[SOLVED] James Corporation is planning to issue bonds

> You are researching the housing market in Bloomington, Indiana, and you come upon an advertisement offering to sell a house for $240,000 with a zero interest rate mortgage. All you have to do is agree to make $4,000 payments ($240,000 ÷ 60 months) at the

> Refer to the financial statements of Urban Outfitters in Appendix C at the end of this book Financial statements of Urban Outfitters: Required: 1. What is the amount of accrued compensation at the end of the most recent reporting year? 2. Does Urban Ou

> A recent annual report for Eastman Kodak reported that the cost of property, plant, and equipment at the end of the current year was $755 million. At the end of the previous year, it had been $751 million. During the current year, the company bought $43

> Karl Company operates in both the beverage and entertainment industries. In June 2013, Karl purchased Good Time, Inc., which produces and distributes motion picture, television, and home video products and recorded music; publishes books; and operates th

> As stated in its recent annual report, “Sysco Corporation . . . is the largest North American distributor of food and related products primarily to the foodservice or food-away-from-home industry. We provide products and related services to approximately

> Vernon Company sells a wide range of goods through two retail stores operated in adjoining cities. Vernon purchases most of the goods it sells in its stores on credit, promising to pay suppliers later. Occasionally, a short-term note payable is used to o

> Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. Neiman Marcus is one of America’s most prestigious retailers. Each Christmas season, Neiman Marcus builds up its inventory to meet th

> Oaks Company has completed the payroll for the month of January, reflecting the following data: Salaries and wages earned………………………………………..$86,000 Employee income taxes withheld…………………………………10,000 FICA payroll taxes…………………………………………………………6,000 Required: 1

> At the end of each year, you plan to deposit $2,000 in a savings account. The account will earn 9% annual interest, which will be added to the fund balance at year-end. The first deposit will be made at the end of Year 1. Required: 1. Give the required

> On January 1, Alan King decided to deposit $58,800 in a savings account that will provide funds four years later to send his son to college. The savings account will earn 8% annually. Any interest earned will be added to the fund at year-end (rather than

> The balance sheet for Nair Corporation provided the following summarized pretax data: The income statement reported tax expense for Year 2 in the amount of $580,000. Required: 1. What was the amount of income taxes payable for Year 2? 2. Explain why ma

> The following information pertains to the Lewis Corporation. Required: 1. For each year, compute income tax expense (assume that no taxes have been paid). 2. Explain why tax expense is not simply the amount of cash paid during the year. Year 1 Year 2

> Refer to the financial statements of American Eagle Outfitters in Appendix B at the end of this book. Financial Statement of American Eagle Outfitters: Required: 1. What is the amount of accrued compensation and payroll taxes at the end of the most rece

> Paul Company completed the salary and wage payroll for the month of March. The payroll provided the following details: Salaries and wages earned by employees …………………………………………..$200,000 Employee income taxes withheld …………………………………………………………..40,000 Employe

> As the new vice president for consumer products at Whole Foods, you are attending a meeting to discuss a serious problem associated with delivering merchandise to customers. Bob Smith, director of logistics, summarized the problem: “It’s easy to understa

> McDonald’s is one of the world’s most popular fast-food restaurants, offering good food and convenient locations. Effective management of its properties is a key to its success. As the following note in its annual report indicates, McDonald’s both owns a

> Diane Corporation is preparing its year-end balance sheet. The company records show the following selected amounts at the end of the year: Total assets…………………………………………………………….$530,000 Total noncurrent assets…………………………………………….362,000 Liabilities:

> Burbank Company owns the building occupied by its administrative office. The office building was reflected in the accounts at the end of last year as follows: Cost when acquired $...........................................................................

> At the end of the annual accounting period, December 31, Year 1, O’Connor Company’s records reflected the following for Machine A: Cost when acquired…………………………………………………..$30,000 Accumulated depreciation…………………………………………….10,200 During January Year 2, the

> Refer to Exercise 7. Data given in Exercise 7: Hulme Company operates a small manufacturing facility as a supplement to its regular service activities. At the beginning of 2017, an asset account for the company showed the following balances: Manufacturi

> Starbucks Corporation is the leading roaster and retailer of specialty coffee, with over 21,000 company operated and licensed stores worldwide. Assume that Starbucks planned to open a new store on Commonwealth Avenue near Boston University and obtained a

> Springer Company had three intangible assets at the end of 2017 (end of the accounting year): a. A copyright purchased on January 1, 2017, for a cash cost of $14,500. The copyright is expected to have a 10-year useful life to Springer. b. Goodwill of $65

> Trotman Company had three intangible assets at the end of 2016 (end of the accounting year): a. Computer software and Web development technology purchased on January 1, 2015, for $70,000. The technology is expected to have a four-year useful life to the

> Refer to the financial statements of American Eagle Outfitters in Appendix B and Urban Outfitters in Appendix C. Financial statements of American Eagle: Financial statements of Urban Outfitters: Required: 1. Compute the percentage of net fixed assets

> Freeport-McMoRan Copper & Gold Inc., headquartered in Phoenix, Arizona, is “a premier U.S.- based natural resource company with an industry leading global portfolio of mineral assets, significant oil and natural gas resources and a growing production pro

> On January 1 of the current year, the records of Sitake Corporation showed the following regarding a truck: Equipment (estimated residual value, $9,000)………………………..$25,000 Accumulated depreciation (straight-line, three years)…………………..6,000 On December 31

> Marriott International is a worldwide operator and franchiser of hotels and related lodging facilities totaling nearly $1.5 billion in net property and equipment. Assume that Marriott replaced furniture that had been used in the business for five years.

> FedEx is the world’s leading express-distribution company. In addition to the world’s largest fleet of allcargo aircraft, the company has more than 650 aircraft and 55,000 vehicles and trailers that pick up and deliver packages. Assume that FedEx sold a

> In a recent 10-K report, United Parcel Service states it “is the world’s largest package delivery company, a leader in the U.S. less-than-truckload industry, and the premier provider of global supply chain management solutions.” The following note and da

> Schrade Company bought a machine for $96,000 cash. The estimated useful life was four years and the estimated residual value was $6,000. Assume that the estimated useful life in productive units is 120,000. Units actually produced were 43,000 in Year 1 a

> A recent annual report for FedEx includes the following information: For financial reporting purposes, we record depreciation and amortization of property and equipment on a straight-line basis over the asset’s service life or related lease term if short

> The 2001 annual report for General Motors Corporation contained the following note: NOTE 3. SIGNIFICANT ACCOUNTING POLICIES Property, Net Property, plant, and equipment, including internal use software, is recorded at cost. Major improvements that extend

> At the beginning of the year, Palermo Brothers, Inc., purchased a new plastic water bottle making machine at a cost of $45,000. The estimated residual value was $5,000. Assume that the estimated useful life was four years and the estimated productive lif

> Strong Metals Inc. purchased a new stamping machine at the beginning of the year at a cost of $950,000. The estimated residual value was $50,000. Assume that the estimated useful life was five years and the estimated productive life of the machine was 30

> Refer to the financial statements of Urban Outfitters in Appendix C at the end of this book Financial statements of Urban Outfitters: Required: For each question, answer it and indicate where you located the information to answer the question. (Hint:

> Assume Purity Ice Cream Company, Inc., in Ithaca, NY, bought a new ice cream maker at the beginning of the year at a cost of $9,000. The estimated useful life was four years, and the residual value was $1,000. Assume that the estimated productive life of

> North Face is one of the world’s most popular outdoor apparel companies. Assume that North Face borrows $2 million from U.S. Bank and signs a note promising to pay the $2 million back in nine months, at which time North Face will also pay any accrued int

> Hulme Company operates a small manufacturing facility as a supplement to its regular service activities. At the beginning of 2017, an asset account for the company showed the following balances: Manufacturing equipment………………………………………………..$120,000 Accumul

> Manrow Growers, Inc., owns equipment for sowing and harvesting its organic fruit, vegetables, and tree nuts that are sold to local restaurants and grocery stores. At the beginning of 2016, an asset account for the company showed the following balances: E

> Steve’s Outdoor Company purchased a new delivery van on January 1 for $45,000 plus $3,800 in sales tax. The company paid $12,800 cash on the van (including the sales tax), with the $36,000 balance on credit at 8 percent interest due in nine months (on Se

> During Year 1, Ashkar Company ordered a machine on January 1 at an invoice price of $21,000. On the date of delivery, January 2, the company paid $6,000 on the machine, with the balance on creditat 10 percent interest due in six months. On January 3, it

> Shahia Company bought a building for $82,000 cash and the land on which it was located for $107,000 cash. The company paid transfer costs of $9,000 ($3,000 for the building and $6,000 for the land). Renovation costs on the building were $21,000. Require

> The following data were included in a recent Apple Inc. annual report ($ in millions): Required: 1. Compute Appleâs fixed asset turnover ratio for 2012, 2013, and 2014. Round your answers to two decimal points. 2. How might a financial

> The following is a list of account titles and amounts (dollars in millions) from a recent annual report of Hasbro, Inc., a leading manufacturer of games, toys, and interactive entertainment software for children and families: Required: Prepare the asset

> Park Corporation is planning to issue bonds with a face value of $600,000 and a coupon rate of 7.5 percent. The bonds mature in four years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year.

> Refer to the financial statements of American Eagle Outfitters in Appendix B at the end of this book. Financial Statement of American Eagle Outfitters: Required: For each question, answer it and indicate where you located the information to answer the

> Park Corporation is planning to issue bonds with a face value of $600,000 and a coupon rate of 7.5 percent. The bonds mature in four years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year.

> You have just started your first job as a financial analyst for a large stock brokerage company. Your boss, a senior analyst, has finished a detailed report evaluating bonds issued by two different companies. She stopped by your desk and asked for help:

> On January 1 of this year, Denver Corporation sold bonds with a face value of $300,000 and a coupon rate of 6 percent. The bonds mature in 10 years and pay interest annually every December 31. At the time the bonds were issued, the annual market rate of

> LaTanya Corporation is planning to issue bonds with a face value of $100,000 and a coupon rate of 8 percent. The bonds mature in seven years. Interest is paid annually on December 31. All of the bonds will be sold on January 1 of this year. Required: Co

> On January 1 of this year, Victor Corporation sold bonds with a face value of $1,400,000 and a coupon rate of 8 percent. The bonds mature in four years and pay interest semiannually every June 30 and December 31. Victor uses the straight-line amortizatio

> On January 1 of this year, Clearwater Corporation sold bonds with a face value of $750,000 and a coupon rate of 8 percent. The bonds mature in 10 years and pay interest annually every December 31. Clearwater uses the straight-line amortization method and

> You are a personal financial planner working with a married couple in their early 40s who have decided to invest $100,000 in corporate bonds. You have found two bonds that you think will interest your clients. One is a zero coupon bond issued by PepsiCo

> Lemond Corporation is planning to issue bonds with a face value of $200,000 and a coupon rate of 10 percent. The bonds mature in three years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year

> On January 1 of this year, Gateway Company issued bonds with a face value of $1 million and a coupon rate of 9 percent. The bonds mature in 10 years and pay interest semiannually every June 30 and December 31. When the bonds were issued, the annual marke

> On January 1 of this year, Houston Company issued a bond with a face value of $10,000 and a coupon rate of 5 percent. The bond matures in three years and pays interest every December 31. When the bond was issued, the annual market rate of interest was 4

> Park Corporation is planning to issue bonds with a face value of $2,000,000 and a coupon rate of 10 percent. The bonds mature in 10 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. P

> The annual report of American Airlines contained the following note: The Company recorded the issuance of $775 million in bonds (net of $25 million discount) as long-term debt on the consolidated balance sheet. The bonds bear interest at fixed rates, wit

> Santa Corporation issued a bond on January 1 of this year with a face value of $1,000. The bondâs coupon rate is 6 percent and interest is paid once a year on December 31. The bond matures in three years. The annual market rate of inter

> On January 1 of this year, Ikuta Company issued a bond with a face value of $100,000 and a coupon rate of 5 percent. The bond matures in three years and pays interest every December 31. When the bond was issued, the annual market rate of interest was 6 p

> On January 1 of this year, Avaya Corporation issued bonds with a face value of $2,000,000 and a coupon rate of 6 percent. The bonds mature in five years and pay interest annually on December 31. When the bonds were sold, the annual market rate of interes

> Apple recently issued a series of bonds with various maturity dates. The information below pertains to one of Appleâs bonds: Explain why investors would care about knowing the coupon rate and yield percentages. Assume that over the nex

> On January 1 of this year, Bidden Corporation sold bonds with a face value of $100,000 and a coupon rate of 10 percent. The bonds mature in five years and pay interest semiannually every June 30 and December 31. Bidden uses the effective-interest amortiz

> On January 1 of this year, Trucks R Us Corporation issued bonds with a face value of $2,000,000 and a coupon rate of 10 percent. The bonds mature in five years and pay interest semiannually every June 30 and December 31. When the bonds were sold, the ann

> After completing a long and successful career as senior vice president for a large bank, you are preparing for retirement. Visiting the human resources office, you find that you have several retirement options: (1) you can receive an immediate cash payme

> On January 1, Ellsworth Company completed the following transactions (use an 8% annual interest rate for all transactions): a. Borrowed $2,000,000 to be repaid in five years. Agreed to pay $150,000 interest each year for the five years. b. Established a

> Tootsie Roll Industries, Inc., is engaged in the manufacture and sale of confectionery products. Last year, Tootsie Roll reported cost of goods sold of $352 million. This year, cost of goods sold was $342 million. Accounts payable was $9 million at the e

> Ford Motor Company is one of the world’s largest companies, with annual sales of cars and trucks in excess of $144 billion. A recent annual report for Ford contained the following note: Warranties Estimated warranty costs are accrued for at the time the

> Using data from problem Alternate Problem-1, complete the following: Data given in Alternate Problem-1: Sturgis Company completed the following transactions during Year 1. Sturgisâs fiscal year ends on December 31. Required: For each

> Sturgis Company completed the following transactions during Year 1. Sturgisâs fiscal year ends on December 31. Required: 1. Prepare journal entries for each of these transactions. 2. Prepare all adjusting entries required on December 3

> On January 1 of Year 1, Austin Auto Company decided to start a fund to build an addition to its plant. Austin will deposit $320,000 in the fund at each year-end, starting on December 31 of Year 1. The fund will earn 9% annual interest, which will be adde

> Carey Corporation has five different intangible assets to be accounted for and reported on the financial statements. The management is concerned about the amortization of the cost of each of these intangibles. Facts about each intangible follow: a. Goodw

> Jones Soda is a regional soda manufacturer in the Pacific Northwest. Jones is currently facing three lawsuits, summarized below: a. A customer is suing Jones for $1 million because he claims to have found a piece of glass in his soda. Management deems th

> During the current year ending December 31, Nguyen Corporation completed the following transactions: a. On January 1, purchased a license for $7,200 cash (estimated useful life, four years). b. On January 1, repaved the parking lot of the building leased

> During the current year ended December 31, Rank Company disposed of three different assets. On January 1 of the current year, prior to their disposal, the asset accounts reflected the following: The machines were disposed of during the current year in t

> The Gap, Inc., is a global specialty retailer of casual wear and personal products for women, men, children, and babies under the Gap, Banana Republic, Old Navy, Athleta, and Intermix brands. The Company operates approximately 3,200 stores across the glo

> At the beginning of the year, Ramos Inc. bought three used machines from Santaro Corporation. The machines immediately were overhauled, installed, and started operating. The machines were different; therefore, each had to be recorded separately in the ac

> A recent annual report for AMERCO, the holding company for U-Haul International, Inc., included the following note: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 3. Accounting Policies Property, Plant and Equipment Property, plant and equipment are sta

> On June 1, the Wallace Corp. bought a machine for use in operations. The machine has an estimated useful life of six years and an estimated residual value of $2,000. The company provided the following expenditures: a. Invoice price of the machine, $60,00

> What is the book value of a bond?

> Define deferred revenue. Why is it a liability?

> What is the difference between an unsecured and a secured bond?

> From the perspective of the issuer, what are some advantages of issuing bonds instead of stock?

> Skullcandy designs, markets, and distributes audio and gaming headphones, earbuds, and speakers. Last year, Skullcandy reported cost of goods sold of $158 million. This year, cost of goods sold was $117 million. Accounts payable was $23 million at the en

> Lemond Corporation is planning to issue bonds with a face value of $200,000 and a coupon rate of 10 percent. The bonds mature in three years and pay interest semiannually every June 30 and December 31. All the bonds were sold on January 1 of this year. L

> What is a bond covenant?

> What does the accounts payable turnover ratio tell you about a company? How is the ratio computed?

> In their balance sheets, what do companies call obligations to pay suppliers in the near future?

> What financial statement is the primary source of information about the liabilities of a company?

> When calculating the present value of a bond’s future cash flows, do investors use the coupon rate or market interest rate as the discount rate?

> Differentiate between a bond indenture and a bond prospectus.

> How is the debt-to-equity ratio computed? What does the debt-to-equity ratio tell you?

> Define annuity.

> Explain the concept of the time value of money.

> What is asset impairment? How is it accounted for?

> You work for a small company that is considering investing in a new Internet business. Financial projections suggest that the company will be able to earn in excess of $40 million per year on an investment of $100 million. The company president suggests

> When a company signs a capital lease, does it record an asset and/or a liability on its balance sheet?

Question: James Corporation is planning to issue bonds