1. Was Lester’s Home Healthcare Services organized as a partnership or corporation? Explain the basis for your answer.
2. During the first month, the records of the company were inadequate. You were asked to prepare the summary of the preceding transactions. To develop a quick assessment of their economic effects on Lester’s Home Healthcare Services, you have decided to complete the spreadsheet that follows and to use plus (+) for increases and minus (-) for decreases for each account. The first transaction is used as an example.
3. Did you include the transaction between the two stockholders—event c—in the spreadsheet? Why?
4 .Based only on the completed spreadsheet, provide the following amounts (show computations):
5. As of January 31, 2005, has the financing for LHHS’S investment in assets primarily comes from liabilities or stockholders’ equity?
Complete the spreadsheet that follows, using plus (+) for increases and minus (-) for decreases for each account. The first transaction is used as an example.
Did you include event h in the spreadsheet? Why or why not?
Based on beginning balances plus the completed spreadsheet, provide the following amounts (show computations):
Total assets at the end of the year. $ 749,000
Total liabilities at the end of the year. $ 349,000
Total stockholders’ equity at the end of the year $ 400,000
As of December 31, 2006, has the financing for MI’S investment in assets primarily comes from liabilities or stockholders’ equity.
50 point problem set
1.ABC Co sold equipment that have a 2 year warranty. Based on experience, warranty
costs should be 4% of sales.
Sales during 2012, the first year of selling the product, were $8,000,000. Actual
warranty expenditures during the year were $52,500.
Prepare journal entries that summarize the sales (all sales are on credit)
and any aspect of the warranty that should be recorded in 2012.
2. When would a gain contingency be reported?
3.On 8/1/12 Zeta Company issues a $900,000 non interest bearing note
6 month note to the bank. Interest is discounted at 10%.
Prepare all journal entries related to the note (issuance, year end, repayment)