Accounting Answers

Anson Company had 8,000,000 shares of common stock outstanding on December 31, Year 11. Anson issued an additional 1,200,000 shares of common stock on April 1, Year 12, and 1,000,000 more on July 1, Year 12. On October 1, Year 12, Anson issued 50,000 of $1,000 face value 4% convertible bonds. Each bond is convertible into 20 shares of common stock. No bonds were converted into common stock in Year 12. What is the number of shares to be used in computing basic earnings per share and diluted earnings per share, respectively, in Year 12? 

A. 8,000,000 and 8,000,000

B. 9,400,000 and 9,400,000

C. 9,400,000 and 9,650,000

D. 7,500,000 and 8,500,000

Charley Wholesalers trade in textiles. They make use of the perpetual inventory system. Charley Wholesalers entered into the following transactions during March 2019: Date Details 1 The owner Charley Wholesalers contributed R100 000 from his personal funds to the business 7 Cashed a cheque of R3 000 for petty cash 15 Purchased merchandise (trading inventory) by cheque, R30 000 18 Acquired a business loan of R50 000 from the bank 27 Paid off R10 000 on the bank loan

costello corporation uses a perpetual inventory system. at the end of the year, the inventory balance reported by its system is $45,270. costello performs an inventory count and determines that the actual ending inventory is $39,780. discuss why a company that uses a perpetual inventory system would still go to the trouble to perform a physical inventory count. why might the ending balance differ between the perpetual inventory system and physical inventory count? assume that costello determines that the difference between the perpetual records and the physical count is due to an accident that occurred during the year. what journal entry should costello make? assume that costello believes the difference between the perpetual records and the physical count is due to errors made by the company’s accounting staff. on occasion, the staff fail to transfer inventory to cost of goods sold when a sale were made. what journal entry should costello make in this case?

Problem 1 The prepaid insurance account had a balance of $4,750 at the beginning of the year. The account was debited for $5,150 for premiums on policies purchased during the year. Prepare the adjusting entry required at the end of the year under each of the following alternatives; (a) the amount of unexpired insurance applicable to future periods is $4,300. (b) The amount of insurance expired during the year is $5,550. 

ABC Acquired 80% of XYZ shares on 1 January 2019. The purchase consideration was Sh. 11 million cash upfront and an additional Sh. 800,000 payable if XYZ maintains profit margin of 30% for the period ending 31 December 2019. XYZ has one million shares and was trading at Sh. 14 per share prior to acquisition. The fair value of net identifiable assets of XYZ on acquisition date was Sh. 12 million. Required: Calculate Goodwill recognized on 1 January 2019 using the fair value method.

Debit Supplies Expense

Credit Supplies Inventory

• What does this journal entry mean?

Debit Rental Revenue

Credit Unearned Rent

• What does this journal entry mean?

Debit Prepaid Expense

Credit Cash

• You make an advance payment and pay cash right?

On 28 December 2020, the net realisable value of trading stock bought on 2 December 2020 was R100 000. A write down of R5 000 was approved but not yet processed.

Recognise in the general journal

Group Accounting Homework 7:

IGNORE VAT AND TAXATION

Peazy purchased 100% of the equity shares (and voting rights) of Simple in exchange for a 

cash payment of R900 000 on 1 September 2020. At acquisition date, the total assets of Simple 

had a carrying value of R2 500 000 and its total liabilities had a carrying value R2 000 000.

The equity of Simple at acquisition date consisted of share capital and retained earnings 

amounting to R200 000 and R300 000 respectively. The fair values of Simple’s property, plant 

and equipment was undervalued by R500 000 and provisions (liabilities) amounting to 

R100 000 was not recognised at the acquisition date.

REQUIRED:

a) Calculate the fair value of the net asset acquired as part of the business combination at 

acquisition date.

(5 Marks)

b) Process the pro forma journal entry/ies required to prepare the consolidation trial balance 

at acquisition date.

(5 Marks)

ABC Acquired 80% of XYZ shares on 1 January 2019. The purchase consideration was Sh. 11 million cash upfront and an additional Sh. 800,000 payable if XYZ maintains profit margin of 30% for the period ending 31 December 2019. XYZ has one million shares and was trading at Sh. 14 per share prior to acquisition. The fair value of net identifiable assets of XYZ on acquisition date was Sh. 12 million. Required: Calculate Goodwill recognized on 1 January 2019 using the fair value method.

Company ABC Ltd operates in the Health services sector and employs mainly contract doctors and nurses for subcontracting out to local hospitals. 

You have used your skills acquired in BUS106 and have found that Health services sector averages for financial ratios/information are as follows:

Overheads = are generally high due to the high cost of employing medical professionals including doctors and surgeons

Operating margin = 40%

Net profit margin = 15%

Quick ratio = 2.5

On average entities in this sector have very little debt.

Required:

Company ABC has a current ratio of 0.5, a debt ratio of 65% and a net profit margin that is negative. Discuss the position and performance of Company ABC in no more than 250 words.