Questions from Intermediate Accounting

Q: Penne Pharmaceuticals sold 8 million shares of its $1 par common

Penne Pharmaceuticals sold 8 million shares of its $1 par common stock to provide funds for research and development. If the issue price is $12 per share, what is the journal entry to record the sale...

Q: Lewelling Company issued 100,000 shares of its $1 par

Lewelling Company issued 100,000 shares of its $1 par common stock to the Michael Morgan law firm as compensation for 4,000 hours of legal services performed. Morgan’s usual rate is $240 per hour. By...

Q: Horton Industries’ shareholders’ equity included 100 million shares of $1 par

Horton Industries’ shareholders’ equity included 100 million shares of $1 par common stock and a balance in paid-in capital—excess of par of $900 million. Assuming that Horton retires shares it reacqu...

Q: First Bank has some question as to the tax-free nature

First Bank has some question as to the tax-free nature of $5 million of its municipal bond portfolio. This amount is excluded from First Bank’s taxable income of $55 million. Management has determined...

Q: Agee Storage issued 35 million shares of its $1 par common

Agee Storage issued 35 million shares of its $1 par common stock at $16 per share several years ago. Last year, for the first time, Agee reacquired 1 million shares at $14 per share. Assuming that Age...

Q: The Jennings Group reacquired 2 million of its shares at $70

The Jennings Group reacquired 2 million of its shares at $70 per share as treasury stock. Last year, for the first time, Jennings sold 1 million treasury shares at $71 per share. By what amount will J...

Q: In previous years, Cox Transport reacquired 2 million treasury shares at

In previous years, Cox Transport reacquired 2 million treasury shares at $20 per share and, later, 1 million treasury shares at $26 per share. By what amount will Cox’s paid-in capital—share repurchas...

Q: Refer to the situation described in BE 18–8. By

Refer to the situation described in BE 18–8. By what amount will Cox’s paid-in capital—share repurchase increase if it determines the cost of treasury shares by the FIFO method? In BE 18–8 In previou...

Q: Southeast Airlines had pretax earnings of $65 million, including a

Southeast Airlines had pretax earnings of $65 million, including a gain on disposal of a discontinued operation of $10 million. The company’s tax rate is 40%. What is the amount of income tax expense...

Q: A company reports pretax accounting income of $10 million, but

A company reports pretax accounting income of $10 million, but because of a single temporary difference, taxable income is only $7 million. No temporary differences existed at the beginning of the yea...