Kirin Nerise and Milt O’Brien agreed to form a partnership to operate a sandwich shop. Kirin contributed $25,000 cash and will manage the store. Milt contributed computer equipment worth $8,000 and $92,000 cash. Milt will keep the financial records. During the year, sales were $90,000 and expenses (including a salary to Kirin) were $76,000. Kirin withdrew $500 per month. Milt withdrew $4,000 (total). Their partnership agreement specified that Kirin would receive a salary of $7,200 for the year. Milt would receive 6% interest on his initial capital investment. All remaining income or loss would be equally divided. Required: Calculate the ending balance in each partner’s equity account.
> Kathy Clark owns a small company that makes ice machines for restaurants and food-service facilities. Kathy knows a great deal about producing ice machines but is less familiar with the best terms to extend to her customers. One customer is opening a new
> Assume that you are the controller of a small, growing sporting-goods company. The prospects for your firm in the future are quite good, but like many other firms, it has been experiencing some cash-flow difficulties because all available funds have been
> Medsupply Inc. produces supplies used in hospitals and nursing homes. Its sales, production, and costs to produce are expected to remain constant over the next five years. The corporate income tax rate is expected to increase over the next three years. T
> Assume that you are a financial analyst attempting to compare the financial results of two companies. The 2017 income statement of Straight Company is as follows: Straight Company depreciates all operating assets using the straight-line method for tax
> BPO’s management believes the company has been successful at increasing sales because it has not increased the selling price of its products even though its competition has increased prices and costs have increased. Price and cost relat
> Diversified Industries is a large conglomerate that is continually in the market for new acquisitions. The company has grown rapidly over the last ten years through buyouts of medium-size companies. Diversified does not limit itself to companies in any o
> Conrad Company has been in operation for four years. The company is pleased with the continued improvement in net income but is concerned about a lack of cash available to replace existing equipment. Land, buildings, and equipment were purchased at the b
> Bailey Corp. just completed the most profitable year in its 25-year history. Reported earnings of $1,020,000 on sales of $8,000,000 resulted in a very healthy profit margin of 12.75%. Each year before releasing the financial statements, the board of dire
> Rohnan Inc. needs to raise $500,000. It is considering two options: a. Issue preferred stock, $100 par, 8%, cumulative, nonparticipating, callable at $110. The stock could be issued at par. b. Issue common stock, $1 par, market $10. Currently, the compan
> Assume that you are an analyst attempting to compare the financial structures of two companies. In particular, you must analyze the debt and equity categories of the two firms and calculate a debt-to-equity ratio for each firm. The Liability and Equity c
> The following excerpts are from the footnotes that accompany Walmart’s financial statements of January 31, 2015. Wage-and-Hour Class Action: The Company is a defendant in Braun/Hummel v. Wal-Mart Stores, Inc., a class-action lawsuit commenced in March 2
> Mega Enterprises is in the process of negotiating an extension of its existing loan agreements with a major bank. The bank is particularly concerned with Mega’s ability to generate sufficient cash flow from operating activities to meet
> Hancock Inc. is owned by nearly 100 shareholders. Judith Stitch owns 48% of the stock. She needs cash to fulfill her commitment to donate the funds to construct a new art gallery. Some of her friends have agreed to vote for Hancock to pay a larger-than-n
> Jim Brock was an accountant with Hubbard Inc., a large corporation with stock that was publicly traded on the New York Stock Exchange. One of Jim’s duties was to manage the corporate reporting department, which was responsible for devel
> During 2017, Mercator Company borrowed $80,000 from a local bank. In addition, Mercator used $120,000 of cash to construct a new corporate office building. Based on average accumulated expenditures, the amount of interest capitalized during 2017 was $8,0
> From the following list, identify each item as operating (O), investing (I), financing (F), or not separately reported on the statement of cash flows (N). ________ Cost incurred to acquire copyright ________ Proceeds from sale of patent ________ Gain on
> From the following list, identify each item as operating (O), investing (I), financing (F), or not separately reported on the statement of cash flows (N). ________ Purchase of land ________ Proceeds from sale of land ________ Gain on sale of land _______
> Glencoe Inc. operates with a June 30 year-end. During 2017, the following transactions occurred: a. January 1: Signed a one-year, 10% loan for $25,000. Interest and principal are to be paid at maturity. b. January 10: Signed a line of credit with Little
> On June 30, 2017, Rolf Inc. borrowed $25,000 from its bank, signing an 8%, two-year note. Required: 1. Assuming that the bank charges simple interest on the note, prepare the journal entry Rolf will record on each of the following dates: December 31, 20
> Centralia Stores Inc. had property, plant, and equipment, net of accumulated depreciation, of $4,459,000 and intangible assets, net of accumulated amortization, of $673,000 at December 31, 2017. The company’s 2016 statement of cash flows, prepared using
> Jen Latke is an accountant for Hale’s Manufacturing Company. Hale’s has entered into an agreement to lease a piece of equipment from EZ Leasing. Jen must decide how to report the lease agreement on Haleâ€
> O’hare Company’s only asset as of January 1, 2017, was a limousine. During 2017, only the following three transactions occurred: Services of $100,000 were provided on account. All accounts receivable were collected. Depreciation on the limousine was $15,
> Griffith Delivery Service purchased a delivery truck for $33,600. The truck has an estimated useful life of six years and no salvage value. For purposes of preparing financial statements, Griffith is planning to use straight-line depreciation. For tax pu
> The term tax shield refers to the amount of income tax saved by deducting depreciation for income tax purposes. Assume that Supreme Company is considering the purchase of an asset as of January 1, 2017. The cost of the asset with a five-year life and zer
> Carter Development Company purchased, for cash, a large tract of land that was immediately platted and deeded into the following smaller sections: Based on recent sales of similar property, the fair market values of the three sections are as follows:
> Sunrise Corp. is a major regional retailer. The chief executive officer (CEO) is concerned with the slow growth both of sales and of net income and the subsequent effect on the trading price of the common stock. Selected financial data for the past three
> The president of Blue Skies Corp. and his vice presidents are reviewing the operating results of the year just completed. Sales increased by 15% from the previous year to $60,000,000. Average total assets for the year were $40,000,000. Net income, after
> The following account balances are taken from the records of Veriform Inc.: Cash ……………………&aci
> The following account balances are taken from the records of Liquiform Inc.: Cash ……………………&ac
> The balance sheet of Terrier Company at the end of 2016 is presented here, along with certain other information for 2017: December 31, 2016 Cash …………………………………………………………………………………… $ 140,000 Accounts receivable ………………………………………………………………… 155,000 Total curre
> Refer to all of the facts in Problem 12-6. Problem 12-6: The income statement for Astro Inc. for 2017 is as follows: For the Year Ended December 31, 2017 Sales revenue …………
> Bunch o’ Balloons markets balloon arrangements to companies that want to thank clients and employees. Bunch o’ Balloons has a unique style that has put it in high demand. Consequently, Bunch o’ Balloo
> Refer to all of the facts in Problem 12-6. Problem 12-6: The income statement for Astro Inc. for 2017 is as follows: For the Year Ended December 31, 2017 Sales revenue …………
> The income statement for Astro Inc. for 2017 is as follows: For the Year Ended December 31, 2017 Sales revenue ………………â€&br
> Refer to all of the facts in Problem 12-3. Problem 12-3: Peoria Corp. just completed another successful year, as indicated by the following income statement: For the Year Ended December 31, 2017 Sales revenue ……
> Refer to all of the facts in Problem 12-3. Problem 12-3: Peoria Corp. just completed another successful year, as indicated by the following income statement: For the Year Ended December 31, 2017 Sales revenue ……
> Peoria Corp. just completed another successful year, as indicated by the following income statement: For the Year Ended December 31, 2017 Sales revenue …………â€&brv
> Refer to all of the facts in Problem 12-1. Problem 12-1: The following balances are available for Chrisman Company: Bonds were retired during 2017 at face value, plant and equipment were acquired for cash, and common stock was issued for cash. Deprec
> Refer to all of the facts in Problem 12-9. Problem 12-9: The balance sheet of Terrier Company at the end of 2016 is presented here, along with certain other information for 2017: December 31, 2016 Cash …………………………………………………………………………………… $ 140,000 Accoun
> The following balances are available for Chrisman Company: Bonds were retired during 2017 at face value, plant and equipment were acquired for cash, and common stock was issued for cash. Depreciation expense for the year was $35,000. Net income was rep
> Louise Abbott and Buddie Costello are partners in a comedy club business. The partnership agreement specifies the manner in which income of the business is to be distributed. Louise is to receive a salary of $20,000 for managing the club. Buddie is to re
> Refer to all of the facts in Problem 11-1. Problem 11-1: Peeler Company was incorporated as a new business on January 1, 2017. The corporate charter approved on that date authorized the issuance of 1,000 shares of $100 par, 7% cumulative, nonparticipat
> John Walton is an accountant for ABC Auto Dealers, a large auto dealership in a metropolitan area. ABC sells both new and used cars. New cars are sold with a five-year warranty, the cost of which is carried by the manufacturer. For several years, however
> Following is the consolidated statement of comprehensive income for Southwest Airlines for the year ended December 31, 2014: Required: 1. Which items were included in comprehensive income? If these items had been included on the income statement as par
> Refer to all of the facts in Problem 11-1. Problem 11-1: Peeler Company was incorporated as a new business on January 1, 2017. The corporate charter approved on that date authorized the issuance of 1,000 shares of $100 par, 7% cumulative, nonparticipat
> On January 1, 2017, Frederiksen Inc.’s Stockholders’ Equity category appeared as follows: Preferred stock, $80 par value, 7%, 3,000 shares issued and outstanding ……..…. $ 240,000 Common stock, $10 par value, 15,000 shares issued and outstanding …………..……
> Favre Company has a history of paying cash dividends on its common stock. However, the firm did not have a particularly profitable year in 2017. At the end of the year, Favre found itself without the necessary cash for a dividend and therefore declared a
> The Stockholders’ Equity category of Greenbaum Company’s balance sheet as of December 31, 2017, appeared as follows: Preferred stock, $100 par, 8%, 1,000 shares issued and outstanding $ 100,000 Common stock, $10 par, 20,000 shares issued and outstanding
> Ellen Hays received a windfall from one of her investments. She would like to invest $100,000 of the money in Linwood Inc., which is offering common stock, preferred stock, and bonds on the open market. The common stock has paid $8 per share in dividends
> On May 1, Chong Yu deposited $120,000 of his own savings in a separate bank account to start a printing business. He purchased copy machines for $42,000. Expenses for the year, including depreciation on the copy machines, were $84,000. Sales for the year
> Peeler Company was incorporated as a new business on January 1, 2017. The corporate charter approved on that date authorized the issuance of 1,000 shares of $100 par, 7% cumulative, nonparticipating preferred stock and 10,000 shares of $5 par common stoc
> Wyhowski Inc. reported income from operations, before taxes, for 2015–2017 as follows: 2015 ………………………………………………………………………. $210,000 2016 ………………………………………………………………………. 240,000 2017 ………………………………………………………………………. 280,000 When calculating income, Wyhowski dedu
> Langsom’s Mfg. is planning for a new project. Usually, Langsom’s depreciates long-term equipment for ten years. The equipment for this project is specialized and will have no further use at the end of the project in three years. The manager of the projec
> Erinn Corporation has compiled its 2017 financial statements. Included in the Long-Term Liabilities category of the balance sheet are the following amounts: Included in the income statement are the following amounts related to income taxes: In the no
> On January 1, 2017, Muske Trucking Company leased a semitractor and trailer for five years. Annual payments of $28,300 are to be made every December 31 beginning December 31, 2017. Interest expense is based on a rate of 8%. The present value of the minim
> McGee Company issued $200,000 face value bonds at a premium of $4,500. The bonds contain a call provision of 101. McGee decides to redeem the bonds due to a significant decline in interest rates. On that date, McGee had amortized only $1,000 of the premi
> Assume the same set of facts for Stacy Company as in Problem 10-2 except that the market rate of interest of January 1, 2017, is 8% and the proceeds from the bond issuance equal $10,799. Required: 1. Prepare a five-year table (similar to Exhibit 10-5) t
> Stacy Company issued five-year, 10% bonds with a face value of $10,000 on January 1, 2017. Interest is paid annually on December 31. The market rate of interest on this date is 12%, and Stacy Company receives proceeds of $9,279 on the bond issuance. Req
> Becca Company is considering the issue of $100,000 face value, ten-year term bonds. The bonds will pay 6% interest each December 31. The current market rate is 6%; therefore, the bonds will be issued at face value. Required 1. For each of the following
> Bombeck Company sells a product for $1,500. When the customer buys it, Bombeck provides a one-year warranty. Bombeck sold 120 products during 2017. Based on analysis of past warranty records, Bombeck estimates that repairs will average 3% of total sales.
> Clearview Company manufactures and sells high-quality television sets. The most popular line sells for $1,000 each and is accompanied by a three-year warranty to repair, free of charge, any defective unit. Average costs to repair each defective unit will
> Brinker International operates Chili’s, Macaroni Grill, and other restaurant chains. The following items are classified as current liabilities on Brinker International’s balance sheets as of 2015 and 2014: Required:
> The following items are classified as current liabilities on Yum! Brands’ balance sheets as of December 27, 2014, and December 28, 2013: Required: 1. Yum! Brands uses the indirect method to prepare its statement of cash flows. Prepare
> Denver Company recently hired Terry Davis as an accountant. He was given responsibility for all accounting functions related to fixed asset accounting. Tammy Sharp, Terry’s boss, asked him to review all transactions involving the current year’s acquisiti
> On January 1, 2017, Chen Yu’s Office Supply Store plans to remodel the store and install new display cases. Chen has the following options of payment. Chen’s interest rate is 8%. a. Pay $180,000 on January 1, 2017. b. Pay $196,200 on January 1, 2018. c.
> Heartland Inc. is a medium-size company that has been in business for 20 years. The industry has become very competitive in the last few years, and Heartland has decided that it must grow if it is going to survive. It has approached the bank for a sizabl
> Tablon Inc. is a wholly owned subsidiary of Marbel Co. The philosophy of Marbel’s management is to allow the subsidiaries to operate as independent units. Corporate control is exercised through the establishment of minimum objectives fo
> Lang Company has not yet prepared a formal statement of cash flows for 2017. Following are comparative balance sheets as of December 31, 2017 and 2016, and a statement of income and retained earnings for the year ended December 31, 2017: Income taxes
> Refer to all of the facts in Problem 12-11. Problem 12-11: Glendive Corp. is in the process of preparing its statement of cash flows for the year ended June 30, 2017. An income statement for the year and comparative balance sheets are as follows: For
> Glendive Corp. is in the process of preparing its statement of cash flows for the year ended June 30, 2017. An income statement for the year and comparative balance sheets are as follows: For the Year Ended June 30, …â€&br
> The newly hired accountant at Ives Inc. prepared the following balance sheet: Assets Cash …………………………………………………………………………. $ 3,500 Accounts receivable ……………………………………………………… 5,000 Treasury stock ………………………………………………………….……… 500 Plant, property, and equipment
> The following transactions occurred at Horton Inc. during its first year of operation: a. Issued 100,000 shares of common stock at $5 each; 1,000,000 shares are authorized at $1 par value. b. Issued 10,000 shares of common stock for a building and land.
> The Stockholders’ Equity section of the December 31, 2017, balance sheet of Eldon Company appeared as follows: Preferred stock, $30 par value, 5,000 shares authorized,? shares issued …….. $120,000 Common stock,? par, 10,000 shares authorized, 7,000 shar
> The following items, listed alphabetically, appear on Walgreens Boots Alliance, Inc consolidated balance sheet at August 31, 2015 (in millions): Accrued expenses and other liabilities …………………………………………… $ 5,225 Deferred income taxes (long-term) ………………………
> Garden Fresh Inc. is a wholesaler of fresh fruits and vegetables. Each year, it submits a set of financial ratios to a trade association. Even though the association doesn’t publish the individual ratios for each company, the president
> Brand Company issued $1,000,000 face value, eight-year, 12% bonds on April 1, 2017, when the market rate of interest was 12%. Interest payments are due every October 1 and April 1. Brand uses a calendar year-end. Required: 1. Identify and analyze the ef
> On July 1, 2017, Leach Company needs exactly $103,200 in cash to pay an existing obligation. Leach has decided to borrow from State Bank, which charges 14% interest on loans. The loan will be due in one year. Leach is unsure, however, whether to ask the
> The following situations involve the application of the time value of money concept: 1. Janelle Carter deposited $9,750 in the bank on January 1, 2000, at an interest rate of 12% compounded annually. How much has accumulated in the account by January 1,
> Brian Imhoff’s grandparents want to give him some money when he graduates from high school. They have offered Brian three choices as follows: a. Receive $15,000 immediately. Assume that interest is compounded annually. b. Receive $2,250 at the end of eac
> Table leaf Inc. purchased a patent a number of years ago. The patent is being amortized on a straight-line basis over its estimated useful life. The company’s comparative balance sheets as of December 31, 2017 and 2016, included the fol
> On January 1, 2017, Castlewood Company purchased machinery for its production line for $104,000. Using an estimated useful life of eight years and a residual value of $8,000, the annual straight-line depreciation of the machinery was calculated to be $12
> During 2012, Reynosa Inc.’s research and development department developed a new manufacturing process. Research and development costs were $85,000. The process was patented on October 1, 2012. Legal costs to acquire the patent were $11,900. Reynosa decid
> Merton Company purchased a building on January 1, 2016, at a cost of $364,000. Merton estimated that its life would be 25 years and its residual value would be $14,000. On January 1, 2017, the company made several expenditures related to the building. Th
> Early in its first year of business, Toner Company, a fitness and training center, purchased new workout equipment. The acquisition included the following costs: Purchase price ……………………………………………………………….. $150,000 Tax …………………………………………………………………………………….. 1
> The following events took place at Pete’s Painting Company during 2017: a. On January 1, Pete bought a used truck for $14,000. He added a tool chest and side racks for ladders for $4,800. The truck is expected to last four years and then be sold for $800
> As assistant controller of Midwest Construction Company, you are reviewing with your boss, the controller, Dave Jackson, the financial statements for the year just ended. During the review, Jackson reminds you of an existing loan agreement with Southern
> Investors and lenders who read financial statements must determine the age, composition, and productivity of operating assets. Refer to the financial information at the back of the book for Chipotle and Panera Bread. Financial information Chipotle: Fi
> The accounting staff of CCB Enterprises has completed the financial statements for the 2017 calendar year. The statement of income for the current year and the comparative statements of financial position for 2017 and 2016 follow. CCB Enterprises Statem
> McLaughlin Inc. operates with a June 30 year-end. During 2017, the following transactions occurred: a. January 1: Signed a one-year, 10% loan for $35,000. Interest and principal are to be paid at maturity. b. January 10: Signed a line of credit with Lit
> On June 30, 2017, Rolloff Inc. borrowed $25,000 from its bank, signing a 6% note. Principal and interest are due at the end of two years. Required: 1. Assuming that the note earns simple interest for the bank, calculate the amount of interest accrued on
> E-Gen Enterprises Inc. had property, plant, and equipment, net of accumulated depreciation, of $1,555,000 and intangible assets, net of accumulated amortization, of $34,000 at December 31, 2017. The company’s 2017 statement of cash flows, prepared using
> Book Company’s only asset as of January 1, 2017, was a copyright. During 2017, only the following three transactions occurred: Royalties earned from copyright use, $500,000 in cash Cash paid for advertising and salaries, $62,500 Amortization, $50,000 Re
> Payton Delivery Service purchased a delivery truck for $28,200. The truck will have a useful life of six years and zero salvage value. For the purposes of preparing financial statements, Payton is planning to use straight-line depreciation. For tax purpo
> The term tax shield refers to the amount of income tax saved by deducting depreciation for income tax purposes. Assume that Rummy Company is considering the purchase of an asset as of January 1, 2017. The cost of the asset with a five-year life and zero
> Dixon Manufacturing purchased, for cash, three large pieces of equipment. Based on recent sales of similar equipment, the fair market values are as follows: Required: 1. What value is assigned to each piece of equipment if the equipment was purchased f
> Sunset Corp. is a major regional retailer. The chief executive officer (CEO) is concerned with the slow growth both of sales and of net income and the subsequent effect on the trading price of the common stock. Selected financial data for the past three
> The president of Blue Moon Corp. and her department managers are reviewing the operating results of the year just completed. Sales increased by 12% from the previous year to $750,000. Average total assets for the year were $400,000. Net income, after add
> In December 2017, Rangers Inc. invested $100,000 of idle cash in U.S. Treasury notes. The notes mature on October 1, 2018, at which time Rangers expects to redeem them at face value of $100,000. The treasurer believes that the notes should be classified
> Consider completing this problem after Problem 13-1A to ensure that you obtain a clear understanding of the effect of various transactions on this measure of solvency. The following account balances are taken from the records of Degas Inc.: Current liab
> Consider completing Problem 13-2A after this problem to ensure that you obtain a clear understanding of the effect of various transactions on this measure of solvency. The following account balances are taken from the records of Monet’s
