For each situation, present the accounts and dollar amounts that would appear on comparative balance sheets and income statements for the ears ending 12/31/16 and 12/31/15.
Prepare an amortization table
List all accounts and dollar amounts. Round dollar amounts to the nearest dollar. You do not need to include cash.
For the Classification {Class:} column of the Balance Sheet use:
• A for Asset
• L for Liability
• E for Equity
For the Classification {Class:} column of the Income Statement use:
• R for Revenue
• E for Expense
The following information relates to R-U Ready Company, a publicly traded company:
Please answer question number 2 and 3.
Case-1 |
The cost or present value of the machine can be calculated uisng the PV of ordinary annuity formula, |
where, the equal annuities = 65000 |
at the interest rate r=9% |
& no.of payments= 5 |
So, the cost of the machine is: |
Cost/PV=65000*(1-1.09^-5)/0.09= |
252827 |
The amortisation table for the above Installment Note will be: | ||||
Date | Annuity | Tow.Int. | Tow.Prin. | Prin. Bal. |
1 | 2 | 3=Prev.5*9% | 4=2-3 | 5=Prev.5-4 |
1/1/2013 | 252827 | |||
12/31/2013 | 65000 | 22754 | 42246 | 210581 |
12/31/2014 | 65000 | 18952 | 46048 | 164534 |
12/31/2015 | 65000 | 14808 | 50192 | 114342 |
12/31/2016 | 65000 | 10291 | 54709 | 59633 |
12/31/2017 | 65000 | 5367 | 59633 | -1 |
Total | 325000 | 72172 | 252828 |
Depreciation under DDB method |
Depreciable value=the carrying value |
Depreciation under DDB =2*St.line rate of depn. |
ie. 2*(1/8 yrs.)= 25% |
So, drawing up the annual depn. schedule |
for the 8 yr. useful life of the machine, |
Date/Yr. ending | Depn. For the Year(25%*Previous carrying value) | Carrying Value |
1/1/2013 | 252827 | |
12/31/2013 | 63207 | 189620 |
12/31/2014 | 47405 | 142215 |
12/31/2015 | 35554 | 106661 |
12/31/2016 | 26665 | 79996 |
12/31/2017 | 19999 | 59997 |
12/31/2018 | 14999 | 44998 |
12/31/2019 | 11249 | 33748 |
12/31/2020 | 8437 | 25311 |
Income Statement(Partial) | |||||
12/31/2016 | 12/31/2015 | ||||
(E)Depreciation | 26665 | 35554 | |||
(E)Interest on Installment note | 10291 | 14808 | |||
Balance Sheet(Partial) | |||||
Liabilities | 12/31/2016 | 12/31/2015 | Assets | 12/31/2016 | 12/31/2015 |
(L)9% Installment Note | 59633 | 114342 | (A) Machinery-Gross | 252827 | 252827 |
Less: Acc. Depn. | 172831 | 146166 | |||
Machinery, Net | 79996 | 106661 | |||
(E)Shareholders' Equity | -36956 | -50362 | |||
(Depn.+Int.) |
Case-2 |
The PV of the bond/issue price of the bond Is calculated using the PV of annuity formula as above, |
where, |
the Face value of the bond= 100000 |
Annual coupon amt.=100000* 6.5%=6500 |
Effective rate of interest = 4.75% p.a. |
no.of coupon payments= 10 |
so, the PV or issue value of the bond= |
Pv of the bond=PV of all its future coupons+PV of fcae value to be received at maturity |
(6500*(1-1.0475^-10)/0.0475)+(100000/1.0475^10)= |
113679 |
So, the bond is issued at a premium of 113679-100000=13679 |
Now the effective interest rate amortisation table of the bond over the 10 yrs.Will be | ||||||
A | B | C | D | E | F | G |
Date | Coupon int.(6.5%*FV) | Interest expense(4.75%*Prev. BV in G) | Premium amortised(C-B) | Bal.in Bond Premium a/c | Bond payable | BV of bonds(F+E) |
Cr. Cash | Dr. Int. exp. | Dr. Bond Premium | ||||
1/1/2010 | 13679 | 100000 | 113679 | |||
12/31/2011 | 6500 | 5400 | -1100 | 12579 | 100000 | 112579 |
12/31/2012 | 6500 | 5347 | -1153 | 11426 | 100000 | 111426 |
12/31/2013 | 6500 | 5293 | -1207 | 10219 | 100000 | 110219 |
12/31/2014 | 6500 | 5235 | -1265 | 8954 | 100000 | 108954 |
12/31/2015 | 6500 | 5175 | -1325 | 7630 | 100000 | 107630 |
12/31/2016 | 6500 | 5112 | -1388 | 6242 | 100000 | 106242 |
12/31/2017 | 6500 | 5047 | -1453 | 4789 | 100000 | 104789 |
12/31/2018 | 6500 | 4977 | -1523 | 3266 | 100000 | 103266 |
12/31/2019 | 6500 | 4905 | -1595 | 1671 | 100000 | 101671 |
12/31/2020 | 6500 | 4829 | -1671 | 1 | 100000 | 100001 |
Income Statement(Partial) | ||
12/31/2016 | 12/31/2015 | |
(E)Interest expense | 5112 | 5175 |
Balance Sheet(Partial) | ||
12/31/2016 | 12/31/2015 | |
(L)6.5% 10-Yr. Bonds payable | 100000 | 100000 |
Unamortised Bond premium | 6242 | 7630 |
106242 | 107630 | |
(E)Shareholders' Equity | -5112 | -5175 |
(Int.exp.) |
Case-3 | ||
The Face Value of the note =220000*1.08^3= | ||
277137 | ||
Date | Interest exp./ payable | Total balance |
1/1/2014 | 220000 | |
12/31/2014 | 17600 | 237600 |
12/31/2015 | 19008 | 256608 |
12/31/2016 | 20529 | 277137 |
Income Statement(Partial) | |||||
12/31/2016 | 12/31/2015 | ||||
(E)Interest expense | 20529 | 19008 | |||
Balance Sheet(Partial) | |||||
Liabilities | 12/31/2016 | 12/31/2015 | Assets | 12/31/2016 | 12/31/2015 |
(L)3-Yr. Note | 220000 | Land | 220000 | 220000 | |
(L)Interest payable | 36608 | ||||
0 | 256608 | ||||
(E)Shareholders' Equity | -20529 | -19008 | |||
(Int.exp.) |
For each situation, present the accounts and dollar amounts that would appear on comparative balance sheets and income s...
The following information relates to R-U Ready Company, a publicly traded company: R. U. Ready acquired Machine B on 1/1/13 by signing a 9% installment note to be paid in 5 equal installments of $65,000. Each payment is due on 12/31, with the first payment due 12/31/13. The useful life of Machine B is 8 years with no residual value. Assume double declining balance depreciation. Requirement: Present the accounts and dollar amounts that would appear on comparative balance sheets and...
P#4-Adjusting entries and account classification. Selected amounts from Trent Company's trial balance of 12/31/17 appear below 1. Accounts Payable $ 160,000 2. Accounts Receivable 150,000 3. Accumulated Depreciation Equipment 200.000 4. Allowance for Doubtful Accounts 20,000 5. Bonds Payable 500,000 6. Cash 150.000 7. Common Stock 60,000 8. Equipment 870,000 9. Prepaid Insurance 30,000 10. Interest Expense 10,000 11. Inventory 300,000 12. Notes Payable (due 6/1/18) 200,000 13. Prepaid Rent 240,000 14. Retained Earnings 818,000 15. Salaries and Wages Expense...
The comparative balance sheets for 2018 and 2017 and the income
statement for 2018 are given below for Arduous Company. Additional
information from Arduous’s accounting records is provided also.
ARDUOUS COMPANY
Comparative Balance Sheets
December 31, 2018 and 2017
($ in millions)
2018
2017
Assets
Cash
$
120
$
87
Accounts receivable
196
206
Investment revenue receivable
14
10
Inventory
212
206
Prepaid insurance
12
19
Long-term investment
176
131
Land
208
156
Buildings and equipment
418
412
Less: Accumulated...
Selected amounts from Reznor Company’s trial balance as of 12/31/16 appear below: (Note that all of these accounts have their standard or normal debit or credit balance.) No adjusting entries have been made yet this year. Account Balance Accounts Payable $360,000 Accounts Receivable $346,000 Accumulated Depreciation- Equipment $210,000 Allowance for Doubtful Accounts $35,000 Cash ??? Common Stock $66,000 Dividends Declared $20,000 Dividends Payable $10,000 Equipment $900,000 Insurance Expense $24,000 Interest Expense $30,000 Merchandise Inventory $300,000 Notes Payable (due 6/1/17) $400,000 Prepaid...
The comparative balance sheets and income statement of Piura Manufacturing follow. Piura Manufacturing Comparative Balance Sheets For the Years Ended June 30, 20X1 and 20X2 1 20X1 20X2 2 Assets: 3 Cash $72,000.00 $146,400.00 4 Accounts receivable 44,000.00 48,000.00 5 Inventory 64,000.00 44,000.00 6 Plant and equipment 104,000.00 112,000.00 7 Accumulated depreciation (52,000.00) (48,000.00) 8 Land 20,000.00 20,000.00 9 Total assets $252,000.00 $322,400.00 10 Liabilities and equity: 11 Accounts payable $32,000.00 $48,000.00 12 Wages payable 4,000.00 2,400.00 13 Bonds payable...
The comparative balance sheets for 2021 and 2020 and the statement of income for 2021 are given below for Dux Company. Additional information from Dux’s accounting records is provided also. DUX COMPANY Comparative Balance Sheets December 31, 2021 and 2020 ($ in thousands) 2021 2020 Assets Cash $ 33 $ 20 Accounts receivable 48 50 Less: Allowance for uncollectible accounts (4 ) (3 ) Dividends receivable 3 2 Inventory 55 50 Long-term investment 15 10 Land 70 40 Buildings and...
The comparative balance sheets for 2018 and 2017 and the income
statement for 2018 are given below for Arduous Company. Additional
information from Arduous’s accounting records is provided
also.
ARDUOUS COMPANY
Comparative Balance Sheets
December 31, 2018 and 2017
($ in millions)
2018
2017
Assets
Cash
$
124
$
85
Accounts receivable
194
202
Investment revenue receivable
10
8
Inventory
213
204
Prepaid insurance
8
14
Long-term investment
168
129
Land
204
154
Buildings and equipment
422
408
Less: Accumulated...
The comparative balance sheets for 2018 and 2017 and the income
statement for 2018 are given below for Arduous Company. Additional
information from Arduous’s accounting records is provided
also.
ARDUOUS COMPANY
Comparative Balance Sheets
December 31, 2018 and 2017
($ in millions)
2018
2017
Assets
Cash
$
120
$
87
Accounts receivable
196
206
Investment revenue receivable
14
10
Inventory
212
206
Prepaid insurance
12
19
Long-term investment
176
131
Land
208
156
Buildings and equipment
418
412
Less: Accumulated...
The comparative balance sheets for 2018 and 2017 and the statement of income for 2018 are given below for Dux Company Additional information from Dux's accounting records is provided also. DUX COMPANY Comparative Balance Sheets Decenber 31, 2018 and 2017 s in 000s) Assets Cash Accounts receivable 2018 2017 $ 33 20 (4)So eBook 48 Less: Allovance for uncollectible accounts Dividends receivable Inventory Long-term investment Land Buildings and equipment 55 50 10 10 250 225 250 Print (25) (50 $420...
Required information The comparative balance sheets for 2018 and 2017 and the statement of income for 2018 are given below for Dux Company. Additional information from Dux's accounting records is provided also. DUX COMPANY Comparative Balance Sheets December 31, 2018 and 2017 $ in e08s) 2018 2817 Assets Cash Accounts receivable $.75、$69 Less: Allowance for uncollectible accounts Dividends receivable Inventory Long-term investment 45 31 60 268 40 28 30 380 Buildings and equipment Less: Accumulated depreciation (43) (80) $ 474...