Horngren. Accounting
E14-16 Identify the effects of the following transactions on total stockholders’ equity. Each transaction is independent. a. A 10% stock dividend. Before the dividend, 500,000 shares of $1 par common stock were outstanding; market value was $6 at the time of the dividend. (p. 694) b. A 2-for-1 stock split. Prior to the split, 60,000 shares of $4 par common were outstanding. (p. 694) c. Purchase of 1,000 shares of treasury stock (par value $0.50) at $5 per share. (pp. 694–695, 697–698) d. Sale of 600 shares of $1 par treasury stock for $5 per share. Cost of the treasury stock was $2 per share. (pp. 696, 697–698) Effects of stock dividends, stock splits, and treasury stock transactions
Thursday, March 31, 2011
FIN 324 Chapter 3: Practice Exercises 3-1 and 3-2-ANSWER KEY (INSTANT DOWNLOAD)
FIN/324 FINANCIAL ANALYSIS FOR MANAGERS
Chapter 3: Practice Exercises 3-1 and 3-2
For PE 3-1 through 3-5, do the following for each transaction:
a. List the accounts impacted by the transaction.
b. For each account, indicate whether the transaction increased or decreased the account.
c. For each account, indicate how much the transaction increased or decreased the
account.
d. Compute the impact of the transaction on total assets, total liabilities, and total owners’
equity.
3-1
Impact of a Transaction
The company borrowed $85,000 in cash from Eastern Bank.
3-2
Impact of a Transaction
The company used $45,000 in cash to purchase land on the west side of Hatu Lake.
Chapter 3: Practice Exercises 3-1 and 3-2
For PE 3-1 through 3-5, do the following for each transaction:
a. List the accounts impacted by the transaction.
b. For each account, indicate whether the transaction increased or decreased the account.
c. For each account, indicate how much the transaction increased or decreased the
account.
d. Compute the impact of the transaction on total assets, total liabilities, and total owners’
equity.
3-1
Impact of a Transaction
The company borrowed $85,000 in cash from Eastern Bank.
3-2
Impact of a Transaction
The company used $45,000 in cash to purchase land on the west side of Hatu Lake.
FIN 324 WEEK 2 Discussion Questions 5 and 7 (Ch. 1) of Accounting Concepts and Applications-ANSWER KEY (INSTANT DOWNLOAD)
FIN/324 FINANCIAL ANALYSIS FOR MANAGERS
1. Individual Assignment: Assignments from the Readings
Prepare answers to the following questions and exercises:
Discussion Questions 5 and 7 (Ch. 1) of Accounting Concepts and Applications
5. Why is accounting often referred to as the “language of business”?
7. What are generally accepted accounting principles (GAAP)? Who currently develops and issues GAAP? What is the purpose of GAAP?
1. Individual Assignment: Assignments from the Readings
Prepare answers to the following questions and exercises:
Discussion Questions 5 and 7 (Ch. 1) of Accounting Concepts and Applications
5. Why is accounting often referred to as the “language of business”?
7. What are generally accepted accounting principles (GAAP)? Who currently develops and issues GAAP? What is the purpose of GAAP?
FIN 324 WEEK 2 Discussion Questions 7, 9, 15, and 16 (Ch. 4) of Accounting Concepts and Applications -ANSWER KEY (INSTANT DOWNLOAD)
FIN/324 FINANCIAL ANALYSIS FOR MANAGERS
Discussion Questions 7, 9, 15, and 16 (Ch. 4) of Accounting Concepts and Applications
7. Why are adjusting entries necessary?
9. The analysis process for preparing adjusting entries involves two basic steps. Identify the two steps and
explain why both are necessary.
15. What is the purpose of closing entries?
16. What is the purpose of the post-closing trial balance? Explain where the information for the post-closing trial balance comes from.
Discussion Questions 7, 9, 15, and 16 (Ch. 4) of Accounting Concepts and Applications
7. Why are adjusting entries necessary?
9. The analysis process for preparing adjusting entries involves two basic steps. Identify the two steps and
explain why both are necessary.
15. What is the purpose of closing entries?
16. What is the purpose of the post-closing trial balance? Explain where the information for the post-closing trial balance comes from.
FIN 324 WEEK 2 7. What are generally accepted accounting principles (GAAP)? Who currently develops and issues GAAP? What is the purpose of GAAP?-ANSWER KEY
FIN/324 FINANCIAL ANALYSIS FOR MANAGERS
7. What are generally accepted accounting principles (GAAP)? Who currently develops and issues GAAP? What is the purpose of GAAP?
7. What are generally accepted accounting principles (GAAP)? Who currently develops and issues GAAP? What is the purpose of GAAP?
FIN 324 WEEK 2 Discussion Questions-ANSWER KEY (INSTANT DOWNLOAD)
FIN/324 FINANCIAL ANALYSIS FOR MANAGERS
1. Individual Assignment: Assignments from the Readings
Prepare answers to the following questions and exercises:
Discussion Questions 5 and 7 (Ch. 1) of Accounting Concepts and Applications
5. Why is accounting often referred to as the “language of business”?
7. What are generally accepted accounting principles (GAAP)? Who currently develops and issues GAAP? What is the purpose of GAAP?
Discussion Questions 7, 9, 15, and 16 (Ch. 4) of Accounting Concepts and Applications
7. Why are adjusting entries necessary?
9. The analysis process for preparing adjusting entries involves two basic steps. Identify the two steps and
explain why both are necessary.
15. What is the purpose of closing entries?
16. What is the purpose of the post-closing trial balance? Explain where the information for the post-closing trial balance comes from.
1. Individual Assignment: Assignments from the Readings
Prepare answers to the following questions and exercises:
Discussion Questions 5 and 7 (Ch. 1) of Accounting Concepts and Applications
5. Why is accounting often referred to as the “language of business”?
7. What are generally accepted accounting principles (GAAP)? Who currently develops and issues GAAP? What is the purpose of GAAP?
Discussion Questions 7, 9, 15, and 16 (Ch. 4) of Accounting Concepts and Applications
7. Why are adjusting entries necessary?
9. The analysis process for preparing adjusting entries involves two basic steps. Identify the two steps and
explain why both are necessary.
15. What is the purpose of closing entries?
16. What is the purpose of the post-closing trial balance? Explain where the information for the post-closing trial balance comes from.
FIN 324 WEEK 2 Why is accounting often referred to as the “language of business”?--ANSWER KEY (INSTANT DOWNLOAD)
FIN/324 FINANCIAL ANALYSIS FOR MANAGERS
1. Individual Assignment: Assignments from the Readings
Prepare answers to the following questions and exercises:
Discussion Questions 5 and 7 (Ch. 1) of Accounting Concepts and Applications
5. Why is accounting often referred to as the “language of business”?
7. What are generally accepted accounting principles (GAAP)? Who currently develops and issues GAAP? What is the purpose of GAAP?
Discussion Questions 7, 9, 15, and 16 (Ch. 4) of Accounting Concepts and Applications
7. Why are adjusting entries necessary?
9. The analysis process for preparing adjusting entries involves two basic steps. Identify the two steps and
explain why both are necessary.
15. What is the purpose of closing entries?
16. What is the purpose of the post-closing trial balance? Explain where the information for the post-closing trial balance comes from.
1. Individual Assignment: Assignments from the Readings
Prepare answers to the following questions and exercises:
Discussion Questions 5 and 7 (Ch. 1) of Accounting Concepts and Applications
5. Why is accounting often referred to as the “language of business”?
7. What are generally accepted accounting principles (GAAP)? Who currently develops and issues GAAP? What is the purpose of GAAP?
Discussion Questions 7, 9, 15, and 16 (Ch. 4) of Accounting Concepts and Applications
7. Why are adjusting entries necessary?
9. The analysis process for preparing adjusting entries involves two basic steps. Identify the two steps and
explain why both are necessary.
15. What is the purpose of closing entries?
16. What is the purpose of the post-closing trial balance? Explain where the information for the post-closing trial balance comes from.
FIN 324 WEEK 2 Practice Exercises 3-1, 3-2, 3-11--ANSWER KEY (INSTANT DOWNLOAD)
FIN/324 FINANCIAL ANALYSIS FOR MANAGERS
For 3-1 through 3-5, do the following for each transaction:
a. List the accounts impacted by the transaction.
b. For each account, indicate whether the transaction increased or decreased the account.
c. For each account, indicate how much the transaction increased or decreased the
account.
d. Compute the impact of the transaction on total assets, total liabilities, and total owners ‘equity.
Practice Exercises 3-1, 3-2, 3-11,
3-1. Impact of a Transaction
The company borrowed $85,000 in cash from Eastern Bank.
3-2. Impact of a Transaction
The company used $45,000 in cash to purchase land on the west side of Hatu Lake.
3-11 Journal Entries
Refer to PE 3-1. Make the journal entry necessary to record the transaction.
3-12, 3-17—related to 3-11 and 3-12—and 3-19—related to 3-17 (Ch. 3) of Accounting Concepts and Applications
3-12 Journal Entries ---Refer to 3-2. Make the journal entry necessary to record the transaction
3-16 Journal Entries with Revenues, Expenses, and Dividends
Make the journal entries necessary to record the following eight transactions.
a. Purchased inventory on account for $130,000.
b. Sold goods for $100,000 cash. The goods originally cost $65,000.
c. Paid $27,000 cash for employee wages.
d. Paid $12,500 cash for advertising.
e. Sold goods for $25,000 cash and $60,000 on account (a total of $85,000). The goods
originally cost $57,000.
f. Collected cash of $47,000 from the $60,000 receivable on account; the remaining
$13,000 is expected to be collected later.
g. Paid cash of $55,000 on the $130,000 payable on account; the remaining $75,000 is
expected to be paid later.
h. Paid cash dividends of $8,500.
3-17 Posting
Refer to the journal entries made in PE 3-11 through PE 3-15. Construct a
T-account representing each account impacted by those five transactions. Post all of the
journal entries to these T-accounts. Compute the ending balance in each account. Assume
that the beginning balance in each T-account is zero.
3-18 Posting with Revenues, Expenses, and Dividends
Refer to the journal entries made in PE 3-16. Construct a T-account representing each account
impacted by those eight transactions. Post all of the journal entries to these T-accounts.
Compute the ending balance in each account. Assume that the beginning balance in each
T-account is zero.
3-19 Preparing a Trial Balance
Refer to the T-accounts constructed in PE 3-17 and PE 3-18. Using the ending balances in
those T-accounts, construct a trial balance. Note: The only account that is common to these
two sets of T-accounts is the cash account; add the two cash account balances together to
get the total balance.
Exercise 3-34 (Ch. 3) of Accounting Concepts and Applications
3-34 Analysis of Journal Entries
The following journal entries are from the books of Kara Elizabeth Company:
a. Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000
Mortgage Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55,000
b. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
c. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Loan Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40,000
d. Salary Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
e. Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12,500
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,500
f. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84,000
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,000
Cost of Goods Sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,000
g. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62,000
Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,000
h. Accounts Payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,000
For each of the journal entries, prepare an explanation of the business event that is being
Represented
For 3-1 through 3-5, do the following for each transaction:
a. List the accounts impacted by the transaction.
b. For each account, indicate whether the transaction increased or decreased the account.
c. For each account, indicate how much the transaction increased or decreased the
account.
d. Compute the impact of the transaction on total assets, total liabilities, and total owners ‘equity.
Practice Exercises 3-1, 3-2, 3-11,
3-1. Impact of a Transaction
The company borrowed $85,000 in cash from Eastern Bank.
3-2. Impact of a Transaction
The company used $45,000 in cash to purchase land on the west side of Hatu Lake.
3-11 Journal Entries
Refer to PE 3-1. Make the journal entry necessary to record the transaction.
3-12, 3-17—related to 3-11 and 3-12—and 3-19—related to 3-17 (Ch. 3) of Accounting Concepts and Applications
3-12 Journal Entries ---Refer to 3-2. Make the journal entry necessary to record the transaction
3-16 Journal Entries with Revenues, Expenses, and Dividends
Make the journal entries necessary to record the following eight transactions.
a. Purchased inventory on account for $130,000.
b. Sold goods for $100,000 cash. The goods originally cost $65,000.
c. Paid $27,000 cash for employee wages.
d. Paid $12,500 cash for advertising.
e. Sold goods for $25,000 cash and $60,000 on account (a total of $85,000). The goods
originally cost $57,000.
f. Collected cash of $47,000 from the $60,000 receivable on account; the remaining
$13,000 is expected to be collected later.
g. Paid cash of $55,000 on the $130,000 payable on account; the remaining $75,000 is
expected to be paid later.
h. Paid cash dividends of $8,500.
3-17 Posting
Refer to the journal entries made in PE 3-11 through PE 3-15. Construct a
T-account representing each account impacted by those five transactions. Post all of the
journal entries to these T-accounts. Compute the ending balance in each account. Assume
that the beginning balance in each T-account is zero.
3-18 Posting with Revenues, Expenses, and Dividends
Refer to the journal entries made in PE 3-16. Construct a T-account representing each account
impacted by those eight transactions. Post all of the journal entries to these T-accounts.
Compute the ending balance in each account. Assume that the beginning balance in each
T-account is zero.
3-19 Preparing a Trial Balance
Refer to the T-accounts constructed in PE 3-17 and PE 3-18. Using the ending balances in
those T-accounts, construct a trial balance. Note: The only account that is common to these
two sets of T-accounts is the cash account; add the two cash account balances together to
get the total balance.
Exercise 3-34 (Ch. 3) of Accounting Concepts and Applications
3-34 Analysis of Journal Entries
The following journal entries are from the books of Kara Elizabeth Company:
a. Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000
Mortgage Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55,000
b. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
c. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Loan Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40,000
d. Salary Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
e. Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12,500
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,500
f. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84,000
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,000
Cost of Goods Sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,000
g. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62,000
Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,000
h. Accounts Payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,000
For each of the journal entries, prepare an explanation of the business event that is being
Represented
P1-42 Carl Redmon completed these transactions during the first half of December-ANSWER KEY (INSTANT DOWNLOAD)
Horngren. Accounting7
Problem 1-42 is the first problem in a sequence that begins an accounting cycle. The cycle is continued in Chapter 2 and completed in Chapter 5. P1-42 Carl Redmon completed these transactions during the first half of December: Dec. 2 Invested $10,000 to start a consulting practice titled Redmon Consulting. 2 Paid monthly office rent, $500. 3 Paid cash for a Dell computer, $2,000. This equipment is expected to remain in service for five years. 4 Purchased office furniture on account, $3,600. The furniture should last for five years. 5 Purchased supplies on account, $300. 9 Performed consulting service for a client on account, $1,700. 12 Paid utility expenses, $200. 18 Performed service for a client and received cash of $800. Requirements 1. Analyze the effects of Redmon’s transactions on the accounting equation. Use the format of Exhibit 1-7, page 18, and include these headings: Cash, Accounts Receivable, Supplies, Equipment, Furniture, Accounts Payable, and Carl Redmon, Capital. 2. Prepare the income statement of Redmon Consulting for the month ended December 31, 2007. List expenses in decreasing order by amount. (p. 20) 3. Prepare the statement of owner’s equity for the month ended December 31, 2007. (p. 20) 4. Prepare the balance sheet at December 31, 2007. (p. 20)
Problem 1-42 is the first problem in a sequence that begins an accounting cycle. The cycle is continued in Chapter 2 and completed in Chapter 5. P1-42 Carl Redmon completed these transactions during the first half of December: Dec. 2 Invested $10,000 to start a consulting practice titled Redmon Consulting. 2 Paid monthly office rent, $500. 3 Paid cash for a Dell computer, $2,000. This equipment is expected to remain in service for five years. 4 Purchased office furniture on account, $3,600. The furniture should last for five years. 5 Purchased supplies on account, $300. 9 Performed consulting service for a client on account, $1,700. 12 Paid utility expenses, $200. 18 Performed service for a client and received cash of $800. Requirements 1. Analyze the effects of Redmon’s transactions on the accounting equation. Use the format of Exhibit 1-7, page 18, and include these headings: Cash, Accounts Receivable, Supplies, Equipment, Furniture, Accounts Payable, and Carl Redmon, Capital. 2. Prepare the income statement of Redmon Consulting for the month ended December 31, 2007. List expenses in decreasing order by amount. (p. 20) 3. Prepare the statement of owner’s equity for the month ended December 31, 2007. (p. 20) 4. Prepare the balance sheet at December 31, 2007. (p. 20)
P3-32A Journalize the adjusting entry needed on December 31-ANSWER KEY (INSTANT DOWNLOAD)
Horngren. Accounting7
Requirements: show how each transaction would be handled using the accrual bais of accounting. give the amount of revenue or expense for January. Journal entries are not required. Use the following format for your answers, and show your computations: (p,125-127) Amount of revenue (expense) for january Date revenue (expense) accrual-basis amount of revenue (expense) 2. compute january net income or net loss under the accrual basis of accounting. (challenge). 3. state why the accrual basis of accounting is preferable to the cash basis. (p. 125-127) P3-32A Journalize the adjusting entry needed on December 31, the end of the current year, for each of the following independent cases affecting Lindsey Landscaping. (p.131-132, 139)
Requirements: show how each transaction would be handled using the accrual bais of accounting. give the amount of revenue or expense for January. Journal entries are not required. Use the following format for your answers, and show your computations: (p,125-127) Amount of revenue (expense) for january Date revenue (expense) accrual-basis amount of revenue (expense) 2. compute january net income or net loss under the accrual basis of accounting. (challenge). 3. state why the accrual basis of accounting is preferable to the cash basis. (p. 125-127) P3-32A Journalize the adjusting entry needed on December 31, the end of the current year, for each of the following independent cases affecting Lindsey Landscaping. (p.131-132, 139)
E15-17 Pluto Corporation issued $400,000 of 7%-ANSWER KEY (INSTANT DOWNLOAD)
Horngren. Accounting7
E15-17 Pluto Corporation issued $400,000 of 7%, 20-year bonds payable on March 31, 2006. The bonds were issued at 100 and pay interest on March 31 and September 30. Record (a) issuance of the bonds on March 31, 2006, (b) payment of interest on September 30, (c) accrual of interest on December 31, and (d) payment of interest on March 31, 2007. (pp. 737–738) Issuing bonds payable, paying and accruing interest
E15-17 Pluto Corporation issued $400,000 of 7%, 20-year bonds payable on March 31, 2006. The bonds were issued at 100 and pay interest on March 31 and September 30. Record (a) issuance of the bonds on March 31, 2006, (b) payment of interest on September 30, (c) accrual of interest on December 31, and (d) payment of interest on March 31, 2007. (pp. 737–738) Issuing bonds payable, paying and accruing interest
E15-18 Columbus, Inc., issued $50,000 of 10-year-ANSWER KEY (INSTANT DOWNLOAD)
Horngren. Accounting7
E15-18 Columbus, Inc., issued $50,000 of 10-year, 6% bonds payable on January 1, 2006. Columbus pays interest each January 1 and July 1 and amortizes discount or premium by the straight-line method. The company can issue its bonds payable under various conditions: a. Issuance at par (maturity) value (pp. 737–738) b. Issuance at a price of 95 (pp. 737–740) c. Issuance at a price of 105 (pp. 744–745) Bond transactions at par, at a discount, and at a premium
E15-18 Columbus, Inc., issued $50,000 of 10-year, 6% bonds payable on January 1, 2006. Columbus pays interest each January 1 and July 1 and amortizes discount or premium by the straight-line method. The company can issue its bonds payable under various conditions: a. Issuance at par (maturity) value (pp. 737–738) b. Issuance at a price of 95 (pp. 737–740) c. Issuance at a price of 105 (pp. 744–745) Bond transactions at par, at a discount, and at a premium
E15-25 At December 31, MediShare Precision Instruments-ANSWER KEY (INSTANT DOWNLOAD)
Horngren. Accounting7
E15-25 At December 31, MediShare Precision Instruments owes $50,000 on accounts payable, plus salary payable of $10,000 and income tax payable of $8,000. MediShare also has $200,000 of bonds payable that require payment of a $20,000 installment next year and the remainder in later years. The bonds payable require an annual interest payment of $7,000, and MediShare still owes this interest for the current year. Report MediShare’s liabilities on its classified balance sheet. List the current liabilities in descending order (largest first, and so on), and show the total of current liabilities. (pp. 568, 748–749) Reporting liabilities
E15-25 At December 31, MediShare Precision Instruments owes $50,000 on accounts payable, plus salary payable of $10,000 and income tax payable of $8,000. MediShare also has $200,000 of bonds payable that require payment of a $20,000 installment next year and the remainder in later years. The bonds payable require an annual interest payment of $7,000, and MediShare still owes this interest for the current year. Report MediShare’s liabilities on its classified balance sheet. List the current liabilities in descending order (largest first, and so on), and show the total of current liabilities. (pp. 568, 748–749) Reporting liabilities
PROBLEM 19-2 Various Funds—Hospital On January 1-ANSWER KEY (INSTANT DOWNLOAD)
ADVANCED ACCOUNTING BY JETER
PROBLEM 19-2 Various Funds—Hospital On January 1, 2008, a new Board of Directors was elected for Bradley Hospital. The new board switched to a different accountant. After reviewing the hospital’s books, the accountant decided that the accounts should be adjusted. Effective January 1, 2008, the board decided that 1. Separate funds should be established for the General Fund, the Bradley Endowment Fund, and the Plant Replacement and Expansion Fund (the old balances will be reversed to eliminate them). 2. The accounts should be maintained in accordance with fund accounting principles. The balances in the general ledger at January 1, 2008, are presented here: Cash $ 50,000 Investment in U.S. treasury bills 105,000 Investment in common stock 417,000 Interest receivable 4,000 Accounts receivable 40,000 Inventory 25,000 Land 407,000 Building 245,000 Equipment 283,000 Allowance for depreciation $ 376,000 Accounts payable 70,000 Bank loan 150,000 Endowment fund balance 119,500 Other fund balances 860,500 Total $1,576,000 $1,576,000 LO2 LO3 958 Problems 921 The following additional information is available: 1. Under the terms of the will of J. Ethington, founder of the hospital, “The principal of the bequest is to be fully invested in trust forevermore in mortgages secured by productive real estate in Central City and/or in U.S. Government securities . . . and the income therefrom is to be used to defray current expenses.” 2. The Endowment Fund consists of the following: Cash received in 1898 by bequest from Ethington $ 81,500 Net gains realized from 1956 through 1989 from the sale of real estate acquired in mortgage foreclosures 23,500 Income received from 1990 through 2007 from 90-day U.S. treasury bill investments 14,500 Balance per general ledger on January 1, 2008 $119,500 3. The land account balance is composed of 1900 appraisal of land at $10,000 and building at $5,000, received by donation at that time. The building was demolished in 1934. $ 15,000 Appraisal increase based on insured value in land title policies issued in 1954. 380,000 Landscaping costs for trees planted. 12,000 Balance per general ledger on January 1, 2008 $407,000 4. The building balance is composed of Cost of present hospital building completed in January 1961, when the hospital commenced operations $ 300,000 Adjustment to record appraised value of building in 1971. (100,000) Cost of elevator installed in hospital building in January 1987. 45,000 Balance per general ledger on January 1, 2008 $ 245,000 The estimated useful lives of the hospital building and the elevator when new were 50 years and 20 years, respectively. 5. The hospital’s equipment was inventoried on January 1, 2008. The costs shown in the inventory agreed with the equipment account balance in the general ledger. The allowance for depreciation account at January 1, 2008, included $158,250 applicable to equipment, and that amount was determined to be accurate. All depreciation is computed on a straight-line basis. 6. A bank loan was obtained to finance the cost of new operating room equipment purchased in 2004. Interest was paid to December 31, 2007. 7. Common stock with a market value of $417,000 was donated to Bradley Hospital with the stipulation that the proceeds from the sale of the stock must be used for facilities expansion. The hospital plans to undertake expansion of its facilities next year and to sell these securities at that time. Required: Using the workpaper form below, prepare the entries necessary to establish the correct balances as of January 1, 2008. Plant Endowment Replacement Trial Balance Adjustments General Fund Fund Fund Account Description Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit (AICPA adapted)
PROBLEM 19-2 Various Funds—Hospital On January 1, 2008, a new Board of Directors was elected for Bradley Hospital. The new board switched to a different accountant. After reviewing the hospital’s books, the accountant decided that the accounts should be adjusted. Effective January 1, 2008, the board decided that 1. Separate funds should be established for the General Fund, the Bradley Endowment Fund, and the Plant Replacement and Expansion Fund (the old balances will be reversed to eliminate them). 2. The accounts should be maintained in accordance with fund accounting principles. The balances in the general ledger at January 1, 2008, are presented here: Cash $ 50,000 Investment in U.S. treasury bills 105,000 Investment in common stock 417,000 Interest receivable 4,000 Accounts receivable 40,000 Inventory 25,000 Land 407,000 Building 245,000 Equipment 283,000 Allowance for depreciation $ 376,000 Accounts payable 70,000 Bank loan 150,000 Endowment fund balance 119,500 Other fund balances 860,500 Total $1,576,000 $1,576,000 LO2 LO3 958 Problems 921 The following additional information is available: 1. Under the terms of the will of J. Ethington, founder of the hospital, “The principal of the bequest is to be fully invested in trust forevermore in mortgages secured by productive real estate in Central City and/or in U.S. Government securities . . . and the income therefrom is to be used to defray current expenses.” 2. The Endowment Fund consists of the following: Cash received in 1898 by bequest from Ethington $ 81,500 Net gains realized from 1956 through 1989 from the sale of real estate acquired in mortgage foreclosures 23,500 Income received from 1990 through 2007 from 90-day U.S. treasury bill investments 14,500 Balance per general ledger on January 1, 2008 $119,500 3. The land account balance is composed of 1900 appraisal of land at $10,000 and building at $5,000, received by donation at that time. The building was demolished in 1934. $ 15,000 Appraisal increase based on insured value in land title policies issued in 1954. 380,000 Landscaping costs for trees planted. 12,000 Balance per general ledger on January 1, 2008 $407,000 4. The building balance is composed of Cost of present hospital building completed in January 1961, when the hospital commenced operations $ 300,000 Adjustment to record appraised value of building in 1971. (100,000) Cost of elevator installed in hospital building in January 1987. 45,000 Balance per general ledger on January 1, 2008 $ 245,000 The estimated useful lives of the hospital building and the elevator when new were 50 years and 20 years, respectively. 5. The hospital’s equipment was inventoried on January 1, 2008. The costs shown in the inventory agreed with the equipment account balance in the general ledger. The allowance for depreciation account at January 1, 2008, included $158,250 applicable to equipment, and that amount was determined to be accurate. All depreciation is computed on a straight-line basis. 6. A bank loan was obtained to finance the cost of new operating room equipment purchased in 2004. Interest was paid to December 31, 2007. 7. Common stock with a market value of $417,000 was donated to Bradley Hospital with the stipulation that the proceeds from the sale of the stock must be used for facilities expansion. The hospital plans to undertake expansion of its facilities next year and to sell these securities at that time. Required: Using the workpaper form below, prepare the entries necessary to establish the correct balances as of January 1, 2008. Plant Endowment Replacement Trial Balance Adjustments General Fund Fund Fund Account Description Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit (AICPA adapted)
PROBLEM 19-3 Various Funds—University A partial statement-ANSWER KEY (INSTANT DOWNLOAD)
ADVANCED ACCOUNTING BY JETER
PROBLEM 19-3 Various Funds—University A partial statement of financial position of Century University is shown below. Century University Partial Statement of Financial Position June 30, 2007 Assets Current Funds Unrestricted Cash $210,000 Accounts Receivable (less allowance for doubtful accounts, $9,000) 341,000 State Appropriations Receivable 75,000 Total Unrestricted 626,000 Restricted Cash 7,000 Investments 60,000 Total Restricted 67,000 Total Current $693,000 Liabilities and Fund Balances Current Funds Unrestricted Accounts Payable $ 45,000 Deferred Revenues 66,000 Fund Balance 515,000 Total Unrestricted 626,000 Restricted Fund Balance 67,000 Total Restricted 67,000 Total Current $693,000 During the fiscal year ended June 30, 2008, the following transactions occurred: 1. A gift of $100,000 was received from an alumnus on July 7, 2007. One-half of the gift was to be used for the purchase of books for the university’s library and the rest was to be used to establish a scholarship fund per the alumnus’s request. It was also requested that the income generated by the scholarship fund be awarded annually as a scholarship for a qualified disadvantaged student. The board decided that the funds for the new scholarship should be invested in savings certificates on July 20, 2007. These savings certificates were purchased on July 21, 2007. 2. Revenue for the fiscal period from student tuition and fees amounted to $1,900,000. During the fiscal year, $1,686,000 of this amount was collected; $66,000 had been collected in the prior year. The university had also received $158,000 by June 30, 2008, for fees for the session beginning July 1, 2008. 3. During the year ended June 30, 2008, the university collected $349,000 of the outstanding accounts receivable at the beginning of the year. The balance was determined to be uncollectible and was written off against the allowance account. At June 30, 2008, the allowance account was increased by $3,000. 4. Because of late student fee payments, $6,000 in interest charges were earned and collected. 5. The state appropriation was received. Another unrestricted appropriation of $50,000 was made by the state. This had not been paid to the university by the fiscal year-end. 6. An unrestricted gift of $25,000 cash was received from alumni of the university. LO2 LO3 960 Problems 923 7. During the year, investments of $21,000 were sold for $26,000. Investment income amounting to $1,900 was received. 8. Unrestricted operating expenses were recorded at $1,777,000, $59,000 of which remains unpaid. 9. Restricted current funds of $13,000 were spent for authorized purposes during the year. 10. The accounts payable at June 30, 2007, were paid during the year. 11. During the year, $7,000 interest was earned and received on the savings certificates purchased in accordance with the board’s resolution [in item (1)]. Required: A. Prepare journal entries to record in summary form the transactions above for the year ended June 30, 2008. Each journal entry should be numbered to correspond with the transaction described above. Set up the following headings: Current Funds Unrestricted Restricted Endowment Fund Accounts Dr. Cr. Dr. Cr. Dr. Cr. B. Prepare a statement of activities for the year ended June 30, 2008. C. Prepare a statement of activities for the current funds for the year ended June 30, 2008. Include more details about the revenues and expenses.
PROBLEM 19-3 Various Funds—University A partial statement of financial position of Century University is shown below. Century University Partial Statement of Financial Position June 30, 2007 Assets Current Funds Unrestricted Cash $210,000 Accounts Receivable (less allowance for doubtful accounts, $9,000) 341,000 State Appropriations Receivable 75,000 Total Unrestricted 626,000 Restricted Cash 7,000 Investments 60,000 Total Restricted 67,000 Total Current $693,000 Liabilities and Fund Balances Current Funds Unrestricted Accounts Payable $ 45,000 Deferred Revenues 66,000 Fund Balance 515,000 Total Unrestricted 626,000 Restricted Fund Balance 67,000 Total Restricted 67,000 Total Current $693,000 During the fiscal year ended June 30, 2008, the following transactions occurred: 1. A gift of $100,000 was received from an alumnus on July 7, 2007. One-half of the gift was to be used for the purchase of books for the university’s library and the rest was to be used to establish a scholarship fund per the alumnus’s request. It was also requested that the income generated by the scholarship fund be awarded annually as a scholarship for a qualified disadvantaged student. The board decided that the funds for the new scholarship should be invested in savings certificates on July 20, 2007. These savings certificates were purchased on July 21, 2007. 2. Revenue for the fiscal period from student tuition and fees amounted to $1,900,000. During the fiscal year, $1,686,000 of this amount was collected; $66,000 had been collected in the prior year. The university had also received $158,000 by June 30, 2008, for fees for the session beginning July 1, 2008. 3. During the year ended June 30, 2008, the university collected $349,000 of the outstanding accounts receivable at the beginning of the year. The balance was determined to be uncollectible and was written off against the allowance account. At June 30, 2008, the allowance account was increased by $3,000. 4. Because of late student fee payments, $6,000 in interest charges were earned and collected. 5. The state appropriation was received. Another unrestricted appropriation of $50,000 was made by the state. This had not been paid to the university by the fiscal year-end. 6. An unrestricted gift of $25,000 cash was received from alumni of the university. LO2 LO3 960 Problems 923 7. During the year, investments of $21,000 were sold for $26,000. Investment income amounting to $1,900 was received. 8. Unrestricted operating expenses were recorded at $1,777,000, $59,000 of which remains unpaid. 9. Restricted current funds of $13,000 were spent for authorized purposes during the year. 10. The accounts payable at June 30, 2007, were paid during the year. 11. During the year, $7,000 interest was earned and received on the savings certificates purchased in accordance with the board’s resolution [in item (1)]. Required: A. Prepare journal entries to record in summary form the transactions above for the year ended June 30, 2008. Each journal entry should be numbered to correspond with the transaction described above. Set up the following headings: Current Funds Unrestricted Restricted Endowment Fund Accounts Dr. Cr. Dr. Cr. Dr. Cr. B. Prepare a statement of activities for the year ended June 30, 2008. C. Prepare a statement of activities for the current funds for the year ended June 30, 2008. Include more details about the revenues and expenses.
PROBLEM 19-5 Journal Entries—Financial Statements—Library Preston Library-ANSWER KEY (INSTANT DOWNLOAD)
ADVANCE ACCOUNTING BY JETER
PROBLEM 19-5 Journal Entries—Financial Statements—Library Preston Library, a nonprofit organization, presented the following statement of financial position and statement of activities for its fiscal year ended February 28, 2007. Preston Library Statement of Financial Position February 28, 2007 Temporarily Assets Unrestricted Restricted Current Assets Cash $ 285,000 $80,000 Grants Receivable 80,000 Prepaid Expenses 65,000 Total 430,000 Investments (at market) 1,020,000 Land, Building, and Equipment (less accumulated depreciation of $50,000) 530,000 Total Assets $1,980,000 $80,000 Liabilities and Fund Balances Current Liabilities Accounts Payable and Accrued Expenses $ 150,000 Total 150,000 Long-Term Debt 200,000 Fund Balances 1,630,000 80,000 Total Liabilities and Fund Balances $1,980,000 $80,000 LO2 962 Problems 925 Preston Library Statement of Activities for Year Ended February 28, 2007 Temporarily Support and Revenue Unrestricted Restricted Support Grants $ 70,000 $—0— Gifts 300,000 80,000 Total 370,000 80,000 Revenue Service Fees 22,000 Book Rentals and Fines 107,000 Investment Income 71,000 Total 200,000 —0— Total Support and Revenue $ 570,000 $80,000 Expenses Program Services Circulating library $ 212,000 Research library 86,000 Exhibits 20,000 Community services 10,000 Total 328,000 —0— Supporting Services General and administrative 175,000 Fund raising 111,000 Total 286,000 —0— Total Expenses 614,000 —0— Increase (decrease) in net assets (44,000) 80,000 Fund Balances—beginning of year 1,674,000 —0— Fund Balances—end of year $1,630,000 $80,000 The following transactions occurred during the fiscal year ended February 28, 2008. 1. Fees were billed as follows: Service fees $30,000 Book rentals 43,000 Book fines 78,000 2. $40,000 of the Grant Receivable was received. Another grant in the amount of $20,000 was promised. 3. Contributions in the amounts summarized below were received: Unrestricted $215,000 Restricted 108,000 4. Investment income totaled $75,000 for the year. 5. Vouchers for the year were approved as follows: Circulating library $189,000 Research library 74,000 Exhibits 15,000 Community services 12,000 General and administrative 166,000 Fund raising 103,000 Total $559,000 6. During the year, $500,000 worth of vouchers were paid. 963 926 Chapter 19 Accounting for Nongovernment Nonbusiness Organizations Adjustment Data 7. Accounts Payable and Accrued Expenses at February 28, 2008, should be $217,000. The difference should be allocated to the following expenses: Research library $5,000 General and administrative 3,000 8. Additions to the research library in the amount of $68,000 that were approved in (5) above were made in accordance with the terms of a contribution that had been received earlier and that was restricted for that purpose. 9. The current market value of the investments is $1,035,000 (no investment transactions occurred). 10. Depreciation amounted to $9,000 for the year. It should be allocated as follows: Circulating library $3,500 Research library 2,900 General and administrative 2,600 11. Prepaid Expenses should be $60,000. The difference should be allocated to: Exhibits $3,700 General and administrative 1,300 Required: A. Prepare journal entries to record the transactions. B. Prepare the statement of financial position and the statement of activities for the year ended February 28, 2008.
PROBLEM 19-5 Journal Entries—Financial Statements—Library Preston Library, a nonprofit organization, presented the following statement of financial position and statement of activities for its fiscal year ended February 28, 2007. Preston Library Statement of Financial Position February 28, 2007 Temporarily Assets Unrestricted Restricted Current Assets Cash $ 285,000 $80,000 Grants Receivable 80,000 Prepaid Expenses 65,000 Total 430,000 Investments (at market) 1,020,000 Land, Building, and Equipment (less accumulated depreciation of $50,000) 530,000 Total Assets $1,980,000 $80,000 Liabilities and Fund Balances Current Liabilities Accounts Payable and Accrued Expenses $ 150,000 Total 150,000 Long-Term Debt 200,000 Fund Balances 1,630,000 80,000 Total Liabilities and Fund Balances $1,980,000 $80,000 LO2 962 Problems 925 Preston Library Statement of Activities for Year Ended February 28, 2007 Temporarily Support and Revenue Unrestricted Restricted Support Grants $ 70,000 $—0— Gifts 300,000 80,000 Total 370,000 80,000 Revenue Service Fees 22,000 Book Rentals and Fines 107,000 Investment Income 71,000 Total 200,000 —0— Total Support and Revenue $ 570,000 $80,000 Expenses Program Services Circulating library $ 212,000 Research library 86,000 Exhibits 20,000 Community services 10,000 Total 328,000 —0— Supporting Services General and administrative 175,000 Fund raising 111,000 Total 286,000 —0— Total Expenses 614,000 —0— Increase (decrease) in net assets (44,000) 80,000 Fund Balances—beginning of year 1,674,000 —0— Fund Balances—end of year $1,630,000 $80,000 The following transactions occurred during the fiscal year ended February 28, 2008. 1. Fees were billed as follows: Service fees $30,000 Book rentals 43,000 Book fines 78,000 2. $40,000 of the Grant Receivable was received. Another grant in the amount of $20,000 was promised. 3. Contributions in the amounts summarized below were received: Unrestricted $215,000 Restricted 108,000 4. Investment income totaled $75,000 for the year. 5. Vouchers for the year were approved as follows: Circulating library $189,000 Research library 74,000 Exhibits 15,000 Community services 12,000 General and administrative 166,000 Fund raising 103,000 Total $559,000 6. During the year, $500,000 worth of vouchers were paid. 963 926 Chapter 19 Accounting for Nongovernment Nonbusiness Organizations Adjustment Data 7. Accounts Payable and Accrued Expenses at February 28, 2008, should be $217,000. The difference should be allocated to the following expenses: Research library $5,000 General and administrative 3,000 8. Additions to the research library in the amount of $68,000 that were approved in (5) above were made in accordance with the terms of a contribution that had been received earlier and that was restricted for that purpose. 9. The current market value of the investments is $1,035,000 (no investment transactions occurred). 10. Depreciation amounted to $9,000 for the year. It should be allocated as follows: Circulating library $3,500 Research library 2,900 General and administrative 2,600 11. Prepaid Expenses should be $60,000. The difference should be allocated to: Exhibits $3,700 General and administrative 1,300 Required: A. Prepare journal entries to record the transactions. B. Prepare the statement of financial position and the statement of activities for the year ended February 28, 2008.
PROBLEM 12-2 Importing/Exporting Transactions with a Forward Contract Hedge Crystal-ANSWER KEY (INSTANT DOWNLOAD)
ADVANCE ACCOUNTING BY JETER
PROBLEM 12-2 Importing/Exporting Transactions with a Forward Contract Hedge Crystal Exporting Co. is a U.S. wholesaler engaged in foreign trade. The following transactions are representative of its business dealings. The company uses a periodic inventory system and is on a calendar-year basis. All exchange rates are direct quotations. Dec. 1 Crystal Exporting purchased merchandise from Chang’s Ltd., a Hong Kong manufacturer. The invoice was for 210,000 Hong Kong dollars, payable on April 1. On this same date, Crystal Exporting acquired a forward contract to buy 210,000 Hong Kong dollars on April 1 for $.1314. Dec. 29 Crystal Exporting sold merchandise to Zintel Retailers for 120,000 Hong Kong dollars, receivable in 90 days. No hedging was involved. April 1 Crystal Exporting received 120,000 Hong Kong dollars from Zintel Retailers. 1 Crystal Exporting submitted full payment of 210,000 Hong Kong dollars to Chang’s, Ltd., after obtaining the 210,000 Hong Kong dollars on its forward contract. Spot rates and the forward rates for the Hong Kong dollar were as follows: Forward Rate for Spot Rate April 1 Delivery Dec. 1 $.1265 $.1314 Dec. 29 .1240 .1305 Dec. 31 .1259 .1308 April 1 .1430 Required: A. Prepare journal entries for the transactions including the necessary adjustments on December 31. B. Explain the income statement treatment given to any transaction gains and losses recognized at December 31.
PROBLEM 12-2 Importing/Exporting Transactions with a Forward Contract Hedge Crystal Exporting Co. is a U.S. wholesaler engaged in foreign trade. The following transactions are representative of its business dealings. The company uses a periodic inventory system and is on a calendar-year basis. All exchange rates are direct quotations. Dec. 1 Crystal Exporting purchased merchandise from Chang’s Ltd., a Hong Kong manufacturer. The invoice was for 210,000 Hong Kong dollars, payable on April 1. On this same date, Crystal Exporting acquired a forward contract to buy 210,000 Hong Kong dollars on April 1 for $.1314. Dec. 29 Crystal Exporting sold merchandise to Zintel Retailers for 120,000 Hong Kong dollars, receivable in 90 days. No hedging was involved. April 1 Crystal Exporting received 120,000 Hong Kong dollars from Zintel Retailers. 1 Crystal Exporting submitted full payment of 210,000 Hong Kong dollars to Chang’s, Ltd., after obtaining the 210,000 Hong Kong dollars on its forward contract. Spot rates and the forward rates for the Hong Kong dollar were as follows: Forward Rate for Spot Rate April 1 Delivery Dec. 1 $.1265 $.1314 Dec. 29 .1240 .1305 Dec. 31 .1259 .1308 April 1 .1430 Required: A. Prepare journal entries for the transactions including the necessary adjustments on December 31. B. Explain the income statement treatment given to any transaction gains and losses recognized at December 31.
18-34 Information relating to the capital structure of Harry Porter Corporation-ANSWER KEY (INSTANT DOWNLOAD)
Intermediate Accounting by James D. Stice
Information relating to the capital structure of Harry Porter Corporation at December 31, 2010 and 2011, is as follows:
Outstanding
Common Stock............................................................................................270,000 shares
Convertible preferred stock noncumulative(issued in 2009).................................24,000 shares
7.5% convertible bonds (issued in 2010)........................................................$900,000
Stock options to purchase 32,000 shares at $12. Market price of Harry Porter stock was $18
at December 31, 2011
Harry Porter Corporation paid dividends of $4 per share on its preferred stock. The preferred stock is convertible into 48,000 shares of common stock. The 7.5% convertible bonds are convertible into a total of 26,000 shares of common stock. The net income for the year ended December 31, 2011, is $760,000. Assume that the income tax rate is 30%. Compute basic and diluted EPS for the year ended December 31, 2011. Round each of your calculations to the nearest whole number of shares
Basic EPS $_________
Diluted EPS $________
Information relating to the capital structure of Harry Porter Corporation at December 31, 2010 and 2011, is as follows:
Outstanding
Common Stock............................................................................................270,000 shares
Convertible preferred stock noncumulative(issued in 2009).................................24,000 shares
7.5% convertible bonds (issued in 2010)........................................................$900,000
Stock options to purchase 32,000 shares at $12. Market price of Harry Porter stock was $18
at December 31, 2011
Harry Porter Corporation paid dividends of $4 per share on its preferred stock. The preferred stock is convertible into 48,000 shares of common stock. The 7.5% convertible bonds are convertible into a total of 26,000 shares of common stock. The net income for the year ended December 31, 2011, is $760,000. Assume that the income tax rate is 30%. Compute basic and diluted EPS for the year ended December 31, 2011. Round each of your calculations to the nearest whole number of shares
Basic EPS $_________
Diluted EPS $________
18-37 Great Northern Inc-ANSWER KEY (INSTANT DOWNLOAD)
Intermediate Accounting by James D. Stice
Great Northern Inc. reported the following comparative information in the Stockholders' Equity section of its 2012 balance sheet.
December 31
2012 2011 2010
12% preferred stock, $50 par............................. $82,500 $67,500 $50,000
Paid-in capital in excess of par-preferred............. 13,400 9,200 5,000
Common Stock, $5 par*.................................... 410,600 399,600 325,000
Paid-in capital in excess of par-common.............. 64,300 58,800 35,000
Paid-in capital from treasury stock...................... 1,800 800 800
Retained Earnings............................................ 471,200 396,460 180,200
Total Stockholders Equity................................... $1,043,800 $932,360 $596,000
*Par value after June 1, 2012, stock split.
In addition, company records show that the following transactions involving stockholders' equity were recorded in 2011 and 2012.
2011
May 1 Sold 4,500 shares of common stock for $12, par value $10.
June 30 Sold 350 shares of preferred stock for $62, par value $50.
Aug. 1 Issued an 8% stock dividend on common stock. The market price of the stock was $15.
Sept. 1 Declared cash dividends of 12% on preferred stock and $1.50 on common stock.
Dec. 31 Income before extraordinary items for the year totaled $316,200. In addition, Great Northern had an extraordinary gain of $12,500, net of tax.
2012
Jan. 31 Sold 1,100 shares of common stock for $15.
May 1 Sold 300 shares of preferred stock for $64.
June 1 Issued a 2-for-1 split of common stock, reduced par value to $5.
Sept. 1 Purchased 500 shares of common stock for $9 to be held as treasury stock.
Oct. 1 Declared cash dividends of 12% on preferred stock and $2 per share on outstanding common stock.
Nov. 1 Sold 500 shares of treasury stock for $11.
Dec. 31 Net income for the year of $247,880 (included an extraordinary loss, net of income tax, of $19,000).
Instructions: Compute the basic EPS amounts for 2011 and 2012 to be presented in the income statement for 2012. Round each of your calculations to the nearest whole number of shares and each dollar amount to the nearest cent.
For 2011 $________
For 2012 $________
Great Northern Inc. reported the following comparative information in the Stockholders' Equity section of its 2012 balance sheet.
December 31
2012 2011 2010
12% preferred stock, $50 par............................. $82,500 $67,500 $50,000
Paid-in capital in excess of par-preferred............. 13,400 9,200 5,000
Common Stock, $5 par*.................................... 410,600 399,600 325,000
Paid-in capital in excess of par-common.............. 64,300 58,800 35,000
Paid-in capital from treasury stock...................... 1,800 800 800
Retained Earnings............................................ 471,200 396,460 180,200
Total Stockholders Equity................................... $1,043,800 $932,360 $596,000
*Par value after June 1, 2012, stock split.
In addition, company records show that the following transactions involving stockholders' equity were recorded in 2011 and 2012.
2011
May 1 Sold 4,500 shares of common stock for $12, par value $10.
June 30 Sold 350 shares of preferred stock for $62, par value $50.
Aug. 1 Issued an 8% stock dividend on common stock. The market price of the stock was $15.
Sept. 1 Declared cash dividends of 12% on preferred stock and $1.50 on common stock.
Dec. 31 Income before extraordinary items for the year totaled $316,200. In addition, Great Northern had an extraordinary gain of $12,500, net of tax.
2012
Jan. 31 Sold 1,100 shares of common stock for $15.
May 1 Sold 300 shares of preferred stock for $64.
June 1 Issued a 2-for-1 split of common stock, reduced par value to $5.
Sept. 1 Purchased 500 shares of common stock for $9 to be held as treasury stock.
Oct. 1 Declared cash dividends of 12% on preferred stock and $2 per share on outstanding common stock.
Nov. 1 Sold 500 shares of treasury stock for $11.
Dec. 31 Net income for the year of $247,880 (included an extraordinary loss, net of income tax, of $19,000).
Instructions: Compute the basic EPS amounts for 2011 and 2012 to be presented in the income statement for 2012. Round each of your calculations to the nearest whole number of shares and each dollar amount to the nearest cent.
For 2011 $________
For 2012 $________
18-39 Kulkulcan Technology Co-ANSWER KEY (INSTANT DOWNLOAD)
Intermediate Accounting by James D. Stice
18-39 Kulkulcan Technology Co. provides the following data at December 31, 2011.
Operating Revenues..........$1,460,000
Operating Expenses..............$790,000
Income Tax Rate.....................35%
Common Stock outstanding during the year.....34,000 Shares
On January 1, 2011, there were options outstanding to purchase 9,000 shares of common stock at $20 per share. The ending market price for the year was $26 per share. The balance sheet reports $510,000 of 7% nonconvertible bonds at December 31, 2011. (Interest expense is included in operating expenses.)
Instructions: Compute basic and diluted EPS for the year ended December 31, 2011. Round each of your calculations to the nearest whole number of shares and each dollar amount to the nearest cent
Basic EPS _______
Diluted EPS_______
18-39 Kulkulcan Technology Co. provides the following data at December 31, 2011.
Operating Revenues..........$1,460,000
Operating Expenses..............$790,000
Income Tax Rate.....................35%
Common Stock outstanding during the year.....34,000 Shares
On January 1, 2011, there were options outstanding to purchase 9,000 shares of common stock at $20 per share. The ending market price for the year was $26 per share. The balance sheet reports $510,000 of 7% nonconvertible bonds at December 31, 2011. (Interest expense is included in operating expenses.)
Instructions: Compute basic and diluted EPS for the year ended December 31, 2011. Round each of your calculations to the nearest whole number of shares and each dollar amount to the nearest cent
Basic EPS _______
Diluted EPS_______
E12-22 Ray, Scott, and Van are liquidating their partnership-ANSWER KEY (INSTANT DOWNLOAD)
E12-22 Ray, Scott, and Van are liquidating their partnership. Before selling the assets and paying the liabilities, the capital balances are Ray $33,000; Scott, $28,000; and Van, $19,000. The partnership agreement specifies no division of profits and losses. Liquidation of a partnership Requirements 1. After selling the assets and paying the liabilities, the partnership has cash of $80,000. How much cash will each partner receive in final liquidation? (pp. 612–613) 2. After selling the assets and paying the liabilities, the partnership has cash of $50,000. How much cash will each partner receive in final liquidation? (pp. 612–614)
E12-18 Heather Hollis is admitted to the partnership-ANSWER KEY (INSTANT DOWNLOAD)
E12-18 Heather Hollis is admitted to the partnership of Rose & Novak. Prior to her admission, the partnership books show Ginny Rose’s capital balance at $100,000 and Chris Novak’s at $50,000. Compute each partner’s equity on the books of the new partnership under the following plans: Admitting a new partner a. Hollis pays $70,000 for Novak’s equity. Hollis pays Novak directly. (pp. 603–605) b. Hollis invests $50,000 to acquire a 1/4 interest in the partnership. (pp. 605–606) c. Hollis invests $90,000 to acquire a 1/4 interest in the partnership. (pp. 605–606)
E12-16 Bob Fultz and Jack Hardie form a partnership-ANSWER KEY (INSTANT DOWNLOAD)
E12-16 Bob Fultz and Jack Hardie form a partnership, investing $40,000 and $80,000, respectively. Determine their shares of net income or net loss for each of the following situations: Computing partners’ shares of net income and net loss a. Net loss is $90,000 and the partners have no written partnership agreement. (p. 602) b. Net income is $60,000, and the partnership agreement states that the partners share profits and losses on the basis of their capital balances. (pp. 602–603) c. Net income is $100,000. The first $60,000 is shared on the basis of partner capital balances. The next $30,000 is based on partner service, with Fultz getting 40% and Hardie 60%. The remainder is shared equally. (pp. 602–603)
Here's the SOLUTION
Here's the SOLUTION
ACC 561 16-42 Balance Sheet and Income Statement The fiscal year for Honshu Company-ANSWER KEY (INSTANT DOWNLOAD)
16-42 Balance Sheet and Income Statement
The fiscal year for Honshu Company ends on May 31. Results for the year ended May 31, 20X1,
included (in millions of Japanese yen except for number of shares outstanding):
Cash and cash equivalents ¥ 35,000
Cost of goods sold 195,000
Inventories 29,000
Other current assets 6,000
Fixed assets, net 217,000
Net sales 415,000
Receivables 22,000
Debentures 77,000
Research and development expenses 42,000
Administrative and general expenses 65,000
Other income (expenses), net (12,000)
Capital construction fund* 28,000
Selling and distribution expenses 41,000
Other current liabilities 9,000
Treasury stock (13,000)
Long-term investments ?
Accounts payable 19,000
Mortgage bonds 84,000
Deferred income tax liability 12,000
Redeemable preferred stock 15,000
Common stock, at par (50,000 shares outstanding) 5,000
Paid-in capital in excess of par 102,000
Income tax expense 49,000
Accrued expenses payable 20,000
Retained income 43,000
Intangible assets 21,000
*A noncurrent asset
Prepare in proper form the balance sheet as of May 31, 20X1, and the income statement for the year
ended May 31, 20X1. Include the proper amount for long-term investments.
Here's the SOLUTION
The fiscal year for Honshu Company ends on May 31. Results for the year ended May 31, 20X1,
included (in millions of Japanese yen except for number of shares outstanding):
Cash and cash equivalents ¥ 35,000
Cost of goods sold 195,000
Inventories 29,000
Other current assets 6,000
Fixed assets, net 217,000
Net sales 415,000
Receivables 22,000
Debentures 77,000
Research and development expenses 42,000
Administrative and general expenses 65,000
Other income (expenses), net (12,000)
Capital construction fund* 28,000
Selling and distribution expenses 41,000
Other current liabilities 9,000
Treasury stock (13,000)
Long-term investments ?
Accounts payable 19,000
Mortgage bonds 84,000
Deferred income tax liability 12,000
Redeemable preferred stock 15,000
Common stock, at par (50,000 shares outstanding) 5,000
Paid-in capital in excess of par 102,000
Income tax expense 49,000
Accrued expenses payable 20,000
Retained income 43,000
Intangible assets 21,000
*A noncurrent asset
Prepare in proper form the balance sheet as of May 31, 20X1, and the income statement for the year
ended May 31, 20X1. Include the proper amount for long-term investments.
Here's the SOLUTION
ACC 561 15-B1 Balance Sheet Equation-Micron Technology is one of the leading producers-ANSWER KEY (INSTANT DOWNLOAD)
15-B1 Balance Sheet Equation
Micron Technology is one of the leading producers of semiconductor components. The company’s
actual data (in millions of dollars) follow for its fiscal year ended September 1, 2005:
Assets, beginning of period $7,760.0
Assets, end of period E
Liabilities, beginning of period A
Liabilities, end of period 2,159.6
Paid-in capital, beginning of period 4,725.1
Paid-in capital, end of period D
Retained earnings, beginning of period 889.7
Retained earnings, end of period C
Revenues 4,880.2
Costs and expenses B
Net income (loss) 188.0
Dividends 0.0
Additional investments by stockholders 43.9
Find the unknowns (in millions), showing computations to support your answers.
Micron Technology is one of the leading producers of semiconductor components. The company’s
actual data (in millions of dollars) follow for its fiscal year ended September 1, 2005:
Assets, beginning of period $7,760.0
Assets, end of period E
Liabilities, beginning of period A
Liabilities, end of period 2,159.6
Paid-in capital, beginning of period 4,725.1
Paid-in capital, end of period D
Retained earnings, beginning of period 889.7
Retained earnings, end of period C
Revenues 4,880.2
Costs and expenses B
Net income (loss) 188.0
Dividends 0.0
Additional investments by stockholders 43.9
Find the unknowns (in millions), showing computations to support your answers.
Wednesday, March 30, 2011
Managerial Accounting Case 8-2 Galloway University Medical Center-ANSWER KEY (INSTANT DOWNLOAD)
Case 8-2 Galloway University Medical Center has a top rated medical facility that draws patients from a three-state area. On the day of discharge from the GUMC hospital, most patients fill their prescriptions from the GUMC pharmacy. However, when it comes time to renew them, they turn to a local pharmacy because that is more convient than driving back to the GUMC pharmacy. To encourage prescription renewals, GUMC is considering offering either free overnight delivery or reduced prices on renewal orders. Currently, the GUMC pharmacy had revenue of $54,990,000 per year on 846,000 orders. The gross margin (price minus cost of drugs) is approximately 25%. Free overnight delivery is expected to cost $8 per order and result in 120,000 renewal orders per year. To deal with the increased volume, the pharmacy will need to hire two pharmacisits at $90,000 each per year and an additional staff person (to handle shipping) at $50,000 per year. Alternatively the pharmacy can generate 120,000 renewal orders per year by offering 20% off the prices of renewal orders. With this option, two pharmacists must be hired, but no additional staff person will be needed. 1.Assumptions drive the accounting projections. Do you have any questions regarding the assumptions used by Galloway University Medical Center Pharmacy in the planned change? 2. What is your recommendation for the proposed change?
Managerial Accounting Case 4-2 Marie Stefano is the group director of customer-ANSWER KEY (INSTANT DOWNLOAD)
Case 4-2 Marie Stefano is the group director of customer training for Mayfield Software. In this capacity she runs a center that provides training to employees of companies that use Mayfield’s inventory control, customer management, and accounting software products. Her group employs a receptionist and an office manager/bookkeeper, and she arrangements with several part-time trainers who are hired on as-needed basis. Trainers are paid $4,000 per daylong class. Mayfield is a decentralized company, and Marie is given considerable authority to advertise and conduct classes as she sees fit. 1.List any recommendations regarding the customer training programs.
Managerial Accounting Case 1-1 Local 635 represents kitchen workers-ANSWER KEY
Local 635 represents kitchen workers at hotels in several southern cities. Part of their labor agreement states that workers “shall receive one free meal per shift up to a cost of $12, with any cost over $12 being deducted from wages paid to said employee.” A labor dispute arose at the Riverside Hotel shortly after it was opened in June. Kitchen workers who ate dinner on the late shift found that their wages were reduced by $10 for each meal they consumed at the hotel during their dinner break. Josh Parker, a line cook, stated the widely held belief of the workers. “There’s no way these dinners cost the Riverside Hotel $12 to make, let alone $22. This is just another case of management trying to rip us off. Take last night. I had the prime rib dinner. The piece of meat cost about $7 and the salad less than $1. That’s only $8 in total. Really there aren’t any other costs to speak of. The cook, well he’s going to be working in the kitchen and getting paid for eight hours whether he makes my meal or not. This claim that my meal cost $22 is baloney!” Management at the Riverside Hotel sees the situation differently. Take the case of Josh’s dinner. In presenting the hotel’s case to a labor arbitration board, Sandy Ross, manager of the hotel, explained, “Look, that dinner goes for $32 on the menu so assigning a cost of $22 represents a very good value to the kitchen workers. The contention that the meal only cost $8 is nonsense. True, the meat costs $7 and the salad ingredients cost $1, but there’s also the labor costs related to preparing the meal and the numerous overhead costs, like the costs of the oven that the prime rib is cooked in. That oven costs more than 20,000. And there’s heat, light, power, etc. Each meal we prepare should be assigned part of these overhead costs. And don’t forget that when the worker finishes his or her meal, someone has to clean up. That costs money too. When you add up all these items, a prime rib dinner easily adds up to $22!” 1. Identify the most important management issues involved in the case. 2. Present you recommendations for resolving the conflict.
WATERWAYS CONTINUING PROBLEM WCP21 Waterways Corporation is continuing its budget preparations-ANSWER KEY
WATERWAYS CONTINUING PROBLEM: WCP21 (This is a continuation of the Waterways Problem from Chapters 14 through 20.) Waterways Corporation is continuing its budget preparations. Waterways had the following static budget and overhead costs for March. Waterways Corporation Waterways Corporation Manufacturing Overhead Budget (Static) Manufacturing Overhead Costs (Actual) For the Month of March For the Month of March Budgeted production in units 117,500 Production in units 118,500 Budgeted costs Costs Indirect materials $ 7,050 Indirect materials $ 7,100 Indirect labor 11,750 Indirect labor 11,825 Utilities 10,575 Utilities 10,700 Maintenance 5,875 Maintenance 5,900 Salaries 42,000 Salaries 42,000 Depreciation 16,800 Depreciation 16,800 Property taxes 2,500 Property taxes 2,500 Insurance 1,200 Insurance 1,200 Janitorial 1,300 Janitorial 1,300 Total budgeted costs $99,050 Total costs $99,325 Waterways produced 118,500 units in March rather than the budgeted number of units. Instructions (a) Prepare a flexible overhead budget based on the following amounts produced. (1) 115,500 units (2) 116,500 units (3) 117,500 units (4) 118,500 units (5) 119,500 units (b) Prepare a flexible budget report showing the differences (favorable and unfavorable) in manufacturing overhead costs for the month of March. (c) Prepare a responsibility report for the manufacturing overhead for March, assuming only variable costs are controllable.
WATERWAYS CONTINUING PROBLEM WCP20 Waterways Corporation is preparing its budget for the coming year, 2011-ANSWER KEY
WATERWAYS CONTINUING PROBLEM: WCP20 (This is a continuation of the Waterways Problem from Chapters 14 through 19.) Waterways Corporation is preparing its budget for the coming year, 2011. The first step is to plan for the first quarter of that coming year. Waterways gathered the following information from the managers. Sales Unit sales for November 2010 112,500 Unit sales for December 2010 102,083 Expected unit sales for January 2011 113,333 Expected unit sales for February 2011 112,500 Expected unit sales for March 2011 116,667 Expected unit sales for April 2011 125,000 Expected unit sales for May 2011 137,500 Unit selling price $12 Waterways likes to keep 10% of the next month’s unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale, and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31, 2010, totaled $183,750. Direct Materials Item__ Amount used per unit Inventory, Dec. 31 Metal 1 lb @ 58¢ per lb. 5,177.5 lbs Plastic 12 oz @ 6¢ per oz 3,883.125 lbs Rubber 4 oz @ 5¢ per oz 1,294.375 lbs 2 lbs per unit 10,355.0 lbs Metal, plastic, and rubber together are 75¢ per pound per unit. Waterways likes to keep 5% of the materials needed for the next month in its ending inventory. Payment for materials is made within 15 days. 50% is paid in the month of purchase, and 50% is paid in the month after purchase. Accounts Payable on December 31, 2010, totaled $120,595. Raw Materials on December 31, 2010, totaled 10,355 pounds. Direct Labor Labor requires 12 minutes per unit for completion and is paid at a rate of $8 per hour. Manufacturing Overhead Indirect materials 30¢ per labor hour Indirect labor 50¢ per labor hour Utilities 45¢ per labor hour Maintenance 25¢ per labor hour Salaries $42,000 per month Depreciation $16,800 per month Property taxes $2,500 per month Insurance $1,200 per month Janitorial $1,300 per month Selling and Administrative Variable selling and administrative cost per unit is $1.62. Advertising $15,000 a month Insurance $1,400 a month Salaries $72,000 a month Depreciation $2,500 a month Other fixed costs $3,000 a month Other Information The Cash balance on December 31, 2010, totaled $100,500, but management has decided it would like to maintain a cash balance of at least $800,000 beginning on January 31, 2011. Dividends are paid each month at the rate of $2.50 per share for 5,000 shares outstanding. The company has an open line of credit with Romney’s Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 8% interest. Waterways borrows on the first day of the month and repays on the last day of the month. A $500,000 equipment purchase is planned for February. Instructions For the first quarter of 2011, do the following.
(a) Prepare a sales budget.
(b) Prepare a production budget.
(c) Prepare a direct materials budget.
(d) Prepare a direct labor budget. (For calculations, round to the nearest hour.) (e) Prepare a manufacturing overhead budget. (Round amounts to the nearest dollar.) (f) Prepare a selling and administrative budget.
(g) Prepare a schedule for expected cash collections from customers.
(h) Prepare a schedule for expected payments for materials purchases.
(i) Prepare a cash budget.
Here's the SOLUTION
(a) Prepare a sales budget.
(b) Prepare a production budget.
(c) Prepare a direct materials budget.
(d) Prepare a direct labor budget. (For calculations, round to the nearest hour.) (e) Prepare a manufacturing overhead budget. (Round amounts to the nearest dollar.) (f) Prepare a selling and administrative budget.
(g) Prepare a schedule for expected cash collections from customers.
(h) Prepare a schedule for expected payments for materials purchases.
(i) Prepare a cash budget.
Here's the SOLUTION
FIN 324 COMPLETE WEEK 4 (ANSWER KEY)
Chapter 15: Discussion Questions 9-11, 16.
9-11
Using the following data and the straight-line method of depreciation, compute depreciation
expense, and make the necessary journal entry to record depreciation expense for the
first year.
Investments in Property, Plant, and Equipment and in Intangible Assets
Cost of machine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000,000
Estimated useful life (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 years
Salvage value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,000
Estimated useful life (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,600,000
Units produced during the first year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000
9-16
The company purchased a building 14 years ago for $720,000. The building has accumulated
depreciation of $504,000 and a fair market value of $150,000. The company expects
the building will generate a net cash inflow of $30,000 per year for the next six years.
Determine whether, from an accounting point of view, the building is impaired.
Chapter 15: Practice Exercise 15-8 Fixed Costs and Variable Costs
15-8
Which of the following is an example of a variable cost?
a. Insurance premium for fire insurance on the factory building
b. The salary of the company president
c. Wood used to make custom tables
d. Rent for use of a storage warehouse
e. Depreciation on the factory building
Chapter 15: Practice Exercise 15-12 Direct and Indirect Costs
15-12
Which one of the following statements best explains why companies want to distinguish between
direct and indirect costs?
a. To evaluate business segments on the basis of only those costs directly traceable to each
segment
b. To better determine whether a company is a large organization or a small
organization
c. To determine the sales prices necessary to break even
d. To better distinguish between variable and fixed costs for each product
e. To better distinguish between materials costs and labor costs
Chapter 15: Practice Exercise 15-14 Out-of-Pocket Costs and Opportunity Costs
.15-14
Which one of the following is an example of an opportunity cost?
a. Revenue lost from sale of cakes by deciding to sell only cookies
b. Wages paid to construction workers
c. Materials used to assemble computers
d. Ordering costs related to a customer’s special order of guitar strings
e. Rent paid for the use of a factory building
Prepare answers to the following problems, exercise, and case from the text, Accounting: Concepts & Applications, by Albrecht:
Chapter 22: Discussion Question 3
22-DQ3
Why is the time value of money so important in
capital budgeting decisions?
9-11
Using the following data and the straight-line method of depreciation, compute depreciation
expense, and make the necessary journal entry to record depreciation expense for the
first year.
Investments in Property, Plant, and Equipment and in Intangible Assets
Cost of machine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000,000
Estimated useful life (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 years
Salvage value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,000
Estimated useful life (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,600,000
Units produced during the first year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000
9-16
The company purchased a building 14 years ago for $720,000. The building has accumulated
depreciation of $504,000 and a fair market value of $150,000. The company expects
the building will generate a net cash inflow of $30,000 per year for the next six years.
Determine whether, from an accounting point of view, the building is impaired.
Chapter 15: Practice Exercise 15-8 Fixed Costs and Variable Costs
15-8
Which of the following is an example of a variable cost?
a. Insurance premium for fire insurance on the factory building
b. The salary of the company president
c. Wood used to make custom tables
d. Rent for use of a storage warehouse
e. Depreciation on the factory building
Chapter 15: Practice Exercise 15-12 Direct and Indirect Costs
15-12
Which one of the following statements best explains why companies want to distinguish between
direct and indirect costs?
a. To evaluate business segments on the basis of only those costs directly traceable to each
segment
b. To better determine whether a company is a large organization or a small
organization
c. To determine the sales prices necessary to break even
d. To better distinguish between variable and fixed costs for each product
e. To better distinguish between materials costs and labor costs
Chapter 15: Practice Exercise 15-14 Out-of-Pocket Costs and Opportunity Costs
.15-14
Which one of the following is an example of an opportunity cost?
a. Revenue lost from sale of cakes by deciding to sell only cookies
b. Wages paid to construction workers
c. Materials used to assemble computers
d. Ordering costs related to a customer’s special order of guitar strings
e. Rent paid for the use of a factory building
Prepare answers to the following problems, exercise, and case from the text, Accounting: Concepts & Applications, by Albrecht:
Chapter 22: Discussion Question 3
22-DQ3
Why is the time value of money so important in
capital budgeting decisions?
FIN 324 WEEK 4 Why is the time value of money so important in capital budgeting decisions-ANSWER KEY
FIN/324 FINANCIAL ANALYSIS FOR MANAGERS
Accounting: Concepts & Applications, by Albrecht:
Chapter 22: Discussion Question 3
22-DQ3
Why is the time value of money so important in
capital budgeting decisions?
Accounting: Concepts & Applications, by Albrecht:
Chapter 22: Discussion Question 3
22-DQ3
Why is the time value of money so important in
capital budgeting decisions?
FIN 324 WEEK 4 PE 15–14 (LO3) Out-of-Pocket Costs and Opportunity Costs-ANSWER KEY
FIN/324 FINANCIAL ANALYSIS FOR MANAGERS
Chapter 15: Practice Exercise 15-14 Out-of-Pocket Costs and Opportunity Costs
.15-14
Which one of the following is an example of an opportunity cost?
a. Revenue lost from sale of cakes by deciding to sell only cookies
b. Wages paid to construction workers
c. Materials used to assemble computers
d. Ordering costs related to a customer’s special order of guitar strings
e. Rent paid for the use of a factory building
Chapter 15: Practice Exercise 15-14 Out-of-Pocket Costs and Opportunity Costs
.15-14
Which one of the following is an example of an opportunity cost?
a. Revenue lost from sale of cakes by deciding to sell only cookies
b. Wages paid to construction workers
c. Materials used to assemble computers
d. Ordering costs related to a customer’s special order of guitar strings
e. Rent paid for the use of a factory building
FIN 324 WEEK 4 PE 15–12 (LO3) Direct and Indirect Costs-ANSWER KEY
FIN/324 FINANCIAL ANALYSIS FOR MANAGERS
Chapter 15: Practice Exercise 15-12 Direct and Indirect Costs
15-12
Which one of the following statements best explains why companies want to distinguish between
direct and indirect costs?
a. To evaluate business segments on the basis of only those costs directly traceable to each
segment
b. To better determine whether a company is a large organization or a small
organization
c. To determine the sales prices necessary to break even
d. To better distinguish between variable and fixed costs for each product
e. To better distinguish between materials costs and labor costs
Chapter 15: Practice Exercise 15-12 Direct and Indirect Costs
15-12
Which one of the following statements best explains why companies want to distinguish between
direct and indirect costs?
a. To evaluate business segments on the basis of only those costs directly traceable to each
segment
b. To better determine whether a company is a large organization or a small
organization
c. To determine the sales prices necessary to break even
d. To better distinguish between variable and fixed costs for each product
e. To better distinguish between materials costs and labor costs
FIN 324 WEEK 4 PE 15–8 (LO3) Fixed Costs and Variable Costs-ANSWER KEY
FIN/324 FINANCIAL ANALYSIS FOR MANAGERS
Chapter 15: Practice Exercise 15-8 Fixed Costs and Variable Costs
15-8
Which of the following is an example of a variable cost?
a. Insurance premium for fire insurance on the factory building
b. The salary of the company president
c. Wood used to make custom tables
d. Rent for use of a storage warehouse
e. Depreciation on the factory building
Chapter 15: Practice Exercise 15-8 Fixed Costs and Variable Costs
15-8
Which of the following is an example of a variable cost?
a. Insurance premium for fire insurance on the factory building
b. The salary of the company president
c. Wood used to make custom tables
d. Rent for use of a storage warehouse
e. Depreciation on the factory building
FIN 324 WEEK 4 PE 9–16 (LO6) Determining Asset Impairment-ANSWER KEY
FIN/324 FINANCIAL ANALYSIS FOR MANAGERS
9-16
The company purchased a building 14 years ago for $720,000. The building has accumulated
depreciation of $504,000 and a fair market value of $150,000. The company expects
the building will generate a net cash inflow of $30,000 per year for the next six years.
Determine whether, from an accounting point of view, the building is impaired.
FIN 324 WEEK 4 PE 9–11 (LO4) Straight-Line Method of Depreciation-ANSWER KEY
FIN/324 FINANCIAL ANALYSIS FOR MANAGERS
Chapter 15: Discussion Questions 9-11,
9-11
Using the following data and the straight-line method of depreciation, compute depreciation
expense, and make the necessary journal entry to record depreciation expense for the
first year.
Investments in Property, Plant, and Equipment and in Intangible Assets
Cost of machine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000,000
Estimated useful life (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 years
Salvage value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,000
Estimated useful life (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,600,000
Units produced during the first year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000
Chapter 15: Discussion Questions 9-11,
9-11
Using the following data and the straight-line method of depreciation, compute depreciation
expense, and make the necessary journal entry to record depreciation expense for the
first year.
Investments in Property, Plant, and Equipment and in Intangible Assets
Cost of machine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000,000
Estimated useful life (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 years
Salvage value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,000
Estimated useful life (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,600,000
Units produced during the first year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000
AlCan Inc.--AlCan, Inc. Balance Sheet Years Ended Dec-05 Dec-06 (ANSWER KEY)
Prepare a Cash Flow Statement using the Indirect Method and the following information. There were no dividends paid in 2005 and 2006. AlCan, Inc. Balance Sheet Years Ended Dec-05 Dec-06 Assets Cash 15,000 35,000 Accounts Receivable 22,500 26,000 Inventory 37,500 40,000 Prepaid Expenses 18,000 12,000 Plant and Equipment 375,000 375,000 Less: Accumulated Depreciation (75,000) (90,000) Total Assets 393,000 398,000 Liabilities Accounts Payable 20,000 22,000 Notes payable 30,000 28,000 Bonds Payable 75,000 50,000 Total Liabilities 125,000 100,000 Stockholders' Equity Common Stock 112,500 135,000 Paid-in Capital 37,500 40,000 Retained Earnings 118,000 123,000 Total Stockholders' Equity 268,000 298,000 Total Liabilities and Stockholders' Equity 393,000 398,000
Here's the SOLUTION
Here's the SOLUTION
Tuesday, March 29, 2011
Rye Company was formed on December 1, 2010-ANSWER KEY
Rye Company was formed on December 1, 2010. The following information is available from Rye's inventory record for Product Bread. Units Unit Cost January 1, 2011 (beginning inventory) 1,700 $17.00 Purchases: January 5, 2011 2,600 $20.00 January 25, 2011 2,400 $21.00 February 16, 2011 1,000 $22.00 March 15, 2011 2,100 $25.00 A physical inventory on March 31, 2011, shows 3,000 units on hand. Instructions Prepare schedules to compute the ending inventory at March 31, 2011, under each of the following inventory methods: (a) FIFO. (b) LIFO. (c) Weighted-average. Show supporting computations in good form.
Advanced Financial Accounting Problem 18-13 Preparing Government-wide Financial Statements Circus City-ANSWER KEY
Advanced Financial Accounting
Problem 18-13 Preparing Government-wide Financial Statements Circus City issued an 8%, 10-year $2,000,000 bond to build a monorail mass transit system. The city received $1,754,217 cash from the bond issuance on January 1, 2008. The bond yield is 10%. Interest is paid annually on December 31 of each year. Disclosure information about capital assets is reported below. LO2 LO8 LO9 912 Problems 877 Disclosure of Information about Capital Assets for the Year Ending December 31, 2008 Primary Government Beginning Ending Governmental Activities Balance Additions Retirements Balance Land $ 500,000 $ 500,000 Building 760,000 760,000 Machinery and Equipment 950,000 $(225,000) 725,000 Construction in Progress $1,500,000 1,500,000 Infrastructure 450,000 450,000 Totals at historical cost $2,660,000 $1,500,000 $(225,000) $3,935,000 Less accumulated depreciation Building (190,000) (59,150) (249,150) Machinery and Equipment (235,000) (76,050) 140,000 (171,050) Infrastructure (50,000) (33,800) (83,800) Total accumulated depreciation $(475,000) $(169,000) $140,000 $(504,000) Governmental activities capital assets, net $2,185,000 $1,331,000 $ (85,000) $3,431,000 Depreciation expense charged to governmental activities as follows: Public Safety $ 55,000 General Government 72,000 Highways and Streets 25,000 Sanitation 17,000 $169,000 Circus City’s governmental funds financial statements are as follows: Circus City Governmental Funds Fund Balance Sheets at December 31, 2008 Capital Debt Total Projects Service Governmental Fund Fund Funds General Monorail Term Bond Assets Fund Fund Fund Cash $ 64,000 $ 300,000 $ — $ 364,000 Interest Receivable 12,000 4,000 16,000 Investments 100,000 1,250,500 100,000 1,450,500 Property Tax Receivable 183,000 183,000 Total Assets $347,000 $1,562,500 $104,000 $2,013,500 Liabilities and Fund Balance Vouchers Payable $ 73,000 $ 50,000 $ 123,000 Total Liabilities $ 73,000 $ 50,000 $ — $ 123,000 Fund Balances: Unreserved 83,000 312,500 395,500 Reserved for Encumbrances 191,000 1,200,000 1,391,000 Debt Service 104,000 104,000 Total Fund Balance 274,000 1,512,500 104,000 1,890,500 Total Liabilities and Fund Balances $347,000 $1,562,500 $104,000 $2,013,500 913 878 Chapter 18 Introduction to Accounting for State and Local Governmental Units Circus City Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances for the Year Ended December 31, 2008 Capital Debt Total Projects Service Governmental Fund Fund Funds General Monorail Fund Fund Term Bond Revenues Property Taxes $ 525,000 $ 50,000 $ 575,000 Licenses and Permits* 150,000 150,000 State Grant—highways and streets 250,000 250,000 Intergovernmental—state grant $1,000,000 1,000,000 Charges for Services (general government) 130,000 130,000 Investment Earnings 75,000 75,000 Total Revenue $1,130,000 $1,000,000 $ 50,000 $2,180,000 Expenditures Public Safety $ 500,000 $ 500,000 General Government 300,000 300,000 Highways and Streets 130,000 130,000 Sanitation 70,000 70,000 Debt Service Interest $160,000 160,000 Capital Outlay $1,500,000 1,500,000 Total Expenditures $1,000,000 $1,500,000 $160,000 $2,660,000 Excess (deficiency) of revenues over expenditures $ 130,000 $ (500,000) $(110,000) $ (480,000) Other Financing Sources (Uses) Proceeds from long-term capital debt $1,754,217 $1,754,217 Transfers in $160,000 160,000 Transfers out $ (160,000) (160,000) Total other $ (160,000) $1,754,217 $160,000 $1,754,217 Special Items Proceeds from sales of equipment $ 115,000 $ 115,000 Net change in fund balance 85,000 1,254,217 50,000 1,389,217 Fund balance—beginning 189,000 258,283 54,000 501,283 Fund balance—ending $ 274,000 $1,512,500 $104,000 $1,890,500 * Revenues from licenses and permits are assigned to highways and streets ($100,000) and to the general government ($50,000). Required: Using the information above, prepare the statement of activities and the statement of net assets on a government-wide basis (using full accrual accounting). The beginning fund balance in the government-wide Statement of Net Assets is $2,686,283.
Problem 18-13 Preparing Government-wide Financial Statements Circus City issued an 8%, 10-year $2,000,000 bond to build a monorail mass transit system. The city received $1,754,217 cash from the bond issuance on January 1, 2008. The bond yield is 10%. Interest is paid annually on December 31 of each year. Disclosure information about capital assets is reported below. LO2 LO8 LO9 912 Problems 877 Disclosure of Information about Capital Assets for the Year Ending December 31, 2008 Primary Government Beginning Ending Governmental Activities Balance Additions Retirements Balance Land $ 500,000 $ 500,000 Building 760,000 760,000 Machinery and Equipment 950,000 $(225,000) 725,000 Construction in Progress $1,500,000 1,500,000 Infrastructure 450,000 450,000 Totals at historical cost $2,660,000 $1,500,000 $(225,000) $3,935,000 Less accumulated depreciation Building (190,000) (59,150) (249,150) Machinery and Equipment (235,000) (76,050) 140,000 (171,050) Infrastructure (50,000) (33,800) (83,800) Total accumulated depreciation $(475,000) $(169,000) $140,000 $(504,000) Governmental activities capital assets, net $2,185,000 $1,331,000 $ (85,000) $3,431,000 Depreciation expense charged to governmental activities as follows: Public Safety $ 55,000 General Government 72,000 Highways and Streets 25,000 Sanitation 17,000 $169,000 Circus City’s governmental funds financial statements are as follows: Circus City Governmental Funds Fund Balance Sheets at December 31, 2008 Capital Debt Total Projects Service Governmental Fund Fund Funds General Monorail Term Bond Assets Fund Fund Fund Cash $ 64,000 $ 300,000 $ — $ 364,000 Interest Receivable 12,000 4,000 16,000 Investments 100,000 1,250,500 100,000 1,450,500 Property Tax Receivable 183,000 183,000 Total Assets $347,000 $1,562,500 $104,000 $2,013,500 Liabilities and Fund Balance Vouchers Payable $ 73,000 $ 50,000 $ 123,000 Total Liabilities $ 73,000 $ 50,000 $ — $ 123,000 Fund Balances: Unreserved 83,000 312,500 395,500 Reserved for Encumbrances 191,000 1,200,000 1,391,000 Debt Service 104,000 104,000 Total Fund Balance 274,000 1,512,500 104,000 1,890,500 Total Liabilities and Fund Balances $347,000 $1,562,500 $104,000 $2,013,500 913 878 Chapter 18 Introduction to Accounting for State and Local Governmental Units Circus City Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances for the Year Ended December 31, 2008 Capital Debt Total Projects Service Governmental Fund Fund Funds General Monorail Fund Fund Term Bond Revenues Property Taxes $ 525,000 $ 50,000 $ 575,000 Licenses and Permits* 150,000 150,000 State Grant—highways and streets 250,000 250,000 Intergovernmental—state grant $1,000,000 1,000,000 Charges for Services (general government) 130,000 130,000 Investment Earnings 75,000 75,000 Total Revenue $1,130,000 $1,000,000 $ 50,000 $2,180,000 Expenditures Public Safety $ 500,000 $ 500,000 General Government 300,000 300,000 Highways and Streets 130,000 130,000 Sanitation 70,000 70,000 Debt Service Interest $160,000 160,000 Capital Outlay $1,500,000 1,500,000 Total Expenditures $1,000,000 $1,500,000 $160,000 $2,660,000 Excess (deficiency) of revenues over expenditures $ 130,000 $ (500,000) $(110,000) $ (480,000) Other Financing Sources (Uses) Proceeds from long-term capital debt $1,754,217 $1,754,217 Transfers in $160,000 160,000 Transfers out $ (160,000) (160,000) Total other $ (160,000) $1,754,217 $160,000 $1,754,217 Special Items Proceeds from sales of equipment $ 115,000 $ 115,000 Net change in fund balance 85,000 1,254,217 50,000 1,389,217 Fund balance—beginning 189,000 258,283 54,000 501,283 Fund balance—ending $ 274,000 $1,512,500 $104,000 $1,890,500 * Revenues from licenses and permits are assigned to highways and streets ($100,000) and to the general government ($50,000). Required: Using the information above, prepare the statement of activities and the statement of net assets on a government-wide basis (using full accrual accounting). The beginning fund balance in the government-wide Statement of Net Assets is $2,686,283.
Advanced Financial Accounting PROBLEM 18-3 Special Assessment Debt The City of Dayville has undertaken a sidewalk-ANSWER KEY
Advanced Financial accounting
PROBLEM 18-3 Special Assessment Debt The City of Dayville has undertaken a sidewalk construction project. The project is being financed by the proceeds from the issue on July 1, 2008, of $500,000 of 7% special assessment debt. One quarter of the principal plus interest is payable on June 30 of each year beginning June 30, 2009. Property owners are assessed to provide the funds to pay the principal and interest on the debt. The following transactions occurred during the period July 1, 2008, through June 30, 2009. 1. The bonds for the construction of the sidewalks were issued at par value. 2. The sidewalks were completed at a cost of $500,000. 3. Property owners were assessed and billed for the first installment of principal and interest on the special assessment debt. LO4 LO8 LO5 LO8 904 Problems 869 4. Assessments for the first installment of principal and interest on the special assessment debt were collected and the June 30, 2009, payment of principal and interest on the special assessment debt was made. Required: Prepare all journal entries for the above transactions that are necessary in the funds of the City of Dayville assuming that. A. The City of Dayville has made a commitment to the holders of the special assessment debt to assure the timely and full payment of principal and interest on the appropriate due dates. B. The City of Dayville has not obligated itself in any manner on the special assessment debt that was issued for the construction of the sidewalks.
PROBLEM 18-3 Special Assessment Debt The City of Dayville has undertaken a sidewalk construction project. The project is being financed by the proceeds from the issue on July 1, 2008, of $500,000 of 7% special assessment debt. One quarter of the principal plus interest is payable on June 30 of each year beginning June 30, 2009. Property owners are assessed to provide the funds to pay the principal and interest on the debt. The following transactions occurred during the period July 1, 2008, through June 30, 2009. 1. The bonds for the construction of the sidewalks were issued at par value. 2. The sidewalks were completed at a cost of $500,000. 3. Property owners were assessed and billed for the first installment of principal and interest on the special assessment debt. LO4 LO8 LO5 LO8 904 Problems 869 4. Assessments for the first installment of principal and interest on the special assessment debt were collected and the June 30, 2009, payment of principal and interest on the special assessment debt was made. Required: Prepare all journal entries for the above transactions that are necessary in the funds of the City of Dayville assuming that. A. The City of Dayville has made a commitment to the holders of the special assessment debt to assure the timely and full payment of principal and interest on the appropriate due dates. B. The City of Dayville has not obligated itself in any manner on the special assessment debt that was issued for the construction of the sidewalks.
MANAGERIAL ACCOUNTING AE13-7 Willingham Corporation's comparative balance sheets-ANSWER KEY
AE13-7
Willingham Corporation's comparative balance sheets are presented below.
WILLINGHAM CORPORATION
Comparative Balance Sheets
December 31
2011 2010
Cash $14,140 $10,880
Accounts receivable 21,190 23,470
Land 20,380 26,100
Building 70,320 70,320
Accumulated depreciation (14,800) (10,260)
Total $111,230 $120,510
Accounts payable $12,180 $31,170
Common stock 75,090 68,800
Retained earnings 23,960 20,540
Total $111,230 $120,510
Additional information:
1. Net income was $22,920. Dividends declared and paid were $19,500.
2. All other changes in noncurrent account balances had a direct effect on cash flows, except the change in accumulated depreciation. The land was sold for $4,730.
Prepare a statement of cash flows for 2011 using the indirect method. (List multiple entries with a positive cash flow first and then the negative cash flow. List amounts from largest to smallest eg 10, 5, 3, 2. If amount decreases cash flow, use either a negative sign preceding the number eg -45 or parentheses eg (45).)
WILLINGHAM CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2011
Cash flows from operating activities
$
Adjustments to reconcile net income
to net cash provided by operating activities
$
Net cash by operating activities
Cash flows from investing activities
Cash flows from financing activities
Net cash by financing activities
Net in cash
Cash at beginning of period
Cash at end of period $
Compute free cash flow. (If amount decreases cash flow, use either a negative sign preceding the number eg -45 or parentheses eg (45).)
$
Willingham Corporation's comparative balance sheets are presented below.
WILLINGHAM CORPORATION
Comparative Balance Sheets
December 31
2011 2010
Cash $14,140 $10,880
Accounts receivable 21,190 23,470
Land 20,380 26,100
Building 70,320 70,320
Accumulated depreciation (14,800) (10,260)
Total $111,230 $120,510
Accounts payable $12,180 $31,170
Common stock 75,090 68,800
Retained earnings 23,960 20,540
Total $111,230 $120,510
Additional information:
1. Net income was $22,920. Dividends declared and paid were $19,500.
2. All other changes in noncurrent account balances had a direct effect on cash flows, except the change in accumulated depreciation. The land was sold for $4,730.
Prepare a statement of cash flows for 2011 using the indirect method. (List multiple entries with a positive cash flow first and then the negative cash flow. List amounts from largest to smallest eg 10, 5, 3, 2. If amount decreases cash flow, use either a negative sign preceding the number eg -45 or parentheses eg (45).)
WILLINGHAM CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2011
Cash flows from operating activities
$
Adjustments to reconcile net income
to net cash provided by operating activities
$
Net cash by operating activities
Cash flows from investing activities
Cash flows from financing activities
Net cash by financing activities
Net in cash
Cash at beginning of period
Cash at end of period $
Compute free cash flow. (If amount decreases cash flow, use either a negative sign preceding the number eg -45 or parentheses eg (45).)
$
Managerial Accounting AE13-5 The current sections of Leach Inc.'s balance sheets at December 31, 2010-ANSWER KEY
AE13-5
The current sections of Leach Inc.'s balance sheets at December 31, 2010 and 2011, are presented here.
Leach's net income for 2011 was $153,350. Depreciation expense was $24,030.
2011 2010
Current assets
Cash $105,230 $99,420
Accounts receivable 109,610 89,240
Inventory 157,780 172,350
Prepaid expenses 26,600 21,950
Total current assets $399,220 $382,960
Current liabilities
Accrued expenses payable $15,290 $4,510
Accounts payable 84,870 91,670
Total current liabilities $100,160 $96,180
Prepare the net cash provided by operating activities section of the company's statement of cash flows for the year ended December 31, 2011, using the indirect method. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. If amount decreases cash flow, use either a negative sign preceding the number eg. -45 or parentheses eg (45).)
LEACH INC,
Partial Statement of Cash Flows
For the Year Ended December 31, 2011
Cash flows from operating activities
$
Adjustments to reconcile net income
to net cash provided by operating activities
$
Net cash provided by operating activities $
The current sections of Leach Inc.'s balance sheets at December 31, 2010 and 2011, are presented here.
Leach's net income for 2011 was $153,350. Depreciation expense was $24,030.
2011 2010
Current assets
Cash $105,230 $99,420
Accounts receivable 109,610 89,240
Inventory 157,780 172,350
Prepaid expenses 26,600 21,950
Total current assets $399,220 $382,960
Current liabilities
Accrued expenses payable $15,290 $4,510
Accounts payable 84,870 91,670
Total current liabilities $100,160 $96,180
Prepare the net cash provided by operating activities section of the company's statement of cash flows for the year ended December 31, 2011, using the indirect method. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. If amount decreases cash flow, use either a negative sign preceding the number eg. -45 or parentheses eg (45).)
LEACH INC,
Partial Statement of Cash Flows
For the Year Ended December 31, 2011
Cash flows from operating activities
$
Adjustments to reconcile net income
to net cash provided by operating activities
$
Net cash provided by operating activities $
Managerial Accounting E13-2 An analysis of comparative balance sheets- Conard Corp. (ANSWER KEY)
E13-2
An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Conard Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary.
Indicate how each item should be classified in the statement of cash flows using these four major classifications: operating activity (indirect method), investing activity, financing activity, and significant noncash investing and financing activity.
(a) Payment of interest on notes payable.
(b) Exchange of land for patent.
(c) Sale of building at book value.
(d) Payment of dividends.
(e) Depreciation.
(f) Receipt of dividends on investment in stock.
(g) Receipt of interest on notes receivable.
(h) Issuance of capital stock.
(i) Amortization of patent.
(j) Issuance of bonds for land.
(k) Purchase of land.
(l) Conversion of bonds into common stock.
(m) Loss on sale of land.
(n) Retirement of bonds.
An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Conard Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary.
Indicate how each item should be classified in the statement of cash flows using these four major classifications: operating activity (indirect method), investing activity, financing activity, and significant noncash investing and financing activity.
(a) Payment of interest on notes payable.
(b) Exchange of land for patent.
(c) Sale of building at book value.
(d) Payment of dividends.
(e) Depreciation.
(f) Receipt of dividends on investment in stock.
(g) Receipt of interest on notes receivable.
(h) Issuance of capital stock.
(i) Amortization of patent.
(j) Issuance of bonds for land.
(k) Purchase of land.
(l) Conversion of bonds into common stock.
(m) Loss on sale of land.
(n) Retirement of bonds.
MANAGERIAL ACCOUNTING UNIT 8 QUIZ (INSTANT DOWNLOAD)
1. The statement of cash flows (Points: 2)
must be prepared on a daily basis.
summarizes the operating, financing, and investing activities of an entity.
is another name for the income statement.
is a special section of the income statement.
2. Which of the following characteristics does not apply to cash equivalents? (Points: 2)
Short-term
Highly-liquid
Readily convertible into cash
Sensitive to interest rate changes
3. The best measure of a company's ability to generate sufficient cash to continue as a going concern is net cash provided by (Points: 2)
financing activities.
investing activities.
operating activities.
processing activities.
4. The category that is generally considered to be the best measure of a company's ability to continue as a going concern is (Points: 2)
cash flows from operating activities.
cash flows from investing activities.
cash flows from financing activities.
usually different from year to year.
5. For the following transaction, indicate where, if at all, it would be classified on the statement of cash flows. Assume the indirect method is used.
Decrease in income taxes payable. (Points: 2)
Operating activities section
Investing activities section
Financing activities section
Does not represent a cash flow
6. Wilton Company reported net income of $40,000 for the year. During the year, accounts receivable decreased by $7,000, accounts payable increased by $3,000 and depreciation expense of $5,000 was recorded. Net cash provided by operating activities for the year is (Points: 2)
$30,000.
$55,000.
$39,000.
$35,000.
7. Starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the (Points: 2)
direct method.
indirect method.
working capital method.
cost-benefit method.
8. Using the indirect method, patent amortization expense for the period (Points: 2)
is deducted from net income.
causes cash to increase.
causes cash to decrease.
is added to net income.
9. Which of the following would be subtracted from net income using the indirect method? (Points: 2)
Depreciation expense
An increase in accounts receivable
An increase in accounts payable
A decrease in prepaid expenses
10. Which of the following would not be an adjustment to net income using the indirect method? (Points: 2)
Depreciation Expense
An increase in Prepaid Insurance
Amortization Expense
An increase in Land
must be prepared on a daily basis.
summarizes the operating, financing, and investing activities of an entity.
is another name for the income statement.
is a special section of the income statement.
2. Which of the following characteristics does not apply to cash equivalents? (Points: 2)
Short-term
Highly-liquid
Readily convertible into cash
Sensitive to interest rate changes
3. The best measure of a company's ability to generate sufficient cash to continue as a going concern is net cash provided by (Points: 2)
financing activities.
investing activities.
operating activities.
processing activities.
4. The category that is generally considered to be the best measure of a company's ability to continue as a going concern is (Points: 2)
cash flows from operating activities.
cash flows from investing activities.
cash flows from financing activities.
usually different from year to year.
5. For the following transaction, indicate where, if at all, it would be classified on the statement of cash flows. Assume the indirect method is used.
Decrease in income taxes payable. (Points: 2)
Operating activities section
Investing activities section
Financing activities section
Does not represent a cash flow
6. Wilton Company reported net income of $40,000 for the year. During the year, accounts receivable decreased by $7,000, accounts payable increased by $3,000 and depreciation expense of $5,000 was recorded. Net cash provided by operating activities for the year is (Points: 2)
$30,000.
$55,000.
$39,000.
$35,000.
7. Starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the (Points: 2)
direct method.
indirect method.
working capital method.
cost-benefit method.
8. Using the indirect method, patent amortization expense for the period (Points: 2)
is deducted from net income.
causes cash to increase.
causes cash to decrease.
is added to net income.
9. Which of the following would be subtracted from net income using the indirect method? (Points: 2)
Depreciation expense
An increase in accounts receivable
An increase in accounts payable
A decrease in prepaid expenses
10. Which of the following would not be an adjustment to net income using the indirect method? (Points: 2)
Depreciation Expense
An increase in Prepaid Insurance
Amortization Expense
An increase in Land
Mini Case - Caledonia (Requirements A to N) - ANSWER KEY (INSTANT DOWNLOAD)
Foundations of Finance: The Logic and Practice of Financial Management, 6th Edition
Arthur Keown
From the Mini Case on page 329-330, parts "a" to "d," summarize your analysis in a concise management statement not to exceed a total of 1,200 words. For parts "e" to "k," use formulas to calculate the ratios and format the cells to insert a comma if there is more than three numbers. Round to the nearest whole number. Clearly label your analysis and your conclusions in not more than 500 words.
We are considering the introduction of a new product. Currently we are in the 34 percent marginal tax bracket with a 15 percent required rate of return or cost of capital. This project is expected to last 5 years and then, because this is somewhat of a fad product, be terminated. The following information describes the new project:
Cost of new plant and equipment $7,900,000
Shipping and installation costs 100,000
Unit sales YEAR UNITS SOLD
1 70,000
2 120,000
3 140,000
4 80,000
5 60,000
Sales price per unit $300/unit in years 1 through 4, $260/unit in year 5 Variable cost per unit $180/unit Annual fixed costs $200,000 Working-capital requirements There will be an initial working-capital requirement of $100,000 just to get production started.
For each year, the total investment in net working capital will be equal to 10 percent of the dollar value of sales for that year. Thus, the investment in working capital will increase during years 1 through 3, then decrease in year 4. Finally, all working capital is liquidated at the termination of the project at the end of year 5. The depreciation method Use the simplified straight-line method over 5 years. Assume that the plant and equipment will have no salvage value after 5 years
a. Should Caledonia focus on cash flows or accounting profits in making its capital-budgeting decisions? Should the company be interested in incremental cash flows, incremental profits, total free cash flows, or total profits?
b. How does depreciation affect free cash flows?
c. How do sunk costs affect the determination of cash flows?
d. What is the project’s initial outlay?
e. What are the differential cash flows over the project’s life?
f. What is the terminal cash flow?
g. Draw a cash flow diagram for this project.
h. What is its net present value?
i. What is its internal rate of return?
j. Should the project be accepted? Why or why not?
k. In capital budgeting, risk can be measured from three perspectives. What are those three measures of a project.
l. According to the CAPM, which measurement of a project’s risk is relevant? What complications does reality introduce into the CAPM view of risk, and what does that mean for our view of the relevant measure of a project’s risk?
m. Explain how simulation works. What is the value in using a simulation approach?
n. What is sensitivity analysis and what is its purpose?
Arthur Keown
From the Mini Case on page 329-330, parts "a" to "d," summarize your analysis in a concise management statement not to exceed a total of 1,200 words. For parts "e" to "k," use formulas to calculate the ratios and format the cells to insert a comma if there is more than three numbers. Round to the nearest whole number. Clearly label your analysis and your conclusions in not more than 500 words.
We are considering the introduction of a new product. Currently we are in the 34 percent marginal tax bracket with a 15 percent required rate of return or cost of capital. This project is expected to last 5 years and then, because this is somewhat of a fad product, be terminated. The following information describes the new project:
Cost of new plant and equipment $7,900,000
Shipping and installation costs 100,000
Unit sales YEAR UNITS SOLD
1 70,000
2 120,000
3 140,000
4 80,000
5 60,000
Sales price per unit $300/unit in years 1 through 4, $260/unit in year 5 Variable cost per unit $180/unit Annual fixed costs $200,000 Working-capital requirements There will be an initial working-capital requirement of $100,000 just to get production started.
For each year, the total investment in net working capital will be equal to 10 percent of the dollar value of sales for that year. Thus, the investment in working capital will increase during years 1 through 3, then decrease in year 4. Finally, all working capital is liquidated at the termination of the project at the end of year 5. The depreciation method Use the simplified straight-line method over 5 years. Assume that the plant and equipment will have no salvage value after 5 years
a. Should Caledonia focus on cash flows or accounting profits in making its capital-budgeting decisions? Should the company be interested in incremental cash flows, incremental profits, total free cash flows, or total profits?
b. How does depreciation affect free cash flows?
c. How do sunk costs affect the determination of cash flows?
d. What is the project’s initial outlay?
e. What are the differential cash flows over the project’s life?
f. What is the terminal cash flow?
g. Draw a cash flow diagram for this project.
h. What is its net present value?
i. What is its internal rate of return?
j. Should the project be accepted? Why or why not?
k. In capital budgeting, risk can be measured from three perspectives. What are those three measures of a project.
l. According to the CAPM, which measurement of a project’s risk is relevant? What complications does reality introduce into the CAPM view of risk, and what does that mean for our view of the relevant measure of a project’s risk?
m. Explain how simulation works. What is the value in using a simulation approach?
n. What is sensitivity analysis and what is its purpose?
12-2 Direct verse indirect cost Estep Construction Company-ANSWER KEY
12-2 Direct verse indirect cost Estep Construction Company is composed of two divisions: (1) Home Construction and (2) Commercial Construction .The Home Construction Division is in the process of building 12 houses and the Commercial Division is working on 3 projects. Cost items of the company follows. Cost of building permits. Materials used in commercial construction projects. Depreciation on home building equipment (small tools such as hammers or saws) Company president’s salary Depreciation on crane used in commercial construction. Depreciation on home office building. Salary of corporate office manager. Wages of workers assigned to a specific construction project. Supplies used by the commercial constructions division. Labor on a particular house. Salary of the supervisor of commercial construction project. Supplies, such as glue and nails used by the Home Construction Division Required A. Identify each cost as being a direct or indirect cost assuming the cost objects are the individual products (houses or projects). B. Identify each cost as being a direct or indirect cost assuming the cost objects are the two divisions. C. Identify each cost as being a direct or indirect cost assuming the cost object is Estep Construction Company as a whole.
BYP13-7 ETHIC CASE Tappit Corp is a medium sized wholesaler of automotive parts-ANSWER KEY
Tappit Corp. is a medium sized wholesaler of automotive parts. It has ten stockholders who have been paid a total of $1 million in cash dividends for eight consecutive years. That board’s policy requires that, for this dividend to be declared, net cash provided by operating activities as reported in Tappit’s current year’s statement of cash flows must exceed $1 million. President and CEO Willie Morton’s job is secure so long as he produces annual operating cash flows to support the usual dividend.
At the end of the current year, controller Robert Jennings presents president Willie Morton with some disappointing news: The net cash provided by operating activities is calculated by the indirect method to be only $970,000. The president says to Robert, "We must get amount above $1 million. Isn’t there some way to increase operating cash flow by another $30,000?" Robert answers, "These figures were prepared by my assistant. I’ll go back to my office and see what I can do." The president replies, "I know you won’t let me down, Robert."
Upon close scrutiny of the statement of cash flows, Robert concludes that he can get the operating cash flows above $1 million by reclassifying a $60,000, 2-year note payable listed in the financing activities section as "Proceeds from bank loan - $60,000." He will report the note instead as "Increase in payables-$60,000" and treat it as an adjustment of net income in the operating activities section. He returns to the president, saying, "You can tell the board to declare their usual dividend. Our net cash flow provided by operating activities is $1,030,000." "Good man, Robert! I knew I could count on you," exults the president.
Address the following questions:
Who are the stakeholders in this situation?
Was there anything unethical about the president’s actions? Was there anything unethical about the controller’s actions?
Are the board members or anyone else likely to discover the misclassification?
At the end of the current year, controller Robert Jennings presents president Willie Morton with some disappointing news: The net cash provided by operating activities is calculated by the indirect method to be only $970,000. The president says to Robert, "We must get amount above $1 million. Isn’t there some way to increase operating cash flow by another $30,000?" Robert answers, "These figures were prepared by my assistant. I’ll go back to my office and see what I can do." The president replies, "I know you won’t let me down, Robert."
Upon close scrutiny of the statement of cash flows, Robert concludes that he can get the operating cash flows above $1 million by reclassifying a $60,000, 2-year note payable listed in the financing activities section as "Proceeds from bank loan - $60,000." He will report the note instead as "Increase in payables-$60,000" and treat it as an adjustment of net income in the operating activities section. He returns to the president, saying, "You can tell the board to declare their usual dividend. Our net cash flow provided by operating activities is $1,030,000." "Good man, Robert! I knew I could count on you," exults the president.
Address the following questions:
Who are the stakeholders in this situation?
Was there anything unethical about the president’s actions? Was there anything unethical about the controller’s actions?
Are the board members or anyone else likely to discover the misclassification?
Advanced Corporate Finance Problem 18-3 Which of the following events are likely to increase the market value -ANSWER KEY (INSTANT DOWNLOAD)
Advanced Corporate Finance
Fundamentals of Financial Management 12th Edition Brigham Houston
Problem 18-3
Which of the following events are likely to increase the market value of a call option on a common stock? Explain.
a. An increase in the stock’s price.
b. An increase in the volatility of the stock price
c. An increase in the risk-free rate
d. A decrease in the time until the option expires
Fundamentals of Financial Management 12th Edition Brigham Houston
Problem 18-3
Which of the following events are likely to increase the market value of a call option on a common stock? Explain.
a. An increase in the stock’s price.
b. An increase in the volatility of the stock price
c. An increase in the risk-free rate
d. A decrease in the time until the option expires
Advanced Corporate Finance 18-3 Discuss some of the techniques available to reduce risk exposure-ANSWER KEY (INSTANT DOWNLOAD)
Advanced Corporate Finance
Fundamentals of Financial Management 12th Edition Brigham Houston
Question
18-3
Discuss some of the techniques available to reduce risk exposure.
Fundamentals of Financial Management 12th Edition Brigham Houston
Question
18-3
Discuss some of the techniques available to reduce risk exposure.
Advanced Corporate Finance Problem 17-12 Edney Manufacturing Company has $2 billion in sales-ANSWER KEY (INSTANT DOWNLOAD)
Advanced Corporate Finance
Fundamentals of Financial Management 12th Edition Brigham Houston
Problem 17-12
Edney Manufacturing Company has $2 billion in sales and $0.6 billion in fixed assets. Currently, the company’s fixed assets are operating at 80% of capacity.
a. What level of sales could Edney have obtained if it had been operating at full capacity?
b. What is Edney’s Target fixed assets/Sales ratio?
c. If Edney’s sales increase 30%, how large of an increase in fixed assets will the company need to meet its Target fixed assets/Sales ratio?
Fundamentals of Financial Management 12th Edition Brigham Houston
Problem 17-12
Edney Manufacturing Company has $2 billion in sales and $0.6 billion in fixed assets. Currently, the company’s fixed assets are operating at 80% of capacity.
a. What level of sales could Edney have obtained if it had been operating at full capacity?
b. What is Edney’s Target fixed assets/Sales ratio?
c. If Edney’s sales increase 30%, how large of an increase in fixed assets will the company need to meet its Target fixed assets/Sales ratio?
Advanced Corporate Finance Problem 17-7 At the end of last year, Roberts Inc. reported-ANSWER KEY (INSTANT DOWNLOAD)
Advanced Corporate Finance
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Problem 17-7
At the end of last year, Roberts Inc. reported the following income statement (in millions of dollars):
Sales $3,000
Operating costs excluding depreciation 2,450
EBITDA $ 550
Depreciation 250
EBIT $ 300
Interest 125
EBT $ 175
Taxes (40%) 70
Net income $ 105
_____
Looking ahead to the following year, the company’s CFO has assembled this information:
• Year-end sales are expected to be 10% higher than the $3 billion in sales generated last year.
• Year-end operating costs, excluding depreciation, are expected to equal 80% of year-end sales.
• Depreciation is expected to increase at the same rate as sales.
• Interest costs are expected to remain unchanged.
• The tax rate is expected to remain at 40%
On the basis of that information, what will be the forecast for Roberts’ year-end net income?
Fundamentals of Financial Management 12th Edition Brigham Houston
Problem 17-7
At the end of last year, Roberts Inc. reported the following income statement (in millions of dollars):
Sales $3,000
Operating costs excluding depreciation 2,450
EBITDA $ 550
Depreciation 250
EBIT $ 300
Interest 125
EBT $ 175
Taxes (40%) 70
Net income $ 105
_____
Looking ahead to the following year, the company’s CFO has assembled this information:
• Year-end sales are expected to be 10% higher than the $3 billion in sales generated last year.
• Year-end operating costs, excluding depreciation, are expected to equal 80% of year-end sales.
• Depreciation is expected to increase at the same rate as sales.
• Interest costs are expected to remain unchanged.
• The tax rate is expected to remain at 40%
On the basis of that information, what will be the forecast for Roberts’ year-end net income?
Advanced Corporate Finance Problem 17-3 Refer to Problem 17-1 and assume that the company had $3 million-ANSWER KEY (INSTANT DOWNLOAD)
Advanced Corporate Finance
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Problem 17-3
Refer to Problem 17-1 and assume that the company had $3 million in assets at the end of 2008. However, now assume that company pays no dividends. Under these assumptions, what additional funds would be needed for the coming year? Why is this AFN different from the one you found in Problem 17-1.
Fundamentals of Financial Management 12th Edition Brigham Houston
Problem 17-3
Refer to Problem 17-1 and assume that the company had $3 million in assets at the end of 2008. However, now assume that company pays no dividends. Under these assumptions, what additional funds would be needed for the coming year? Why is this AFN different from the one you found in Problem 17-1.
Advanced Corporate Finance Problem 17-2 Refer to Problem 17-1. What additional funds would be needed-ANSWER KEY (INSTANT DOWNLOAD)
Advanced Corporate Finance
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Problem 17-2
Refer to Problem 17-1. What additional funds would be needed if the company’s year-end 2008 assets had been $4 million? Assume that all other numbers are the same. Why is this AFN different from the one you found in Problem 17-1? Is the company’s “capital intensity” the same or different? Explain.
Fundamentals of Financial Management 12th Edition Brigham Houston
Problem 17-2
Refer to Problem 17-1. What additional funds would be needed if the company’s year-end 2008 assets had been $4 million? Assume that all other numbers are the same. Why is this AFN different from the one you found in Problem 17-1? Is the company’s “capital intensity” the same or different? Explain.
Advanced Corporate Finance Problems 17-1 Carter Corporation’s sales are expected to increase -ANSWER KEY (INSTANT DOWNLOAD)
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Problems 17-1
Carter Corporation’s sales are expected to increase from $5 million in 2008 to $6 million in 2009, or by 20%. Its assets totaled $3 million at the end of 2008. Carter is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2008, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 5%, and the forecasted retention ratio is 30%. Use the AFN equation to forecast the additional funds Carter will need for the coming year.
Fundamentals of Financial Management 12th Edition Brigham Houston
Problems 17-1
Carter Corporation’s sales are expected to increase from $5 million in 2008 to $6 million in 2009, or by 20%. Its assets totaled $3 million at the end of 2008. Carter is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2008, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 5%, and the forecasted retention ratio is 30%. Use the AFN equation to forecast the additional funds Carter will need for the coming year.
Advanced Corporate Finance 17-5 Suppose a firm makes the following policy changes-ANSWER KEY (INSTANT DOWNLOAD)
Advanced Corporate Finance
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17-5
Suppose a firm makes the following policy changes. If the change means that external nonspontaneous financial requirements (AFN) will increase, indicate this with a (+); indicate a decrease with a (-); and indicate an indeterminate or negligible effect with a (0). Think in terms of the immediate short-run effect on funds requirements.
a. The dividend payout ratio is increased. _____
b. Rather than produce computers in advance, a computer in advance, a computer
Company decides to produce them only after an order has been received. _____
c. The firm decides to pay all suppliers on delivery, rather than after a 30-day delay,
to take advantage of discounts for rapid payment. _____
d. The firm begins to sell on credit. (Previously, all sales had been on a cash basis.) _____
e. The firm’s profit margin is eroded by increased competition; sales are steady. _____
f. Advertising expenditures are stepped up. _____
g. A decision is made to substitute long-term mortgage bonds for short-term bank
loans. _____
h. The firm begins to pay employees on a weekly basis. (Previously, it has paid
employees at the end of each month.) _____
Fundamentals of Financial Management 12th Edition Brigham Houston
17-5
Suppose a firm makes the following policy changes. If the change means that external nonspontaneous financial requirements (AFN) will increase, indicate this with a (+); indicate a decrease with a (-); and indicate an indeterminate or negligible effect with a (0). Think in terms of the immediate short-run effect on funds requirements.
a. The dividend payout ratio is increased. _____
b. Rather than produce computers in advance, a computer in advance, a computer
Company decides to produce them only after an order has been received. _____
c. The firm decides to pay all suppliers on delivery, rather than after a 30-day delay,
to take advantage of discounts for rapid payment. _____
d. The firm begins to sell on credit. (Previously, all sales had been on a cash basis.) _____
e. The firm’s profit margin is eroded by increased competition; sales are steady. _____
f. Advertising expenditures are stepped up. _____
g. A decision is made to substitute long-term mortgage bonds for short-term bank
loans. _____
h. The firm begins to pay employees on a weekly basis. (Previously, it has paid
employees at the end of each month.) _____
Advanced Corporate Finance 17-3 Would you agree that computerized corporate planning-ANSWER KEY (INSTANT DOWNLOAD)
Advanced Corporate Finance
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17-3
Would you agree that computerized corporate planning models were a fad during the 1990s but that because of a need for flexibility in corporate planning, they are no longer used by most firms?
Fundamentals of Financial Management 12th Edition Brigham Houston
17-3
Would you agree that computerized corporate planning models were a fad during the 1990s but that because of a need for flexibility in corporate planning, they are no longer used by most firms?
Advanced Corporate Finance 17-2 Assume that an average firm in the office supply business-ANSWER KEY (INSTANT DOWNLOAD)
Advanced Corporate Finance
Fundamentals of Financial Management 12th Edition Brigham Houston
17-2
Assume that an average firm in the office supply business has a 6% profit margin, a 40% debt/assets ratio, a total assets turnover of 2 times, and a dividend payout ratio of 40%. Is it true that if such a firm is to have any sales growth (g > 0), it will be forced to borrow or to sell common stock (that is, it will need some nonspontaneous external capital even if g is very small)? Explain
Fundamentals of Financial Management 12th Edition Brigham Houston
17-2
Assume that an average firm in the office supply business has a 6% profit margin, a 40% debt/assets ratio, a total assets turnover of 2 times, and a dividend payout ratio of 40%. Is it true that if such a firm is to have any sales growth (g > 0), it will be forced to borrow or to sell common stock (that is, it will need some nonspontaneous external capital even if g is very small)? Explain
Advanced Corporate Finance 17-1 What are the key factors on which external financing-ANSWER KEY (INSTANT DOWNLOAD)
Advanced Corporate Finance
Fundamentals of Financial Management 12th Edition Brigham Houston
17-1
What are the key factors on which external financing depends, as indicated in the AFN equation?
Fundamentals of Financial Management 12th Edition Brigham Houston
17-1
What are the key factors on which external financing depends, as indicated in the AFN equation?
Wednesday, March 9, 2011
ACC 220 ENTIRE CLASS (INSTANT DOWNLOAD)
Week One: Careers and Accounting in Business
· Summarize the role accounting plays in business.
· Discuss the importance of ethics in financial reporting.
· Discuss the various career opportunities within the field of accounting.
Week Two: Introduction to Statements I
· Compare and contrast sole proprietorships, partnerships, and corporations.
· Define commonly used accounting terms.
· Give examples of the data found on various financial statements.
Week Three: Introduction to Statements II
· Discuss characteristics to consider when reviewing a financial report.
· Identify the components of groups within a classified balance sheet.
Week Four: Cash Management
· Discuss principles of internal control.
· Summarize ways companies can monitor internal cash control.
· Examine the basic principles of cash management.
Week Five: Managerial Accounting
· Compare and contrast managerial accounting and financial accounting.
· Analyze managers’ use of accounting information.
Week Six: Cost, Volume, and Profit
· Explain the components of cost-volume-profit analysis.
Week Seven: Looking at Budgets
· Discuss the benefits of budgeting.
· Examine the use of different types of budgets.
Week Eight: Responsibility Centers and Incremental Analysis
· Identify the components of a flexible budget.
· Discuss the accountability of each type of responsibility center.
· Give examples of business decisions that would involve incremental analysis.
Week Nine: Principles and Practices
Assess how accounting principles and practices function within a business.
Here's the SOLUTION
· Summarize the role accounting plays in business.
· Discuss the importance of ethics in financial reporting.
· Discuss the various career opportunities within the field of accounting.
Week Two: Introduction to Statements I
· Compare and contrast sole proprietorships, partnerships, and corporations.
· Define commonly used accounting terms.
· Give examples of the data found on various financial statements.
Week Three: Introduction to Statements II
· Discuss characteristics to consider when reviewing a financial report.
· Identify the components of groups within a classified balance sheet.
Week Four: Cash Management
· Discuss principles of internal control.
· Summarize ways companies can monitor internal cash control.
· Examine the basic principles of cash management.
Week Five: Managerial Accounting
· Compare and contrast managerial accounting and financial accounting.
· Analyze managers’ use of accounting information.
Week Six: Cost, Volume, and Profit
· Explain the components of cost-volume-profit analysis.
Week Seven: Looking at Budgets
· Discuss the benefits of budgeting.
· Examine the use of different types of budgets.
Week Eight: Responsibility Centers and Incremental Analysis
· Identify the components of a flexible budget.
· Discuss the accountability of each type of responsibility center.
· Give examples of business decisions that would involve incremental analysis.
Week Nine: Principles and Practices
Assess how accounting principles and practices function within a business.
Here's the SOLUTION
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