50.000 common shares at $40. The market price of the common shares averaged $39 during 2011.Compute Jackson Basic and diluted earnings per share for 2011.9) Lindy Company’s auditor discovered two errors. No errors were corrected during 2010. The errors are described as follow.Merchandise costing $4,000 was sold to a costumer for $9,000 on December 31, 2010, but it was recorded as a sale on January 2, 2011. The merchandise was properly excluded from the 2010 ending inventory. Assume the periodic inventory system is used.A machine with a five year life was purchased on January 1, 2010. The machine cost $20,000 and has no expected salvage value. No depreciation was taken in 2010 0r 2011. Assume the straight line method for depreciation.10 Partial balance sheet for Yarborough Company and additional information are found belowYarborough CompanyPartial Balance SheetAs December 31Assets 2011 2010Equipment $100,000 $75,000Accumulated Depreciation (25,000) (20,000)Inventory 40,000 35,000Share holders equityCommon stock $5 par $150,000 $100,000Paid-in capital—excess of par 20,000 0Retained earnings 40,000 30,000Additional informationJuly 1 issued shares of common stock for cashJuly1 purchased new equipment for cashDecember 31 paid cash dividends of $30,000RequiredPrepare the investment activities section of the statement of cash flows for 2011.

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