Ganang Surya Hananta Swara

1901572691

Tugas Personal ke-4 Minggu 8

Tugas personal 4 minggu 8 ini diambil dari buku wajib:

Weygandt, Kimmel, Kieso. (2013). Financial Accounting, IFRS Edition. 2nd edition. John
Wiley & Sons. Inc. New Jersey. ISBN: 978-1-118-28590-9.

Buatlah soal-soal berikut ini:

Chapter 11:

E11 – 2 dan E11 – 3 halaman 562

Answer E11 – 2 :
1. True.
2. False. Corporation management (separation of ownership and management),
government regulations, and additional taxes are the major disadvantages of a
corporation.
3. False. When a corporation is formed, organization costs are expensed as incurred.
4. True.
5. False. The number of issued shares is always less than or equal to the number of
authorized shares.
6. False. No journal entry is required for the authorization of ordinary shares.
7. False. Publicly held corporations usually issue shares indirectly through an investment
banking firm.
8. True.
9. False. The market value of ordinary shares has no relationship with the par value.
10. False. Share capital is the total amount of cash and other assets paid in to the
corporation by shareholders in exchange for shares.

Answer E11 – 3 :
a. Jan 10 Cash (70,000 X Rs4) ................................................. 280,000
Share Capital—Ordinary ................................ 280,000

July 1 Cash (30,000 X Rs7) ................................................. 210,000

Share Capital—Ordinary (30,000 X Rs4) ............ 120,000
Share Premium—Ordinary (30,000 X Rs3) ......... 90,000

b. Jan 10 Cash (70,000 X Rs4) ................................................. 280,000

Share Capital—Ordinary (70,000 X Rs1) ............ 70,000
Share Premium—Ordinary (70,000 X Rs3) ......... 210,000

July 1 Cash (30,000 X Rs7) ................................................. 210,000

Share Capital—Ordinary (30,000 X Rs1) ............ 30,000
Share Premium—Ordinary (30,000 X Rs6) ......... 180,000
P11 – 1A dan P11 – 2A halaman 567

Answer P11 – 1A :

a. Jan 10 Cash (100,000 X HK$50) ......................................................... 5,000,000

Share Capital—Ordianry (100,000 X HK$20) .................... 2,000,000
Share Premium—Ordinary (100,000 X HK$30) ................. 3,000,000

Mar 1 Cash (5,000 X HK$1,050) ........................................................ 5,250,000

Share Capital—Preference (5,000 X HK$1,000) ............... 5,000,000
Share Premium—Preference (5,000 X HK$50) ................. 250,000
Continue
Apr. 1 Land ........................................................................................ 920,000
Share Capital—Ordinary (18,000 X HK$20) ...................... 360,000
Share Premium—Ordinary (HK$920,000 – HK$360,000) .. 560,000

May 1 Cash (80,000 X HK$45) ........................................................... 3,600,000

Share Capital—Ordinary (80,000 X HK$20) ...................... 1,600,000
Share Premium—Ordinary (80,000 X HK$25) ................... 2,000,000

Aug. 1 Organization Expense ............................................................ 300,000

Share Capital—Ordinary (10,000 X HK$20) ...................... 200,000
Share Capital—Ordinary (10,000 X HK$20) ...................... 100,000

Sept. 1 Cash (10,000 X HK$50) ........................................................... 500,000

Share Capital—Ordinary (10,000 X HK$20) ...................... 200,000
Share Premium—Ordinary (10,000 X HK$30) ................... 300,000

Nov. 1 Cash (1,000 X HK$1,080) ........................................................ 1,080,000

Share Capital—Preference (1,000 X HK$1,000) ................ 1,000,000
Share Premium—Preference (1,000 X HK$80) .................. 80,000

b. Share Capital—Preference
Date Explanation Ref. Debit Credit Balance
Mar. 1 J5 5,000,000 5,000,000
Nov. 1 J5 1,000,000 6,000,000

Share Capital—Ordinary
Date Explanation Ref. Debit Credit Balance
Jan. 10 J5 2,000,000 2,000,000
Apr. 1 J5 360,000 2,360,000
J5 1,600,000 3,960,000
Aug. 1 J5 200,000 4,160,000
Sept. 1 J5 200,000 4,360,000

Share Premium—Preference
Date Explanation Ref. Debit Credit Balance
Mar. 1 J5 250,000 250,000
Nov. 1 J5 80,000 330,000
continue

Share Premium—Ordinary
Date Explanation Ref. Debit Credit Balance
Jan. 10 J5 3,000,000 3,000,000
Apr. 1 J5 560,000 3,560,000
May 1 J5 2,000,000 5,560,000
Aug. 1 J5 100,000 5,660,000
Sept. 1 J5 300,000 5,960,000

c. GÂO CORPORATION
Statement of Financial Position (Partial)
December 31, 2014

Equity
Share capital—preference
8%, HK$1,000 par value, 10,000 shares authorized,
6,000 shares issued and outstanding .................. HK$ 6,000,000
Share capital—ordinary, no par, HK$20 stated
value, 500,000 shares authorized, 218,000 shares
issued and outstanding ..................................... 4,360,000
Share premium—preference ................................ 330,000
Share premium—ordinary .................................... 5,960,000
Total share capital ............................................ HK$16,650,000

Answer P11 – 2A :

a. Mar. 1 Treasury Shares (5,000 X $9) .................................................. 45,000

Cash .............................................................................. 45,000

June 1 Cash (500 X $12) .................................................................... 6,000

Treasury Shares (500 X $9) ........................................... 4,500
Premium—Treasury (500 X $3) ..................................... 1,500

Sept. 1 Cash (2,500 X $10) ................................................................. 25,000

Treasury Shares (2,500 X $9) ......................................... 22,500
Share Premium—Treasury (2,500 X $1) ......................... 2,500
 continue

Dec. 1 Cash (1,000 X $6) ................................................................... 6,000

Share Premium—Treasury (1,000 X $3) .................................. 3,000
Treasury Shares (1,000 X $9) ......................................... 9,000

Income Summary .................................................................... 34,000

Retained Earnings .......................................................... 34,000

b. Share Premium—Treasury
Date Explanation Ref. Debit Credit Balance
June 1 J10 5,000,000 5,000,000
Sept. 1 J10 1,000,000 6,000,000
Dec. 1 J10 3,000

Treasury Shares
Date Explanation Ref. Debit Credit Balance
Mar. 1 J10 45,000 45,000
June 1 J10 4,500 40,500
Sept. 1 J10 22,500 18,000
Dec. 1 J10 9,000 9,000

Retained Earnings
Date Explanation Ref. Debit Credit Balance
Jan. 1 Balance ✓ 100,000
Dec. 31 J10 34,000 134,000

c. ELSTON CORPORATION
Statement of Financial Position (Partial)
December 31, 2014

Equity
Share capital—ordinary, $5 par, 80,000 shares issued and
79,000 outstanding .................................................. $400,000
Share premium—ordinary ............................................. 200,000
Share premium—treasury ............................................. 1,000
Retained earnings ......................................................... 134,000
Less: Treasury shares (1,000 shares) ............................... 9,000
Total equity ............................................................ $726,000
P11 – 5B dan P11 – 6B halaman 572
Answer P11 – 5B
a. ANDES COMPANY
Retained Earnings Statement
For the Year Ended December 31, 2014

Balance, January 1, as reported ............................................ $ 900,000

Correction for overstatement of net
income in 2013 (depreciation error) ............................ -65,000
Balance, January 1, as adjusted ........................................... 835,000
Add: Net income ................................................................... 3,600,000
4,435,000
Less: Cash dividends—ordinary ........................................... $1,480,000*
Cash dividends—preference ....................................... 800,000 2,280,000
$2,155,000

*(1,500,000 – 20,000) X $1

b. ANDES COMPANY
Partial Statement of Financial Position
December 31, 2014

Equity
Share Capital—Preference, $100 par value, 8%, cumulative,
100,000 shares issued and outstanding ........................ $10,000,000
Share Capital—Ordinary, $10 par value, 1,500,000 shares
issued and 1,480,000 shares outstanding ...................... 15,000,000
Share Premium—Preference ............................................. 500,000
Share Premium—Ordinary ................................................. 1,500,000
Retained earnings ................................................................... 2,155,000
Less: Treasury Shares (20,000 shares) ....................................... 280,000
Total Equity ........................................................... $28,875,000
 Answer P11 – 6B
a. Retained Earnings
Nov. 1 Cash Dividends 500,000 Jan. 1 Balance 2,450,000
Dec. 31 Share Dividends 400,000 Dec. 31 Net Income 970,000
Dec. 31 Balance 2,520,000

b. FORTALEZA CORPORATION
Retained Earnings Statement
For the Year Ended December 31, 2014

Balance, January 1 .......................................... R$2,450,000

Add: Net income ............................................ 970,000
3,420,000
Less: Cash dividends ....................................... R$500,000
Share dividends ...................................... 400,000 900,000
Balance, December 31 ..................................... R$2,520,000

c. FORTALEZA CORPORATION
Partial Statement of Financial Position
December 31, 2014

Equity
Share Capital—Preference
8%, R$100 par value, noncumulative,
callable at R$125, 20,000
shares authorized, 8,000
shares issued and
outstanding ................................................ R$800,000
Share Capital—Ordinary, no par, $5
stated value, 600,000 shares
authorized, 400,000 shares
issued and outstanding ............................... 2,000,000
Ordinary Share Dividends Distributable ............. 200,000
Share Premium—Preference .................. 100,000
Share Premium—Ordinary ..................... 1,220,000
Retained Earnings (see Note A) ............. 2,520,000
Total Equity ....................................... R$6,840,000

Note A: Retained earnings is restricted for plant expansion, R$100,000.

d. Total dividend .........................................................................R$500,000
Allocated to preference shares—current year only ............... 64,000
Remainder to ordinary shares ................................................R$436,000
Chapter 12:

E12 – 1 dan E12 – 2 halaman 607

Answer E12 – 1 :
1. Companies purchase investments in debt or share securities because they have excess
cash, to generate earnings from investment income, or for strategic reasons.
2. A corporation would have excess cash that it does not need for operations due to
seasonal fluctuations in sales and as a result of economic cycles.
3. The typical investment when investing cash for short periods of time is low-risk, high
liquidity, short-term securities such as government-issued securities.
4. The typical investments when investing cash to generate earnings are debt securities
and share securities.
5. A company would invest in securities that provide no current cash flows for speculative
reasons. They are speculating that the investment will increase in value.
6. The typical share investment when investing cash for strategic reasons is shares of
companies in a related industry or in an unrelated industry that the company wishes to
enter.
Answer E12 – 2 :

a. Jan. 1 Debt Investments ................................................................... 50,000

Cash ................................................................................. 50,000

July 1 Cash ($50,000 X 8% X 1/2) ..................................................... 2,000

Interest Revenue .............................................................. 2,000

1 Cash ........................................................................................ 33,500

Debt Investments ($50,000 X 3/5) .................................... 30,000
Gain on Sale of Debt Investments ($33,500 – $30,000) ... 3,500

b. Dec. 31 Interest Receivable ................................................................. 800

Interest Revenue ($20,000 X 8% X 1/2) ............................ 800

P12 – 1B dan P12 – 2B halaman 613

Answer P12 – 1B :

a. 2014
Jan. 1 Debt Investments ................................................................... 400,000
Cash .................................................................................. 400,000

July 1 Cash ($400,000 X .09 X 1/2) ................................................... 18,000

Interest Revenue .............................................................. 18,000

Dec. 31 Interest Receivable ................................................................. 18,000

Interest Revenue .............................................................. 18,000

2017
Jan. 1 Cash ........................................................................................ 18,000
Interest Receivable ........................................................... 18,000

1 Cash ($200,000 X 1.14) .......................................................... 228,000

Debt Investments ............................................................. 200,000
Gain on Sale of Debt Investments .................................... 28,000

July 1 Cash ($200,000 X .09 X 1/2) ................................................... 9,000

Interest Revenue .............................................................. 9,000

Dec. 31 Interest Receivable ................................................................. 9,000

Interest Revenue ............................................................... 9,000

b. Statement of Financial Position

Current assets
Interest receivable ......................................................................... $18,000

Investments
Debt investments, at fair value ..................................................... $400,000
Answer P12 – 2B :
a. Feb. 1 Share Investments ................................................................... 30,800
Cash ................................................................................... 30,800

Mar. 1 Share Investments ................................................................... 20,300

Cash ................................................................................... 20,300

Apr. 1 Debt Investments .................................................................... 40,000

Cash ................................................................................... 40,000

July 1 Cash ($0.60 X 500) ..................................................................... 300

Dividend Revenue .............................................................. 300

Aug. 1 Cash ......................................................................................... 20,700

Gain on Sale of Share Investments ...................................... 2,220
Share Investments [($30,800 ÷ 500) X 300] ............................ 18,480

Sept. 1 Cash ($1 X 600) ......................................................................... 600

Dividend Revenue .............................................................. 600
 continue

Oct. 1 Cash ($40,000 X 9% X 1/2) ......................................................... 1,800

Interest Revenue ................................................................ 1,800

1 Cash ......................................................................................... 44,000

Debt Investments ................................................................ 40,000
Gain on Sale of Debt Investments ($44,000 – $40,000) ........... 4,000

Share Investments Debt Investments

Feb. 1 30,800 Aug. 1 18,480 Apr. 1 40,000 Oct. 1 40,000
Mar. 1 20,300
Dec. 31 Bal. 32,620 Dec. 31 Bal. 0

b. Dec. 31 Unrealized Loss—Income ......................................................... 2,020

Fair Value Adjustment—Trading ......................................... 2,020

Security Cost Fair Value

Joy ordinary $12,320 $13,200 (200 X $66)
Aurelius ordinary 20,300 17,400 (600 X $29)
$32,620 $30,600

c. Current assets
Short-term investments, at fair value .............................................. $30,600

d. Income Statement Account Category

Dividend Revenue Other income and expense
Gain on Sale of Share Investments Other income and expense
Interest Revenue Other income and expense
Gain on Sale of Debt Investments Other income and expense
Unrealized Loss—Income Other income and expense
CP12 halaman 616 dan 617

Answer Part I :

To : Mindy Feldkamp, Oscar Lopez, and Lori Melton

From : Joe Student
Date : 5/26/2013
Re : Analysis of Partnership vs. Corporate Form of Business Organization

I have examined your situation regarding the establishment of your business. Before discussing
my recommendations, I would like to briefly review the advantages and disadvantages of
partnerships and corporations.

The primary advantages of a partnership over a corporation are:

1. Partnerships are more easily formed than corporations. Partnerships can be formed
simply by the voluntary agreement of two or more individuals. Forming a corporation
requires preparing and filing documents with governmental agencies, paying
incorporation fees, etc.

2. Income from a partnership is subject to less tax than income from a corporation. Even
though partnerships are required to file information tax returns (returns that show
financial information, but do not require any payment of taxes), they are not considered
taxable entities. A partner’s share of partnership income is taxed only on the partner’s
personal income tax return. Corporations are taxable entities and pay taxes on
 corporate income. In addition, any dividends distributed by corporations to individuals
are subject to personal income tax on the personal income tax return. This is known as
double taxation.

3. Partnerships have more flexibility in decision making. The decisionmaking process used
in a partnership is determined by the partners, whereas some decisions required in
corporations must follow formal procedures described in the bylaws of the corporation.

The primary advantages of a corporation over a partnership are:

1. Mutual agency does not exist in a corporation. This means that the owners of a
corporation (shareholders) do not have the power to bind the corporation beyond their
authority. For example, a shareholder who is not employed by the firm cannot enter
into contracts or other agreements on behalf of the corporation. Owners of a
partnership (partners) are bound by the actions of their partners, even when partners
act beyond the scope of their authority. This is true as long as the actions seem
appropriate for the business.

2. The owners of a corporation have limited liability. When the corporation’s assets are not
sufficient to pay creditors’ claims, the personal assets of the shareholders are protected
from the corporation’s creditors. In a partnership, once the assets of the partnership
have been used to pay creditors’ claims, the personal assets of the partners can be
taken to satisfy the creditors’ demands. A special type of partnership, a limited
partnership, protects the personal assets of limited partners, but at least one partner’s
assets are still at risk. This partner is called a general partner.

3. The life of a corporation is unlimited. When ownership changes occur (e.g., shareholders
buy or sell shares), the corporation continues to exist as a legal entity. When ownership
changes occur in a partnership (e.g., existing partner leaves, new partner is added), the
old partnership no longer exists as a legal entity. A new partnership can be formed and
the business can continue, but the original partnership must be dissolved.

After examining your situation, I believe that you would be wise to choose the corporate form
of business organization. There are two reasons for this recommendation. The first reason is
that the venture you are about to undertake will require significant capital and, generally,
capital is more easily raised via a corporation than a partnership. The other reason is that you
will be protected from unlimited liability if you incorporate as opposed to forming a
partnership. Given the potential risk of starting a venture of this kind, I believe it is in your best
interest to protect your personal assets by using the corporate form of organization.
I wish you the best in your new endeavor and please call upon me when you are in need of
further assistance.

Answer Part II :

b. Equity financing option :

Positives Negatives
 No fixed interest payments required  Control of the corporation is lost
 Difficulty of finding an interested investor
 Earnings per share are lower

Debt financing option:

Positives Negatives
 Control stays with three incorporators  Interest payments quickly drain cash
 No need for additional investor
 Earnings per share are higher

Shares outstanding before financing 60,000 shares

continue

Equity Financing Debt Fin ancing

Income before interest and taxes $300,000 $300,000
Interest expense 126,000
Income before taxes 300,000 174,000
Tax expense 96,000 55,680
Net income $204,000 $118,320
Shares outstanding after financing 200,000 60,000
Earnings per share $1.02 $1.97

Answer Part III :

c. 1. 6/12/2013 Cash .................................................................... 100,000

Buildings ............................................................. 200,000
Share Capital—Ordinary ................................. 120,000
Share Premium—Ordinary .............................. 180,000

7/21/2013 Cash .................................................................... 900,000

Share Capital—Ordinary .................................. 180,000
Share Premium—Ordinary .............................. 720,000
continue

7/27/2014 Share Dividends (150,000 X .10 X $3) .................... 45,000

Ordinary Share Dividends Distributable........... 30,000
Share Premium—Ordinary .............................. 15,000

7/31/2014 No entry

8/15/2014 Ordinary Share Dividends Distributable ............... 30,000

Share Capital—Ordinary ................................. 30,000

12/4/2014 Cash Dividends (165,000 X $0.05) ......................... 8,250

Dividends Payable .......................................... 8,250

12/14/2014 No entry

12/24/2014 Dividends Payable ............................................... 8,250

Cash ............................................................... 8,250

2. Shares Issued and Outstanding

Number of Total Shares
Shares Issued and
Date Event Issued Outstanding
6/12/2013 Issuance to Incorporators 60,000 60,000
7/21/2013 Issuance to Marino 90,000 150,000
8/15/2014 Share dividend issuance 15,000 165,000
Answer Part IV :

d. 1. 6/1/2015 Cash ................................................................... 548,000

Bonds Payable .............................................. 548,000

2. 12/1/2015 Interest Expense ................................................. 20,600

Bonds Payable ($52,000 ÷ 20) ......................... 2,600
Cash ($600,000 X .03) ..................................... 18,000

3. 12/31/2015 Interest Expense ................................................. 3,433

Bonds Payable [($52,000 ÷ 20) ÷ 6]................... 433
Interest Payable [($600,000 X .03) ÷ 6] ............. 3,000

4. 6/1/2016 Interest Payable .................................................. 3,000

Interest Expense ($20,600 – $3,433) ..................... 17,167
Interest Expense ($20,600 – $3,433) ................. 18,000
Bonds Payable ($2,600 – $433) ......................... 2,167
Answer Part V :

e. 1. 2013 Share Investments ..................................................... 900,000

Cash .................................................................... 900,000

Share Investments ..................................................... 18,000

Revenue from Share Investments (.6* X $30,000) .. 18,000
*90,000 ÷ 150, 000

Cash .......................................................................... 1,260

Share Investments (.6 X $2,100) ............................ 1,260

2014 Share Investments..................................................... 42,000

Revenue from Share Investments (.6 X $70,000) ... 42,000

Cash .......................................................................... 12,000

Share Investments (.6 X $20,000) ........................... 12,000

2015 Share Investments ..................................................... 63,000

Revenue from Share Investments (.6 X $105,000) ... 63,000

Cash .......................................................................... 30,000

Share Investments (.6 X $50,000) ........................... 30,000
 continue

2. Share Investments
900,000
18,000 1,260
42,000 12,000
63,000 30,000
979,740