BCO123 Accounting II - On April 2, 2019, Orpheus Inc. acquired a new piece

BCO123 Accounting II Task brief & rubrics

Task: Re-sit Assignment (Grade will be capped at 70%)

This task assesses the following learning outcomes:

· Understand the reasons for depreciating fixed assets and prepare the depreciation table.

· Apply acquired knowledge to account for paid-in capital and analyze the equity section of a corporate balance sheet.

· Identify the steps of how irregular income items, such as discontinued operations and extraordinary items are presented in the income statement.

· Prepare and interpret the statement of cash flows.

This assignment includes 4 questions.

QUESTION 1 (30 points)

On April 2, 2019, Orpheus Inc. acquired a new piece of filtering equipment. The cost of the equipment was €160,000 with a residual value of €20,000 at the end of its estimated useful lifetime of 4 years.

Instructions:

Prepare a complete depreciation schedule, beginning with calendar year 2019, under each of the methods listed below (with fractional years rounded to the nearest whole month):

(1) Straight-line (10 points)

(2) 200 percent declining-balance (10 points)

(3) 150 percent declining-balance (10 points)

QUESTION 2 (20 points)

The stockholders' equity section of the balance sheet of Gilbert Corporation (with certain details omitted) appears below:

Instructions:

Answer the following questions based on the stockholders' equity section given above.

(1) What is the total amount of legal capital? (5 points)

(2) How many shares of common stock were issued? (5 points)

(3) What is the total amount of dividends paid annually to the preferred stockholders? (5 points)

(4) What is the average issue price of a share of common stock? (5 points)

QUESTION 3 (25 points)

Shown below is information relating to operations of Fazer Co. for the year ended 2019:

 

Continuing operations:
Net sales	€2,750,000
Cost and expenses (including income taxes)	2,125,000
Other data:
Current-year loss generated by segment of the business discontinued in July (net of income taxes)	€207,500
Gain on disposal of discontinued segment (net of income taxes)	€137,500
Prior-period adjustment (decrease in prior years' income net of tax benefit)	€45,000
Extraordinary loss (net of income tax benefit)	€17,500
Cash dividends declared (€1.50 per share)	€150,000

Instructions:

(1) Prepare a condensed income statement for 2019, including earnings per share figures. The company had 100,000 shares of a single class of capital stock outstanding throughout the year. (10 points)

(2) Prepare a statement of retained earnings for the year ended December 31, 2019. As originally reported, retained earnings at December 31, 2018, amounted to €2,468,000. (10 points)

(3) Compute the amount of cash dividend per share of common stock declared by the board of directors for 2019. Assume no dividends in arrears on the preferred stock. (5 points)

QUESTION 4 (25 points)

In order to prepare the statement of cash flows for Sophia Corporation for 2019, the accountant has compiled the following data regarding cash flows:

Purchases of marketable securities	€48,000
Proceeds from sales of marketable securities	€75,000
Interest and dividends received	€19,500
Interest paid	€18,000
Taxes paid	€43,500
Dividends paid	€27,000
Proceeds from short-term borrowing	€31,500
Payments to settle short-term debts (principal repaid)	€36,000
Cash received from customers	€681,000
Cash paid to suppliers and employees	€531,000
Proceeds from issuing capital stock	€118,500
Purchases of plant assets	€201,000
Proceeds from sales of plant assets	€58,500
Cash and cash equivalents, beginning of year	€73,500

 

Instructions:

 

Based on the above information, prepare a complete statement of cash flows for Sophia Corporation, showing the computation of net cash flows from operating activities by the direct method. (25 points)