Bruce Van Company Case Study

2057 Words 9 Pages
Register to read the introduction… | Question : | (TCO C) Presented below is information related to Bruce Van Company. Retained earnings, December 31, 2010 | $650,000 | Sales | 1,400,000 | Selling and administrative expenses | 240,000 | Hurricane loss (pre-tax) on plant (extraordinary item) | 290,000 | Cash dividends declared on common stock | 33,600 | Cost of goods sold | 780,000 | Gain resulting from computation error on depreciation charge in 2009(pre-tax) | 520,000 | Other revenue | 120,000 | Other expenses | 100,000 |

Instructions: Prepare in good form a multiple-step income statement for the year 2011. Assume a 30% tax rate and that 80,000 shares of common stock were outstanding during the year. Show EPS computations as well. | | | Student Answer: | | | | | | Comments: | No Answer | | | 4. | Question : | (TCO D) The following balance sheet was prepared by the bookkeeper for Purple Company as of December 31, 2011 Purple Company Balance Sheet as of December 31, 2011 Cash | $ 80,000 | Accounts payable | $ 75,000 | Accounts receivable (net) | 52,200 | Long-term liabilities | 100,000 | Inventories | 57,000 | Stockholders' equity | 218,500 | Investments | 76,300 | |
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| Question : | (TCO E) Jack Sawyer is presently leasing a copier from John Office Equipment Company. The lease requires 11 annual payments of $2,500 at the end of each year and provides the leaser (John) with an 8% return on its investment. You may use the following 8% interest factors: | 9 Periods | 10 Periods | 11 Periods | Future Value of 1 | 1.99900 | 2.15892 | 2.33164 | Present Value of 1 | .50025 | .46319 | .42888 | Future Value of | | 12.48756 | 14.48656 | Ordinary Annuity of 1 | | | | Present Value of | 6.24689 | 6.71008 | 7.13896 | Ordinary Annuity of 1 | | | | Present Value of | 6.74664 | 7.24689 | 7.71008 | Annuity Due of 1 | | | |
(a) Assuming the computer has an eleven-year life and will have no salvage value at the expiration of the lease, what was the original cost of the copier to John?
(b) What amount would each payment be if the 11 annual payments are to be made at the beginning of each period? |
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Instructions
Prepare schedules to compute the ending inventory at March 31, 2011, under each of the following inventory methods:
(a) FIFO.
(b) LIFO.
(c) Weighted-average.
Show supporting computations in good form. | | | Student Answer: | | a)Under FIFO the most recent purchases are in inventory: 2,100 @ 25= 52,500 900 @ 22= 19,800 Inventory= 72,300 b) Under LIFO the oldest purchases are in inventory: 1,700 @ 17= 28,900 1,300 @ 20= 26,000 Inventory = 54,900 c) Weighted average: 1700* 17 +2600*20 +2400*21+1,000*22 +2100*25= 205,800 205,800/9,800= 21 Inventory is 3,000*21= 63,000 | | | | Comments: | Very Good | | | 8. | Question : | (TCO H) A machine cost $500,000 on April 1, 2010. Its estimated salvage value is $50,000 and its expected life is eight years.
Instructions
Calculate the depreciation expense (to the nearest dollar) by each of the following methods, showing the figures used.
(a) Straight-line for 2010
(b) Double-declining balance for 2011
(c) Sum-of-the-years'-digits for 2011 |

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