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, 2017 December 31, 2018 June 30, 2019 2. Assume instead that the bank charges 8% on the note, which is compounded semiannually. Identify and analyze the effect on the dates in part (1). 3. How much additional interest expense will Rolf have in part (2) than in part (1)?
> For the year ended September 26, 2015, Apple, Inc., reported net income of $53,394 million. Total shareholders’ equity on this date was $119,355 million, and on September 27, 2014, it was $111,547 million. No preferred stock was outstanding in either yea
> Madison Corp. reported the following in the Current Assets section of its comparative balance sheets: Supplemental information at the bottom of Madison’s 2017 statement of cash flows was as follows: Madison’s 2017
> Cass Corp.’s December 31, 2016, balance sheet reported current assets of $120,000 and current liabilities of $100,000. The current ratio increased by 25% one year later, on December 31, 2017. Current liabilities on this date were $140,000. Determine curr
> Wolf’s comparative balance sheets included inventory of $45,000 at December 31, 2016, and $63,000 at December 31, 2017. The comparative balance sheets also included accounts payable of $33,000 at December 31, 2016, and $39,000 at December 31, 2017. Wolf’
> Butler Corp. reported the following in the Current Assets section of its comparative balance sheets: The company uses the direct method on its statement of cash flows and reported that it collected $45,200 during 2017 from its customers. Determine sale
> Stanley Company’s comparative balance sheets included accounts receivable of $80,800 at December 31, 2016, and $101,100 at December 31, 2017. Sales reported by Stanley on its 2017 income statement amounted to $1,450,000. What is the amount of cash collec
> Spencer Corp. reported accounts receivable of $28,000 on its December 31, 2016, balance sheet. On December 31, 2017, accounts receivable had decreased to $22,000. Sales for the year amounted to $55,000. What is the amount of cash collections that Spencer
> Redstone Inc. has the following debt outstanding on December 31, 2017: On this date, Redstone retired the entire bond issue by paying cash of $510,000. Required: 1. Identify and analyze the transaction to record the bond retirement. 2. Describe how th
> Following is the current assets and current liabilities portion of the balance sheet of Keurig Green Mountain for the years ended September 26, 2015 and September 27, 2014: Required: Determine the company’s current ratio for each fis
> On its most recent statement of cash flows, a company reported net cash provided by operating activities of $12,000,000. Its capital expenditures for the same year were $2,000,000. A note to the financial statements indicated that the total amount of deb
> The following account balances for the noncash current assets and current liabilities of Suffolk Company are available: Net income for 2017 is $40,000. Depreciation expense is $20,000. Assume that all sales and all purchases are on account. Required:
> Timber Corp. began the year with a balance in its Income Taxes Payable account of $10,000. The year-end balance in the account was $15,000. The company uses the indirect method in the Operating Activities section of the statement of cash flows. Therefore
> Stanton Corp. began operations on January 1, 2017. The statement of cash flows for the first year reported dividends paid of $160,000. The balance sheet at the end of the first year reported $40,000 in dividends payable and $580,000 in ending retained ea
> The following selected account balances are available from the records of Lewistown Company: Other information available for 2017 is as follows: a. Lewistown reported net income of $285,000 for the year. b. It declared and distributed a stock dividend
> The computation of cash provided by operating activities requires analysis of the noncash current asset and current liability accounts. Determine the missing amounts for each of the following independent cases: Case 1 Accounts receivable, beginning of y
> The following account balances for the noncash current assets and current liabilities of Labrador Company are available: In addition, the income statement for 2017 is as follows: 2017 Sales revenue ……â
> Homeier Heating reported the following amounts on its comparative balance sheets: The company uses the direct method on its statement of cash flows and reported that it spent $44,000 during 2017 to acquire inventory. Determine cost of goods sold expens
> Lester Enterprises’ comparative balance sheets included inventory of $90,200 at December 31, 2016, and $70,600 at December 31, 2017. Lester’s comparative balance sheets also included accounts payable of $57,700 at December 31, 2016, and $39,200 at Decemb
> Kerry Company has 1,000 shares of $100 par value, 9% preferred stock and 10,000 shares of $10 par value common stock outstanding. The preferred stock is cumulative and nonparticipating. Dividends were paid in 2013. Since 2013, Kerry has declared and paid
> Refer to Panera Bread’s and Chipotle’s financial statements reprinted at the back of the book. Using the companies’ balance sheets and accompanying notes, write a response to the following questions:
> The Stockholders’ Equity category of Little Joe’s balance sheet on January 1, 2017, appeared as follows: Common stock, $5 par, 40,000 shares issued and outstanding ……………… $200,000 Additional paid-in capital …………………………………………………………………………. 90,000 Retained
> The Stockholders’ Equity category of Bradford Company’s balance sheet on January 1, 2017, appeared as follows: Common stock, $10 par, 10,000 shares issued and outstanding ……………… $100,000 Additional paid-in capital …………………………………………………………………………. 50,000 Re
> The following transactions are for Weber Corporation in 2017: a. On March 1, the corporation was organized and received authorization to issue 5,000 shares of 8%, $100 par value preferred stock and 2,000,000 shares of $10 par value common stock. b. On Ma
> Horace Company had the following transactions during 2017, its first year of business. a. Issued 5,000 shares of $5 par common stock for cash at $15 per share. b. Issued 7,000 shares of common stock on May 1 to acquire a factory building from Barkley Co
> Assume that the following amounts are known for Colten Company for the current year: Retained Earnings, beginning balance ………………………………………… $210,000 Retained Earnings, ending balance ……………………………………………… 250,000 Net income …………………………………………………………………………………..
> Assume that the following amounts are known for Miles Company for the current year: Retained Earnings, beginning balance …………………………………………… $420,000 Retained Earnings, ending balance ………………………………………………… 500,000 Cash dividends declared …………………………………………………
> Clifford Company’s comparative balance sheet included dividends payable of $80,000 at December 31, 2016, and $100,000 at December 31, 2017. Dividends declared by Clifford during 2017 amounted to $400,000. Required: 1. Calculate the amount of dividends a
> The Stockholders’ Equity category of Zache Company’s balance sheet appears below. Common stock, $10 par, 10,000 shares issued, 9,200 outstanding ……………………. $? Additional paid-in …………………………………………………………………………………… capital? Total contributed capital ……………………
> Armstrong Aero Ace, a flight training school, issued $100,000 of 20-year bonds at face value when the market rate was 10%. The bonds have been outstanding for ten years. The company pays annual interest on January 1. The current rate for similar bonds is
> Assume that you are a loan officer in charge of reviewing loan applications from potential new clients at a major bank. You are considering an application from Molitor Corporation, which is a fairly new company with a limited credit history. It has provi
> Following are excerpts from the notes that accompanied the financial statements of Hewlett- Packard for the year ended October 31, 2015. HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES Note 17: Litigation and Contingencies In re HP Securities Litigat
> 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
> 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
> 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. Duri
> 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
