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Review Exercise

Review Exercise. Chapter. 11, 13 - 15. Exercise 1: Warranty Expense (Chap 11). August,16,2005 Chang Co. sold copier costing $3,800 with $5,500 cash Nov,22,2006 on-site repair of the copier with $199 repair inventory Chang expect warranty cost of 4% of dollar sales.

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Review Exercise

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  1. Review Exercise Chapter 11, 13-15

  2. Exercise 1: Warranty Expense (Chap 11) • August,16,2005 Chang Co. sold copier costing $3,800 with $5,500 cash • Nov,22,2006 on-site repair of the copier with $199 repair inventory • Chang expect warranty cost of 4% of dollar sales

  3. Exercise 2: Cumulative & Noncumulative Preferred Stock Dividend (Chap 13) • Citicool’s outstanding stock consist of 40,000 shares of noncumulative 7.5% preferred stock with $10 par value, 100,000 shares of common stock with $1 par value • How about dividend for two type stock if preferred stock is cumulative?

  4. Exercise 3: Treasury Stock (Chap 13) Oct,10 Nobel System’s statement of Stockholders’ Equity • Prepare Journal Entry • Oct,11 Purchase 4,500 shares of its own stock with $30 per share • Nov,1 Sell 1,200 shares with $36 per share • Nov,25 Sell remaining treasury stock for $25 per share • Nobel’s statement of stockholder’s equity before treasury stock purchase (oct,10) and after.

  5. Exercise 4: Bond Issuance, Bond Discount Amortization & Bond Retirement (Chap 14) January 1,2004 Steadman issue $350,000 of 10%, 15-year bond at a price 97.75. Six years later, Jan,1,2010 Steadman retires 20% of the bond with price 104.50. All interest paid before purchase. Straight-line amortization is used. • Journal Entry for Bond Issue • Amortization of Bond Discount 1/1/2004-12/31/2009 • Carry value of Bond and 20% of Bond • Journal Entry of retirement of 20% Bond

  6. Exercise 5: Installment Note with Equal Payments or Equal Principal Payments (Chap 14) January 1,2005, Randa borrow $25,000 cash by signing a 4-year 7% Installment Note, Randa will pay equal payment on Dec,31,2005- 2008 • What’s the amount of equal payment? • Amortization of Equal Payment • How about if Randa pay Equal Principal Payment?

  7. Exercise 6: Equity Method (Chap 15) Kash Company 2005 Jan,2 Purchase 30,000 shares of Bushtex Co. common stock for $204,000 cash and broker’s fee $3,480 cash. Bushtex has 90,000 shares outstanding Sept,1 Bushtex declare and Paid a Cash dividend $3.10 Dec,31 Bushtex announce Net income of $624,900 2006 June,1 Bushtex declare and Paid a Cash dividend $3.60 Dec,31 Bushtex announce Net income of $699,750 Dec,31 Kash sold 10,000 shares of Bushtex for $162,500

  8. Exercise 7: Trading Portfolio (Chap 15) Dec,27,2005 Forex Co. purchase investment in trading securities at a cost of $56,000 Dec,31,2005 these securities had a market value of $66,000 This is first and only purchase of such securities

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