Intermediate I: Comprehensive SG Answers

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Intermediate IComprehensive SG Answers
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Classified B/S (1)

• H I
• F
• A
• A usually , sometimes B
• F
• G
• (F)
• (A)
• B .. Because Long term

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Classified B/S (2)

• B
• X expense is on I/Stmt
• F
• F
• (J)
• (HIJ) .. Subtracted at bottom of S/Eq
• B maybe E
• B
• A prepaid CA

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Classified B/S (3)

• B
• A
• I
• A
• F
• F
• C
• X on I/Stmt
• X not a liability until earned

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Classified B/S (4)

• D
• D
• H not paid in cash .. Not CL
• F
• B for LT Purpose. Similar to Sinking Fund
• J
• J
• F 36. (F)

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Classified B/S (5)

• F this is the unearned side
• A this is the prepaid side
• A .. Type of inventory
• A Type of inventory
• ( C )
• F
• C
• ( C )
• J

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Classified B/S (6)

• F .. Move to liabilities side
• X .. On I/Stmt
• (A) or (B) if Long Term contra account to
  Installment Receivable
• What would Billings be?
• Contra to CIP (A)

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Concepts I (1)

• Comparability
• Industry practice
• Consistent
• Verifiable
• Timely
• Historical Cost
• Conservatism
• Stable dollar/monetary unit assumption

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Concepts I (2)

• Conservatism
• Matching
• Economic Entity Concept
• Matching
• Historical cost
• Materiality

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Concepts II

• ECONOMIC ENTITY Not a company expense .. Dr.
  W/drawals
• REALIZATION/RECOGNITION PRINCIPLE not
  earned/realized
• Fails DEFINITION OF AN ASSET.. probable future
  sacrifice .. Too conservative
• HISTORICAL COST .. Not realized
• Record Jan2 .. Not earned until title passes
  REALIZATION/RECOG.

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Closing/Balances etc. (1)

• Stmt Bal CGS? Closed? Dr/Cr/C
• Cash B D N N
  N/A
• F. In I D Y Y
  C
• Purch I D Y Y
  C
• S. Ret I D N Y
  C
• S. Dis I D N Y
  C
• A Depr B C N N
  N/A
• Dep Exp I D N Y
  C
• RentE I C N Y
  D

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Closing/Balances etc. (2)

• Stmt Bal CGS? Closed? Dr/Cr/NA
• SupU I D N Y
  C
• PpdIns B D N N
  NA
• UnRent B C N N
  NA
• RE B C N N
  NA
• WDraw B D N Y C
• PDisc I C Y Y
  D
• Tout I D N Y
  C
• AR B D N N
  NA

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Closing/Balances etc. (3)

• Stmt Bal CGS? Closed? Dr/Cr/NA
• PrBP B C N N
  NA
• D NR B C N N
  NA
• Invest B D N N
  NA
• DepExp I D N N
  NA
• CStk B C N N
  NA
• AP B C N N
  NA
• SD Lost I C N Y
  D
• EI B and I D Y N
  NA

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Closing/Balances etc. (4)

• Stmt Bal CGS? Closed? Dr/Cr/NA
• Repairs I D N Y
  C
• Rearr. I or B? D N ?
  ?
• LImpr B D N N
  NA
• IntRev I C N Y
  D

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NOTE PROB A

• 50,000 PV up front (cash equiv.)
• 3 pmts at END of next 3 yrs .. 6 rate
• PVOA concept
• 50,000 X (PVOA factor for 3 per, 6)
• 50,000 X ( 2.67301)
• X 50,000/2.67301 18,706

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NOTE PROB A entries (1)

• Eq 50,000 N/R 50,000
• N/P 50,000 Sales
  50,000
• CGS
  ??
• 
  Inventory ??
• Int Exp 3,000 Cash 18706
• N/P 15,706 Interest Rev
  3000
• Cash 18706 N/R
  15706
• New CV 50,000 15706 34294

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NOTE PROB A entries (2)

• New CV 34294 X .06 2058 Interest
• Int Exp 2058 Cash 18706
• N/P 16648 Int Rev 2058
• Cash 18706 N/R 16648
• New CV 34294-16648 17646 X 6 1059

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NOTE PROB A entries (3)

• New CV 34294-16648 17646 X 6 1059
• Int Exp 1059 Cash 18706
• N/P 17646 Int Rev
  1059
• Cash 18706 N/R
  17646
• Doesnt balance by 1
• fudge Int Exp/revenue to 1060

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NOTE PROB B

• Pays 120,000 after 2 yrs. 6
• 120,000 (PV of 1 factor for 2 periods, 6)
• 120,000 ( .890) 106,800
• Equip 106,800 N/R 120,000
• Disct 13,200 Disct
  13,200
• N/P 120,000 Sale
  106,800
• CGS ??
  
• 
  Inventory ???

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NOTE PROB B (2)

• Equip 106,800 N/R 120,000
• Disct 13,200 Disct
  13,200
• N/P 120,000 Sale
  106,800
• Note CV 120,000 13,200 106,800
• 106,800 X 6 Interest of 6408
• Int. Exp 6408 NRDisct 6408
• NP Disct 6408 Int Rev 6408
• New CV 106,800 6408 113,208

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NOTE PROB B (3)

• New CV 120,000 6792 113,208 X 6 6792
• Int Exp 6792 NRDisct 6792
• NPDisc 6792 Int Rev
  6792
• Double check ..
• Wrote off 6408 6792 13,200
• N/P 120,000 Cash 120,000
• Cash 120,000 N/R 120,000

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Adjusting Entries

• Ins Exp shows dr. balance of 2400 which is the
  cost of a 2 yr fire insur. policy dated Aug 1 of
  current yr.
• What adjusting entry?
• Correct expense 500 .. So
• Ppd 1900
• Ins Expense 1900

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Adjusting Entries

• On Nov 1, Unearned Rev was credited for 1800,
  representing 3 months rent.
• What is the adjusting Entry Dec 31 no
  adjustment was made in Nov.
• 2 month or 1200 is earned, 600 still unearned
• Unearned Rent 1200
• Earned Rent Revenue 1200

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Adjusting Entries

• Purchased 1000 of advertising materials in
  December was dr. to Expense at that time.
• On Dec 31 what is the adjusting entry if 200 is
  still on hand?
• Ppd Supplies 200
• Supplies Expense 200

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Questions?