Question: a. Three dates are important in connection

> On January 1, 2020, Eddy Corporation had retained earnings of $610,000. During the year, Eddy had the following selected transactions. 1. Declared cash dividends $120,000. 2. Corrected overstatement of 2019 net income because of inventory error $40,000.

> Before preparing financial statements for the current year, the chief accountant for Toso Company discovered the following errors in the accounts. 1. The declaration and payment of $50,000 cash dividend was recorded as a debit to Interest Expense $50,000

> On January 1, 2020, the stockholders’ equity section of Newlin Corporation shows common stock ($5 par value) $1,500,000; paid-in capital in excess of par $1,000,000; and retained earnings $1,200,000. During the year, the following treasury stock transact

> B. Higgins, J. Mayo, and N. Rice have capital balances of $95,000, $75,000, and $60,000, respectively. They share income or loss on a 5:3:2 basis. Rice withdraws from the partnership under each of the following conditions. 1. Rice is paid $64,000 in cash

> Data for Sedgwick Company are presented in E12.8. Sedgwick Company now decides to liquidate the partnership. Instructions Prepare the entries to record: a. The sale of noncash assets. b. The allocation of the gain or loss on realization to the partners.

> Sedgwick Company at December 31 has cash $20,000, noncash assets $100,000, liabilities $55,000, and the following capital balances: Floyd $45,000 and DeWitt $20,000. The firm is liquidated, and $105,000 in cash is received for the noncash assets. Floyd a

> Terry, Nick, and Frank are forming The Doctor Partnership. Terry is transferring $30,000 of personal cash and equipment worth $25,000 to the partnership. Nick owns land worth $28,000 and a small building worth $75,000, which he transfers to the partnersh

> For National Co., beginning capital balances on January 1, 2020, are Nancy Payne $20,000 and Ann Dody $18,000. During the year, drawings were Payne $8,000 and Dody $5,000. Net income was $40,000, and the partners share income equally. Instructions a. Pr

> Coburn (beginning capital, $60,000) and Webb (beginning capital $90,000) are partners. During 2020, the partnership earned net income of $80,000, and Coburn made drawings of $18,000 while Webb made drawings of $24,000. Instructions a. Assume the partner

> Indicate whether each of the following statements is true or false. If false, indicate how to correct the statement. ________ 1. Each partner is personally and individually liable for all partnership liabilities. ________ 2. If a partnership dissolves, e

> On January 1, 2020, Vahsholtz Corporation purchased 5,000 shares of treasury stock. Other information regarding Vahsholtz Corporation is provided as follows. (a) Compute earnings per share for each year and (b) discuss its change from 2019 to 2020.

> On January 1, 2020, Vahsholtz Corporation purchased 5,000 shares of treasury stock. Other information regarding Vahsholtz Corporation is provided as follows. (a) Compute return on common stockholders’ equity for each year, and (b) dis

> Hoyle Corporation has issued 100,000 shares of $5 par value common stock. It authorized 500,000 shares. The paid-in capital in excess of par on the common stock is $263,000. The corporation has reacquired 7,000 shares at a cost of $46,000 and is currentl

> Frontenac Company reported net income of $75,000. The partnership agreement provides for salaries of $25,000 to Miley and $18,000 to Guthrie. They divide the remainder 40% to Miley and 60% to Guthrie. Miley asks your help to divide the net income between

> The partners of LR Company have decided to liquidate their business. Noncash assets were sold for $125,000. The income ratios of the partners Cisneros, Gunselman, and Forren are 3:2:3, respectively. Complete the following schedule of cash payments for LR

> PFW Co. reports net income of $45,000. Partner salary allowances are Pitts $15,000, Filbert $5,000, and Witten $5,000. Indicate the division of net income to each partner, assuming the income ratio is 50:30:20, respectively.

> Rod Dall Co. reports net income of $75,000. The income ratios are Rod 60% and Dall 40%. Indicate the division of net income to each partner, and prepare the entry to distribute the net income.

> Penner and Torres decide to merge their proprietorships into a partnership called Pentor Company. The balance sheet of Torres Co. shows: The partners agree that the net realizable value of the receivables is $14,500 and that the fair value of the equip

> Barbara Ripley and Fred Nichols decide to organize the ALL-Star partnership. Ripley invests $15,000 cash, and Nichols contributes $10,000 cash and equipment having a book value of $3,500. Prepare the entry to record Nichols’s investment in the partnershi

> Income and common stock data for Ziegler Corporation are presented in BE14.8. Assume also that Ziegler has cumulative preferred stock dividends for the current year of $30,000 that were declared and paid. Compute the earnings per share of common stock.

> Ziegler Corporation reports net income of $380,000 and a weighted-average of 200,000 shares of common stock outstanding for the year. Compute the earnings per share of common stock.

> Financial Statement The following information is available for Reinsch Corporation for the year ended December 31, 2020: cost of goods sold $205,000, sales revenue $350,000, other revenues and gains $50,000, and operating expenses $75,000. Assuming a cor

> SUPERVALU, one of the largest grocery retailers in the United States, is headquartered in Minneapolis. Suppose the following financial information (in millions) was taken from the company’s 2020 annual report: net sales $40,597, net income $393, beginnin

> For the year ending December 31, 2020, Soto Inc. reports net income $170,000 and cash dividends $85,000. Determine the balance in retained earnings at December 31, assuming the balance in retained earnings on January 1, 2020, was $220,000.

> The stockholders’ equity section of Pretzer Corporation consists of common stock ($10 par) $2,000,000 and retained earnings $500,000. A 10% stock dividend (20,000 shares) is declared when the market price per share is $14. Show the before-and-after eff e

> Lance Kosinski and Matt Morrisen are considering a business venture. They ask you to explain the advantages and disadvantages of the partnership form of organization.

> Langley Corporation has 50,000 shares of $10 par value common stock outstanding. It declares a 15% stock dividend on December 1 when the market price per share is $16. The dividend shares are issued on December 31. Prepare the entries for the declaration

> M. Bot Corporation has 10,000 shares of 8%, $100 par value, cumulative preferred stock outstanding at December 31, 2020. No dividends were declared in 2018 or 2019. If M. Bot wants to pay $375,000 of dividends in 2020, what amount of dividends will commo

> The balance sheet for Lauren Inc. shows the following: total paid-in capital and retained earnings $877,000, total stockholders’ equity $817,000, common stock issued 44,000 shares, and common stock outstanding 38,000 shares. Compute the book value per sh

> Greenwood Corporation has 80,000 shares of common stock outstanding. It declares a $1 per share cash dividend on November 1 to stockholders of record on December 1. The dividend is paid on December 31. Prepare the entries on the appropriate dates to reco

> Pine Corporation has the following accounts at December 31: Common Stock, $10 par, 5,000 shares issued, $50,000; Paid-in Capital in Excess of Par—Common Stock $30,000; Retained Earnings $45,000; and Treasury Stock, 500 shares, $11,000. Prepare the stockh

> On July 1, Raney Corporation purchases 500 shares of its $5 par value common stock for the treasury at a cash price of $9 per share. On September 1, it sells 300 shares of the treasury stock for cash at $11 per share. Journalize the two treasury stock tr

> Garb Inc. issues 5,000 shares of $100 par value preferred stock for cash at $130 per share. Journalize the issuance of the preferred stock.

> Lei Inc.’s $10 par value common stock is actively traded at a market price of $15 per share. Lei issues 5,000 shares to purchase land advertised for sale at $85,000. Journalize the issuance of the stock in acquiring the land.

> On June 1, Noonan Inc. issues 4,000 shares of no-par common stock at a cash price of $6 per share. Journalize the issuance of the shares assuming the stock has a stated value of $1 per share.

> On May 10, Jack Corporation issues 2,000 shares of $10 par value common stock for cash at $18 per share. Journalize the issuance of the stock.

> Fouts Corporation purchased 2,000 shares of its $10 par value common stock for $130,000 on August 1. It will hold these shares in the treasury until resold. On December 1, the corporation sold 1,200 shares of treasury stock for cash at $72 per share. Jou

> At December 31, Ortiz Corporation reports net income of $480,000. Prepare the entry to close net income.

> Angie Baden is studying for her accounting midterm examination. Identify for Angie the advantages and disadvantages of the corporate form of business organization.

> Data pertaining to Pelmar Co. are presented in BE12.9. Instead of payment from personal assets, assume that Fernetti receives $24,000 from partnership assets in withdrawing from the firm. Journalize the withdrawal of Fernetti.

> Capital balances in Pelmar Co. are Lango $40,000, Oslo $30,000, and Fernetti $20,000. Lango and Oslo each agree to pay Fernetti $12,000 from their personal assets. Lango and Oslo each receive 50% of Fernetti’s equity. The partners share income equally. J

> In Eastwood Co., capital balances are Irey $40,000 and Pedigo $50,000. The partners share income equally. Vernon is admitted to the firm with a 45% interest by an investment of cash of $58,000. Journalize the admission of Vernon.

> Gamma Co. capital balances are Barr $30,000, Croy $25,000, and Eubank $22,000. The partners share income equally. Tovar is admitted to the firm by purchasing one-half of Eubank’s interest for $13,000. Journalize the admission of Tovar to the partnership.

> After liquidating noncash assets and paying creditors, account balances in the Mann Co. are Cash $21,000; A, Capital (Cr.) $8,000; B, Capital (Cr.) $9,000; and C, Capital (Cr.) $4,000. The partners share income equally. Journalize the final distribution

> Nabb & Fry Co. reports net income of $31,000. Interest allowances are Nabb $7,000 and Fry $5,000, salary allowances are Nabb $15,000 and Fry $10,000, and the remainder is shared equally. Show the distribution of income.

> Gorton Corporation has 30,000 shares of $10 par value common stock outstanding when it announces a 2-for-1 stock split. Before the split, the stock had a market price of $120 per share. After the split, how many shares of stock will be outstanding? What

> Rich Mordica asks, “Since stock dividends don’t change anything, why declare them?” What is your answer to Rich?

> Beauty Island Corporation began operations on April 1 by issuing 60,000 shares of $5 par value common stock for cash at $13 per share. On April 19, it issued 2,000 shares of common stock to attorneys in settlement of their bill of $27,500 for organizatio

> Farley Inc. declares a $55,000 cash dividend on December 31, 2020. The required annual dividend on preferred stock is $10,000. Determine the allocation of the dividend to preferred and common stockholders assuming the preferred stock is cumulative and di

> Jan Kimler maintains that adequate cash is the only requirement for the declaration of a cash dividend. Is Jan correct? Explain.

> Emko Inc.’s common stock has a par value of $1, a book value of $24, and a current market price of $18. Explain why these amounts are all different.

> What is the formula for computing book value per share when a corporation has only outstanding common stock?

> What were the amounts of basic earnings per share of common stock that Apple reported in the years 2014 to 2015?

> Why must preferred stock dividends be subtracted from net income in computing earnings per share?

> What is the unique feature of a corporation income statement? Illustrate this feature, using assumed data.

> Dean Percival, who owns many investments in common stock, says, “I don’t care what a company’s net income is. The stock price tells me everything I need to know!” How do you respond to Dean?

> Rafy Furcal believes that both the beginning and ending balances in retained earnings are shown in the stockholders’ equity section. Is Rafy correct? Discuss.

> Kevin Mathis is confused about the partnership characteristics of (a) mutual agency and (b) unlimited liability. Explain these two characteristics for Kevin.

> How are retained earnings restrictions generally reported in the financial statements?

> a. What is a dividend? b. “Dividends must be paid in cash.” Do you agree? Explain.

> What factors help determine the market price of stock?

> The corporate charter of Luney Corporation allows the issuance of a maximum of 100,000 shares of common stock. During its first two years of operations, Luney sold 70,000 shares to shareholders and reacquired 7,000 of these shares. After these transactio

> How does the balance sheet for a corporation differ from the balance sheet for a proprietorship?

> a. What are the two principal components of stockholders’ equity? b. What is paid-in capital? Give three examples.

> a. The following terms pertain to the forming of a corporation: (1) charter, (2) by-laws, and (3) organization costs. Explain the terms. b. Donna Fleming believes a corporation must be incorporated in the state in which its headquarters’ office is locate

> a. Your friend Katie Fehr cannot understand how the characteristic of corporation management is both an advantage and a disadvantage. Clarify this problem for Katie. b. Identify and explain two other disadvantages of a corporation.

> How many shares of common stock did Apple have outstanding at September 26, 2015, and at September 27, 2014?

> Indicate how each of the following accounts should be classified in the stockholders’ equity section. a. Common stock. b. Paid-in capital in excess of par—common stock. c. Retained earnings. d. Treasury stock. e. Paid-in capital from treasury stock. f. P

> At the end of its first year of operation, Goss Corporation has $1,000,000 of common stock and net income of $236,000. Prepare (a) the closing entry for net income and (b) the stockholders’ equity section at year-end.

> Diaz Inc.’s common stock has a par value of $1 and a current market price of $15. Explain why these amounts are different.

> The treasury stock purchased in Question 14 is resold by Meng, Inc. for $16,000. What eff ect does this transaction have on (a) net income, (b) total assets, (c) total paid-in capital, an (d) total stockholders’ equity?

> Meng, Inc. purchases 1,000 shares of its own previously issued $5 par common stock for $12,000. Assuming the shares are held in the treasury, what effect does this transaction have on (a) net income, (b) total assets, (c) total paid-in capital, and (d) t

> Land appraised at $80,000 is purchased by issuing 1,000 shares of $20 par value common stock. The market price of the shares at the time of the exchange, based on active trading in the securities market, is $95 per share. Should the land be recorded at $

> Why is common stock usually not issued at a price that is less than par value?

> What effect does the issuance of stock at a price above par value have on the issuer’s net income? Explain.

> 1. Mark Kemp, a student, asks your help in understanding the following characteristics of a corporation: (a) separate legal existence, (b) limited liability of stockholders, and (c) transferable ownership rights. Explain these characteristics to Mark.

> How is a deceased partner’s equity determined?

> Your roommate argues that partnership assets should be revalued in situations like those in Question 21. Why is this generally not done? Data from Question 21: Jaime Keller has a $41,000 capital balance in a partnership. She sells her interest to Sam Pa

> Andrea Riley retires from the partnership of Jaggard, Pester, and Riley. She receives $85,000 of partnership assets in settlement of her capital balance of $81,000. Assuming that the income-sharing ratios are 5:3:2, respectively, how much of Riley’s bonu

> Jurgens Company has had 4 years of net income. Due to this success, the market price of its 400,000 shares of $3 par value common stock has increased from $12 per share to $46. During this period, paid-in capital remained the same at $2,800,000. Retained

> Jaime Keller has a $41,000 capital balance in a partnership. She sells her interest to Sam Parmenter for $45,000 cash. What entry is made by the partnership for this transaction?

> Jill Parsons purchases for $72,000 Jamar’s interest in the Tholen-Jamar partnership. Assuming that Jamar has a $68,000 capital balance in the partnership, what journal entry is made by the partnership to record this transaction?

> Jerry Park decides to invest $25,000 in a partnership for a one-sixth capital interest. How much do the partnership’s net assets increase? Does Park also acquire a one-sixth income ratio through this investment?

> Susan Turnbull decides to purchase from an existing partner for $50,000 a one-third interest in a partnership. What effect does this transaction have on partnership net assets?

> Why is Apple not a partnership?

> Before the final distribution of cash, account balances are Cash $27,000; S. Shea, Capital $19,000 (Cr.); L. Seastrom, Capital $12,000 (Cr.); and M. Luthi, Capital $4,000 (Dr.). Luthi is unable to pay any of the capital deficiency. If the income-sharing

> Norris, Madson, and Howell have income ratios of 5:3:2 and capital balances of $34,000, $31,000, and $28,000, respectively. Noncash assets are sold at a gain and allocated to the partners. After creditors are paid, $103,000 of cash is available for distr

> In continuing their discussion from Question 13, Mike says that even in the case of a capital deficiency, all cash should still be distributed on the basis of capital balances. Is Mike correct? Explain. Data from Question 13: Roger Fuller and Mike Range

> Roger Fuller and Mike Rangel are discussing the liquidation of a partnership. Roger maintains that all cash should be distributed to partners on the basis of their income ratios. Is he correct? Explain.

> How does the liquidation of a partnership differ from the dissolution of a partnership?

> Herr Corporation has 3,000 shares of 7%, $100 par value preferred stock outstanding at December 31, 2020. At December 31, 2020, the company declared a $105,000 cash dividend. Determine the dividend paid to preferred stockholders and common stockholders u

> Are the financial statements of a partnership similar to those of a proprietorship? Discuss.

> Tran Corporation is authorized to issue both preferred and common stock. The par value of the preferred is $50. During the first year of operations, the company had the following events and transactions pertaining to its preferred stock. Feb. 1 Issued 20

> Rinehart Corporation purchased from its stockholders 5,000 shares of its own previously issued stock for $255,000. It later resold 2,000 shares for $54 per share, then 2,000 more shares for $49 per share, and finally 1,000 shares for $43 per share. Inst

> The financial statements of Louis Vuitton are presented in Appendix F. The complete annual report, including the notes to its financial statements, is available at the company’s website. Instructions Use the company’s

> Meenen Corporation has the following accounts at December 31 (in euros): Share Capital— Ordinary, €10 par, 5,000 shares issued, €50,000; Share Premium—Ordinary €10,000; Retained Earnings €45,000; and Treasury Shares—Ordinary, 500 shares, €11,000. Prepare

> The stockholders’ meeting for Percival Corporation has been in progress for some time. The chief financial officer for Percival is presently reviewing the company’s financial statements and is explaining the items that

> Partners T. Greer and R. Parks are provided salary allowances of $30,000 and $25,000, respectively. They divide the remainder of the partnership income in a ratio of 3:2. If partnership net income is $40,000, how much is allocated to Greer and Parks?

> Use the stockholders’ equity section of an annual report and identify the major components. Instructions Go to the Annual Reports website, select a company of your choice, and then answer the following questions. a. What is the company’s name? b. What c

> Amazon.com, Inc.’s financial statements are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. The complete annual reports of Amazon and Wal-Mart, including the notes to the financial sta