Effective April 27, 2017, Dorr Corporation’s shareholders approved a two-for-one split of the company’s common stock and an increase in authorized common shares from 100,000 shares (par value of $20 per share) to 200,000 shares (par value of $10 per share). The stock split shares were issued on June 30, 2017. Dorr accounts for the split as a stock split (as opposed to a stock dividend). At the date of declaration, the fair value of each share of stock $60. Dorr’s shareholders’ equity accounts immediately before issuance of the stock split shares were: Common stock, par value $20; 100,000 shares authorized; ………… $1,000,000 50,000 shares outstanding Additional paid-in capital …………………...…………………... 150,000 Retained earnings …………………...…………………... 1,350,000 After issuing the stock split shares, what are the balances of the Additional paid-in capital and Retained earnings accounts in Dorr’s June 30, 2017, statement of shareholders’ equity?
> [A] Aon Corporation’s Mezzanine Preferred Stock In its 2002 annual report to shareholders, Aon Corporation described its mandatorily redeemable preferred stock as follows: In January 1997, Aon created Aon Capital A, a wholly-owned statu
> Selected financial statements for Ralston Company, a sole proprietorship, are as follows: Additional Information: a. During 2017, equipment having accumulated depreciation of $4,500 was sold for a $3,000 gain. b. A $3,750 lease payment was made in 201
> Karr Inc. reported net income of $300,000 for 2017. Changes occurred in several balance sheet accounts as follows: Equipment ……………... $25,000 increase Accumulated depreciation ……………...40,000 increase Note payable ……………...30,000 increase Additional Inf
> During 2017, King Corporation wrote off accounts receivable totaling $25,000 and made sales, all on account, of $710,000. Other information about the company’s sales activities follows: In addition, in February 2017, King accepted a $
> An income statement for Hamilton Corporation follows: Additional Information: a. Decrease in accounts receivable, $36,000. b. The prepaid insurance account increased by $4,800 during the year. c. Included in salary expenses are salaries of $9,600 accr
> During 2017, Xan Inc. had the following activities related to its financial operations: Payment for the early retirement of long-term bonds payable (carrying value $370,000) ……………...……………...……………... $375,000 Distribution in 2017 of cash dividend declare
> Hoffman Engineering Company is a young and growing producer of pre-stressed concrete manufacturing equipment. You have been retained by the company to advise it in the preparation of a statement of cash flows. Hoffman uses the direct method in reporting
> Papa John’s International, Inc., operates and franchises pizza delivery and carryout restaurants in domestic and global markets. In its December 30, 2012, 10-K filing with the SEC, Papa John’s discloses the following relationship with a variable interest
> Sage Inc. bought 40% of Adams Corporation’s outstanding common stock on January 2, 2017, for $400,000. The carrying amount of Adams’s net assets at the purchase date totaled $900,000. Fair values and carrying amounts were the same for all items except fo
> Information related to Jones Company’s portfolio of trading securities at December 31, 2017, follows: Aggregate cost of securities ………………….. $340,000 Gross unrealized gains (cumulative) …………………..8,000 Gross unrealized losses (cumulative) …………………..52,000
> On January 1, 2017, Chesapeake Corporation issued common stock with a fair value of $810,000 in exchange for 90% of Deardon Corporation’s common stock. Following are the January 1, 2017, separate balance sheets of Chesapeake and Deardon
> Refer to the salesforce.com financial statement excerpts given below to answer the questions. On January 31, 2015, the price of salesforce.com stock was $56.45, and there were 650,596,000 shares of common stock outstanding. All questions relate to the ye
> On January 5, 2018, Alpha Inc. acquired 80% of the outstanding voting shares of Beta Inc. for $2,000,000 cash. Following are the separate balance sheets for the two companies immediately after the stock purchase, as well as fair value information regardi
> Lindy, a calendar-year U.S. corporation, bought inventory items from a supplier in Germany on November 5, 2017, for 100,000 euros, when the spot exchange rate was $1.40 per euro. At Lindy’s December 31, 2017, year-end, the spot exchange rate was $1.38. O
> A wholly owned subsidiary of Ward Inc. has certain expense accounts for the year ended December 31, 2017, stated in local currency units (LCU) as follows: The exchange rates at various dates are as follows: Required: Assume that the LCU is the subsid
> On July 1, 2017, Pushway Corporation issued 100,000 shares of common stock in exchange for all of Stroker Company’s common stock. The Pushway stock issued had a market value of $500,000 on the date of the exchange. Following are the Jul
> Pate Corp. owns 80% of Strange Inc.’s common stock. During 2017, Pate sold inventory to Strange for $600,000 on the same terms as sales made to outside customers. Strange sold the entire inventory purchased from Pate by the end of 2017.
> Founded on January 1, 2017, Gehl Company had the following short-term investments in securities at the end of 2017 and 2018 (all were held in the “trading” portfolio): Required: If the company recorded a $4,000 debit
> Stone has provided the following information on its available-for-sale securities: Aggregate cost as of 12/31/17 …………………..$170,000 Unrealized gain as of 12/31/17 …………………..4,000 Unrealized losses as of 12/31/17 …………………..26,000 Net realized gains during
> On September 1, 2017, Cano & Company, a U.S. corporation, sold merchandise to a foreign firm for 250,000 euros. Terms of the sale require payment in euros on February 1, 2018. On September 1, 2017, the spot exchange rate was $1.30 per euro. At Cano’s yea
> Sea Company purchased 60% of Island Company’s common stock for $180,000. On the acquisition date, Island’s book value of net assets totaled $250,000 and the fair value of identifiable net assets totaled $275,000. The $
> The following data pertain to Tyne Company’s investments in marketable equity securities. (Assume that all securities were held throughout 2016 and 2017.) Required: 1. What amount should Tyne report as unrealized holding gain (loss) i
> Several years ago, RJR Nabisco Holdings Corporation (Holdings) offered for sale 93 million shares of its subsidiary RN-Nabisco Group. According to the prospectus, the estimated initial public offering price for RN-Nabisco common stock would be in the ran
> On December 31, 2017, the Stockholders’ Equity section of Mercedes Corporation was as follows: Common stock, par value $5; authorized 30,000 shares; ………… $ 45,000 issued and outstanding, 9,000 shares Additional paid-in capital …………………………………………………… 58,00
> Newton Corporation was organized on January 1, 2017. On that date, it issued 200,000 shares of its $10 par-value common stock at $15 per share (400,000 shares were authorized). During the period from January 1, 2017, through December 31, 2019, Newton rep
> Weldon Wire has issued 2,500,000 shares of $2 par common stock at an average price of $10 per share. Of these, 100,000 shares were repurchased during the year for $15 each and retired. Another 200,000 shares of the shares were repurchased for $17 each an
> Munn Corporation’s records included the following stockholders’ equity accounts: Preferred stock, par value $15, authorized 20,000 shares …………………… $255,000 Additional paid-in capital—preferred stock ………………………………………… 15,000 Common stock, no par, $5 stated
> Warren Corporation was organized on January 1, 2017, with an authorization of 500,000 shares of common stock ($5 par value per share). During 2017, the company had the following capital transactions: January 5 ………… Issued 100,000 shares at $5 per share A
> On July 1, 2017, Amos Corporation granted nontransferable, nonqualified stock options to certain key employees as additional compensation. The options permit the purchase of 20,000 shares of Amos’s $1 par common stock at a price of $32 per share. On the
> Information concerning the capital structure of the Petrock Corporation is as follows: During 2017, Petrock paid dividends of $1 per share on its common stock and $2.40 per share on its preferred stock. The preferred stock is convertible into 20,000 sha
> Tam Company’s net income for the year ending December 31, 2017, was $10,000. During the year, Tam declared and paid $1,000 cash dividends on preferred stock and $1,750 cash dividends on common stock. At December 31, 2017, the company had 12,000 shares of
> On January 1, 2017, Cello Co. established a defined benefit pension plan for its employees. At January 1, 2017, Cello estimated the service cost for 2017 to be $45,000. At January 1, 2018, it estimated 2018 service cost to be $49,000. On the plan incepti
> George Corporation has a defined benefit pension plan for its employees. The following information is available for 2017: PBO at 1/1 ………………………………………… $930,000 Payments made to retirees at 12/31 ………… 204,000 Service cost ………………………………………… 196,000 Actua
> Starbucks Corp., the passionate purveyors of coffee and everything else that goes with a full and rewarding coffeehouse experience, included the following table in its 2009 annual report: Total stock based compensation and ESPP expense recognized in the
> At January 1, 2017, Archer Co.’s PBO is $500,000 and the fair value of its pension plan assets is $630,000. The average remaining service period of Archer’s employees is 12 years. The AOCI—net actuari
> At January 1, 2017, Milo Co.’s projected benefit obligation is $300,000, and the fair value of its pension plan assets is $340,000. The average remaining service period of Milo’s employees is 10 years. Milo Co. uses th
> Bonny Corp. has a defined benefit pension plan for its employees who have an average remaining service life of 10 years. The following information is available for 2016 and 2017 related to the pension plan: Bonny Corp. had no beginning balance in its AO
> Zeff Manufacturing provides the following information about its postretirement health care plan for 2017: Accumulated postretirement benefit obligation on 1/1 ………… $300,000 Fair value of plan assets on 1/1 ………………………………………… 30,000 Benefits paid to retiree
> Jones Company has a postretirement benefit (health care) plan for its employees. On January 1, 2017, the balance in the Accumulated postretirement benefit obligation account was $300 million. The assumed discount rate—for purposes of determining postreti
> Cummings Inc. had the following reconciliation at December 31, 2017: Fair value of plan assets …………………………. $5,000 PBO …………………….………………………………. 4,200 Funded status …………………….………………. $ 800 AOCI—prior service cost ………………………. $ 300 AOCI—net actuarial loss …………
> Neighborhood Supermarkets is preparing to go public, and you are asked to assist the firm by preparing its statement of cash flows for 2017. Neighborhood’s balance sheets at December 31, 2016, and December 31, 2017, and its income state
> The Barden Corporation’s comparative balance sheets for 2017 and 2016 are presented below. The income statement of Barden Corporation for the year ended December 31, 2017, is as follows: Additional Information: a. On January 11, 2
> Metro Inc. reported net income of $150,000 for 2017. Changes occurred in several balance sheet accounts during 2017 as follows: Investment in Videogold Inc. stock, carried on the equity basis ……………...……………...……………...v $5,500 increase Accumulated deprec
> Alp Inc. had the following activities during 2017: Acquired 2,000 shares of stock in Maybel Inc. for $26,000. Sold an investment in Rate Motors for $35,000 when the carrying value was $33,000. Acquired a $50,000, four-year certificate of deposit from
> Lino Company’s worksheet for the preparation of its 2017 statement of cash flows included the following information: Lino’s 2017 net income is $150,000. Required: What amount should Lino include as net cash that is
> The income statement and statement of cash flows for ABC Equipment Company for 2017 are provided below. Supplemental Information: Other current liabilities represent obligations for general and administrative expenses. Derive a direct method presen
> Bostonian Company provided the following information related to its defined benefit pension plan for 2017: PBO on 1/1 …………………….…………………….………… $2,500,000 Fair value of plan assets on 1/1 ………………………… 2,000,000 Service cost …………………….…………………….………... 120,000 Ac
> On January 1, 2017, Pack Corp. acquired all of Slam Corp.’s common stock for $500,000. On that date, the fair values of Slam’s net assets equaled their book values of $400,000. During 2017, Slam paid cash dividends of
> Fountain Inc. has 5,000,000 shares of common stock outstanding on January 1, 2017. It issued an additional 1,000,000 shares of common stock on April 1, 2017, and 500,000 more on July 1, 2017. On October 1, 2017, Fountain issued 10,000 convertible bonds;
> The following information pertains to Lee Corporation’s defined benefit pension plan for 2017: Service cost ……………….……………….……………….…………… $160,000 Actual and expected return on plan assets ……………….……………….35,000 Amortization of prior service costs ……………….……
> Hukle Company has provided the following information pertaining to its postretirement plan for 2017: Service cost ……………….…………………………. $240,000 Benefit payment made at 12/31 ……………………. 110,000 Interest on accumulated postretirement benefit obligation…
> Mason Manufacturing had 600,000 shares of common stock outstanding and 150,000 shares of $100 par value preferred stock outstanding January 1, 2017. An additional 120,000 shares of common stock were issued on August 1 and 24,000 common shares were repurc
> On January 1, 2017, Pitt Company acquired an 80% investment in Saxe Company. The acquisition cost was equal to Pitt’s equity in Saxe’s recorded net assets at that date. On January 1, 2017, Pitt and Saxe had retained earnings of $500,000 and $100,000, res
> On April 1, 2017, Dart Company paid $620,000 for all issued and outstanding common stock of Wall Corporation in a transaction properly accounted for under the acquisition method. Wall’s recorded assets and liabilities on April 1, 2017,
> On April 30, 2017, Pound Corp. acquired for cash all 200,000 shares of the outstanding common stock of Shake Corp. for $20 per share. At April 30, 2017, Shake’s balance sheet showed net assets with a $3,000,000 book value. On that date, the fair value of
> Superfine Company collected the following data in preparing its cash flow statement for the year ended December 31, 2017: Amortization of bond discount ……………...……………...……………...……………...$ 1,000 Dividends declared ……………...……………...……………...……………...……………...22,
> ESCO Technologies Inc. and Take-Two Interactive Software, Inc., both capitalize software development costs in accordance with their respective policies as summarized here. The condensed financial information that follows was extracted from each company&a
> In January 2017, Harold Corporation acquired 20% of Otis Company’s outstanding common stock for $400,000. This investment gave Harold the ability to exercise significant influence over Otis. The book value of Otis’s net assets was $1,500,000. The excess
> Spridget Company has 1 million shares of common stock authorized with a par value of $3 per share, of which 600,000 shares are outstanding. The company received $7 per share when it issued shares to the public. Required: What is the book value of the Co
> On January 2, 2017, Loch Company established a defined benefit plan covering all employees and contributed $1,000,000 to the plan. At December 31, 2017, Loch determined that the 2017 service and interest costs totaled $620,000. The expected and the actua
> At December 31, 2017, Kerr Corporation’s pension plan administrator provided the following information: Fair value of plan assets ………………. $3,450,000 Accumulated benefit obligation ……………….4,300,000 Projected benefit obligation ……………….5,700,000 Required
> The following information pertains to Seda Company’s pension plan for 2017: Actuarial estimate of projected benefit obligation at ……………….1/1 $72,000 Actuarial estimate of projected benefit obligation at ……………….1/1 $72,000 Service cost ……………….……………….……
> Omega Corporation’s comparative balance sheet accounts worksheet at December 31, 2017 and 2016, follow, together with a column showing the increase (decrease) from 2016 to 2017. Additional Information: On December 31, 2016, Omega ac
> A statement of cash flows for Friendly Markets, Inc., for 2017 appears below. Required: Prepare the worksheet entry that would be made to prepare a cash flow statement for each of the numbered line items. For example, the worksheet entry for item (1) i
> Presented next are the balance sheet accounts of Bergen Corporation as of December 31, 2017 and 2016. Additional Information: On January 2, 2017, Bergen sold all of its marketable investment securities for $95,000 cash. On March 10, 2017, Bergen paid
> Excerpts from the financial statements of Stanley Black & Decker, Inc. follow. From Stanley Black & Decker’s Accounts receivable note: Required: 1. Determine the difference between the change in accounts and notes receiv
> The balance sheets of Global Trading Company follow: Additional Information: The company reported a net loss of $279,500 during 2017. There are no income taxes. Goodwill as of December 31, 2016, was part of an acquisition made during 2016. The com
> The following information is based on a real company whose name has been disguised. Opus One operates in a single business segment, the retailing and servicing of home audio, car audio, and video equipment. Its operations are conducted in Texas through 2
> The following are selected balance sheet accounts of Zach Corporation at December 31, 2017 and 2016, as well as the increases or decreases in each account from 2016 to 2017. Also presented is selected income statement information for the year ended Decem
> Rite Aid Corporation operates retail drugstores in the United States. It is one of the country’s largest retail drugstore chains with 3,333 stores in operation as of March 3, Year 3. The company’s drugstoresâ
> The management of Banciu Corporation provides you with the comparative analysis of changes in account balances between December 31, 2016, and December 31, 2017, appearing below. Supplemental Information: a. The following table presents a comparative
> On January 1, 2017, Pluto Company acquired all of Saturn Company’s common stock for $1,000,000 cash. On that date, Saturn had retained earnings of $200,000 and common stock of $600,000. The book values of Saturn’s asse
> Refer to the balance sheets of Plate and Salad in the previous problem. Assume that Plate buys 80% of Salad’s common stock for $180,000 cash. The fair value of Salad’s land is $20,000, the fair value of Salad’s buildings and equipment is $110,000, and al
> The following are the balance sheets for Plate and Salad immediately prior to Plate’s September 1, 2017, acquisition of Salad: Consider the following cases: Case 1 Plate buys 100% of Salad’s common stock for $180,00
> Prince Corp. and Sprite Corp. reported the following balance sheets at January 1, 2017: On January 2, 2017, Prince issued $36,000 of stock and used the proceeds to purchase 90% of Sprite’s common stock. The excess of the purchase price
> On January 1, 2017, Delta Inc. acquired 80% of Sigma Company’s outstanding stock for $80,000 cash. Following are the balance sheets for Delta and Sigma immediately before the acquisition, as well as fair value information regarding Sigm
> On January 1, 2017, Newyork Capital Corporation purchased 30% of the outstanding common shares of Delta Crating Corp. for $250 million and accounts for this investment under the equity method. The following information is available regarding Delta Cratin
> On December 31, 2017, Pate Corporation acquired 80% of Starmont Corporation’s common stock for $900,000 cash. Assume that the fair values of Starmont’s identifiable assets and liabilities equaled book values on the acq
> The income statement for the year ended December 31, 2017, as well as the balance sheets as of December 31, 2017, and December 31, 2016, for Lucky Lady Inc. follow. This information is taken from the financial statements of a real company whose name has
> Groupe Casino is a French multinational company that operates more than 9,000 multiformat retail stores—hypermarkets, supermarkets, discount stores, convenience stores, and restaurants— throughout the world. In January 20X5, Casino issued €600 million of
> Yachting in Paradise, Inc., was founded late in 2010 by retired Admiral Andy Willits to provide executive retreats aboard a luxury yacht with ports of call scattered around the South Pacific. Yachting in Paradise is a U.S. firm and follows U.S. GAAP. On
> Four years ago Omega Technology, Inc., acquired a machine to use in its computer chip manufacturing operations at a cost of $35,000,000. The firm expected the machine to have a seven-year useful life and a zero salvage value. The company has been using s
> Fly-by-Night is an international airline company. Its fleet includes Boeing 757s, 747s, and 737s and McDonnell Douglas MD-83s and MD-80s. Assume that Fly-by-Night made the following expenditures related to these aircraft in 2017: Required: 1. New jet en
> Hoyle Company owns a manufacturing plant with a fair value of $4,600,000, a recorded cost of $8,500,000, and accumulated depreciation of $3,650,000. Patterson Company owns a warehouse with a fair value of $4,400,000, a recorded cost of $6,900,000, and ac
> On April 23, 2017, Starlight Department Stores, Inc., acquired a 75-acre tract of land by paying $25,000,000 in cash and by issuing a six-month note payable for $5,000,000 and 1,000,000 shares of its common stock. On April 23, 2017, Starlight’s common st
> Cayman Diving, Inc., needs to acquire a new dive boat. The seller will accept a noninterest bearing note for $400,000 due in four years or $250,000 in cash. The company’s incremental cost of borrowing is 10%. Required: Which option should Cayman Diving
> On June 30, 2017, Macrosoft Company acquired a 10-acre tract of land. On the tract was a warehouse that Macrosoft intended to use as a distribution center. At the time of purchase, the land had an assessed tax value of $6,300,000, and the building had an
> On January 2, 2016, Half, Inc., purchased a manufacturing machine for $864,000. The machine has an eight-year estimated life and a $144,000 estimated salvage value. Half expects to manufacture 1,800,000 units over the machine’s life. During 2017, Half ma
> Required: 1. Which of the following qualifies as a hedged item? a. A company’s work-in-process inventory of unfinished washers, dryers, and refrigerators. b. Credit card receivables at JCPenney. c. Bushels of corn owned by the Farmers’ Cooperative. d. Sa
> On January 1, 2017, Tusk Company issued $300 million of bonds with a 6% coupon interest rate. The bonds mature in 10 years and pay interest annually on December 31 of each year. The market rate of interest on January 1, 2017, for bonds of this risk class
> Royal Dutch Shell had pretax income of $2,047 million, $28,314 million and $33,592 million in 2015, 2014, and 2013, respectively. Presented below are excerpts from the 2015 annual report of Royal Dutch Shell, a Dutch company that finds, extracts, process
> On July 1, 2017, Mirage Company issued $250 million of bonds with an 8% coupon interest rate. The bonds mature in 10 years and pay interest semiannually on June 30 and December 31 of each year. The market rate of interest on July 1, 2017, for bonds of th
> On January 1, 2016, Roland Inc. issued $125 million of 8% bonds at par. The bonds pay interest semiannually on June 30 and December 31 of each year, and they mature in 15 years. On December 31, 2017 (before the interest payment is made), the bonds are tr
> In January 2017, Vorst Company purchased a mineral mine for $2,640,000. Removable ore was estimated at 1,200,000 tons. After it has extracted all the ore, Vorst will be required by law to restore the land to its original condition. The expected present v
> Pearl, Inc., develops and markets computer software. During 2016, one of Pearl’s engineers began developing a new and very innovative software product. On July 1, 2017, a team of Pearl engineers determined that the software product was technologically fe
> In 2017, Ball Labs incurred the following costs: Direct costs of doing contract research and development…….……$400,000 work for the government to be reimbursed by a governmental unit Research and development costs not included above were: Depreciation ……
> Akers Company sold bonds on July 1, 2017, with a face value of $100,000. These bonds are due in 10 years. The stated annual interest rate is 6% per year, payable semiannually on June 30 and December 31. These bonds were sold to yield 8%. Required: How m
> On January 2, 2014, Lava, Inc., purchased a patent for a new consumer product for $90,000. At the time of purchase, the patent was valid for 15 years; however, its useful life was estimated to be only 10 years due to the product’s competitive nature. On
> On January 1, 2013 Vick Company purchased a trademark for $400,000, which had an estimated useful life of 16 years. In January 2017, Vick paid $60,000 for legal fees in a successful defense of the trademark. Required: How much should Vick record as trad
> McClelland Corporation agreed to purchase some landscaping equipment from Agri-Products for a cash price of $500,000. Before accepting delivery of the equipment, McClelland learned that the same equipment could be purchased from another dealer for $460,0
