A03 Principles of Accounting II
Directions: Be sure to save an electronic copy of your answer before submitting it to Ashworth College for grading. Unless otherwise stated, answer in complete sentences, and be sure to use correct English, spelling and grammar. Sources must be cited in APA format. Your response should be four (4) double-spaced pages; refer to the "Assignment Format" page located on the Course Home page for specific format requirements.
Part A (15 points each for a possible total of 30 points)
1. After several years of business, Abel, Barney, and Cole are liquidating. The following are post-closing account balances.
Cash 18,000
Inventory 73,000
Other assets 157,000
Accounts Payable 61,000
Abel, Capital 50,000
Barney, Capital 50,000
Cole, Capital 87,000
Non-cash assets are sold for $275,000. Profits and losses are shared equally.
After all liabilities are paid, divide the remaining cash amongst the partners.
2. The partnership of Brandon and Ryan is being liquidated. All gains and losses are shared in a 3:1 ratio, respectively. Before liquidation, their balance sheet balances are as follows:
Cash $10,000
Other Assets 8,000
Liabilities 4,000
Brandon, Capital 7,000
Ryan, Capital 7,000
a. If the Other Assets are sold for $10,000, how much will each partner receive before paying liabilities and distributing the remaining assets?
b. If the Other Assets are sold for $8,000, how much will each partner receive before paying liabilities and distributing remaining assets?
Part B (20 points each for a possible total of 40 points)
1. Simon Brothers pays $47,000 into a bond sinking fund each year to redeem the future maturity of its bonds. During the first year, the fund earned $3,825. At the time of bond redemption, the fund has a balance of $417,000. Of this, $400,000 was used to redeem the bonds. Journalize the following entries.
a. Initial deposit
b. The first year's interest
c. The redemption of the bonds
2. On January 1, Auctions Online issued $300,000, 9%, 10-year bonds to lenders at the contract rate. Interest is to be paid semiannually on July 1 and January 1. Journalize the following entries.
a. Issued the bonds
b. Paid first semiannual interest payment
c. Retired the bonds at maturity
Part C (15 points each for a possible total of 30 points)
1. Prepare a statement of retained earnings in proper form for White Corporation for the year ended December 31, 2012, from the following:
Retained Earnings, January 1, 2012 $2,000
Dividends paid during the year 800
Net income for the year 3,000
Correction of prior year error. Purchase
of land recorded as rent expense 1,000
2. Curtis Corporation's balance sheet included the following:
Common Stock, $5 par value, 5,000 shares issued
and outstanding $25,000
Retained Earnings 20,000
Total Stockholders' Equity $45,000
Prepare journal entries for the following transactions.
May 3 Issued 500 shares at $6 per share.
9 Reacquired 100 shares at $4 per share.
15 Reissued 50 of the Treasury shares at $7 per share.
17 Reissued 10 of the Treasury shares at $3 per share.
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