BUSINESS COLLEGE

During its first year of operations, the McCollum Corporation entered into the following transactions relating to shareholders’ equity. The corporation was authorized to issue 100,000,060 common shares, $1 par per share. Required: Prepare the appropriate journal entries to record each transaction. Jan. 9 Issued 50,000,000 common shares for $18 per share. Mar. 11 Issued 4,500 shares in exchange for custom-made equipment. McCollum’s shares have traded recently on the stock exchange at $18 per share. Part B A new staff accountant for the McCollum Corporation recorded the following journal entries during the second year of operations. McCollum retires shares that it reacquires (restores their status to that of authorized but unissued shares). Date General Journal Debit Credit Jan. 12 Land 5,000,000 Paid-in capital—donation of land 5,000,000 Sept. 1 Common stock 2,000,000 Retained earnings 44,000,000 Cash 46,000,000 Dec. 1 Cash 24,000,000 Common stock 1,000,000 Gain on sale of previously issued shares 23,000,000

Answers

Answer 1
Answer:

Answer:

cash       900,000,000 debit

  common stock          50,000,000 credit

  additional paid-in    850,000,000 credit

---   Jan 9th issuance   ---

Equipment       81,000 debit

    Common Stock          4,500 credit

   Addtional paid-in      76,500 credit

---    March 11th issuance ---

Equity at end of Year 1:

  common stock          50,004,500 credit

  additional paid-in    850,076,500 credit

Explanation:

cash proceeds: 50 millions x 18 dolllars = 900 millions

      face value:  50 millions x  1 dollars   =  50 million

             additional paid-in                           850 millions

Equipment: 4,500 x 18 = 81,000

face value  4,500 x 1 =      4,500

addiional                          76,500

Equity at year-end will be the sum of both
Answer 2
Answer:

Final answer:

The appropriate journal entries for the transactions related to shareholders' equity are provided for the first and second year of operations.

Explanation:

To record the transactions related to shareholders' equity for the first year of operations, the appropriate journal entries are as follows:

  • January 9: Debit Cash for $900,000,000 and Credit Common Stock for $50,000,000 and Paid-in Capital in Excess of Par for $850,000,000
  • March 11: Debit Custom-Made Equipment for $81,000 and Credit Common Stock for $81,000

For the second year of operations, the journal entries recorded by the new staff accountant are:

  • January 12: Debit Land for $5,000,000 and Credit Paid-in Capital—Donation of Land for $5,000,000
  • September 1: Debit Common Stock for $2,000,000, Debit Retained Earnings for $44,000,000, and Credit Cash for $46,000,000
  • December 1: Debit Cash for $24,000,000, Credit Common Stock for $1,000,000, and Credit Gain on Sale of Previously Issued Shares for $23,000,000

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onlon Chemicals manufactures paint thinner. Information on the work in process follows: Beginning inventory, 30,000 partially complete gallons. Transferred out, 157,500 gallons. Ending inventory (materials are 10 percent complete; conversion costs are 20 percent complete). Started this month, 180,000 gallons. Required: a. Compute the equivalent units for materials using the weighted-average method. b. Compute the equivalent units for conversion costs using the weighted-average method.

Answers

Answer:

a. 162,750 gallons

b. 168,000 gallons

Explanation:

Step 1 Determine the Units of Closing Work In Process Inventory

Units of Closing Work In Process =  Beginning inventory units + units Started this month - units Transferred out

                                                         =  30,000+180,000-157,500

                                                         = 52,500

Step 2 Determine the equivalent units for materials

Note : materials are 10 percent complete in Units of Closing Work In Process

Units of Closing Work In Process ( 52,500 ×10%)  = 5,250

Units Transferred out ( 157,500 ×100%)                   =157,500

Total                                                                           =162,750

Step 3 Determine the equivalent units for conversion costs

Note : conversion costs are 20 percent complete in Units of Closing Work In Process

Units of Closing Work In Process ( 52,500 ×20%)  = 10,500

Units Transferred out ( 157,500 ×100%)                   =157,500

Total                                                                            =168,000

Answer:

The equivalent units for conversion costs using the weighted-average method are 168,000

The equivalent units for materials using the weighted-average method are 162,750

Explanation:

onlon Chemicals

Equivalent units can be calculated by the following

Particulars            Units      % of Completion           Equivalent Units

                                                   Mat.  Con. Costs     Materials C. Costs

Transferred out, 157,500           100       100             157,500  157,500

Ending inventory, 52,500          10            20              5250      10,500

Total Equivalent Units                                                162,750   168,000

Working

Ending Inventory= Opening + Started - Transferred Out

Ending Inventory=30,000 +180,000 -157,500 = 52,500 gallons

The equivalent units are calculated by two ways either by adding ending inventory and transferred out units or by adding beginning inventory with units started.

QS 3-7 Adjusting prepaid (deferred) expenses LO P1 For each separate case, record the necessary adjusting entry. On July 1, Lopez Company paid $1,200 for six months of insurance coverage. No adjustments have been made to the Prepaid Insurance account, and it is now December 31. Zim Company has a Supplies account balance of $5,000 at the beginning of the year. During the year, it purchased $2,000 of supplies. As of December 31, a physical count of supplies shows $800 of supplies available. Prepare the year-end adjusting entries to reflect expiration of the insurance and correctly report the balance of the Supplies account and the Supplies Expense account as of December 31.

Answers

Answer:

S/n   General Journal              Debit      Credit

a       Insurance expense        $1,200

               Prepaid Insurance                   $1,200  

        (To record insurance expired)

b       Supplies expense          $6,200

                Supplies                                  $6,200

                ($5,000 + $2,000 - $800)

         (To record supplies used)

Final answer:

Lopez company should adjust their prepaid insurance and Zim company should adjust their supplies account due to their use during the year. Both adjustments will be debits to relevant expense accounts & credits to Prepaid Insurance for Lopez, and Supplies for Zim.

Explanation:

The two adjustments that need to be made are for the prepaid insurance and the supplies. To compute the adjustment for the prepaid insurance, we would divide the total insurance payment by the number of months covered to find the monthly cost. For Lopez Company, six months of insurance is valued at $1,200, therefore the monthly cost is $200. From July 1 to December 31, six months have passed, so $1,200 of insurance has been used up. As a result, we need to debit the Insurance Expense account by $1,200 and credit Prepaid Insurance by $1,200.

Regarding Zim Company, the beginning balance in the Supplies account was $5,000, and it purchased $2,000 more throughout the year - that sum up to $7,000 of total supplies. At the end of the year, they still had $800 left, so they used $6,200 of supplies during the year. The adjustment will be a debit to Supplies Expense by $6,200 and a credit to Supplies by $6,200, reflecting the fact that those supplies are no longer available for use.

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Suppose two paper plants dump industrial waste into a river. The EPA decides pollution concentration is too high at a receptor site down river from the paper plants. The two firms have identical marginal cost of pollution abatement, but firm 1 has a transfer coefficient of 0.8 and firm 2 has a transfer coefficient of 0.3. To reduce pollution concentration at a receptor site, who should reduce dumping more? Select one: a. Firm 1 b. Firm 2 c. Both should reduce the same d. No way to tell

Answers

Answer:

a. Firm 1

Explanation:

from the information, firm 1 has a higher transfer coefficient of 0.8 compared to that of the firm 2, so to reduce pollution concentration at a recepto site, the firm with the higher transfer coefficient will have to decrease its dumping, in this case firm 1 should reduce dumping.

A company has budgeted $328,000 to be used by both the marketing department and the finance department. The marketing department uses cash at the rate of $42,000 per month, which is three times the rate of the finance department. How many months until the budgeted amount is used up? Round all amounts to the nearest tenth.

Answers

Answer:

5.9 months

Explanation:

Market department monthly budget = $42,000

Since the finance department uses a third of the budget used by the market department, the total monthly budged for both departments is:

B = (1+(1)/(3))*\$42,000\nB= \$56,000

The number of months that until a budgeted amount of $328,000 is used is given by:

n=(\$328,000)/(\$56,000) \nn=5.9\ months

It will take 5.9 months until the budgeted amount is used up

In January, 2006, Findley Corporation purchased a patent for a new consumer product for $720,000. At the time of purchase, the patent was valid for fifteen years. Due to the competitive nature of the product, however, the patent was estimated to have a useful life of only ten years. During 2011 the product was permanently removed from the market under governmental order because of a potential health hazard present in the product. What amount should Findley charge to expense during 2011, assuming amortization is recorded at the end of each year?a. $480,000.
b. $360,000.
c. $72,000.
d. $48,000.

Answers

Answer:

b. $360,000.

Explanation:

Data provided in the question

Purchase value of the patent = $720,000

At the time of purchase, the patent life is 15 years

And, the useful life of the patent is 10 years

So, the amortization expense recorded value is

= $720,000 ÷ 10 years × 5 years

= $360,000

The five years is counted from the year 2006 to the year 2011

The following data (in millions) are taken from the financial statements of Tarrow Corporation: Recent Year Prior Year Revenue $386,972 $356,000 Operating expenses 326,634 303,000 Operating income $60,338 $53,000 a. For Tarrow Corporation, determine the amount of change in millions and the percent of change (round to one decimal place) from the prior year to the recent year for: Revenue Operating expenses Operating income Amount of Change (in millions) Percent of Change (round to 1 decimal place) Increase or Decrease 1. Revenue $fill in the blank 1 30,976 fill in the blank 2 % 2. Operating expenses fill in the blank 4 fill in the blank 5 3. Operating income fill in the blank 7 fill in the blank 8 b. During the recent year, revenue and operating expenses . As a result, operating income , from the prior year.

Answers

Answer:

Tarrow Corporation

a) Amount of change in millions and the percent of change:

                                   Amount      Percentage   Direction

                                of Change     of Change   of Change

Revenue                    $30,972           8.7%          Increase

Operating expenses   23,634           7.8%          Increase

Operating income       $7,338          13.8%          Increase

b) During the recent year, revenue and operating expenses increased by 8.7% and 7.8% respectively.  As a result, the operating income increased by 13.8%, from the prior year.

Explanation:

a) Data and Calculations:

Tarrow Corporation:

                                Recent Year    Prior Year    Change  Percentage

Revenue                   $386,972      $356,000    $30,972   8.7% Increase

Operating expenses 326,634         303,000      23,634    7.8% Increase

Operating income     $60,338        $53,000       $7,338  13.8% Increase
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