.

(TCO H) XYZ Corporation purchased 10, $1,000, 8% bonds of Jackson Corporation when the market
rate of interest was 10%. Interest is paid semiannually on the bonds, and the bonds mature in 6
years.

Instructions:
Compute the total price paid by XYZ Corporation for the bonds showing your calculation for the
present value of the principal and the present value of the interest payments.

Present value tables (Exhibit 8-14 and Exhibit 8-15) are available on pages 452 and 453 of your
Harrison, Horngren, and Thomas textbook. NOTE: Be sure you review the PV Tables completely to
ensure you find the correct period and interest rate for the calculation. (Points : 20)

Question 4.4. (TCO A) The following items are taken from the financial statements of BCT Company
for 2013:

$138,800
Cash
75,000
Accounts Payable
15,000
Supplies
35,000
Accounts Receivable
45,000
Inventory
30,000
Salaries Payable
45,000
Unearned Revenue
318,000
Property, plant, and equipment, net
260,000
Intangible assets
100,000
Common Stock
400,000
Additional Paid-in Capital
21,000
Retained Earnings, 12/31/2012
90,000
Long-term debt
 746,000
Service revenue
639,200
Cost of Goods Sold
30,000
Rent expense
5,000
Supplies expense
21,000
Insurance expense

Instructions:
(1) Create a classified balance sheet in good form for the year ended 2013. (30 points)
(2) Calculate the current ratio and debt ratio and explain your findings. (6 points) (Points : 36)

Question 5.5. (TCO B) The Delta Company gathered the following condensed data for the year ended
December 31, 2014:

Cost of goods sold $300,000

Net sales 525,000

Administrative expenses 110,000

Interest expense 18,000

 Common stock dividends paid 25,000

Selling expenses 52,000

Income tax percentage 33%

Instructions:
(1) Prepare a multiple-step income statement for the year ended December 31, 2014. (30 points)

(2) Compute the gross margin percentage and net profit margin ratio. Delta Companys assets at the
beginning of the year were $800,000, and the total assets were $1,000,000 at the end of the year. To
qualify for full credit, you must state the formula you are using, show your computations, and explain
your findings. (6 points) (Points : 36)

Question 6.6. (TCO C) This is a 2-part question.

Part 1) Please indicate which section of the statement of cash flows should contain each of the
following items, and whether each item would result in an inflow or outflow of cash. The sections are
Operating, Investing, and Financing. (30 points)
(a) Increase in accounts receivable
(b) Purchased a factory with cash
(c) Depreciation of a building
(d) Retired bonds with cash
(e) Received cash dividends

Part 2) Please explain how to calculate free cash flow and the importance of free cash flow to
investors. (6 points) (Points : 36)

Question 7.7. (TCO F) This is a 2-part question.

Part 1) Journalize the adjusting entries below at year-end December 31, XXXX. Please share your
supporting calculations for the adjusting entries requiring computations.
(a) Accrued Service Revenue of $5,000
(b) The unadjusted balance of the Supplies account is $1,700. The total cost of supplies remaining is
$900.
(c) Interest revenue of $500 has been earned but not yet received.
(d) Equipment was purchased at the beginning of the year for $35,000. The equipments useful life is
5 years and the residual value is $7,000. Record the depreciation for this year.
(e) The weekly payroll is $30,000. Employees are owed for 2 days of a 5-day work week.
(f) Beginning unearned service revenue is $3,000, and ending unearned service revenue is $1,500.
(30 points)

Part 2) Calculate the overall overstatement or understatement of net income if the above adjusting
entries were not made. Please share your work. (6 points) (Points : 36)
Question 8.8. (TCO G) Please review the following 6 ratios for Langley Company and XYZ Inc. for the
year ended 2014, and address the 2 questions below.

Ratio Name Langley Company XYZ Inc.

(a) Rate of return on total 21.5% 17.9%

assets

(b) Debt ratio 25.0% 10.1%

(c) Accounts receivable 8.3 7.5

turnover

(d) Price-Earnings ratio 25 19

(e) Inventory turnover 6.1 5.2

(f) Current ratio 1.96 3.12

Instructions: This is a 2-part question.

(1) Explain the meaning of each of the Langley Company ratios above. (18 points)
(2) State which company performed better for each ratio. (18 points) (Points : 36)

Time Remaining: