Practical Accounting Problems 1

CPAR HO#5764
1 Cash (600 - 200)
AR
Inventory
Prepaid expenses
Land held for resale
Current assets

400,000
700,000
1,200,000
200,000
2,000,000
4,500,000 A

2 AP
Dividends payable
Income tax payable
Note Payable
Current liabilities

1,900,000
500,000
900,000
600,000
3,900,000 C

3 Unadjusted net assets

Treasure shares included as investment
Total adjusting events

8,750,000
(250,000)
8,500,000 A

4 Income before taxes (560,000 / 70%)

Divide by (100% - ((20% / 40%) + 20% + 5%)
Adjustment toliability

800,000
25.00%
3,200,000 D

5 Accounting and legal

Officers salaries
Insurance
Generaland admin.expense

250,000
1,500,000
850,000
2,600,000 A

6 Net sales revenue

Interest
Gain on sale
Total revenue

2,000,000
100,000
50,000
2,150,000 D

7 Unadjusted income
Dividend from equity investedd
Correction of an error
G&A expenses

5,000,000
(320,000)
1,400,000
6,080,000 D

8 Building (15M x 12/15) / 10

Machinery (10.5M x 7/10) /
Furniture (3.5M x 4/7) /5
Total depreciation

1,200,000
1,050,000
400,000
2,650,000 A

9 2013 Depreciation (3,072 - 200) / 8

10 Combined segment profit

359,000 D
406,000 D

11 Checkbook balance
NSF check
Undelivered check
Coins and currencies
Total cash

8,000,000
(3,000,000)
2,500,000
800,000
8,300,000 C

12 Disbursements per bank

Outstanding checks - June
Outstanding checks - July
Cash and cash equivalents

9,000,000
(1,400,000)
1,000,000
8,600,000 A

Practical Accounting Problems 1

CPAR HO#5764
13 Trade accounts receivable
Allowance
Claims receivable
Total current net receivables

930,000
(20,000)
30,000
940,000 D

14 ADA 1/1
Writeoffs
Recovery
Interim provisions (20M x 4%)
Balance before adjustment
Additional writeoff
Credit adjustment on 12/31
ADA 12/31 per aging

1,000,000
(200,000)
50,000
800,000
1,650,000
(100,000)
100,000 B
1,650,000

15 Face value
Less: Unamorized discount (10.8% x 5M x 7/12)
Carrying amoun

5,000,000
315,000
4,685,000 C

16 Face value
Interest on maturity
Maturity value
Less: Discount (5.45m X 12% x 8/12)
Proceeds
Less: Total receivable
Loss on discounting

500,000
50,000
550,000
33,000
517,000 D
525,000
(8,000)

17 Face value of 5 year note

Interest to be paid on maturity (5M x 3% x 5)
Total cash flow on maturity date
PV factor
Carrying amount to be presented
Face value of 9 month note
Total carrying amount

2,000,000
300,000
2,300,000
0.68
1,564,000
2,000,000
3,564,000 D

18 Face value of loan

Direct cost
Total
Less: Nonrefundable loan origination fee (4%)
Carrying amoun of loan receivable

1,500,000
40,000
1,540,000
60,000
1,480,000 B

The direct cost is added to carrying amount while loan origination fee is deducted from
carrying amount and indirect cost is an expense
19 Revenue from desks produced guaranteed by government contract

550,000 C

20 Goods out on consignment plus freight

1,900,000 B

21 Physical count
Goods in transit purchased FOB shipping point
Correct amount of inventory

6,000,000
300,000
6,300,000 D

22 Unadjusted accounts payable

Undelivered check
Unrecorded invoice - net method
Adjusted accounts payable

4,500,000
2,000,000
735,000
7,235,000 C

23 Carrying amount 1/1

Increases due to purchase
Gain form price change
Gain from physical change
Decreases due to sales
Decreases due to harvest
Carrying amount 12/31

5,000,000
2,000,000
400,000
600,000
(850,000)
(200,000)
6,950,000 A

Practical Accounting Problems 1

CPAR HO#5764
24 COGS (6M - 2.4M)
Less: Costs sold from purchases
7/12 (14,000 x 60)
6/9 Purchases
6/5 Purchases
Cost of beginning inventory

3,600,000
840,000
756,000
650000

2,246,000
1,354,000 A

25 Estimated cost of goods sold (7,280,000 / 130%)

5,600,000 D

26 GAS at retail (1M + 6.3m + 700 - 500)

Less: Sales and shoplifting lossess
EI at retail
Cost ratio (4.8 / 8)
Estimated cost

7,500,000
6,800,000
700,000
60.00%
420,000

27 Stock dividends and equity method are not income

0 D

28 Cost
Share in net income (4M x 20%)
Amortization of half of inventory (1M x 20% x 1/2)
Dividends received
Carrying amount

5,000,000
800,000
(100,000)
(300,000)
5,400,000 A

29 Investment income (6M x 30% x 6/12)

30 Cost of long term investment
Add: Amortization
Effective interest
Nominal interest
Carrying amount 12/31/10
Add: Amortization
Effective interest
Nominal interest
Carrying amount 12/31/11
31 Premium
Less: Increase in CSV
Life insurance expense
32 Dollar value of YEN on 11/1/13
Dollar value of YEN on 12/31/13
Derivative asset
33 Average expenditures
Capitalization rate
Captalizable Borrowing cost on GENERAL borowings

900,000 B
4,562,000
456,200
400,000

461,820
400,000

56,200
4,618,200

61,820
4,680,020 A
60,000
25,000
35,000 C
435,000
398,750
36,250 C
12,500,000
12.00%
1,500,000 C

34 Down payment
PV of installments (200,000 x 4.712)
Cost of the machine

200,000
942,400
1,142,400 D

35 FV of old machine (4M - 1.2M)

Less: Carrying amount
Loss on exchange

2,800,000
3,500,000
(700,000) C

36 FV of building
Repairs and remodelling
Total cost

4,000,000
600,000
4,600,000 B

37 Acquisiton cost of equipment

Direct cost and estimated dismantling cost
Capitalized cost of equipment

2,500,000
1,800,000
4,300,000 A

38 All cost are capital expenditures

1,650,000 A

39 Full Year Depreciation (3M x 5/15)

9 Months Depreciation (3M x 4/15 x 9/12)
Accumulated Depreciation 12/31/14

1,000,000
600,000
1,600,000

40 Jan to June Depreciation (6.4M x 25% x 6/12)

July to Dec Depreciation (4.8M x 25% x 6/12)
2014 Depreciation

800,000
600,000
1,400,000

41 Depletable amount (36M + 10.8M + 1.8M) - 3.6M

Divide by estimated output
Depletion rate
Depletion in COS (11.25 x 300,000)

45,000,000
4,000,000
11.25
3,375,000 B

Practical Accounting Problems 1

CPAR HO#5764
42 Carying amount June 30
Less: Additional depreciation
Carrying amount Dec. 31
Fair value
Less: Carrying amount
Revaluation Surplus
43 Patent amortization (1,680,000 / 6 years)
Non competion contract (200,000 / 5)
Total amortization of intangibles
44 Cost of patent
Less: Amortization (4.5M /15 x 3)
Carrying amount 1/1/13
Sales price
Less: Carrying amount
Gain on sale
45 Cost
Less: Accumulated depreciation ((5,600,000 - 800,000) / 96 x 44)
Carrying amount at date of impairment testing

5,250,000
375,000
4,875,000
6,825,000
4,875,000
1,950,000 B
280,000
40,000
320,000 A
4,500,000
900,000
3,600,000
7,500,000
3,600,000
3,900,000 D
5,600,000
2,200,000
3,400,000 B

The recoverable amount of 175,000 is higher than the carrying amount, therefore the asset is not
impaired.
46 Purchase price
Less: FV of net assets (32M + 7.5M - 5M + 2M)
Goodwill

40,000,000
36,500,000
3,500,000 A

47 Depreciation of R&D equipment for various projects (1.8M / 4)

Engineering cost
Total R&D

450,000
1,200,000
1,650,000 A

48 Cash paid
PV of future installments (2.91 x 2,000,000)
Cost of franchise

4,000,000
5,820,000
9,820,000 C

49 Amortization of LHI (3.6M /6)

50 Legal fees and meeting of incorporating

600,000 D
1,400,000 A