Accounting Problems

Question 1

QUESTION 1A

On December 31, 2015, Raleigh Corp. had the following balances (all balances are normal):

The following events occurred during 2015 and were not recorded:

a On January 1, Raleigh Corp. declared a 5% stock dividend on its common stock when the market value of the common stock was $15 per share.

b. Stock dividends were distributed on January 31 to shareholders as of January 25.

c. On February 15, Raleigh reacquired 1,000 shares of common stock for $20 each.

d. On March 31, Raleigh reissued 250 shares of treasury stock for $25 each.

e. On July 1, Raleigh reissued 500 shares of treasury stock for $16 each.

f. On October 1, Raleigh declared full year dividends for preferred stock (see outstanding shares in table above).

g. Then, paid preferred shareholders on October 15

h. On October 1, Raleigh also declared $1.50 cash dividends for the 104,750 remaining common outstanding shares.

i. Then, paid common shareholders on October 15.

j. On December 15, Raleigh split common stock 2 shares for 1.

QUESTION 1B

a Given below is information for the Stockholder Equity section of Jones Balance Sheet as of December, 2014

b 8% Preferred stock, $100 par value, 10,000 shares authorized, 5,000 shares issued and outstanding.

c Common stock, no par, $2 stated value, 500,000 shares authorized, 204,000 shares  issued and outstanding

d Additional paid-in capital:

Preferred stock in excess of par value is $34,000
Common stock in excess of stated value is $437,000

Requirements:? ?Prepare a Stockholders' section of Jones classified balance sheet as of December 31, 2014.

Question 2

On January 1, 2016, XYZ Company purchased shares of the stock of Rayco, and did obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $90,000, and represents a 30% ownership stake. Rayco made $25,000 of net income in 2014, and paid dividends of $10,000.

Requirements:

Prepare the January 1 and December 31 general journal entries for XYZ Company.

How much should the XYZ Company report on the balance sheet for the investment in Rayco at the end of 2016?

Question 3

The following is selected information from Reliant Company for the fiscal years ended December 31, 2016: Reliant Company had net income of $1,225,000. Accounts receivable decreased by $25,000. Accounts payable decreased by $40,000. Depreciation was $500,000. Purchases of plant assets were for $1,250,000 cash, and sold plant assets for $500,000 cash, which resulted in a $50,000 gain. Stock was issued in exchange for an outstanding note payable of $725,000. Dividends of $300,000 were paid to shareholders. Cash balance on Dec 31, 2015 was $250,000 and cash balance on Dec 31, 2016 was $860,000.

Requirements: Prepare Reliant Company's statement of cash flows for the year ended December 31, 2016 using the indirect method.

Question 4

Rayco Corporation had the following bond transactions during the fiscal year 2014:

On January 1: issued $10,000 of 6%, 5 year bonds at 102. Straight-line amortization method is used. Interest is payable semi-annual on July 1 and Jan 1.

On July 1: issued $500,000 of 10%, 10-year bonds at 88.5. Straight-line amortization method is used. Interest is payable semi-annual on July 1 and Jan 1.

On July 1: issued $10,000 of 8%, 10-year bonds for $10,853 cash. Straight-line amortization method is used. Interest is payable semi-annual on July 1 and Jan 1.

Requirements:

Prepare 3 separate journal entries for the issuance of the 3 bonds on Jan 1 and July 1.

Prepare journal entry for the payment of interest on July 1 for the bonds issued on Jan 1, assuming no prior accrual (note: should also include amortization of the premium).

Prepare separate journal entries for the accrual of interests on December 31 for all 3 bonds (should also include amortization of any premium or discount)

Question 5

XYZ selling price is $100 per unit, variable cost is $50 per unit and fixed cost is $2,500.

Requirements:

What is the break-even point in sales dollars and in units if the fixed factory overhead increased by $1,700?

What is the break-even point in sales dollars and in units if costs remain as originally projected?

Question 6

XYZ manufactures tote bags. It costs $8 per unit ($5 variable and $3 fixed) to make a product that normally sells for $10. A buyer offers to buy 50,000 footballs for $7.50 each. Sufficient capacity exists to manufacture the extra footballs and normal sales will not be affected.

Requirements: Prepare an incremental analysis schedule to demonstrate the net income (loss) XYZ would realize by accepting the special order. Should the order be accepted?

Question 7

RSW Company manufactures 10,000 units of wheel sets for use in its annual production. Costs are direct materials $20,000, direct labor $55,000, variable overhead $45,000, and fixed overhead $70,000. The company has an opportunity to instead buy 10,000 units of wheel sets for $18 per unit. If RSW buys the units, all variable cost will be eliminated but only $40,000 of the fixed overhead applied to the wheel sets would be eliminated. Additionally, some of the facilities presently used to manufacture the wheel sets could be rented to a third party at an annual rental of $15,000.

Requirements: Prepare an incremental analysis schedule to demonstrate if RSW should make or buy the wheel sets.