Accounting and Finance Essay - 2750 Words

Accounting and Finance (Essay Sample) Content: AccountingYour nameName of the institutionName of the lecturerDate Exercise 7-1 Cash and cash equivalents; restricted cash [LO7-2]The controller of the Red Wing Corporation is in the process of preparing the companyà ¢Ã¢â€š ¬s 2013 financial statements. She is trying to determine the correct balance of cash and cash equivalents to be reported as a current asset in the balance sheet. The following items are being considered: a. Balances in the companyà ¢Ã¢â€š ¬s accounts at the First National Bank; checking $13,500, savings $22,100. b. Undeposited customer checks of $5,200. c. Currency and coins on hand of $580. d. Savings account at the East Bay Bank with a balance of $400,000. This account is being used to accumulate cash for future plant expansion (in 2015). e. $20,000 in a checking account at the East Bay Bank. The balance in the account represents a 20% compensating balance for a $100,000 loan with the bank. Red Wing may not withdraw the funds until the loan is due in 2016. f. U.S. Treasury bills; 2-month maturity bills totaling $15,000, and 7-month bills totaling $20,000. Required: 1. Determine the correct balance of cash and cash equivalents to be reported in the current asset section of the 2013 balance sheet.  ÂÂCash and cash equivalents includes:  ÂÂTotal balance in the companyà ¢Ã¢â€š ¬s bank account $35,600  ÂÂundeposited Check $5,200  ÂÂCurrency and coins on hand $580  ÂÂTreasury bills $35,000  Â   ÂÂÂÂÂÂTotal $76,380  Exercise 7-18 Factoring of accounts receivable without recourse [LO7-8]Mountain High Ice Cream Company transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was madeÂwithout recourse.ÂPrudential remits 90% of the factored amount to Mountain High and retains 10%. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,000) less a 2% fee (2% of the total factored amount). Required: Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. General Journal Debit Credit Cash $52,800  ÂÂloss on sale of receivables $1,200  ÂÂÂÂaccount receivable $6000 Credit account receivable $60,000 Exercise 7-18 Factoring of accounts receivable without recourse [LO7-8]Mountain High Ice Cream Company transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was madeÂwithout recourse.ÂPrudential remits 90% of the factored amount to Mountain High and retains 10%. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,000) less a 2% fee (2% of the total factored amount). Requ ired: Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. General Journal Debit Credit ÂÂCash $54,000  ÂÂloss on sale of receivables $6,200  ÂÂReceivable from factor $4,800 Recourse liability $5,000 ÂÂÂÂÂaccount receivable  $60,000 Exercise 12-9 Various transactions related to securities available-for-sale [LO12-3]Construction Forms Corporation buys securities to be available for sale when circumstances warrant, not to profit from short-term differences in price and not necessarily to hold debt securities to maturity. The following selected transactions relate to investment activities of Construction Forms whose fiscal year ends on December 31. No investments were held by Construction Forms at the beginning of the year. 2013  Mar. 2 Purchased 1 million Platinum Gauges, Inc., common shares for $31 m illion, including brokerage fees and commissions. Apr. 12 Purchased $20 million of 10% bonds at face value from Zenith Wholesale Corporation. July 18 Received cash dividends of $2 million on the investment in Platinum Gauges, Inc., common shares. Oct. 15 Received semiannual interest of $1 million on the investment in Zenith bonds. 16 Sold the Zenith bonds for $21 million. Nov. 1 Purchased 500,000 LTD International preferred shares for $40 million, including brokerage fees and commissions. Dec. 31 Recorded the necessary adjusting entry(s) relating to the investments. The market prices of the investments are $32 per share for Platinum Gauges, Inc., and $74 per share for LTD International preferred shares. 2014  Jan. 23 Sold half the Platinum Gauges, Inc., shares for $32 per share. Mar. 1 Sold the LTD International preferred shares for $76 per share. Required: 1. Prepare the appropriate journal entry f or each transaction or event.Â(Enter your answers in millions rounded to 1 decimal place.) Date General Journal Debit Credit 2013    ÂÂMar. 2 Shares $31   ÂÂÂÂÂÂÂcash paid  31     ÂÂApril 12 ÂÂBonds $20   ÂÂÂÂÂÂÂCash  $20     ÂÂJuly 18 ÂÂCash $20   ÂÂÂÂÂÂAccounts Receivable  $20     ÂÂOct. 15 ÂÂInterest $1   ÂÂÂÂÂÂZenith  $1     ÂÂOct. 16 ÂÂCash  $21   ÂÂÂÂÂÂZenith bonds  $21  Â       ÂÂNov. 1 ÂÂShares $40   ÂÂÂÂÂÂÂCash Æš $40 Date General Journal Debit Credit Dec. 31 ÂÂCashl $69   ÂÂÂÂÂÂÂShares  $71 Date General Journal Debit Credit 2014    ÂÂJan. 23 ÂÂCash $16   ÂÂÂÂÂÂÂPlatinum Gauges, Inc., shares  $15.5  Â       ÂÂMar. 1 ÂÂCash $38   Â    ÂÂÂÂÂÂÂLTD International preferred shares  $40 2. Show the amounts that would be reported in the company's 2013 income statement relative to these investments.Â(Enter your answers in millions.) 2013 Income Statement($ in millions) ÂÂRevenue $Â256 ÂÂCosts of sales  $259.5 ÂÂOther comprehensive income:  Â $0 Exercise 12-11 Various investment securities [LO12-1, LO12-2, LO12-3]At December 31 , 2013, Hull-Meyers Corp. had th... Accounting and Finance Essay - 2750 Words Accounting and Finance (Essay Sample) Content: AccountingYour nameName of the institutionName of the lecturerDate Exercise 7-1 Cash and cash equivalents; restricted cash [LO7-2]The controller of the Red Wing Corporation is in the process of preparing the companyà ¢Ã¢â€š ¬s 2013 financial statements. She is trying to determine the correct balance of cash and cash equivalents to be reported as a current asset in the balance sheet. The following items are being considered: a. Balances in the companyà ¢Ã¢â€š ¬s accounts at the First National Bank; checking $13,500, savings $22,100. b. Undeposited customer checks of $5,200. c. Currency and coins on hand of $580. d. Savings account at the East Bay Bank with a balance of $400,000. This account is being used to accumulate cash for future plant expansion (in 2015). e. $20,000 in a checking account at the East Bay Bank. The balance in the account represents a 20% compensating balance for a $100,000 loan with the bank. Red Wing may not withdraw the funds until the loan is due in 2016. f. U.S. Treasury bills; 2-month maturity bills totaling $15,000, and 7-month bills totaling $20,000. Required: 1. Determine the correct balance of cash and cash equivalents to be reported in the current asset section of the 2013 balance sheet.  ÂÂCash and cash equivalents includes:  ÂÂTotal balance in the companyà ¢Ã¢â€š ¬s bank account $35,600  ÂÂundeposited Check $5,200  ÂÂCurrency and coins on hand $580  ÂÂTreasury bills $35,000  Â   ÂÂÂÂÂÂTotal $76,380  Exercise 7-18 Factoring of accounts receivable without recourse [LO7-8]Mountain High Ice Cream Company transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was madeÂwithout recourse.ÂPrudential remits 90% of the factored amount to Mountain High and retains 10%. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,000) less a 2% fee (2% of the total factored amount). Required: Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. General Journal Debit Credit Cash $52,800  ÂÂloss on sale of receivables $1,200  ÂÂÂÂaccount receivable $6000 Credit account receivable $60,000 Exercise 7-18 Factoring of accounts receivable without recourse [LO7-8]Mountain High Ice Cream Company transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was madeÂwithout recourse.ÂPrudential remits 90% of the factored amount to Mountain High and retains 10%. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,000) less a 2% fee (2% of the total factored amount). Requ ired: Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. General Journal Debit Credit ÂÂCash $54,000  ÂÂloss on sale of receivables $6,200  ÂÂReceivable from factor $4,800 Recourse liability $5,000 ÂÂÂÂÂaccount receivable  $60,000 Exercise 12-9 Various transactions related to securities available-for-sale [LO12-3]Construction Forms Corporation buys securities to be available for sale when circumstances warrant, not to profit from short-term differences in price and not necessarily to hold debt securities to maturity. The following selected transactions relate to investment activities of Construction Forms whose fiscal year ends on December 31. No investments were held by Construction Forms at the beginning of the year. 2013  Mar. 2 Purchased 1 million Platinum Gauges, Inc., common shares for $31 m illion, including brokerage fees and commissions. Apr. 12 Purchased $20 million of 10% bonds at face value from Zenith Wholesale Corporation. July 18 Received cash dividends of $2 million on the investment in Platinum Gauges, Inc., common shares. Oct. 15 Received semiannual interest of $1 million on the investment in Zenith bonds. 16 Sold the Zenith bonds for $21 million. Nov. 1 Purchased 500,000 LTD International preferred shares for $40 million, including brokerage fees and commissions. Dec. 31 Recorded the necessary adjusting entry(s) relating to the investments. The market prices of the investments are $32 per share for Platinum Gauges, Inc., and $74 per share for LTD International preferred shares. 2014  Jan. 23 Sold half the Platinum Gauges, Inc., shares for $32 per share. Mar. 1 Sold the LTD International preferred shares for $76 per share. Required: 1. Prepare the appropriate journal entry f or each transaction or event.Â(Enter your answers in millions rounded to 1 decimal place.) Date General Journal Debit Credit 2013    ÂÂMar. 2 Shares $31   ÂÂÂÂÂÂÂcash paid  31     ÂÂApril 12 ÂÂBonds $20   ÂÂÂÂÂÂÂCash  $20     ÂÂJuly 18 ÂÂCash $20   ÂÂÂÂÂÂAccounts Receivable  $20     ÂÂOct. 15 ÂÂInterest $1   ÂÂÂÂÂÂZenith  $1     ÂÂOct. 16 ÂÂCash  $21   ÂÂÂÂÂÂZenith bonds  $21  Â       ÂÂNov. 1 ÂÂShares $40   ÂÂÂÂÂÂÂCash Æš $40 Date General Journal Debit Credit Dec. 31 ÂÂCashl $69   ÂÂÂÂÂÂÂShares  $71 Date General Journal Debit Credit 2014    ÂÂJan. 23 ÂÂCash $16   ÂÂÂÂÂÂÂPlatinum Gauges, Inc., shares  $15.5  Â       ÂÂMar. 1 ÂÂCash $38   Â    ÂÂÂÂÂÂÂLTD International preferred shares  $40 2. Show the amounts that would be reported in the company's 2013 income statement relative to these investments.Â(Enter your answers in millions.) 2013 Income Statement($ in millions) ÂÂRevenue $Â256 ÂÂCosts of sales  $259.5 ÂÂOther comprehensive income:  Â $0 Exercise 12-11 Various investment securities [LO12-1, LO12-2, LO12-3]At December 31 , 2013, Hull-Meyers Corp. had th...