PRINCIPLES OF ACCOUNTING 2 GRADED PROJECT.DOCX

PRINCIPLES OF ACCOUNTING 2 GRADED PROJECT

Directions: Be sure to make 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 a minimum of one (1) single-spaced page to a maximum of two (2) pages in length; refer to the “Assignment Format “page for specific format requirements. Assignment Details: This assignment will include the three-part graded project described below and 30 multiple choice exam questions covering this lesson, Corporations and Bonds Payable and the next lesson Investments and Cash Flow.

The combined project and exam portions of this Assignment total 100 points. You should complete your work for this project at this time and submit it with the exam questions (available at the Assignments tool) after your next lesson.

Part A
(5 points each for a possible total of 10 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

Noncash assets are sold for $275,000. Profits and losses are shared
equally.
After all liabilities are paid, divide the remaining cash amongst the
partners.

76 PRINCIPLES OF ACCOUNTING 2

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

If the Other Assets are sold for $10,000, how much will each partner
receive before paying liabilities and distributing the remaining
assets?
If the Other Assets are sold for $8,000, how much will each partner
receive before paying liabilities and distributing remaining assets?

Part B

 (10 points each for a possible total of 20 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

PRINCIPLES OF ACCOUNTING 2 77

Part C

(10 points each for a possible total of 20 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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