Apache Motors Corporation - Accounting II - Spring 2012Susan Apache decided to form a corporation from her sole proprietorship, Apache Motors’ Company. The state of Delaware allowed her to incorporate on January 1, 2009. The corporate charter authorizes Apache Motors’ Corporation to issue 1 million shares of $1 par value common stock as well as 200,000 shares of no par preferred stock. During the 1st quarter, as a corporation, Apache completed the following selected transactions:January 1- Incorporated as Apache Motors’ Corporation.• Issued 50,000 shares of $1 par value common stock to Susan Apache. Susan Apache purchased these shares with her Owner’s Equity in Apache Motor’s Company and cash of $265,950. (Hint: Zero out the owner’s capital account.)• Issued $200,000 of 9%, 10 year bonds paying interest semiannually when the market rate of interest was 8%• Interest paid on note payableJanuary 5 - Issued 2,000 shares of no-par preferred stock, receiving cash of $100,000January 12 – Paid salaries from December 31, 2008.February 2 - Purchased 11,000 shares of Apache common stock for the treasury at $5 per share February 19 - A building in California was destroyed by a tornado. The building had a cost of $100,000, Accumulated Depreciation of $40,000, and insurance proceeds from the destruction were $50,000. This item is considered to be both unusual in nature and infrequent in occurrence. (Ignore tax savings until Adjustments!)March 1 - Sold 1,000 share of treasury stock for cash of $6.25 per shareMarch 1 – a) Purchased an office complex for $200,000 cash. It has a 20 year life and will have zero salvage value.b) Paid off the note payable (Ignore additional Interest).c) Obtained a delivery vehicle by signing a note payable for $50,000. The vehicle has a 5 year life with a $3,000 salvage value. March 31 - Sold merchandise for $700,000 (70% paid in cash, 30% on account). Cost of goods sold was $400,000. - Operating Expense were $170,000 with $160,000 of this amount paid. Apache uses a perpetual inventory system.March 31 – Adjusting Entries• Prepaid insurance expired $100• Amortization of the patent $2,400 per year.• Depreciation expense - Office Equipment $5,000• Depreciation expense on the Delivery Vehicle & Office Complex• Supplies on hand at year end $900• Accrued interest and amortized the discount (effective interest method) on the bonds payable • Accrued income tax of $35,000, less the tax savings from the Extraordinary Loss on 2/19 (35% Tax Rate)• Unearned revenue from December 31, 2008 =$0• Declared a quarterly cash dividend of $1.00 per share on preferred stock. Date of record is April 11 with payment scheduled for April 19. Requirements:Part 1a) Record the transactions in the general journal and ledger accounts of Apache Motors January 1st thru March 31, 2009. (15 points) b) Prepare a trial balance as of March 31, 2009 (5 points)c) Prepare a complete amortization schedule for the bond (10 points)d) Record the adjusting entries and prepare an adjusted trial balance as of March 31, 2009 (10 points)Due Date: April 8, 2012Part 2a) Prepare the Financial statements of Apache Motors’ Corporation: (35 points)1) Prepare a multi step income statement including earnings per share for the quarter ended March 31, 2009. Determine how many shares of Apache common stock outstanding. 2) Prepare a Statement of Stockholder’s Equity 3) Prepare a Classified Balance Sheet 4) Prepare a Statement of Cash Flow, using the DIRECT METHOD for Operating Activities 5) Prepare the closing entries for the corporation and post closing trial balance for the corporation.b) Write a letter to the board of directors describing the corporation’s 1st Quarter performance (1 pg) (10 points)Due Date: April 28, 2012Note: All submissions are to be done in a professional manner. Please refer to your textbook for examples as well as your syllabus. Format and print the project. The Grade Sheet is after the Balance on the Next Page Apache Motors CorporationBalance SheetDecember 31, 2008AssetsCurrent assetsCash $6,600Short-term investments 2,000Accounts receivable 7,000Inventories 425,000Supplies 2,100Prepaid insurance 580Total current assets $443,280Property, plant, and equipmentBuilding 100,000Less: Accumulated depreciation 40,000 60,000Land 10,000Office equipment $24,000 Less: Accumulated depreciation 5,000 19,000 89,000Intangible assetsPatents 10,300Total assets $542,580Liabilities and Owner’s EquityCurrent liabilitiesAccounts payable $452,100 Salaries payable 1,600Unearned revenue 900Interest payable 450Total current liabilities $455,050Long-term liabilitiesMortgage payable 41,000Notes payable 12,480 53,480Total long-term liabilitiesTotal liabilities 508,530Susan Apache, Capital 34
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