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Student Name: Instructor Class: McGraw-Hill/Irwin Problem 20-01 Requirement 1: CECIL-BOOKER VENDING COMPANY General Journal Account To record

the change: Inventory Deferred tax liability Cumulative effect of accounting change Debit 35,000 14,000 21,000
- Correct!

Credit

Requirement 2: CECIL-BOOKER VENDING COMPANY Comparative Income Statements 2011 525,000 $ (210,000) 315,000 $
Correct!

Income before taxes Income tax expense Net income Earnings per share: Earnings per common share

$ $

2010 399,000 (159,600) 239,400


Correct!

3.15
Correct!

2.39
Correct!

Given P20-01: CECIL-BOOKER VENDING COMPANY Inventories (average cost basis), 12/31/10 Inventories (average cost basis), 12/31/09 Inventories (FIFO basis), 12/31/10 Inventories (FIFO basis), 12/31/09 Tax rate Common shares outstanding each year Income from continuing operations, 2010 Income from continuing operations, 2011 $ $ $ $ 120,000 124,000 155,000 160,000 40% 100,000 400,000 525,000

$ $

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 20-02 Requirement 1: PYRAMID CONSTRUCTION COMPANY General Journal Account Construction in process Deferred tax liability Retained earnings Debit 39,000 Credit 15,600 23,400

- Correct!

Requirement 2: PYRAMID CONSTRUCTION COMPANY Comparative Income Statement 2011 51,000 $ (20,400) 30,600 $
Correct!

Income before income taxes Income tax expense Net Income

$ $

2010 45,000 (18,000) 27,000


Correct!

Earnings per share 50,000 shares Requirement 3:

0.61
Correct!

0.54
Correct!

PYRAMID CONSTRUCTION COMPANY Statement of Shareholders' Equity For the Years Ended Dec. 31, 2011 and 2010 Additional Paid-in Capital 180,000
Correct!

Balance at Jan. 1, 2010 Net income Cash dividends Balance at Dec. 31, 2010 Net income Cash dividends Balance at Dec. 31, 2011

Common Stock 50,000


Correct!

Total Retained Shareholders' Earnings Equity 54,000 284,000


Correct! Correct!

50,000
Correct!

180,000
Correct!

27,000 (10,000) 71,000


Correct!

27,000 (10,000) 301,000


Correct!

50,000
Correct!

180,000
Correct!

30,600 (10,000) 91,600


Correct!

30,600 (10,000) 321,600


Correct!

Given Data P20-02: PYRAMID CONSTRUCTION COMPANY Income tax rate 40% Income Before Income Tax % of Completed Completion Contract Method Method $ 90,000 $ 60,000 45,000 36,000 $ 135,000 $ 96,000 $ 51,000 $ 46,000

2009 2010 Total 2011

Difference 30,000 9,000 $ 39,000 $ 5,000 $ 50,000 230,000 10,000

Income Tax Effect $ 12,000 3,600 $ 15,600 $ 2,000

Difference After Tax $ 18,000 5,400 $ 23,400 $ 3,000

$1 par Common shares issued Common shares issued for Dividends paid, 2010 and 2011

$ $

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 20-07 Requirement 1: MARION COMPANY Depletion and Depreciation Cost of mineral mine: Purchase price Development costs

$ 1,600,000 600,000 $ 2,200,000


Correct!

Depletion: Land resale value Estimated ore extracted (tons) Depletion per ton 2011 Ore extracted (tons) Depletion 2012 Ore extracted (tons) Revised ore extraction (tons) Revised depletion rate Depletion Depreciation: Structures: Building cost Depreciation per ton 2011 depreciation Revised depreciation rate 2012 depreciation Equipment: Equipment cost Estimated equipment sale Depreciation per ton 2011 depreciation Revised depreciation rate 2012 depreciation

$ $

100,000 400,000 5.25


Correct!

50,000 262,500
Correct!

$ $

80,000 487,500 4.20 336,000


Correct!

$ $ $ $ $

150,000 0.375
Correct!

18,750
Correct!

0.300 24,000
Correct!

$ $ $ $ $ $

80,000 4,000 0.19


Correct!

9,500
Correct!

0.152 12,160
Correct!

Requirement 2: MARION COMPANY Book Value Mineral mine: Cost Less accumulated depletion: 2011 depletion 2012 depletion Book value, 12/31/2012 Structures: Cost Less accumulated depreciation: 2011 depreciation 2012 depreciation Book value, 12/31/2012 Equipment: Cost Less accumulated depreciation: 2011 depreciation 2012 depreciation Book value, 12/31/2012

$ 2,200,000 $ 262,500 336,000

598,500 $ 1,601,500
Correct!

$ $ 18,750 24,000 $

150,000

42,750 107,250
Correct!

$ $ 9,500 12,160 $

80,000

21,660 58,340
Correct!

Given Data P20-07: MARION COMPANY Land purchase Additional development costs Estimated tons extracted Land resale value Building costs Useful life of buildings New equipments cost Auction price of equipment 2011 ore extracted and sold Revised estimated tons extracted 2012 ore extracted $ 1,600,000 $ 600,000 400,000 $ 100,000 $ 150,000 10 years $ 80,000 $ 4,000 50,000 tons 487,500 80,000 tons

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 20-14 Requirement 1: WHALEY DISTRIBUTORS General Journal ($ in millions) Account a. Inventory Retained earnings b. Liability - litigation Gain - litigation Cash c. Retained earnings Patent 2011 adjusting entry: Patent amortization expense Patent d. No entry to record the change 2009 adjusting entry: Depreciation expense Accumulated depreciation Calculation of annual depreciation after the change: Cost Previous depreciation (calculated below) Undepreciated cost Estimated residual value To be depreciated Estimated remaining life New annual depreciation *Cumulative effect of the change: SYD 2007 depreciation $ 2008 depreciation Accumulated depreciation $
Correct!

Debit 10

Credit

10 7 3 4 6 6 3 3

- Correct!

- Correct!

- Correct!

- Correct!

4 4
- Correct!

$ $ $ $
Correct!

30 (18) 12 12 3 years 4

10 8 18

Requirement 2: WHALEY DISTRIBUTORS Financial Statements Shareholders' Net Assets Liabilities Equity Income Expenses $ 740 $ 330 $ 410 $ 210 $ 150 (12) (12) (12) 12 no adjustments to prior years (3) (3) (3) 3 no adjustments to prior years $ 725 $ 330 $ 395 $ 195 $ 165
Correct! Correct! Correct! Correct! Correct!

2009 2009 inventory Loss contingency Patent amortization Depreciation

2010 2009 inventory 2010 inventory Loss contingency Patent amortization Depreciation

820

400

420 10 (6)

10 no adjustments to prior years (6) no adjustments to prior years $ 824 $ 400


Correct! Correct!

230 12 10 (3)

175 (12) (10) 3

424
Correct!

249
Correct!

156
Correct!

Given Data P20-14: WHALEY DISTRIBUTORS Financial Statements, 12/31/08 (in millions): Shareholders' Net Assets Liabilities Equity Income Expenses $ 740 $ 330 $ 410 $ 210 $ 150 820 400 420 230 175

2009 2010

Additional information: (a) Errors in inventory (in millions) 2009 2010 (b) Liability accrued Lawsuit settlement (c) Patent cost Patent benefit to operations (d) Conveyor equipment cost Conveyor equip. useful life

$ $ $ $ $ $

12 10 7 4 18 6 30 5

overstated understated million million million years million years

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