会计英语2(Review)1.doc

Review
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一、Available-for-sale
1、W Co. made the following available-for-sale securities transactions:
2011
Jan 14 Purchased 5,0000 shares of C Corporation stock at $20 per share
Mar 1 Received a cash dividend of $0.30 per share on the C Corporation stock
Dec 31 The market value of the C Corporation stock was $18per share.
2012
May 8 Purchased 20,000 shares of C Corporation stock at $26 per share
Jun 1 Received a cash dividend of $0.40 per share on the C Corporation stock
Aug 1 sold 10,000 shares of C Co. stock at $28 per share.
Dec 31 The market value of the C Corporation stock was $18per share.
Required: Prepare the journal entries required to record each of these events

2、Prepare journal entries to record the transactions.
In January 2004, S Inc. determined that it had excess cash on hand and decided to invest in H Company stock. The company intends to hold the stock for a period of three to five years, thereby making the investment an available-for-sale security. The following transactions took place in 2004, 2005, 2006
2004 Jan．17 Purchased 2750 shares of H Company stock for $89500.
May 10 Received a cash dividend of $1.30 per share on H Company stock.
Dec. 31 The market value of the H Company stock was $30 per share.
2005 May 22 Purchased 750 shares of H Company stock at $40 per share.
July 18 Received a cash dividend of $0.90 per share on the H Company stock.
Dec. 31 The market value of the H Company stock was $42 per share.
2006 June 7 Received a cash dividend of $1 per share on the H Company stock.
Oct. 5 Sold the H Company stock 1000 shares at $27 per share for cash.
Dec. 31 The market value of the H Company stock was $25 per share.
Required: Prepare the journal entries required to record each of these events

二、long-term investment
1、Presented below are two independent situations:
Situation I
C company acquired 10% of the $200 000 shares of common stock of M company at a total cost of $13 per share on March 18, 2006. On June 30, M declared and paid a $75 000 cash dividend.
On December 31, M reported net income of $122 000 for the year. At December 31, the market price of M was $15 per share. The securities are classified long-term investment.
Situation II
M Inc. obtained significant influence over S Corporation by buying 30% of S’ $3 000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2006. On June 15, S declared and paid a cash dividend of $36 000. On December 31, S reported a net income of $85 000 for the year.
Required Prepare all necessary journal entries in 2006 for both situations.
2、Situation I
F Company acquired 15% of 400,000 of common stock of M Company at total cost of $25 per share on Mar.28, 2009. On June 30 and on Dec.30. M Company declared and paid a $340,000 cash dividend respectively. On Dec 31. M Company reported net income of $820,000 for the year. The securities are classified as available-for –sale.
Situation II
M Company obtained significant influence over S Company by buying 40% of S Company’s 50,000 shares of outstanding common stock at a total cost of $11 per share on Jan 1,2009. On June 15, S Company declared and paid cash dividend of $255,000. On Dec 31, S Company reported a net income of $620,000 for the year.
Required:
Prepare journal entries using cost method and equity method

3、A company acquired 40% of B company’s voting stock for $300000 on January 2,2007. A’s 40% interest in B give A the ability to exercise significant influence over B’s operating and financial policies. During 2007, B earned $200000 and paid dividends of $150000. B reported earnings of $100000 for the six months ending June 30,2008, and $140000 for the year ending December 31,2008. On July 1, 2008, A sold half of its stock in B for $195000 cash. B paid dividends of $60000 on December 23,2008.
Required:
Prepare journal entries using cost method and equity method

三、Treasury stock
1、Cable transmissions engaged in the following transactions involving treasury stock:
Nov 10 Purchased for cash 12,500 shares of treasury stock at a price of $40 per share.
Dec 4 Reissued 5,000 shares of treasury stock at a price of $44 per share.
Dec 12 Reissued 7,500 shares of treasury stock at a price of $38 per share.
Dec 18Purchased for cash 40,000 shares of treasury stock at a price of $36 per share.
Dec 4 Reissued 25,000 shares of treasury stock at a price of $34 per share.
Dec 12 Reissued 5,000 shares of treasury stock at a price of $32per share.
Required:
Prepare general journal entries to record these transactions.

2、Cable transmissions engaged in the following transactions involving treasury stock:
Nov 10 Purchased for cash 12,500 shares of treasury stock at a price of $30 per share.
Dec 4 Reissued 5,000 shares of treasury stock at a price of $33 per share.
Dec 12 Reissued 7,500 shares of treasury stock at a price of $29 per share.
Dec 18Purchased for cash 40,000 shares of treasury stock at a price of $28 per share.
Dec 4 Reissued 25,000 shares of treasury stock at a price of $27 per share.
Dec 12 Reissued 5,000 shares of treasury stock at a price of $26per share.
Required:
Prepare general journal entries to record these transactions.
四、stock dividend，stock split & EPS
Glass corporation has 500,000 shares of $10 par value capital stock outstanding. You are to prepare the journal entries to record the following transactions:
Mar 1 Distributed an additional 500,000 shares of capital stock in a 2 for 1 stock split. Par value per share was reduced from $10 to $5.
June 1 declared a cash dividend of 60 cents per share.
July 1 paid the 60 cent cash dividend to stock holders.
Aug 1 declared a 10% stock dividend. Market price of stock was $20 per share.
Oct 1 issued 100,000 shares to the 10% stock dividend.
Dec 1 declared a 30% stock dividend. Market price of the stock was $25 per share.
Dec 31 The net income of the corporation in the current year was $600,000
Prepare general journal entries to record the above transactions and calculate the EPS.

五、held-to-maturity securities
1、On Dec31,2007, when the market interest rate was 10 percent , an investor purchased $20,000 of Bail Corp. 6-year, 8-percent coupon rate bonds at issuance. Determine the cost (present value) of this long-term bond investment, which the investor expected to hold to maturity. Journalized the purchase on Dec 31,2007. The first semiannual interest receipt was on June 30,2008 and the year-end interest receipt on Dec 31,2008. The investor uses the effective amortization method.
Required:
1Determined the cost (present value) of this long-term bond investment.
2Using the effective interest method to amortizing the bond investment through 2008-2009.
Additional information:
Present Value of $1
Period (year)
4%
5%
8%
10%
3
0.8890
0.8638
0.7938
0.7513
6
0.7903
0.7462
0.6302
0.5645
12
0.6246
0.5568
0.3971
0.3186
Present Value of an ordinary annuity $1
Period (year)
4%
5%
8%
10%
3
2.7551
2.7232
2.5771
2.4869
6
5.2421
5.0757
4.6229
4.3553
12
9.3851
8.8633
7.5361
6.8137

Date
Cash received
Interest Revenue
Discount Amortized
Unamortized
Discount
Carrying Amount of Bonds

2、On December 31, 2007, when the market interest rate is 8 percent, an investor purchases $500 000 of Bail Corp. 6-year, 10-percent bonds at issuance. Determine the cost (present value) of this long-term bond investment, which the investors expect to hold to maturity. Journalize the purchase on December 31, 2007, the first semiannual interest receipt on June 30, 2008, and the year-end interest receipt on December 31, 2008. The investor uses the effective amortization method.
Required:
(1). Determine the present value of the bond on Dec.31, 2007.
(2). Use the interest method to amortize the premium of the bond through 2008-2009.
(3). Prepare a journal entry to record the interest received and premium amortization of the bond for June 30, 2008. (15%)
Date
Cash received
Interest Revenue
premium Amortized
Unamortized
premium
Carrying Amount of Bonds

六、The statement of cash flow
1、Net changes in the non cash balance sheet accounts of the E Co. during the year ended December 31,2008 are listed below:
Increase Decrease
Current assets other than Cash $1500000
Plant, property and equipment
Accumulated Depreciation
Land
Patents
Current liabilities
Non-current liabilities
Stockholder’s equity
Retained earnings
Additional facts are as follows:
1) E. Co. sustained a net loss during 2008 of $400000,including a loss of $500000 on the sale of land having a book value of $1600000
2) 100000 shares of common stock were sold at $8 per share.
3) A cash dividend of $100 000 was paid. No stock dividends were declared.
Required using the indirect method to prepare a statement of cash flows.

2.The following data are taken from the records of Fuhe Company:
Fuhe Company
Income Statement
Dec.31, 2008
Sales $2000
Less: Cost of goods sold (1200)
Gross profit 800
Less: General and administrative expense (350)
Plus: Gain on sale of building 50
Less: Loss on the sale of land (100)
Earning before Tax 400
Less: Income tax expense 100
Net Income $300

Balance Sheets
December 31, 2008 and 2007
Assets 2008 2007
Cash $310 $80
Accounts Receivable 110 180
Inventory 160 130
Prepaid expense 100 90
Current Assets 680 480
Buildings 1,800 1,600
Land 2,100 2,000
Total Assets $4,580 $4,080
Liabilities and Stockholders’ Equity
Accounts payable $700 $800
Salaries payable 200 100
Income Taxes payable 100 80
Current liabilities 1,000 980
Long-Term bank loans 2,300 2,220
Total liabilities $3,400 $3,200
Owners’ equity 1,180 880
Total Liabilities and Stockholders’ Equity $4,580 $4,080
1. Fuhe Co. bought and sold buildings during the year. The historical cost of the building that was sold was $700.
2. Fuhe Co. bought and sold land during the year. The historical cost of the land that was sold was $800.
Required Prepare B’s statement of cash flows for 2006, using the indirect or direct method.